Private Equity | Hedging | Capital Markets | Capital Expenditure | Drilling Program - Wells | Capital Expenditure - 2020

InPlay Oil Corp. Ramping Up Spending, Production in 2021

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InPlay Oil Corp. has detailed its 2021 capital plans as well as its hedging position.

2021 Capital Program Overview

• Capital program for 2021 of $23 million (up 98% from $11.6 million in 2020)

• 2021 annual average production of 5,100 to 5,400 boe/d (69% light oil & liquids) (representing 28% to 35% of annual production growth over 2020)

• Well Plans: Drill approximately 8.0 net ERH Cardium wells in Pembina and Willesden Green and completing the 0.2 net Nisku ERH well drilled in 2020.

Initial plans for the first quarter, consist of three ERH wells to be drilled on our recently acquired Pembina lands, with the remaining five wells to be drilled in both the Willesden Green and Pembina areas over the balance of the year.

The Company’s 2021 guidance is based on a current future commodity price curve with an annual average WTI price of US $49.50/bbl, $2.45/GJ AECO and estimated foreign exchange of $0.78 CDN/USD.

2021 Hedging

InPlay has continued to execute upon an active hedging program, entering into various near-term crude oil and natural gas derivative contracts, directed at reducing the Company’s potential exposure to volatile oil prices, thereby backstopping initial high rate production from our capital development program. The following hedges are currently in place:

Business Update

In 2020, InPlay implemented initiatives to reduce costs, deferring the servicing of wells that went down, curtailing production and shutting in marginally economic wells in order to avoid selling proved developed producing reserves at a loss. These efforts are expected to result in corporate and operating cost reductions of approximately $8 million, or approximately 25%, compared to our original January 2020 (pre COVID-19) budget and we estimate retaining up to 10%, of the full 25% of these cost reductions, going forward.

InPlay was able to secure a $25 million senior second lien four-year term loan facility with the Business Development Bank of Canada (“BDC”) and our syndicate in October. As a result, we are now expecting to achieve production in excess of pre-COVID (2019) levels in the first quarter of 2021, estimated currently at approximately 5,300 boe/d based on field estimates.

4Q20 Ops Update

In the fourth quarter the Company resumed its development program drilling three (3.0 net) extended reach horizontal (“ERH”) wells in Willesden Green which were completed and placed on production at the end of 2020 and one (0.2 net) ERH Nisku well which was drilled and will be completed and brought on production in the first quarter of 2021. As a result of changes in well design and continued advances in completion technology, in addition to exceptional project execution, this three well program was among the most cost-effective and efficient programs to date in Willesden Green. Drilling these three wells took 7.9, 8.3, and 8.8 days respectively compared to our previously experienced drilling times of 9.0 – 9.5 days. This sets a new industry standard for pacesetter drill times in the area with InPlay now drilling 4 of 5 of the fastest ERH wells in the area to date. Completions and equipping of the wells were also executed efficiently on time and under budget leading to drilling, completions, and equipping cost savings of approximately $800,000 per well. Total drilling, completion, and equipping costs were under $2.4 million per well, equating to a 25% reduction, versus previous costs of $2.9 – $3.3 million per well significantly enhancing the economics and capital efficiencies in the area.

Efforts toward restoring economic production that had been temporarily curtailed in April continued through the fourth quarter. Currently, there remains approximately 150 boe/d (75% light oil and liquids) of production requiring servicing, of which the majority is expected to be brought back on production in 2021 with commodity price improvements.

Current production, which includes approximately one week of early clean up production from the three new Willesden Green ERH wells, is estimated at 5,300 boe/d (70% light oil and liquids) based on field estimates.