IPC Switches to Harvest Mode — and Refuses to Hedge the Crop
From build to harvest — the inflection is real
For four years International Petroleum was a capex story wearing an E&P costume: Blackrod Phase 1 ate the cash, the buyback was starved, and every analyst call ended on the same note. That story flipped this quarter. Q3 production came in on forecast at 44,000 barrels of oil equivalent per day, Blackrod Phase 1 was delivered ahead of schedule and on budget, and — for the second quarter running — the company printed positive free cash flow ($27M in Q3). Net debt stepped down to $473M from $484M at year-end, and CFO Christophe Nerguararian put leverage at “slightly under 1.8x, if you compare our net debt to 12-month trailing EBITDA at the end of September” — Christophe Nerguararian, Chief Financial Officer · 2026-11-03. Management expects to exit 2026 above 50,000 boe/d and lifted the corporate rate target by roughly 50% by 2028.The mechanics of that inflection are the whole point of cash flow generation now outranking every other phrase in the keyword set: Blackrod's state-of-the-art central processing facility is ramping (12 well pairs online at quarter-end, ~18 now, plateau of 30,000 b/d targeted by end-2027), and the company is transitioning from "growth capital into the ground" to "harvest."
But what I can say is, we expect to be in excess of 50,000 barrels of oil equivalent per day, for sure, exiting this year.
The oil-price torque — and a hard bet not to hedge it
Q3 landed in an extraordinary tape. Dated Brent averaged close to $97, IPC's Malaysia cargoes sold at a record premium, and the company is fully, deliberately unhedged on Brent and WTI benchmark prices. That is why the range for full-year free cash flow is absurdly wide — $35M to $110M on an $80–$110 Brent assumption — and why the market's own price of oil trade has been an advancer over the trailing year. IPC is a levered pure-play on a supply shock management itself calls historic.But the genuinely new signal this quarter is not the torque; it is the policy. For several calls, hedging was framed as "opportunistic." On the prior call the CFO said:
“when the bulk of the CapEx is behind us or we don't have any specific debt maturities, we will take a lighter approach on benchmark hedging.” — Christophe Nerguararian, Chief Financial Officer · 2026-08-04That lighter approach has now hardened into a rule. With no debt maturing into 2027 and a light capex year, management is explicitly declining to lock in benchmark prices — a confident, almost aggressive stance that the curve is wrong or the asset is worth more unhedged. The keyword benchmark oil prices lost momentum even as the underlying price soared; hedging as a theme is fading from a talk-track to a policy statement.
Absent any significant debt maturities or significant CapEx, we are not going to hedge benchmark oil prices.
Capex creep and the buyback that keeps waiting
Here is the tension. The company talks harvest, but the shovel keeps re-entering the ground. Full-year capex guidance was raised to $185M from $163M "mainly due to the sanctioning of additional projects at our thermal assets" — the second consecutive raise (May took $122M to $163M). Those are framed as quick-payback resource maturation and infill work, and they are sensible on paper. But the pattern matters: incremental capital keeps beating the buyback to the punchline.Teodor Nilsen of SB1 has asked virtually the same question for two straight quarters — “should we expect you to do some more on repurchases than you have done over the past couple of quarters?” — Teodor Nilsen, Analyst · 2026-08-04 — and was previously told management was “steadfast on focusing on getting Blackrod on to production here.” — William Lundin, President and Chief Executive Officer · 2026-08-04 Blackrod is now onstream, and 1.3 million shares ($27M) were repurchased this quarter, with the NCIB program set to renew in December. Yet 1.3M shares against 78 million bought back since 2017 (>$1.3B of "value created" per management) is a modest restart, and the CEO's own framing leans on a future that hasn't arrived: he wants to update the buyback slide "when our production figure has a 6 handle in front of it." The current share price discount remains the talking point rather than the trigger.
Mooney, Mega Deduction, and a quieter M&A line
Two genuinely company-unique items surfaced this quarter. First, the non-core Mooney disposal: ~CAD 70M gross, roughly 4 million barrels of 2P, and about $12 per barrel in proceeds — a rich exit that flattered the quarter's net result. Second, the Canadian "Mega Deduction," a federal measure allowing 100% expensing of Canadian capex from September 15 — a quiet liquidity tailwind the company now leans on.On M&A, the M&A landscape has been frantic — Tamarack/Headwater, BlueNord/Var Energi, Capricorn/DNO, and Cenovus/MEG — yet IPC has been an active bidder without a deal:
“We have been actively involved in several processes in Canada and elsewhere in Southeast Asia this year. None have translated into a successful result, as of course, that would have otherwise been made public.” — William Lundin, President and Chief Executive Officer · 2026-11-03That disclosure is more honest than most, but it also reveals a company that is long on resource (1.2 billion barrels contingent) and short on need — hence the scarcity value of Blackrod and the refusal to chase.
What management stopped talking about
Two silences are as telling as the headlines. High oil price is the obvious friend in the room, but the market's runaway global obsession — tariff refunds — is entirely absent from IPC's narrative this quarter, having been a live topic back in 2025 when U.S.–Canada crude tariffs loomed (and were dismissed). And artificial intelligence got a single, refreshingly candid line: IPC is a “fast follower rather than a company that is going to be implementing R&D and early-stage technologies” — William Lundin, President and Chief Executive Officer · 2026-11-03. No AI halo here — just barrels, buybacks and a leveraged bet on the oil price.Net-net: IPC has earned the right to harvest, but the capital is still being redeployed into short-cycle projects before it reaches shareholders, and management has chosen to stand naked in front of an oil price it calls a historic shock. That is either conviction or complacency — this quarter's tape suggests it is working, but the wide free-cash-flow range says the next test of the thesis will be a down-move in Brent, not an up-move.