Okay. A very good morning to everybody, and welcome to IPC's first quarter results and operations update presentation. My name is Mike Nicholson. I'm the CEO of IPC. Joining me this morning is Christophe Nerguararian, the CFO, and Rebecca Gordon, who is our VP of Investor Relations. I'll begin in the usual fashion by walking through the highlights and the operations update, and then I'll pass across to Christophe, and he will walk through the financial numbers. At the end of the presentation, you'll have the opportunity to ask questions, and you can submit those online, or also we can take calls from the conference call number. To get started with the highlights from the first quarter. It's been another phenomenal performance for the company and record high financial performance.
If we start with our production numbers for the first quarter, 45,000 barrels of oil equivalent per day, and that was actually above the high end of our guidance range for the first quarter. We're retaining the full year production guidance of 46,000-48,000 barrels of oil equivalent per day. With our operating costs, the first quarter OpEx was marginally above our guidance, $17.70 per BOE, $0.50 per barrel above guidance, but really driven by higher gas and energy prices. Christophe will go into more detail. Actually a net positive for us, given how much gas that we produce in Canada. We are taking the opportunity with the stronger gas prices to nudge up our guidance up from $15.20 to $16-$17 per BOE OpEx for the full year.
In terms of free cash flow netback, though, with the higher gas prices, that should be more than offset by our free cash flow netback. In terms of our capital expenditure program, it's retaining our full-year CapEx budget of $127 million. We spent $40 million in the first quarter, which is about a third of our CapEx, so exactly in line with forecast. In terms of the cash flow numbers, the strong production above high-end guidance combined with strong gas prices and oil prices means that we've had another quarter of record cash flow generation. Operating cash flow of $145 million. First quarter free cash flow of $96 million.
Given the strong pricing that we've seen in the first four months of this year, we're revising up our full-year free cash flow guidance up to now between $275 million at the low end to $480 million at the high end. That represents a $70-$100 per barrel Brent oil price forecast range for the remainder of 2022. As you can imagine, with such strong cash flow generation, the balance sheet's in really good shape. Our net debt was down to just over $40 million by the end of March. With the big receivables, Christophe will talk about that in his presentation, we actually moved into a net cash position in April.
In terms of the hedging, IPC doesn't have any benchmark hedges, so no Brent or WTI hedges. We're fully benefiting from the strength that we're seeing in oil prices. We have some of our WCS differential exposure hedged. 60% is hedged at $13 per barrel, and that's currently where the market is pricing that differential. On the gas side, around a third of our gas production is hedged for the second and third quarter at CAD 3.60 per Mcf. In terms of the ESG performance, it's been another strong quarter. We haven't had any material incidents to report during the first quarter. With the carbon offsets that we've secured, we're well on track to meeting our emission reductions targets through 2025.
Last but not least, in terms of share repurchases, we're announcing this morning a fourth share repurchase program since the company was started back in 2017 with an intention to launch a $100 million Dutch auction to return value to our shareholders. That's the highlights. If we first get into a little bit more detail on our production. As I mentioned, first quarter production was just under 46,000 barrels of oil equivalent per day. If you look at the chart on the right-hand side of the screen, you can see the production guidance range that we had for the first quarter. Pleased to say that we performed on average just above the high end of that guidance, and we've had exceptional production performance from all of our assets.
Daily production records achieved at Onion Lake Thermal, and we had a stronger delivery on our gas production from our Suffield property, given that the weather in Canada was relatively milder, so we didn't have as much freeze-off impact as we would typically see during a winter. Internationally, continued strong performance both in Malaysia and in France. You're starting to see, again, if you look at the top right-hand side of the chart, the impact of the capital program that we've just completed on Bertam. Technical potential of the company, you can now see we've actually produced on a number of days above 50,000 barrels of oil equivalent per day.
Quite an impressive growth in the first four months of this year for the company. If we look at the full year guidance, though, this was the chart that we showed in our Capital Markets Day forecast. We did expect Q1 to be slightly lower on production because we had the rig moves in Malaysia and typically the colder weather in Canada, but still above high-end guidance and with full recovery of our production relative to the pre-COVID production levels. We expect to see some growth through the year as we continue to complete our capital projects for 2022. Turning to the operating cash flow on the left, the blue bars was the guidance that we gave in our Capital Markets Day forecast.
First quarter Brent prices averaged $102 per barrel, so we're trending towards the high end of that guidance range. As a result of the first four months of 2022 above $100 per barrel, we're re-guiding the $70 per barrel range to reflect the strong pricing we've seen year to date. At the low end of the range, our operating cash flow is expected to be now between $430 million-$445 million, and we're retaining the high-end guidance at $600 million-$635 million. In terms of the capital expenditure program and focused on strong free cash flow generation this year with a measured budget just below $130 million.
$40 million was spent in the first quarter, so slightly more front-end loaded in CapEx and investment program. We should see higher free cash flow generation in the remaining quarters of the year, with a third of that CapEx already having been spent in Q1. The investment plans this year, as you can see from the chart on the right-hand side of the screen, is targeted at growth across all of the IPC assets in Malaysia, in France, and in Canada. The 2022 program is fully funded at less than $50 per barrel Brent. That's why we can generate such significant free cash flow.
Of course, with the balance sheet, you'll see as Christophe takes us through the balance sheet, the company is in really strong position to continue to mature our organic growth opportunities and still continue to be opportunistic with respect to growth in the M&A space. If we look at the free cash flow guidance, likewise on the left-hand side was our Capital Markets Day forecast. The fact that we've generated just under $100 million of free cash flow in the first quarter means that we're also guiding up our low-end range at $70 per barrel for the rest of this year to now $270-$280 million. Again, we're retaining the high-end free cash flow guidance of $460-$480 million.
Given where our forward markets are, at this level, we look to be trending towards the high end of that guidance range. At $480 million, that represents 33% free cash flow yield on a full year basis for 2022. If we look at IPC also through the value lens, the stock has performed well this year, but still trades at a large discount to just our 2P reserves base on a relatively conservative reserve auditor's price deck. The $2.4 billion of 2P net asset value assumes a $75 per barrel Brent price this year, dropping to $70 by 2024 and then escalating at 2% per annum. If you plug that oil price into our 2P reserves book, that gives you that $2.4 billion value.
Given where the stock is trading today, at just below $1.5 billion, that represents a 40% discount to our 2P value. Doesn't apply a single dollar of value to our 1.4 billion barrels of undeveloped contingent resources. As a result of the, you know, the strong operational performance and the robust financial outlook, we've decided to accelerate our share repurchase programs in line with our capital allocation framework that we announced back in February. We started the year with a Normal Course Issuer Bid. So far under that program, we've repurchased and canceled 4.4 million shares. The average cost of those shares has been $0.60 per share or $29 million.
What we've decided to do this morning is to pause for the time being the NCIB process to allow us the chance to accelerate our share repurchases under a Substantial Issuer Bid. As I mentioned, given the company's operational performance, the fact that we're in a net cash position and we have such a strong free cash flow generation potential for the rest of the year, as well as the robust value proposition, we feel that we can add a lot of value to shareholders by accelerating the share repurchase.
We plan through a $100 million Dutch auction to repurchase our shares with a target price range of between CAD 12 and CAD 14 per share, which translates on a cent per share basis at the low end to 92¢ per share to the high end of 107¢ per share. That represents either a 3% discount to the ten-day VWAP or a 13% premium to the 10-day VWAP. Of course, if prices stay at this level, around $100 per barrel, there's room to return up to even $30 million more over and above the $100 million we're announcing this morning. If we go now into a little bit on the individual assets on our Suffield Oil property.
As you can see from the chart on the slide, very strong and stable performance above 8,000 barrels of oil per day during the first quarter. We've managed through investment, mainly in our N2N project, to offset the historical declines, and we're producing more oil today than we did four years ago when we acquired this property. Given the success we've seen from our Alkaline Surfactant Polymer flood at N2N, we've decided to expand that project this year, and we're gonna drill four new wells in the third quarter that should allow us to continue to sustain production at around those levels. On the gas side, Christophe will go into it in more detail. We've seen extremely strong Canadian gas pricing in the recent weeks and months.
The fact that we had modest freeze-offs through the first quarter means that we're able to deliver a lot of free cash flow from our gas business in Canada. No wells have been drilled. Extremely impressive performance by the team on the ground to essentially keep production relatively flat with just optimization activity. You can see from the chart on the bottom left-hand side of this slide, that we've been ramping up that gas optimization activity. Of course, with such strong gas pricing, we'll be looking at ways to see if we can further accelerate our gas activity from existing well stock that we have at Suffield. Turning now to Onion Lake Thermal Project.
Record production was achieved in the first quarter of 2022, with daily rates, as you can see from the chart on the bottom of this slide, in excess of 13,000 barrels per day. Obviously, last year, we concluded the drilling of our D' pads as well as five infill wells, and that's starting to really pay dividends in terms of that production growth that we're seeing. Within our capital plans for this year, we plan to move on to the next pad, which is our L Pad, as well as an additional two infill wells on the back of the success that we saw in 2021. Ferguson property, we're very excited to get moving with this one. This was the Granite acquisition that we made back in early 2020.
We, of course, paused our investment plans because of the COVID crisis. We're really happy that we sanctioned this year a pretty active 13-well horizontal development program. We plan also to convert three oil wells into gas injectors and upgrade the compression facilities on this project. We're well ahead of schedule. We've completed already the drilling of the first three wells, and we've moved on to the second pad to commence the next three wells. We should actually start to see the first production contribution from well pad one within a matter of days. The final slide on our Canadian business is our Blackrod project. This is a slide we showed back in February in our Capital Markets Day. Based upon the technical work that our teams have done in Canada, we saw material uplift in our 2C numbers for Blackrod.
Our phase one resources were lifted from 180 million barrels to just under 220 million barrels. I'm very pleased that as part of our budget plans this year, we're moving ahead with FEED studies. The contractor has now been appointed, and we should be in a position to conclude those studies by the fourth quarter of this year. Extremely attractive project. It has a $50 per barrel WTI breakeven. On the reserve auditors price deck, that gives a value of around $860 million. We're really happy to be further maturing our Blackrod contingent resource project. Turning to the international business, if we start with Malaysia, our Bertam asset continues to deliver extremely solid performance. Another quarter of uptime close to 100%.
If you look at the chart on the bottom of the slide, we've just finished the drilling of the E15 sidetrack and the pump up sizing program. If you look at the red dot, which is the current spot rate, you can see that we're currently producing in excess of 6,000 barrels of oil per day. You have to go back to 2019 to get back to those rates. For a relatively mature asset, really good to see some material production growth, particularly given the high oil price environment that we're seeing right now. Turning to France, again, good production from all the major producing fields. The biggest single contributor in our French business is our VGR-113 well. That continues to outperform.
If you look at the chart on the bottom right-hand side of this slide, you can see the actual production level is still significantly above our investment case level. We still have not seen any water breakthrough from this well. It was originally planned in our simulation models to come in the third quarter of 2020. We still haven't seen any water in the first quarter of this year. The boost in production from the conversion of the VGR five producer into a water injection is allowing us to continue to sustain production at those levels. We're also very pleased to be moving forward with the rig contracting for the next major investment program in our French business.
We're planning to drill three wells into the western flank of our Villeperdue field, and that activity should commence in the fourth quarter of 2022. Lots of activity in Canada, in Malaysia, and in France, all driving that production growth. Finally, on sustainability and ESG, we didn't have any material incidents through the first quarter on the health and safety side. In terms of our climate strategy to reduce our net emissions intensity by 50% through the end of 2025. You can see last year we were already well on track to do that, and we've secured enough carbon offsets for this year to continue to meet that long-term target.
Last year, we produced our second sustainability report, which is fully GRI compliant, and alongside our second quarter results, we plan to publish our third sustainability report. That concludes my part of the presentation. I'll pass across now to Christophe, and he'll walk you through the financial numbers for the first quarter. Christophe?
Thank you very much, Mike. Good morning to everyone. You will agree, as Mike mentioned, that this quarter results are really good. In terms of production, with 45,800 barrels of oil equivalent per day for this quarter, we were close to 1,000 barrel higher than what we guided at our Capital Markets Day for first quarter. Really strong operating performance there. We were well on track to deliver within the full year guidance of between 46,000-48,000 barrels of oil equivalents per day. Obviously, I think one of the main most important points during this first quarter was the strength of oil and gas prices.
The Brent averaged in excess of $100 per barrel, which haven't been the case for many years now. The flip side of this overall high natural resources prices environment is that with the high gas prices, the gas we have to purchase as part of operations in Canada was more expensive, and our operating costs per barrel were higher. Now, because we are selling roughly three times more gas than we're purchasing in Canada, this increased gas price in Canada is a very strong and positive element for IPC. It's not about looking at operating costs and thinking the costs are not under control. They're imposed on us through gas prices, but beneficial to the business case for IPC.
That resulted into the highest EBITDA and operating cash flow for IPC ever at $145 million just for the quarter. With a capital expenditure at $40 million, which was a bit front loaded, closer to a third of the overall CapEx plan for the year, we generated just shy of $100 million of free cash flow for this year, translating into a net profit of $81 million and a very low net debt at $42 million and a leverage at 0.1. Realized prices were very high, as I mentioned, with Brent averaging in excess of 100 dollars per barrel for the quarter.
When you look at the realized prices in Malaysia, it's a bit misleading because we sold our cargo from Malaysia in March at the peak of the quarter. Now this being said, it's worth mentioning that we're able these days to sell our cargos in Malaysia at a dated Brent plus a premium ranging from $5-$8 per barrel. Very, very positive there. In France, again, a bit misleading 'cause we sold more oil from Aquitaine in the first months of the quarter. We're continuing to sell our oil in France on parity with Brent.
Maybe one point to notice in this first quarter was the slightly wider differential between Brent and WTI, which is just showing how tight the physical oil market was in the North Sea. Now, with the WTI, WCS differential remaining below 15 for that first quarter, we had a WCS, which is our heavy oil benchmark, reference for all of our Canadian oil sales at above CAD 80. That was as high as it's ever been since IPC went to Canada back in January 2018. I think looking at the gas prices, this slide is very important because one point to obviously notice is that we realized gas prices, we sold our gas for just below CAD 5 per Mcf.
If you look on that chart and you see the trend of gas prices in Western Canada in the months of April, and the outlook certainly remains very, very strong, regularly above five, sometimes above 6 CAD per Mcf for the following quarter. That is why we re-guided our operating costs per barrel, 'cause we know or we believe, if you look at the forward curve, that gas prices will remain high, which again, is a positive because we sell 3x more gas than we have to purchase for operations. Just looking back, if you look at the comparison between the first quarter 2021 and the first quarter 2022, it's staggering.
It's more than both operating cash flow and EBITDA. They more than doubled over that period, while oil prices increased by less than 70%. It's already a lot, but you can see the multiplying effect with OCF and EBITDA increasing more than twice. On the operating costs, as we explained, because of energy costs and gas prices, we were slightly above in this first quarter. As you can expect with our production increasing over time from the first quarter on the back of the drilling activity in Malaysia, Mike showed that we are producing more than 6,000 barrels a day in Malaysia.
The overall production of the company is going to increase from the first quarter level, having a positive effect on reducing on a unit basis the operating costs going forward. We've slightly increased from 15.2, our guidance for operating costs to $16-$17 per barrel oil equivalent. Looking at the netback, I really like this slide. If you look back at the Capital Markets Day, their original base case, which was set at $70 per barrel, both the operating cash flow and EBITDA netback were $21 per barrel and it's not quite twice as much. For this first quarter, on netback on an operating cash flow EBITDA basis remained in excess of $35.
We are again well on track, if oil prices stay where they are to deliver our high case at the equivalent of $100 per barrel for the full year, and certainly believe that we could maintain those netbacks at $35-$36 per barrel for the year. Looking at the cash flow and the impact of our free cash flow during this first quarter on our net debt. We reduced our net debt from $94 million down to $42 million. What is important to understand is we generated $96.5 million of free cash flow.
Out of this, we used SEK 21 million to buy back our shares as part of the normal course issuer bid in the first quarter. Also because on average, the December revenues, which we cashed in January, compared to the March revenues, which we cashed in April, because oil prices increased from December to March by $40, the receivables are much higher. You have a change in working capital eating into this free cash flow. That change in working cap is 25. SEK 21 million used to buy back shares, SEK 25 million to fund that change in working cap, and SEK 50 million of net debt reduction. Now, as Mike mentioned, all of the March oil and gas sales proceeds we cashed in during the last week of April.
As of the end of April, we were net debt-free. For the 5th anniversary of IPC, as we started to list on the 24th of April, 2017 in Stockholm and Toronto, we were born debt-free, and we are net debt-free again, having increased production 5x and reserves almost 10x in between those over the last five years. On the interest, financial items and G&A, we now have issued bonds on the 1st of February this year. The interest expenses you can see here reflect the cost of the reserve-based lending facilities we had in the months of January.
We repaid those with the proceeds from the bond issuance and those interests are the accrued coupon for the bonds for the months of February and March. G&A are slightly higher. It's a technicality as a long-term incentive plan date was moved by two months, and so this reflects actually four years of long-term incentive plan instead of three. You can see that the G&A remain well under control and the cost on a unit basis remain below $1 per barrel at the company level. Looking at the financial results, very strong. Again, a cash margin of close to $150 million, a gross profit of almost $120 million, and net result of $81 million just for one quarter. Very, very good results.
Looking at the balance sheet, two points to note. The size of the balance sheet has increased by $300 million, and this is really the result of having issued bonds. Before that, we used to have only net debt. We didn't have cash on the balance sheet. Now we have a lot of cash and a lot of bonds outstanding. As I mentioned, we are actually, as we speak, sitting on as much cash as debt. The other point to mention is the actual increase in receivables. As I was explaining, there's a change in working cap of $25 million, and that is reflecting higher receivables at the end of March compared to the receivables at the end of December last year. The capital structure I just touched upon.
We've replaced and refinanced all our debt from reserve-based lending facilities, both internationally and in Canada, with the issuance of $300 million of bonds in the Nordic markets. Those are five-year bonds, unsecured with a non-call period of three years and coupons at 7.25%. We got a corporate rating of B, and the bonds are rated B+. We still have a French secured loan for EUR 30 million which is really small and reducing over time. We have a Canadian RCF backup liquidity line which we are not using with the exception of $3 million worth of letters of credit. This is really a backup liquidity line which we are not using.
In terms of hedging, Mike touched on that. I think the important point is that IPC has not hedged any Brent or WTI. We are fully exposed to the current oil price environment. What we did is because we believe there is more downside than upside on the WTI, WCS differential, we hedged roughly 60% of that differential between now and the end of the year. We actually had some positive margin, positive revenues from that hedging position. On the gas side, we hedged just above a third of our second and third quarter Canadian gas production at CAD 3.6 per Mcf. But the rest is floating unhedged.
We are fully benefiting from the very high gas prices that we see in the market. Based on our new capital structure, we don't have specific hedge covenants. For the time being, we intend to focus on some forward gas sales, some hedging of the WTI, WCS differential, but essentially to leave open our exposure to Brent and WTI. Thank you very much. Mike will conclude.
Okay, thank you very much, Christophe. I think everyone will agree that's an excellent set of numbers and certainly a record for IPC. As Christophe mentioned, we just passed our five-year anniversary on the 24th of April of this year. Really good to be setting new highs for the company. Production, just as a recap, above high-end guidance at 46,000 barrels of oil equivalent per day for the first quarter. We're retaining the full year guidance of 46,000-48,000 BOEs per day. As we've seen in April, the company on a technical potential day has produced in excess of 50,000 barrels. On the OpEx side, we're pushing up our OpEx guidance to $16-$17 per barrel.
As Christophe mentioned, that's largely the result of higher gas and energy prices in Canada, and that's more than offset by the fact that we're generating much higher cash flows from our Suffield gas property. CapEx is exactly in line with expectation. A third of the CapEx budget was spent in the first quarter, and the growth projects will now focus in Canada and in France for the remainder of 2022. Record high cash flows in the first quarter, just under $100 million of free cash flow. We're guiding upwards our full year free cash flow forecast now at the low end, assuming $70 Brent for the rest of the year to $275 million. To the high end of $100 per barrel, $480 million.
That $480 million represents a third of our entire IPC market cap as it stood today. Obviously, with the strong cash flow, we've been able to substantially reduce the debt. It was down to just over $40 million at the end of March. As Christophe mentioned, exactly on our fifth anniversary, we went debt-free, which is a major achievement given the growth that we've seen in the company over these last five years. Sustainability remains key to our strategy. We had no material incidents to report during the first quarter. As we said, we're well on track to achieving that 50% net reduction in our emissions through 2025.
As we articulated in our Capital Markets Day presentation, our capital allocation framework that sets out the clear terms under which we'll be distributing our free cash flow to shareholders. We're really accelerating that return of value to shareholders through a Substantial Issuer Bid, whereby we plan to repurchase up to $100 million of our stock at a price of between 92 SEK and 107 SEK per share. Phenomenal first quarter. I'd like to thank all of the teams in Malaysia, in France, and in Canada, and corporately here in Geneva for delivering such a phenomenal quarter. That concludes the presentation part. I guess we can now pass back to the operator, and we can take questions, and also you can send in your questions via the internet.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question comes from the line of Teodor Sveen-Nilsen from SpareBank 1 Markets AS. Please go ahead.
Good morning, Mike and Christophe, and thanks for taking my questions, and thank you for the update. Three questions from me. First on the guidance you provide on net debt to EBITDA, now EBITDA below one. Should we interpret that as a guidance through this cycle or something that you aim to reach over the next few quarters? My second question on the supplier market in Canada. We hear that is a bit tight now. If that may be a challenge for you over the next two quarters, and what do you see of cost inflation? My third question is on the M&A environment, just in general, Canada versus outside Canada. Should you still expect it to pursue opportunities primarily in Canada, or are you also looking outside Canada? Thanks.
Okay. Yeah, thanks, Teodor Sveen-Nilsen. Yeah, I mean, so the first question on the target leverage ratio to be below 1x. Yes. I mean, that's our target is to be through the cycle at that level. Obviously, we've moved into a net cash position, so we're comfortably within that level right now, and that allows us to, as we've mentioned, to accelerate the share repurchase program this morning. On the second question, there's no doubt that markets are getting tighter. I think that's only gonna increase. I think we're in the fortunate position that certainly for the activity plans that we have set out for this year, we have the rig, you know, available for our Suffield drilling program, and we do have the option to extend that.
We haven't seen a material increase in the cost for those services. I guess the biggest inflationary pressure, as Christophe referred in his presentation, has been with respect to energy prices, electricity prices, and gas prices. We do have a natural hedge within the portfolio with our, you know, 100 million scf a day of gas production. Then your final question with respect to M&A, whether it's just focused in Canada or internationally, nothing has changed since we started back in 2017. You know, we're still looking for opportunities in Canada. Internationally, of course, the majors are looking to dispose of some non-core properties and, you know, as they focus on growing their renewables business. We still see opportunity internationally outside Canada.
Okay. Thank you.
The next question comes from the line of Mark Wilson from Jefferies. Please go ahead.
Hi. Good morning, gentlemen. Yes, congratulations on another very good quarter. First question from me is just to clarify, Mike, you talk about the longer period of cold weather in the U.S., which reduced storage and that helped gas pricing. You also said how production had benefited from milder winter in Canada, the freeze up. Is that just happens to be the geographies we're talking about? Just expand on those two contrasting points.
Yeah. Thank you, Mark. Yeah. So, as I mentioned in. Mainly U.S. gas prices with a much colder period, which meant the storage levels did not manage to replenish. Actually, even if you go back to the summer of last year in the U.S., it was an extremely warm summer, so demand for air con meant usually during the time when you'd be able to replenish storage inventories, that just wasn't happening. You had tightness in U.S. markets. The Canadian situation, obviously in Southern Alberta, where our Suffield gas property is, typically we see extremely cold weather in January, February, and into early March. What that does is it does curtail the amount of gas production that we do have in that very cold period.
Because it was relatively milder in Southern Alberta during that period meant that we produced more gas than we normally would as a result of the cold weather. Two slightly different things going on there.
Got it. Okay. Just to dig into the gas side of things a little bit more. In the production performance you've had from Suffield Oil and Ferguson, you're looking to drill there again, has been very good. Can you just outline again regarding Suffield Gas, you know, you've slowed the rate of decline there by the well swabs and you talked about keeping on with that program from existing well stock. Could you just outline to us quite why, you know, or you're not discussing planning new gas wells at Suffield, or could that be a plan for 2023 or beyond?
That's a very good question, Mark. I guess the short answer is we can generate high returns from incremental investments on the oil side. But of course what we are looking at, and if you go back to 2019, we did run a refrack and recomplete program on some of our gas wells. The team's very actively looking at that right now to see if we can accelerate some of that activity in the second half of this year. In terms of new gas drilling, when we bought the Suffield property from Cenovus back in 2017, they did carry 30 million barrels of oil equivalent, in addition to what we've got on our books in their 2P reserves.
We actually reclassified that into contingent resources because it did need much higher gas prices. We do have a not insignificant amount of contingent resource bases within our portfolio. If we continue to see very high sustained gas prices, I guess those then start to become more competitive with some of the oil projects which has been the focus so far, for new drilling in Canada.
Okay. Got it. Thank you. Last from me, you talk about the Ferguson oil production potentially doubling. I was wondering if you could give us a timeline on that and where we should offset that in the portfolio, given the longer term guidance for flat production around 47?
We should be able to see that by late this year, early 2023, Mark, by the time that we've concluded the initial 13 well development program. Included within the reserves, as part of the acquisition of the Ferguson property, we have more than 50 infill drilling locations. Even if we get to that level, as long as we run a similar activity set into 2023 and beyond, we should be able to sustain those kind of rates for a number of years.
Yeah. The offsetting scenario in the portfolio?
The offsetting.
The oil.
In terms of.
How do we maintain the 47 over the years if we're going to increase the-
Yeah, I mean.
Ferguson
Yeah, I mean, you've got natural decline coming from the Malaysia and the French business. Natural decline from our Suffield gas and oil business and some growth coming from Onion Lake thermal. I would say in the big picture, it's Onion thermal and Ferguson growth that offsets overall declines from the rest of the assets in the portfolio.
Excellent. Very clear. Yeah, excellent quarter. Thanks guys. Bye.
Thank you very much, Mark.
We have one more audio question from the line of Lars Zollmann from Mirabaud. Please go ahead.
Hi, everyone. Good morning, gentlemen, and Rebecca, I suppose. I have a question as I was not on the phone early enough. I only started 10 minutes late. Sorry about that. I was impressed by the numbers. I have a question starting with, how did you come up with a range of the SIB?
Yes. Lars, it is a fairly common instrument that's used in Canada, and typically the range, you know, is between a kind of 3%-5% discount to a 10%-15% premium. I guess we're kind of pitched right in the middle with the typical range that you see for these SIBs in Canada.
Thanks, Mike, for that. Another question would be, obviously we're, we run into net cash by now and I really appreciate the SIB. Obviously M&A, as you said, is nothing is imminent. If oil prices continuously stay high as we see in your guidance, what it would mean on the cash build side? Should we expect, and I know it's a bit out because we just start the SIB now. Should we expect more from IPC in that regard if we stay in net cash and after the SIB later in the year to do another SIB?
Yeah, but.
If there's no M&A target.
Yes. If we go, Lars, back to the capital allocation framework that we set out in the February Capital Markets Day presentation, it was very clear about our intentions as to exactly how much we would distribute to shareholders. If we see oil prices sustained at $100 per barrel level through the remainder of this year, under that framework, what it means is just around $170 million would be allocated to shareholder returns. If you look at the fact that the NCIB thus far has returned just under $30 million, that we're planning to do the $100 million SIB. Provided that prices stay at $100 per barrel, there is room for another about $40 million of returns.
Whether that's done through an NCIB or through other mechanisms remains to be decided, but absolutely that would be our intention.
Coming on a bit more on that part, Mike. If that's the case, let's assume oil stays pretty high. That would mean that we are building up a significant net cash position on top of obviously because 60% is still staying with IPC. If for whatever reason there is no M&A target imminent or there's nothing which you consider attractive enough from a terms point of view, do you think that it's okay for the management to build up a significant net cash balance at IPC?
Yeah, I think Lars it's prudent because it still gives us the ability to continue to look for further M&A opportunities. I mean, there's no secret that success of IPC thus far has been the huge value that we've created from the first four acquisitions. I think M&A will still be part of our strategy going forward and having the resources to demonstrate to sellers that there is a low degree of completion risk, that definitely puts us in a more favorable position. I think on the second pillar of value creation, which is contingent resources, you know, we have 1.4 billion barrels of contingent resource and of course FEED studies are ongoing in Blackrod.
I think it's still prudent for the company to retain some firepower for either M&A or for organic growth.
Okay. Last but not least, on the M&A front. Can you elaborate a bit more on, as you said in the release, there is no imminent target. Do you see it is more difficult these days because of seller expectation versus buyer expectation on price? Or just the right deal hasn't come around the corner from an operational perspective, meaning resources, development potential, region, et cetera?
Yeah, it's an excellent question, Lars. I think that is the big challenge because you know, as some of the bigger companies look to optimize their portfolio, you know, what we've seen is there's sometimes a bit of a dislocation in terms of value expectation. You know, smaller mid-cap companies like us, obviously you can see where we trade at in terms of our discount to net asset value or what our free cash flow yield is. So when we look at new M&A opportunities, they have to compete with share buybacks or projects like Blackrod with a $50 per barrel breakeven. My sense is the, you know, right now the majors have perhaps too lofty value expectations, so you've gotta try and find ways to bridge that gap.
I think it'll make it more challenging for them to pursue their renewable ambitions if they continue to hold too high value expectations.
Last but not least, probably one more on that because I'm thinking it was the last one in the line anyhow. If you don't mind. If you look at M&A opportunities, what is a reasonable size? Meaning, because obviously as another Ferguson is not that substantial probably. What kind of size we should look at? What kind of target size you're looking at when you screen for M&A opportunities? Because obviously IPC with over EUR 1.4 billion market cap is also bigger, it's a bigger fish than a couple of years back. You're producing quite nicely 47,000 a day. So another 1,000 probably wouldn't change the needle.
No, I think that's a fair point, Lars. That's exactly the reason why we decided to access the debt capital markets and do the $300 million bond issuance back in January. You know, there's no doubt that there's gonna be more assets coming to market from the majors. We wanted to differentiate ourselves from some of the competition that don't have the financial strength of IPC. With the $300 million bond issuance that we did, the fact that we're gonna generate at current prices close to half a billion dollars of free cash flow this year, means that we can, you know, move into the category of $500 million to $1 billion plus and still easily finance those types of acquisitions.
It would be much more transformational for the company as opposed to a small bolt-on acquisition like you mentioned. That was exactly the reason that we decided to access the debt capital markets, to give us the optionality.
Okay, thank you very much. Congratulations.
Thank you.
Again on a fantastic quarter. Well done.
Thank you very much. Thank you very much indeed.
Thanks.
There are no further audio questions.
Okay, we have a few web questions. That's for Christophe. Let's give Mike a bit of a break there. Christophe, will Malaysia coverage increase now that Bertam is producing 2,000 barrels a day more in Q2?
In the size of the barrel, of the cargoes or?
Uh, size or.
Size, yeah.
Yes, I'll answer the third question first. It's a little bit premature to talk about farm-ins. We've gotta get the FEED studies concluded first, and then decide at the end of this year what the best way forward would be for Blackrod. I think the first question about would it be better to redirect the $100 million of buyback to Blackrod. I think the simple answer is absolutely not. I mean, if you looked at the value slide.
That I showed on the chart, the 2P value of our portfolio is above SEK 150 a share. If you add just the phase I value of Blackrod, you know, you're getting up to close to SEK 200 a share. That's on a $70 per barrel valuation. If we can use $100 cash flow and to buy back at a 50% discount to 2P plus phase I Blackrod on a $70 valuation, I think that creates a huge amount of value for our long-term shareholders. I think also second part to that question is we don't have to.
I mean, if you look at the five-year business plan, where all we do is develop our 2P reserves and keep our production flat at 47,000 barrels of oil equivalent per day. Between $75 a barrel and $95 a barrel, we would generate between $1.2 billion and $1.8 billion of free cash flow. When you set the $540 million of Blackrod phase I development CapEx against that $1.2-$1.8 billion, the $100 million buyback is a drop in the ocean.
Yeah, the two are not mutually exclusive. We can do both if we want to.
Yeah.
On that theme, Christophe, will management consider expansion of Onion Lake, which was an original development plan by Legacy?
Yeah, we're looking into that as we speak. The nameplate capacity of the facility now is 14,000 barrels a day. That was always the possibility to ramp that nameplate capacity slightly up. So this is one of the constant opportunities we consider.
Thank you. Mike, just a couple of questions here on expected timeline for the Dutch auction?
Yeah. We expect within a matter of days to come out with the press release and the prospectus. Typically we're looking at a four to five-week period after that announcement. It should be concluded by June.
Okay. Thanks very much. That's pretty much all the questions we have time for today. Thanks very much to both of you.
Thanks, Rebecca.
Okay. Thanks again everyone for tuning in, and we look forward to present again back in early August for the Q2 results.
Thank you very much.
Thank you.