Okay, so welcome everyone to the IPC 2025 year-end update presentation. My name is William Lundin, I'm the President and CEO, and along with me is Christophe Nerguararian, the CFO, as well as Rebecca Gordon, our SVP of Investor Relations and Corporate Planning. I'll begin with some of the highlights, and then Christophe will touch on our financial performance in 2025. So this presentation update is really focused largely on our 2025 results. We'll be quite efficient overall, and our 2026 forward-looking business plans will be covered later on today during our CMD presentation. So jumping into the highlights for the year, for the fourth quarter as well as 2025, overall is a really strong year for International Petroleum.
Our Q4 production average was 45.6 thousand barrels of oil equivalent per day, and we were very pleased to finish with a full-year production average of 44.9 thousand barrels of oil equivalent per day, which is near the top end of our guidance range, which was 43-45 thousand BOEs per day. The Q4 and annual operating costs achieved was $17.40 and $17.80 per barrel of oil equivalent, respectively, largely in line with the forecast range of $18-$19 per BOE for the full year. We're really thrilled to have delivered first steam at year-end 2025 for the Blackrod Phase 1 development project, approximately a quarter earlier than originally guided when the project was sanctioned the beginning of 2023. The full-year capital expenditure for IPC, inclusive of decommissioning, was $344 million, which was in line with our guidance of $340 million.
The Blackrod Phase 1 development remains on budget with $228 million of growth capital incurred in 2025, an accumulative spend of $820 million spent on the Phase 1 development out of the total $850 million budget from the time of sanction, again in early 2023. The company generated robust operating cash flow of $259 million in operating cash flow, and when taking into account the full growth CapEx, our free cash flow was minus $153 million for the year. So both of those metrics were settling in slightly ahead of our latest guidance. On the heels of our major Blackrod spend program, our net debt number stands at $484 million at the end of 2025. We did elect to refinance our $450 million of bonds in late 2025. That closed in October, which extended the maturity to late 2030.
That was a prudent undertaking by the company given the favorable conditions in the debt capital markets. In addition, IPC has access to CAD 250 million RCF in Canada. This gives us good liquidity access as we enter into the inflection year of 2026, with material cash flow growth expected from Blackrod upon it ramping up later in 2026 and into the years beyond that. So the hedges that we implemented in 2025, they served as a net benefit to the company, mainly driven from the headline benchmark oil price swaps that we had on Brent and WTI. Very pleased, there were no material HSE incidents recorded in 2025, and we issued our sixth annual sustainability report in August last year.
Share buyback, so major achievement for the company to return back to the original share count in 2025 relative to inception, thanks to fulfilling our 2024-2025 NCIB program where we bought 7.7 million shares representing an approximate 6.5% absolute reduction in our shares outstanding. One of the core quality characteristics of the IPC portfolio is our low decline production. As shown on the slide on the bottom left, the company has a really excellent track record of delivering within or ahead of guidance. 2025 was another year of just that, with full-year average production of 44.9 thousand BOEs per day. Some of the short-cycle sustaining activity we successfully executed last year at Onion Lake Thermal and at the Bertam field in Malaysia gave us a nice boost in production midway through 2025.
Again, our operating costs were stable with the full-year outturn settling at $17.80 per BOE, slightly below guidance, mainly due to cheaper energy input costs in Canada, and also slightly benefited from the higher production relative to the mid-case estimate assigned at CMD 2025. Strong production and cost discipline combined with a full-year average oil price of $69 Brent translated into operating cash flow of $259 million for the year. This is a great result considering at CMD we expected a midpoint OCF of $245 million at $75 Brent, and the re-guided OCF forecast for Q3 2025, as shown on the right part of this slide, was between $245-$255 million. OCF in Q4 was $63 million.
You can see the oil price for Q4 was lower than the annual average Brent at $64 per barrel Brent for Q4, and we also saw a slightly wider Brent to WTI differential of $5. However, the WTI to WCS discount remained tight throughout the year, settling in at around $11. The 2025 capital program was successfully delivered with $344 million spent. Recall at Q3 2025, we announced the schedule acceleration on the Blackrod Phase 1 project, with first steam to be delivered by year-end 2025 as opposed to Q1 2026. With that, we decided to bring forward the drilling activity for the final pad at Blackrod and re-guided our CapEx to $340 million from $320. So that drilling activity has gone very well and will continue into 2026.
So just shy of $230 million of Blackrod Phase 1 growth capital was spent in 2025, again bringing the total to $820 million spent in the project since the beginning of 2023. The project remains on budget to deliver within the $850 million growth capital budget to first oil, which is expected in Q3 2026. The other Blackrod spend of $26 million in 2025 was spent on capitalized operations as well as resource maturation works. As we transition from build to startup, operating-related expenditures will rise as planned and be reclassified to OpEx upon oil production coming from the commercial development. The rest of the capital and decommissioning program was delivered in line with forecast, mainly being the Onion Lake Thermal infill program and Bertam drilling plus workover campaign.
So for the free cash flow, similar to the operating cash flow, our 2025 CMD pricing outlook assumed Brent between $65 and $85 per barrel. Following the continuous downward pressure we saw on prices throughout the year, the Q3 pricing guidance was adjusted to $55-$65 Brent for the remainder of 2025. Final free cash flow pre-Blackrod expenditure was $103 million, and post-all expenditures was -$153 million, slightly ahead of the latest Q3 guidance. And to note, relative to the CMD free cash flow guidance, in addition to the revised CapEx I explained on the prior slide, we also opportunistically called our bonds, which was not in the base case assumption for 2025. So notwithstanding those two movements, our final FCF would have settled closer to the middle of the CMD FCF guidance.
On the share repurchase front, the anti-dilution measures continued in 2025 with the fulfillment of our 2024-2025 normal course issuer bid program, which resulted in IPC canceling around 6.5% of our shares outstanding. We now have less shares outstanding compared to that of the amount at inception for the company. The portfolio growth enhancements, you see 4.5 x on production, 18 x on 2P Reserves, significant add on the Reserves Life Index, and in excess of 1 billion barrels of contingent resources added and multiple higher on net asset value. It's really remarkable what's taken place in the company through the course of the last nine years since we've existed. 77 million shares have been repurchased in aggregate since inception, at an average price of 79 SEK per share or 11 CAD per share, which is well below half of our current share price.
That's translated into significant value creation for our smart, longstanding shareholders. I'll pass it to Christophe to touch on the financial highlights.
Thank you, Will. Good morning, everyone. Very happy to be here for this fourth quarter results. As mentioned by Will, the production was very strong during this fourth quarter, and we averaged for the whole year just at the high end of our production guidance at 44,500 barrels a day of oil equivalent. The oil prices were a bit lower in the fourth quarter, below $65 Brent, but with operating costs overall under control at $18.4 per BOE for the quarter and below $18 for the whole year, we generated very strong cash flows overall. So an operating cash flow of $63 million for the quarter and $260 million for the full year. Very happy to report again the strong delivery around our investment program. 2025 was the second largest investment year for IPC since inception.
We dedicated $340 million to our investments overall during the year and more than $228 million to the Phase One at Blackrod. So this is really we're turning a corner, and by the end of 2025, we have spent $820 million at Blackrod Phase One, and so we really only have a small amount left to complete and reach first oil in 2026. The free cash flow was negative at $28.6 million or 150 for the whole year. The net debt stands at $484 million at the end of the year, but we still have large access to liquidity through the revolving credit facility with our Canadian supportive banks. Realized prices, you can see that for the whole year, the Brent averaged $69, WTI $65. I think what really catches the eyes here is the very tight WTI/WCS differential we enjoyed in 2025 at -$11.
It was close to a record low for the Canadian market, and so, of course, that translated into profitable business across the board, profitable activity in France where we're selling our crude on parity with Brent. In Malaysia, we continue to enjoy strong premium up and above the dated Brent. On that subject, very happy to report that that trend is continuing because we continue to see very high premiums for our Malaysian cargoes in the first quarter of 2026. In Canada, we're selling on parity or very close to parity with the WCS, which was $48 in the fourth quarter, $48 per barrel in the fourth quarter, and $54 for the whole year on average. Gas prices remain relatively weak.
Unfortunately, as we mentioned previously, the storage levels are reasonably high in Canada and in Alberta in particular, and you see that the decoupling of the Canadian gas prices with the U.S. gas prices is continuing. Now, the good news is still gas prices were reasonably higher in the fourth quarter. It's traditional for the winter months, but still, that was a good outcome for the quarter. The second good piece of news is that the LNG Canada plant is now running its second train, and so progressively, we're expecting that second train to alleviate the congestion at the gas storage in Canada. So the gas prices are not strong yet, but we hope that the situation over time is going to continuously improve.
Looking at our operating cash flows abated year-over-year, of course, as you would expect, with lower oil prices in 2025 and lower production, our operating cash flows abated in 2025 were lower. Now, I think it's important to flip this chart on its head, and when you look ahead, as we'll be talking about this afternoon, for the production range in 2026, we are finally going to increase production in 2026, and that's going to further increase in 2027. So even if you can see here cash flows lower in 2025 compared to 2024, we are turning a corner here, and you can expect progressively, with higher production and hopefully higher oil prices in the years to come, our ability to generate stronger operating cash flows again. The operating costs remain relatively flat.
Overall, for the year, we were below the guidance of $18-$19 per barrel of oil equivalent, slightly higher costs in the fourth quarter, including because we had two liftings, two cargoes in Malaysia, but overall, the costs remain under control. The netback, you can see here that it's been relatively stable, whether you're looking at the fourth quarter or for the full year, with $42. That includes, obviously, gas prices, but with $42 per barrel of revenues and $18 per barrel of operating costs, the gross margin is around $15 per barrel, and operating cash flow was $15 per barrel of netback in the fourth quarter and close to $16 per barrel of netback for the full year.
We increased our net debt during this year, which was really the result of the last high spending, high investment year at Blackrod Phase 1, and the share buyback program, which we completed in 2025. So we generated $260 million of operating cash flow, which fully covered our investment in Blackrod Phase 1, but not the non-Blackrod CapEx. Together with $100 million of share buyback, we increased our net debt by around $280 million. The cost overall, as I mentioned, remained under control, certainly with the operating cost per barrel at around $18 per BOE. You can see here that the net financial incomes have been very stable quarter-to-quarter, a bit higher in the fourth quarter as a result of the bond refinancing. The cash cost of that bond refinancing was around $18 million. The GNA remained relatively low at around $1 per barrel.
Looking at the financial results here in this graphic format, you can see revenues of $686 million for the whole year, generating a cash margin of $260 million and gross profit, so net of essentially the depletion and depreciation, a gross profit of $128 million and net profit of $29 million for the year. The balance sheet is interesting. There's a clear rebalancing from the cash we had. We had $246 million of cash on the balance sheet, only $7 million at the end of 2025, and of course, all this cash was invested into our assets, and you can see that the value of oil and gas properties increased from $1.5 billion to close to $1.8 billion. And essentially, this is in relation with the Blackrod Phase One investment, obviously. The balance sheet remains strong and in good shape.
Our leverage was around 2x at the end of the year. We refinanced the bonds, leveraging on some very good market conditions at the end of September and early October 2025. Happy to report that we have still full access to the Canadian revolving credit facility. Only $50 million was outstanding at the end of last year, and we continue to have very good relationship with our Canadian banks and lots of support on that front, so we're good from a liquidity perspective. In terms of hedging, I think some of the, of course, the teams on the ground performed very, very well in 2025.
The production they delivered was very strong at the high end of the range, but of course, during 2025, we were able to place some very good hedges, which clearly helped the financial performance of the fourth quarter and the whole year as a whole. And so we generated hedging gains on our WTI hedges, on our Brent hedges, and on our gas hedges, and we lost money that was on the protection we entered into at the beginning of the year on the differential and lost a bit of money on the FX as well. But overall, our hedges contributed positively to our financial performance in Q4 and for the whole year 2025, and you will see this afternoon, we'll be talking about some of the further opportunistic hedges we've placed for 2026.
Excellent. Thanks, Christophe. So to conclude with the summary for the 2025 highlights, strong year again. We spent $344 million. $228 million out of that was spent on the Phase 1 development project at the Blackrod asset. Production was 45,600 BOE per day for Q4 and averaged 44,900 barrels of oil equivalent per day for the full year, right near the top end of our guidance range for 2025. Operating costs were $18.40 for Q4, and the full year 2025 unit cost was $17.80 for the year. Good cash flow generation again at $259 million, and operating cash flow was generated from the business and taking into account all the growth capital expenditures, $153 million - $153 million in free cash flow for the year. Again, we prudently refinanced our bonds at the end of 2025, extending the maturity now to 2030.
Net debt is at $484 million as at the end of last year and starting into 2026. Very pleased, given we are the operator at all of our assets, there are no material incidents that took place, safety or environmental. And that's also a big shout-out to the teams at Blackrod where there hasn't been any material incidents, no LTIs since the beginning of the development activity started in 2023. Really impressive safety performance by the teams, and of course, a huge achievement there in executing and getting first steam ahead of the original guidance at the end of 2025. Share repurchases, we fulfilled our NCIB program, 7.7 million shares canceled out. We now have less shares outstanding compared to that of when we began life. So strong year and very excited to update the market as well with our forward-looking plans later on today.
We can now transition into Q&A, which can be submitted over the web, and with that, I'll look towards Rebecca to see if we have some questions trickling in on the system.
Well, we will, but unfortunately, there are all questions relating to our forward guidance for this afternoon. So if people don't mind, I think what we'll do is we'll hold onto the questions. We'll ask them as part of the CMD later on, and so we'll disclose all the information this afternoon relating to your questions here. So thanks, Teodor, Samuel, and Rob. We'll update you this afternoon. Thank you.
Okay. Thanks very much.
Thanks, everyone.