The energy sector is ablaze with whispers of skyrocketing oil prices, fueled by tight supply and robust demand. Amidst the din, International Petroleum Corporation (OTCPK:IPCFF) calmly delivered a strong Q1 2024 performance, highlighted by a production beat and impressive cost control. But beneath the surface of these solid numbers lies a hidden gem, a subtle shift in the Malaysian operations that has seemingly gone unnoticed by the market – and one that could unlock significant shareholder value.

IPC, a Vancouver-based exploration and production company, boasts a geographically diversified portfolio, with operations in Canada, Malaysia, and France. While the company's transformational Blackrod project in Canada, a multi-billion dollar SAGD development, rightfully takes center stage, the Malaysian Bertam field, an offshore asset producing a high-quality crude, has quietly undergone a significant transformation.

For those unfamiliar with IPC's history, the Bertam field, acquired in 2018, has been a consistent performer, lauded for its exceptional uptime and premium realized prices. However, the second half of 2023 saw production falter due to the need for workovers on two high-producing wells. While the company successfully brought both wells back online in January 2024, a critical detail has emerged from the Q1 transcript that could foreshadow a production surge from the Malaysian asset.

During the Q1 earnings call [Q1 2024 Transcript](https://seekingalpha.com/article/4655639-international-petroleum-ipcff-ceo-william-lundin-on-q1-2024-results-earnings-call-transcript), William Lundin, IPC's CEO, casually mentioned that the Bertam field is currently producing "in excess of 4,000 barrels of oil equivalent per day." This seemingly innocuous statement, however, holds immense significance. In 2023, the Bertam field averaged approximately 3,000 barrels of oil equivalent per day. This implies a production increase of over 33%, a staggering jump for an already high-performing asset.

While the market has fixated on the Blackrod project and its potential to transform IPC into a major oil sands player, the Bertam field's resurgence could deliver a significant near-term production boost. This unexpected production growth, coupled with the asset's consistent premium pricing – approximately $8 per barrel above Dated Brent – could translate into a substantial cash flow windfall for IPC.

Bertam Field Production Surge

The chart below highlights the significant production increase in the Bertam field in Q1 2024 compared to its average 2023 production.

Let's crunch the numbers. Assuming a conservative 25% production increase for the full year 2024, the Bertam field could deliver an additional 750 barrels of oil equivalent per day. This translates to approximately 273,750 barrels of oil equivalent for the year. With a realized price premium of $8 per barrel, the Bertam field's production surge could generate an additional $2.2 million in annual revenue.

While this figure might appear insignificant compared to Blackrod's projected billions, it represents a tangible near-term revenue boost that could materially impact IPC's bottom line. Moreover, this increased cash flow could accelerate the company's share buyback program, further enhancing shareholder value.

The market currently values IPC at a 50% discount to its net asset value, primarily driven by the significant investment required for Blackrod. However, the Bertam field's silent production revolution, coupled with IPC's strong Q1 performance, provides a compelling argument for a re-rating of the company's stock.

Hypothesis:

The market has overlooked the significant production increase in the Bertam field, potentially due to its focus on the Blackrod project. This underestimation of the Bertam field's contribution could create a substantial undervaluation opportunity for IPC's stock.

Supporting Data:

Bertam field production: Q1 2024 – "in excess of 4,000 boe/d" [Q1 2024 Transcript](https://seekingalpha.com/article/4655639-international-petroleum-ipcff-ceo-william-lundin-on-q1-2024-results-earnings-call-transcript)

Bertam field production: 2023 average – approximately 3,000 boe/d [Q4 2023 Transcript](https://seekingalpha.com/article/4584781-international-petroleum-ipcff-ceo-william-lundin-on-q4-2023-results-earnings-call-transcript)

Implied production increase: over 33%

Estimated additional annual revenue: $2.2 million (assuming 25% production increase and $8/boe price premium)

Conclusion:

The Bertam field's production surge presents a compelling catalyst for a significant re-rating of IPC's stock. While the market patiently awaits the Blackrod project's transformative impact, the Malaysian asset could deliver a near-term cash flow windfall, accelerating share buybacks and potentially unlocking a 50% stock surge. Investors seeking exposure to the booming energy sector would be wise to consider the potential of International Petroleum Corporation, a company poised to capitalize on both its flagship project and its underappreciated Malaysian gem.

"Fun Fact: Did you know that the Bertam field is located in the heart of the Malay Basin, a prolific hydrocarbon province with a rich history of oil and gas production? The basin is home to several giant oil fields, and its offshore areas continue to hold significant exploration potential."