ESTMA report 2018 for IPC Group

Extractive Sector Transparency Measures Act - Annual Report

Reporting Entity Name			International Petroleum Corporation
Reporting Year	From	01/01/2018	To:	31/12/2018	Date submitted	17/05/2019
Reporting Entity ESTMA Identification Number	E478943		Original Submission
	Amended Report
Other Subsidiaries Included
(optional field)
Not Consolidated
Not Substituted
Attestation by Reporting Entity

In accordance with the requirements of the ESTMA, and in particular section 9 thereof, I attest I have reviewed the information contained in the ESTMA report for the entity(ies) listed above. Based on my knowledge, and having exercised reasonable diligence, the information in the ESTMA report is true, accurate and complete in all material respects for the purposes of the Act, for the reporting year listed above.

Full Name of Director or Officer of Reporting Entity	Christophe Nerguararian	Date	30/04/2019
Position Title	Chief Financial Officer

Extractive Sector Transparency Measures Act - Annual Report

Reporting Year

From:

01/01/2018

To:

31/12/2018

Reporting Entity Name

International

Petroleum Corporation

Currency of the Report

USD

Reporting Entity ESTMA

E478943

Identification Number

Subsidiary Reporting Entities (if

necessary)

Payments by Payee

Departments, Agency, etc…

Infrastructure

Total Amount paid to

Country

Payee Name1

within Payee that Received

Taxes

Royalties

Fees

Production Entitlements

Bonuses

Dividends

Notes34

Improvement Payments

Payee

Payments2

Exchange rate as of the issuer's

Netherlands

Tax department, Rotterdam

Team olie en gas

90,000

90,000 financial year end

1 EUR = 1.1815 USD

Direction Départementale des Finances

Exchange rate as of the issuer's

France

770,000

770,000 financial year end

Publiques - Aube

1 EUR = 1.1815 USD

Direction Départementale des Finances

Exchange rate as of the issuer's

France

2,530,000

2,530,000 financial year end

Publiques - Marne

1 EUR = 1.1815 USD

Service des Impôts des Particuliers Troyes

Exchange rate as of the issuer's

France

640,000

640,000 financial year end

Extérieur

1 EUR = 1.1815 USD

Service des Impôts des Particuliers Vitry-le

Exchange rate as of the issuer's

France

90,000

90,000 financial year end

François

1 EUR = 1.1815 USD

Service des Impôts des Particuliers Chalons-en-

Exchange rate as of the issuer's

France

830,000

830,000 financial year end

Champagne

1 EUR = 1.1815 USD

Exchange rate as of the issuer's

France

Service des Impôts des Particuliers Epernay

480,000

480,000 financial year end

1 EUR = 1.1815 USD

Exchange rate as of the issuer's

France

Trésoreie de Montmirail

1,250,000

1,250,000 financial year end

1 EUR = 1.1815 USD

Production entitlements includes in-kind contributions. The value of the in-kind contributions were determined using

MalaysiaPetroliam Nasional Berhad910,00027,010,00027,920,000 volumes reported on a lifting basis and valued at market price.

Exchange rate as of the issuer's financial year end

1 USD = 4.0354 MYR

7,590,000	-	-	27,010,000	-	34,600,000

	(1) All payments are reported in United States Dollars ("USD") which is the reporting currency used in IPC consolidated financial statements. Payments made in currencies other than USD have been translated using a 12 month average exchange rate during the period.
	FX rates used:
	USD/EUR = 1.1815
Additional Notes:	MYR/USD = 4.0354
	(2) In 2018, IPC was engaged in production sharing contracts in Malaysia and under these contracts the host government is entitled to a share of the oil or gas produced. These entitlements are commonly paid in-kind. In this report, such volumes are reported on a lifting basis and valued at market price.
	(3) This 2018 IPC ESTMA report does not include payments done by IPC Alberta LTD. and BlackPearl Resources Inc. Please refer to their separate audited ESTMA reports.

1. Enter the proper name of the Payee receiving the money (i.e. the municipality of x, the province of y, national government of z).
2. Optional field.
3. When payments are made in-kind, the notes field must highlight which payment includes in-kind contributions and the method for calculating the value of the payment.
4. Any payments made in currencies other than the report currency must be identified. The Reporting Entity may use the Additional notes row or the Notes column to identify any payments that are converted, along with the exchange rate and primary method used for currency conversions.

Extractive Sector Transparency Measures Act - Annual Report

Reporting Year

From:

01/01/2018

To:

31/12/2018

USD

Reporting Entity Name

International Petroleum Corporation

Currency of the Report

Reporting Entity ESTMA

E478943

Identification Number

Subsidiary Reporting Entities (if

necessary)

Payments by Project

Country

Project Name1

Taxes

Royalties

Fees

Production Entitlements

Bonuses

Dividends

Infrastructure

Total Amount paid by

Notes23

Improvement Payments

Project

90,000

Exchange rate as of the issuer's

Netherlands

Corporate

90,000

financial year end

1 EUR = 1.1815 USD

France

Paris Bassin

6,590,000

6,590,000

Exchange rate as of the issuer's

financial year end

1 EUR = 1.1815 USD

Production entitlements

includes in-kind contributions.

The value of the in-kind

contributions were determined

Malaysia

Bertam MP7

910,000

27,010,000

27,920,000

using volumes reported on a

lifting basis and valued at

market price.

Exchange rate as of the issuer's

financial year end

1 USD = 4.0354 MYR

7,590,000

-

-

27,010,000

-

-

-

$34,600,000

(1) All payments are reported in United States Dollars ("USD") which is the reporting currency used in IPC consolidated financial statements. Payments made in currencies other than USD have been translated using a 12 month average exchange rate during the period.

FX rates used:

USD/EUR = 1.1815

Additional Notes3:

MYR/USD = 4.0354

(2) In 2018, IPC was engaged in production sharing contracts in Malaysia and under these contracts the host government is entitled to a share of the oil or gas produced. These entitlements are commonly paid in-kind. In this report, such volumes are reported on a lifting basis and valued at market price.

(3) This 2018 IPC ESTMA report does not include payments done by

IPC Alberta LTD. and BlackPearl Resources Inc. Please refer to their separate audited ESTMA reports.

1. Enter the project that the payment is attributed to. Some payments may not be attributable to a specific project, and do not need to be disclosed in the "Payments by Project" table.
2. When payments are made in-kind, the notes field must highlight which payment includes in-kind contributions and the method for calculating the value of the payment.
3. Any payments made in currencies other than the report currency must be identified. The Reporting Entity may use the "Additional Notes" row or the "Notes" column to identify any payments that are converted, along with the exchange rate and primary method used for currency conversions.

ESTMA INTRODUCTION

International Petroleum Corp. ("IPC" or the "Corporation" and, together with its subsidiaries, the "Group") has prepared the following annual report ("the Annual Report") of payments made to government entities for the year ended December 31, 2018 as required by the Extractive Sector Transparency Measures Act S.C. 2014, c.39, s.376 ("ESTMA" or "the Act").

BASIS OF PREPARATION

The report is presented in United States Dollars, the Company's reporting currency, and has been prepared in accordance with the requirements of the Act and the Natural Resources Canada ("NRCan") Technical Reporting Specifications.

The report includes all payments by the subsidiaries of the Group except the payments made by IPC Alberta Ltd. and by BlackPearl Resources Inc. which are disclosed in specific audited ESTMA reports.

The following is a summary of significant policies and judgments that the Group has made for the purpose of preparing the report.

Significant policies

Cash and in-kind payments

Payments are reported on a cash basis and have been reported in the period in which the payment was made. In-kind payments are converted to an equivalent cash value based on cost or, if cost is not determinable, the in-kind payment is reported at the fair market value. The valuation method for each payment has been disclosed in the notes section of the ESTMA Annual Report.

Payments to the "same payee" that meet or exceed USD 75,000 in one category of payment are disclosed. Payments are rounded to the nearest USD 10,000.

Payee

For the purposes of the Act, a payee is:

1. Any government in Canada or in a foreign state;
2. A body that is established by two or more governments; or
3. Any trust, board, commission, corporation or body or other authority that is established to exercise or perform, or that exercises or performs, a power, duty or function of a government for a government referred to in paragraph (a) above or a body referred to in paragraph (b) above.

Payees include governments at any level, including national, regional, provincial, local, or municipal levels. Payees may include non-governmental entities if the benefit bestowed would have otherwise been provided by the government. Payees also include any government-owned or government-controlled entities that exercise or perform a power, duty or function of government.

The individual department, agency or other body of the payee that received the payment has been disclosed in the appropriate section of the ESTMA Annual Report.

	Suite 2000
International Petroleum Corporation	885 West Georgia Street
GST: 73449.7894.RT0001	Vancouver BC, V6C 3E8 Canada	Tel. [phone]	www.international-petroleum.com

Reportable Payments

A reportable payment for ESTMA purposes is one that:

1. Is made to the same payee;
2. Is made in relation to the commercial development of oil, gas or minerals; and
3. Totals, as a single or multiple payments, at least USD 75,000 within one of the following prescribed seven payment categories

Taxes

This category includes taxes paid by the Group on its income, profits or production in relation to the commercial development of oil and gas resources. Taxes reported include property taxes, business taxes and certain provincial resource surcharges. Consumption taxes, personal income taxes and taxes withheld by others on behalf of the Group are excluded as per the Act.

Royalties

Royalties are payments for the rights to extract oil and gas resources, typically at a set percentage of revenue. Both cash royalties and royalties paid in-kind are reported in this category.

Fees

This category may include rental fees, entry fees, administration fees, annual fees, interest penalty charges and regulatory charges as well as fees or other consideration for licenses, permits or concessions. The fee category is broad and includes payments to various payees that in substance is a fee. Consultation payments to Aboriginal governments are reported under this category. Amounts paid in ordinary course commercial transactions in exchange for services provided by a payee are excluded.

Production entitlements

A payee's share of oil, gas or mineral production under a production sharing agreement or similar contractual or legislated arrangement is reported under this category.

Bonuses

Signing, discovery, production and any other type of bonuses paid to a payee in relation to the commercial development of oil and gas resources are reported under this category. The bonus category is broad and includes payments to payees that in substance is a bonus.

Dividends

Dividends are dividend payments, other than dividends paid to a payee as an ordinary shareholder of the Group on shares that were acquired by the payee on the same terms as were available at the time of acquisition to other shareholders, that are not in lieu of any other reportable payment.

Infrastructure improvement payments

This payment category consists of payments for the construction of infrastructure that do not relate primarily to the operational purposes of the Group.

Significant Estimates and Judgements

The preparation of the Report in accordance with the Act requires the use of judgements, estimates and assumptions, which includes evaluation of the substance, rather than the form, of the payment.

Payments by Project Level

Payments have been reported at the project level as required by the Act. A "project" means the operational activities are governed by a single contract, license, lease, concession or similar legal agreement that forms the basis for a payment liability with a payee. If multiple such agreements are substantially interconnected, they would be considered a single project.

"Substantially interconnected" means forming a set of operationally and geographically integrated contracts, licenses, leases or concessions or related agreements with substantially similar terms that are signed with a government and give rise to payment liabilities.

The Group has determined that the operational activities governed by surface or mineral lease contracts related to key operational areas are substantially interconnected and has reported payments related to each such area as a single project. The Group has considered geographical location and common infrastructure as two key indicators for making this determination.