CALGARY, May 27, 2016 /CNW/ - Ikkuma Resources
Corp. ("Ikkuma" or the "Corporation") (TSXV: IKM) is pleased
to report its financial and operating results for the three months
ended March 31, 2016. Selected
financial and operational information is set out below and should
be read in conjunction with Ikkuma's interim condensed financial
statements and the related management's discussion and analysis
("MD&A") for the three months ended March 31, 2016. Ikkuma's condensed interim
financial statements and MD&A are available for review at
www.sedar.com and on the Corporation's website at
www.ikkumarescorp.com.
HIGHLIGHTS
- Achieved record average production of 7,497 boe/d in the first
quarter (98% gas).
- Oil and natural gas sales were 27% lower at $7.9 million from the $10.8 million reported in Q1 2015, due to the
significant decline in natural gas prices.
- Mitigated the impact of the decline in gas price with realized
gains from the Corporation's hedging program of $4.52 per boe.
- Generated funds flow from operations in the first quarter of
$2.2 million ($0.03/share) despite significantly lower
commodity prices.
- Lowered per unit operating costs to $8.00/boe by shutting in 525 boe/d of uneconomic
sour gas and implementing other cost reduction plans. These efforts
resulted in a 13% reduction in per unit operating costs from Q1
2015 and a 15% reduction from Q4 2015.
- Achieved net income for the quarter of $2.4 million ($0.03/share).
- Spent $3.1 million to drill one
oil well within Ikkuma's Foothills land base that will be completed
in the third quarter.
- On May12, 2016 Ikkuma completed a bought deal private placement
pursuant to which the Corporation issued 14.1 million common shares
of Ikkuma on a "flow through" basis at a price of $0.71 per flow-through share for gross proceeds
of $10 million ($9.3 million net of share issue costs). The
Corporation is committed to incurring $10
million of eligible Canadian exploration expenses prior to
December 31, 2017.
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(Expressed in
thousands of Canadian dollars except
per boe and Share
amounts)
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Three months
ended
March
31,
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|
|
2016
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2015
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OPERATIONS
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Average daily
production
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Natural gas
(mcf/d)
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44,220
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41,629
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Light oil
(bbls/d)
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-
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50
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NGL's
(bbl/d)
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127
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134
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Total equivalent
(boe/d)
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7,497
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7,121
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Average prices and
operating netback
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Natural gas
($/mcf)
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$
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1.85
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$
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2.69
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Light oil
($/bbl)
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-
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38.87
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NGL
($/bbl)
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19.62
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18.06
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Revenue
($/boe)
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11.57
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16.84
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Realized gain on
commodity contracts ($/boe)
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4.52
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0.80
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Royalties
($/boe)
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(1.00)
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(1.88)
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Operating
($/boe)
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(8.00)
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(9.23)
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Transportation costs
($/boe)
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(1.83)
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(1.53)
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Operating netback
(1) ($/boe)
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$
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5.26
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$
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5.00
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FINANCIAL
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Oil and natural gas
sales
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$
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7,896
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$
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10,793
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Funds flow from
operations (1)
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$
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2,194
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$
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1,945
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Per share – basic and
diluted
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$
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0.03
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$
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0.02
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Net income
(loss)
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$
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2,427
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$
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(4,853)
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Per share – basic and
diluted
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$
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0.03
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$
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(0.06)
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Capital
expenditures
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$
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3,115
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$
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18,741
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Property acquisitions
(dispositions)
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$
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21
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$
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25
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Net debt
(1)
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$
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34,018
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$
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26,802
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Bank loan
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$
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29,232
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$
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14,933
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Shares outstanding
(000)
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80,159
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80,159
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Weighted average
shares outstanding
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Basic and diluted
(000)
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80,159
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80,159
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(1)Funds flow from operations,
operating netback and net debt are non-IFRS measures. See "Non-
IFRS Measures".
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OUTLOOK
The Corporation is expecting to resume field operations in early
August 2016. The first operation will
be a multistage fracture stimulation of the horizontal oil well
drilled in the first quarter. Ikkuma will then spud a second
horizontal light oil well in the same area. The results of these
field operations will not be fully known until the end of the
fourth quarter. These wells are 100% owned and operated by Ikkuma,
and the total costs for these operations are expected to be
approximately $4 - 6 million
resulting in an aggregate 2016 capital budget of $10 - $15 million. A large portion of the costs
incurred for the second horizontal light oil drill will reduce
Ikkuma's commitment to spend qualifying Canadian exploration
expenditures from its recent flow-through share issuance.
Additional field operations under consideration include an
inventory of oil and gas recompletions; however, the Corporation
has elected to defer these projects until such time that forecasted
commodity prices supports execution.
Although Ikkuma's production capability is currently 8,000
-8,200 boe/d, recent sales production has been between 6,500 -
7,500 boe/d due to third party curtailments and shutting in
uneconomic gas. Recent downstream curtailments are related,
in part, to the forest fires in Alberta. While these are temporary production
interruptions, the Corporation anticipates a continuation of
challenging natural gas prices through to the end of the third
quarter with perhaps some strengthening in the fourth quarter as we
head into the winter heating season. To date, Ikkuma and its
operating partners have shut in approximately 800 boe/d (net) of
uneconomic sour gas production.
ABOUT IKKUMA
Ikkuma Resources Corp. is a diversified junior public oil and
gas company listed on the TSXV under the symbol "IKM", with
holdings in both conventional and unconventional projects in
Western Canada. The technical team has worked together for
over a decade in the Foothills Region of Western Canada, through two successful,
publicly traded companies. The unique skills and repeat
success at exploiting a complex, potentially prolific play type are
fundamental ingredients for a successful growth-oriented company in
Western Canada. Corporate information can be found at:
www.ikkumarescorp.com.
Forward-Looking Statements and Information and Cautionary
Statements
This press release contains forward‑looking statements and
forward‑looking information within the meaning of applicable
securities laws including, without limitation, those listed under
"Risk Factors" and "Forward-looking Statements" in Ikkuma's Annual
Information Form and in its other filings available on SEDAR at
www.sedar.com. The use of any of the words "expect",
"anticipate", "continue", "estimate", "objective", "ongoing",
"may", "will", "project", "should", "believe", "plans", "intends"
and similar expressions are intended to identify forward‑looking
statements or information. Forward-looking statements and
information in this press release includes, but is not limited to,
Ikkuma's 2016 capital budget ranging from $10 million to $15 million depending on commodity
prices and the timing of completion and drilling projects. Although
Ikkuma believes that the expectations and assumptions on which the
forward‑looking statements and information are based are
reasonable, undue reliance should not be placed on the
forward‑looking statements and information because Ikkuma cannot
give any assurance that they will prove to be correct. Since
forward‑looking statements and information address future events
and conditions, by their very nature they involve inherent risks
and uncertainties. Actual results could differ materially
from those currently anticipated due to a number of factors and
risks. These include but are not limited to the risks
associated with the oil and gas industry in general (e.g.,
operational risks in development, exploration and production;
delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of
reserve estimates; the uncertainty of estimates and projections
relating to production, costs and expenses; failure to obtain
necessary regulatory approvals for planned operations; health,
safety and environmental risks; uncertainties resulting from
potential delays or changes in plans with respect to exploration or
development projects or capital expenditures; volatility of
commodity prices, currency exchange rate fluctuations; imprecision
of reserve estimates; and competition from other explorers) as well
as general economic conditions, stock market volatility, and the
ability to access sufficient capital. We caution that the
foregoing list of risks and uncertainties is not
exhaustive.
In addition, the reader is cautioned that historical results
are not necessarily indicative of future performance. The
forward-looking statements and information contained in this press
release are made as of the date hereof and Ikkuma undertakes no
obligation to update publicly or revise any forward‑looking
statement or information, whether as a result of new information,
future events or otherwise, unless so required by applicable
securities laws.
Certain information set out herein may be considered as
"financial outlook" within the meaning of applicable securities
laws. The purpose of this financial outlook is to provide
readers with disclosure regarding Ikkuma's reasonable expectations
as to the anticipated results of its proposed business activities
for the periods indicated. Readers are cautioned that the
financial outlook may not be appropriate for other
purposes.
Non-IFRS Measures
This press release provides certain financial measures that
do not have a standardized meaning prescribed by IFRS. These
non-IFRS financial measures may not be comparable to similar
measures presented by other issuers. Funds flow from operations,
operating netback and net debt are not recognized measures under
IFRS. Management believes that in addition to net income (loss),
funds flow from operations, operating netback and net debt are
useful supplemental measures that demonstrate the Corporation's
ability to generate the cash necessary to repay debt or fund future
capital investment. Investors are cautioned, however, that these
measures should not be construed as an alternative to net income
(loss), determined in accordance with IFRS, as an indication of
Ikkuma's performance. Funds flow from operations is calculated by
adjusting net income (loss) for depletion and depreciation,
exploration and evaluation expense, impairment, gain (loss) on sale
of petroleum, natural gas and equipment, share-based payments,
unrealized gain (loss) on financial instruments and accretion.
Operating netback equals the total of petroleum and natural gas
sales, realized gains or losses on commodity contracts, less
royalties, transportation and operating expenses. Net debt is the
total of cash and cash equivalents plus accounts receivable, plus
prepaids and deposits, less accounts payable and accrued
liabilities and bank debt.
Oil and Gas Advisory
In this press release, the abbreviation boe means a barrel of
oil equivalent derived by converting gas to oil in the ratio of 6
Mcf of gas to 1 bbl of oil (6 Mcf:1 bbl). Boe may be
misleading, particularly if used in isolation. A boe
conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. Given that
the value ratio based on the current price of crude oil as compared
to natural gas is significantly different from the energy
equivalency of 6 Mcf:1 bbl, utilizing a conversion ratio on a 6 Mcf
of gas to 1 bbl of oil basis may be misleading as an indication of
value.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX
VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE.
SOURCE Ikkuma Resources Corp.