CALGARY, Aug. 25, 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 June 30, 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 June
30, 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.
CREDIT FACILITY RENEWAL
On August 24, 2016, Ikkuma entered
into an amendment to its credit facility agreement (the "Facility")
following the completion of the banking syndicate's semi-annual
borrowing base review. The revolving period has been extended
to July 28, 2017 and the borrowing
base has been re-determined at $40
million. The amendment also includes a requirement for the
Corporation to hedge no less than 17,500 GJ/day of natural gas
production for 2017 and 10,500 GJ/day of natural gas production for
2018.
The available lending limits under the Facility are reviewed
semi-annually and are based on the bank syndicate's interpretation
of the Corporation's reserves and future commodity prices.
There can be no assurance that the amount of the available Facility
will not be adjusted at the next borrowing base review to be done
on or before November 30, 2016.
As at June 30, 2016, the Corporation
had $21.1 million drawn on the
Facility.
SECOND QUARTER HIGHLIGHTS
- Achieved funds flow from operations of $2.4 million or $0.03/share despite 25% lower natural gas price
and lower production volumes for scheduled facility
maintenance.
- Completed a strategic acquisition of certain Foothills natural
gas assets for $2.7 million which
increases the Corporation's working interest in existing producing
wells and facilities, allows Ikkuma to farm-in on lands strategic
to Ikkuma's development of its oil play and provides clear access
to certain gas recompletions.
- Produced an average of 5,921 boe/d in Q2 2016, 75% of Ikkuma's
production capability of 7,900 boe/d, due to shut in uneconomic
sour gas and downtime due to scheduled plant turnaround. Ikkuma had
approximately 1,000 boe/d of uneconomic gas shut in for most of Q2
2016. Approximately 350 BOE/d of this gas was back on production in
early July and further volumes may be returned under more favorable
gas prices.
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(Expressed in
thousands of Canadian dollars except
per boe and Share
amounts; unaudited)
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Three months
ended
June
30,
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Six months
ended
June
30,
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2016
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2015
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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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35,361
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39,552
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39,790
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40,585
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Light Oil
(bbls/d)
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-
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35
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-
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42
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NGL's
(bbl/d)
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27
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141
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77
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137
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Total equivalent
(boe/d)
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5,921
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6,769
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6,709
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6,944
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Average prices and
operating netback
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Natural gas
($/mcf)
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$
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1.37
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$
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2.74
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$
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1.63
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$
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2.72
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Light Oil
($/bbl)
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-
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47.76
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-
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42.61
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NGL
($/bbl)
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44.12
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24.14
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23.95
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21.20
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Revenue
($/boe)
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8.49
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17.45
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10.21
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17.14
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Realized gain on
commodity contracts ($/boe)
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8.19
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1.53
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6.12
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1.17
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Royalties
($/boe)
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0.73
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(1.50)
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(0.24)
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(1.69)
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Operating expenses
($/boe)
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(8.49)
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(7.99)
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(8.22)
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(8.62)
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Transportation costs
($/boe)
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(1.77)
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(1.55)
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(1.80)
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(1.54)
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Operating netback
(1) ($/boe)
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$
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7.15
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$
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7.94
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$
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6.07
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$
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6.46
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FINANCIAL
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Oil and natural gas
sales
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$
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4,576
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$
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10,748
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$
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12,472
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$
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21,541
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Funds flow from
operations (1)
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$
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2,397
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$
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3,428
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$
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4,591
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$
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5,373
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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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0.04
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$
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0.05
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$
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0.07
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Loss
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$
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(9,441)
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$
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(3,670)
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$
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(7,014)
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$
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(8,523)
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Per share – basic and
diluted
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$
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(0.11)
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$
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(0.05)
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$
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(0.08)
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$
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(0.11)
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Capital
expenditures
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$
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694
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$
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3,852
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$
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3,809
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$
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22,593
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Property
acquisitions
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$
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2,713
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$
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-
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$
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25
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$
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-
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Net debt
(1)
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$
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25,819
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$
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27,325
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$
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25,819
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$
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27,325
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Bank loan
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$
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21,141
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$
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23,002
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$
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21,141
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$
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23,002
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Shares outstanding
(000) (2)
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94,244
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80,159
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94,244
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80,159
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Weighted average
shares outstanding
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Basic and diluted
(000) (2)
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87,743
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80,159
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83,951
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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
Ikkuma plans to complete the oil well drilled in the first
quarter and also drill another horizontal oil well. These
projects were planned for early August; however, they have been
delayed by at least one month due to weather. The Corporation
intends to complete these projects by early Q4. In addition,
the Corporation will recomplete up to two gross gas wells before
year-end. In aggregate the capital budget for 2016 is
forecasted to be $15 - $17
million.
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 $15 million to $17 million and the timing and
duration 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.