CALGARY, Nov. 24, 2016 /CNW/ - Ikkuma Resources
Corp. ("Ikkuma" or the "Corporation") (TSXV: IKM) is pleased
to report an operations update and its financial and operating
results for the three months ended September
30, 2016.
OPERATIONS UPDATE
In October, the Corporation completed the stimulation of the 670
m horizontal Cardium oil well drilled in the first quarter of this
year. The stimulation was a 16 stage slick-water fracture
operation. After 28 days and under mechanical pump production
operations, daily fluid rates have varied between 158 and 334
bbl/d. The proportion of frac water has decreased steadily and is
currently approximately 40% of the total pumped fluid. As we move
towards full recovery of the frac fluid, we expect the well will
pump at about 150 – 250 boe/d, which includes about 40 – 45 boe/d
gas. The balance of the production consists of approximately
500 API oil, attracting a premium price to Edmonton par. Ikkuma completed drilling the
second (offset) horizontal Cardium oil well by mid-October. The
lateral length of this well is 1.4 times longer than that of the
first horizontal well drilled in the pool, and the Corporation
anticipates executing a 25 stage slick-water frac before year
end. The second well is in a more favourable structural
position to encounter a higher number of natural fractures, which
typically translates into higher initial production rates.
Unfortunately, stimulation has been delayed due to unseasonable
weather in the early fall and, more recently, to a backlog of
fracture stimulation operations in the region.
This initial well result is the first in a light oil play which
may include more than 150 well locations, net to Ikkuma. The
current rates are comparable to those in the deep basin, despite
having a horizontal section which is less than half of most deep
basin Cardium wells. Once the second well has been stimulated,
further delineation of the program will occur through early 2017,
followed by a continuous pad-based operation, pending budgetary
considerations and new well results. As the Corporation moves
forward with this oil play, it will continue to make modifications
to the drilling/completions "recipe" with the objective of
improving well results.
Ikkuma's gas recompletion operations have also been delayed by
weather. The Corporation plans to execute one gas recompletion
prior to year-end. In aggregate Ikkuma's 2016 capital program is
still forecasted to aggregate $15 - $17
million.
THIRD QUARTER 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 September 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.
Highlights
- Produced an average of 5,866 boe/d for the quarter with
approximately 1,000 boe/d of shut-in gas production due to
economics and third party curtailments.
- Achieved funds flow from operations of $2.6 million ($0.03/share) for the third quarter and
$7.2 million ($0.08/share) for the nine months ended
September 30, 2016.
- Resumed Foothills drilling and completion operations during the
quarter spending $4.1 million;
however, due to wet weather delays the stimulation of the Cardium
horizontal oil well drilled in the first quarter and the second
Cardium horizontal oil drill were in progress at quarter end rather
than completed, as planned.
- Achieved top quartile per unit G&A costs of $1.67/boe for the third quarter and $1.73/boe for the nine months ended September 30, 2016.
|
|
|
(Expressed in
thousands of Canadian dollars except
per boe and Share
amounts; unaudited)
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2016
|
2015
|
2016
|
2015
|
OPERATIONS
|
|
|
|
|
|
|
|
|
Average daily
production
|
|
|
|
|
|
|
|
|
Natural gas
(mcf/d)
|
|
34,487
|
|
38,248
|
|
38,009
|
|
39,797
|
Light Oil
(bbls/d)
|
|
-
|
|
32
|
|
-
|
|
39
|
NGL's
(bbl/d)
|
|
118
|
|
135
|
|
91
|
|
136
|
Total equivalent
(boe/d)
|
|
5,866
|
|
6,541
|
|
6,426
|
|
6,808
|
Average prices and
operating netback
|
|
|
|
|
|
|
|
|
Natural gas
($/mcf)
|
$
|
2.34
|
$
|
2.92
|
$
|
1.85
|
$
|
2.77
|
Light Oil
($/bbl)
|
|
-
|
|
40.13
|
|
-
|
|
41.92
|
NGL
($/bbl)
|
|
21.81
|
|
20.68
|
|
23.01
|
|
21.03
|
Revenue
($/boe)
|
|
14.21
|
|
18.37
|
|
11.44
|
|
17.54
|
Realized gain on
commodity contracts ($/boe)
|
|
3.39
|
|
0.98
|
|
5.29
|
|
1.11
|
Royalties
($/boe)
|
|
0.41
|
|
(1.48)
|
|
(0.04)
|
|
(1.62)
|
Operating expenses
($/boe)
|
|
(9.01)
|
|
(9.39)
|
|
(8.46)
|
|
(8.87)
|
Transportation costs
($/boe)
|
|
(1.72)
|
|
(1.70)
|
|
(1.78)
|
|
(1.59)
|
Operating netback
(1) ($/boe)
|
$
|
7.28
|
$
|
6.78
|
$
|
6.45
|
$
|
6.57
|
|
|
|
(Expressed in
thousands of Canadian dollars except
per boe and Share
amounts; unaudited)
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2016
|
2015
|
2016
|
2015
|
FINANCIAL
|
|
|
|
|
|
|
|
|
Oil and natural gas
sales
|
$
|
7,670
|
$
|
11,054
|
$
|
20,142
|
$
|
32,595
|
Funds flow from
operations (1)
|
$
|
2,563
|
$
|
2,696
|
$
|
7,154
|
$
|
8,069
|
Per share – basic and
diluted
|
$
|
0.03
|
$
|
0.03
|
$
|
0.08
|
$
|
0.10
|
Loss
|
$
|
1,952
|
$
|
3,662
|
$
|
8,966
|
$
|
12,185
|
Per share – basic and
diluted
|
$
|
0.02
|
$
|
0.05
|
$
|
0.10
|
$
|
0.15
|
Capital
expenditures
|
$
|
4,111
|
$
|
10,434
|
$
|
7,920
|
$
|
33,027
|
Property acquisitions
(dispositions)
|
$
|
27
|
$
|
(2,968)
|
$
|
2,761
|
$
|
(2,943)
|
Net debt
(1)
|
$
|
27,403
|
$
|
32,073
|
$
|
27,403
|
$
|
32,073
|
Bank loan
|
$
|
21,965
|
$
|
26,603
|
$
|
21,965
|
$
|
26,603
|
Shares outstanding
(000) (2)
|
|
94,244
|
|
80,159
|
|
94,244
|
|
80,159
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
Basic and diluted
(000) (2)
|
|
94,244
|
|
80,159
|
|
87,407
|
|
80,159
|
(1)Funds flow from operations,
operating netback and net debt are non-IFRS measures. See "Non-
IFRS Measures".
|
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.
Well Locations
Unbooked locations are internal estimates based on the
Corporation's prospective acreage and an assumption as to the
number of wells that can be drilled per section based on industry
practice and internal technical analysis review. Unbooked locations
have been identified by management based on evaluation of
applicable geologic, seismic, engineering, production and reserves
information. Unbooked locations do not have proved or probable
reserves attributed to them in the Sproule Report.
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.