CALGARY, Aug. 15, 2017
/CNW/ - Ikkuma Resources Corp. ("Ikkuma" or the
"Corporation") (TSX VENTURE: IKM) is pleased to
announce that it has entered into a purchase and sale agreement
(the "Purchase and Sale Agreement") to acquire (the
"Acquisition") assets located in the Alberta Foothills as
well as in the British Columbia Deep Basin (the "Assets"),
effective as of July 1, 2017, for
cash consideration of $34,000,000,
subject to customary adjustments. The Acquisition is subject to
standard industry closing conditions, approval by the TSX Venture
Exchange ("TSXV") and the concurrent sale of certain
midstream assets by the vendor of the Assets (the "Vendor")
to a third party purchaser. The Acquisition is expected to
close on or about November 1,
2017.
In conjunction with the Acquisition, the Corporation has entered
into a separate purchase and sale agreement to sell 51% of its
trunk line and associated facilities (the "Infrastructure
Disposition") in its existing northern Alberta Foothills
properties to an undisclosed buyer, for a total consideration of
$20,000,000, payable in cash. The
Infrastructure Disposition has an effective date of September 1, 2017 and is expected to close
September 15, 2017, but in any event,
prior to the closing of the Acquisition.
The Acquisition will be funded by the proceeds from the
Infrastructure Disposition and available cash balances. The
Corporation's lenders have provided a $15
million estimate of lending value for the acquired Assets
resulting in an expected pro forma unutilized syndicated
credit facility of $40 million.
ACQUISITION
The Acquisition is transformational for Ikkuma and will result
in a stronger oil and natural gas company focused on the Western
Canadian Foothills with a pro forma production base of
approximately 20,800 BOE/d (98% natural gas), with significant
growth potential. The Acquisition is highly accretive, has a low
decline rate, provides increased cash flow, and allows the
Corporation to grow within cash flow while remaining focused on
developing its Narraway light oil pool.
The Assets are primarily located within the Central Alberta
Foothills, northwest of Rocky Mountain
House. Other minor assets included in the Acquisition
are located in the British Columbia Deep Basin, approximately 100
km southeast of Fort Nelson, on
the eastern edge of the Peace River Arch.
The Vendor maintained these properties in a safe and effective
manner, a credit to existing field personnel, and Ikkuma is very
pleased with the due diligence reviews conducted to date.
Acquisition Highlights (also see tables):
- Pro forma diluted cash flow per share increases
130%.
- Significant growth potential as the Assets provide an
extensive, risk-balanced, low cost oil and gas prospect portfolio
that nearly doubles the Corporation's present drilling
inventory.
- 33.6 MMBOE of proved developed producing ("PDP") reserve
additions (246% increase).
- Production additions (220% increase) of 14,300 BOE/d (60%
operated), from low decline assets providing sustainable cash flow
to exploit the Narraway light oil and other discovered
resources.
- Pro forma leverage improves approximately 32%.
- Pro forma Licensee Liability Rating ("LLR") rating of
7.62 (65% improvement).
- The Central Alberta Foothills Assets, representing most of the
production included in the Acquisition, have an annual decline rate
of 8% resulting in a pro forma annual decline of
approximately 11%.
- Significant field operational cost savings have been identified
and are expected to be 10-30%.
- Ikkuma's technical team has significant experience with the
Assets including the Stolberg Oil Pool.
- The Assets include additional lands within Ikkuma's northern
Alberta Foothills light oil pool located at Narraway.
- 398,037 of net developed and undeveloped acres added.
- Adds significant underutilized infrastructure (working interest
in 1,327 km of pipelines, 5 major facilities and 10 minor
facilities), which can be utilized to exploit bypassed oil and gas
zones.
- Majority of the production will flow to a midstream operated
plant. Ikkuma has negotiated favourable fees and agreed
conditionally to dedicate reserves for a 10 year period.
- The Assets include two additional light oil pools, Cordel and
Brown Creek, with infill drilling and secondary oil recovery
opportunities.
- The Assets also include 5,100 kilometre lines of 2D and 143
square kilometres of 3D seismic data.
Asset Summary
|
|
|
|
Purchase
Price(1)
|
$
|
34,000,000
|
|
Production at closing
(BOE/d)(2)
|
14,300
|
|
PDP Reserves
(MBOE)(3)
|
33,579
|
|
2P Reserves
(MBOE)(3)
|
43,886
|
|
PDP Reserves @ 10%
($MM)(4)
|
$
|
126.8
|
|
|
|
|
|
|
(1)
|
Effective date of
July 1, 2017, subject to closing adjustments.
|
|
|
|
(2)
|
Current production is
18,700 BOE/d. 4,400 BOE/d of production is expected to be shut-in
by the Vendor
in September 2017.
|
|
(3)
|
Gross reserves are
the total company working interest in the Assets (operating and
non-operating)
before deduction of royalties and without including any royalty
interest receivable on the Assets. Gross
reserve estimates are based on the Deloitte Report (as at June 30,
2017 in respect of the Central
Alberta Foothills Assets) and the GLJ Reports (as at December 31,
2016 in respect of the BC and
Other Alberta Assets). See "Acquisition Reserves"
below.
|
|
(4)
|
Before tax net
present value based on a 10% discount rate and Deloitte's forecast
prices as at
March 31, 2017 (the "Deloitte Price Forecast") in respect of
the Central Alberta Foothills Assets and
GLJ's forecast prices as at December 31, 2016 in respect of the BC
and Other Alberta Assets
(the "GLJ Price Forecast"). Estimated values of future net
revenues do not represent the fair market
value of the reserves. See "Acquisition Reserves"
below.
|
|
Metrics (net of undeveloped land and
seismic)(1)
|
|
|
|
$/PDP BOE
|
$
|
1.01
|
|
$/PDP Mcf
|
$
|
0.17
|
|
$/BOE/d
|
$
|
2,369
|
|
$/Acreage
Acquired
|
$
|
85.42
|
|
Purchase
price/Operating Netback(1)(2)
|
|
2.2 X
|
|
|
|
|
|
(1)
|
Based on a purchase
price of $34 million and current production of 14,300 BOE/d. The
purchase price is
subject to closing adjustments.
|
|
(2)
|
Operating netback is
a non-IFRS measure. See "Non-IFRS Measures"
below.
|
|
|
|
(3)
|
Operating netback for
the Assets is an annualized estimate based on recent lease
operating statements
provided by the Vendor using an estimated AECO natural gas price of
$2.50/Mcf.
|
|
Pro Forma Information
|
|
|
|
|
|
|
|
|
|
|
|
|
Ikkuma(1)
|
|
Acquisition
|
Equity
Issue(2)
|
|
Pro
Forma
|
Increase -
decrease (%)
|
Outstanding shares
(MM)
|
- Basic
|
|
|
94,300
|
|
|
12,195
|
|
106,495
|
13%
|
|
- Diluted
|
|
|
111,450
|
|
|
12,195
|
|
123,645
|
11%
|
Cash flow per
share
|
- Basic
|
|
$
|
0.09
|
|
|
|
$
|
0.22
|
130%
|
|
- Diluted
|
|
$
|
0.08
|
|
|
|
$
|
0.19
|
134%
|
PDP Reserves @ NPV10%
($MM) (3)(4)
|
|
$
|
103.6
|
$
|
126.8
|
|
$
|
230.4
|
122%
|
PDP Reserves
(MMBOE)(3)(5)
|
|
|
13.6
|
|
33.6
|
|
|
47.2
|
246%
|
Production
(BOE/d)(6)
|
|
|
6,500
|
|
14,300
|
|
|
20,800
|
220%
|
Operating Netback
($MM) (7)(8)
|
|
$
|
16.09
|
$
|
15.71
|
|
$
|
31.80
|
98%
|
Adjusted Debt/
EBITDA on closing (7)
|
|
|
3.5
X
|
|
|
|
|
2.4
X
|
-32%
|
Production Base
Decline
|
|
|
16%
|
|
8%
|
|
|
11%
|
-28%
|
LLR
Rating(9)
|
|
|
4.63
|
|
10.6
|
|
|
7.62
|
65%
|
Net Developed Land
(acres)
|
|
|
56,883
|
|
151,767
|
|
|
208,650
|
267%
|
Net Undeveloped Land
(acres)
|
|
|
177,037
|
|
246,270
|
|
|
423,307
|
139%
|
Total Land
(acres)
|
|
|
233,920
|
|
398,037
|
|
|
631,957
|
170%
|
(1)
|
The reserves
information contained herein in respect of Ikkuma's reserves are
based upon an independent report prepared by Sproule Associates
Limited ("Sproule") dated March 15, 2017 and effective as of
December 31, 2016 (the "Sproule Report") based on the price
forecast prepared by Sproule for December 31, 2016 which is the
average of the pricing, inflation and exchange rate forecasts of
three independent reserve evaluators, namely, Sproule, GLJ and
McDaniel's & Associates Consultants Ltd.
|
(2)
|
See "Equity
Financing" below.
|
(3)
|
Only developed
reserves were evaluated for the Acquisition.
|
(4)
|
Before tax net
present value based on a 10% discount rate and the Deloitte Price
Forecast in respect of the Central Alberta Foothills Assets and the
GLJ Price Forecast in respect of the BC and Other Alberta Assets.
Estimated values of future net revenues do not represent the fair
market value of the reserves. See "Acquisition Reserves"
below.
|
(5)
|
Gross reserves are
the total company working interest in the Assets (operating and
non-operating) before deduction of royalties and without including
any royalty interest receivable on the Assets. Gross reserve
estimates are based on the Deloitte Report (as at June 30, 2017 in
respect of the Central Alberta Foothills Assets) and the GLJ
Reports (as at December 31, 2016 in respect of the BC and Other
Alberta Assets). See "Acquisition Reserves"
below.
|
(6)
|
Based on current
production. Excludes 4,400 BOE/d of production that is expected to
be shut-in by the Vendor in September 2017.
|
(7)
|
Debt, EBITDA and
Operating Netback are non-IFRS measures. See "Non-IFRS
Measures" below.
|
(8)
|
Operating netback is
an annualized estimate based historical lease operating statements
and using an estimated natural gas price of $2.50/Mcf
AECO.
|
(9)
|
LLR (Licensee
Liability Rating, AER Directive 006).
|
ACQUISITION RESERVES
The reserves data set forth below are based on an independent
reserves evaluation of certain oil and gas assets in the Foothills
area of Alberta (the
"Central Alberta
Foothills Assets"), effective June
30, 2017 (the "Deloitte Report") prepared by Deloitte
LLP ("Deloitte") and independent reserves assessments on the
Assets other than the Central Alberta Foothills Assets (the "BC
and Other Alberta Assets") effective December 31, 2016 (the "GLJ Reports")
prepared by GLJ Petroleum Consultants Ltd. ("GLJ") for the
Vendor. The Deloitte Report is based on certain factual data
supplied by the Vendor. Deloitte reviewed the land data
provided by the Vendor as it related to any producing wells but
accepted the working interest presented in the well lists as
factual with no further review for the non-producing wells.
The GLJ Reports, as delivered by the Vendor, contain details
regarding crude oil, natural gas liquids and natural gas reserves
and the net present values before income tax of future net revenue
using forecast prices and costs as set out in the GLJ
Reports. The GLJ Reports have been prepared in accordance
with definitions, standards, and procedures contained in the
Canadian Oil and Gas Evaluation Handbook ("COGE Handbook")
and National Instrument 51-101 – Standards of Disclosure for Oil
and Gas Activities ("NI-51-101"). The GLJ Reports are
based on the GLJ Price Forecast, which is available on GLJ's
website. The Deloitte Report was also prepared in accordance
with NI 51-101; however, Deloitte was instructed to evaluate proved
and probable developed reserves only. No effort was made by
Deloitte to assess proved developed non-producing or undeveloped
reserves. As such, only proved and probable developed reserves are
provided for the Foothills Assets. The Deloitte Report is based on
the Deloitte Price Forecast, which is available on Deloitte's
website. The information regarding the Assets set forth herein is
in respect of all of the Assets. All of the reserves associated
with the Assets are in Canada and,
specifically, in Alberta and
British Columbia.
In certain of the tables set forth below, the columns may not
add due to rounding. In addition, the net present values in
the tables set forth below do not include capital gas cost
allowance as these are determined on a corporate basis.
All evaluations and summaries of future net revenue are stated
prior to provision for interest, debt service charges or general
administrative expenses and after deduction of royalties, operating
costs, estimated well abandonment and reclamation costs and
estimated future capital expenditures. It should not be assumed
that the estimates of future net revenues presented in the tables
below represent the fair market value of reserves. There is no
assurance that the forecast prices and cost assumptions will be
attained and variances could be material. The estimates of reserves
and future net revenue for individual properties may not reflect
the same confidence level as estimates of reserves and future net
revenue for all properties due to the effects of aggregation. The
recovery and reserve estimates of crude oil, natural gas liquids
and natural gas reserves provided herein are estimates only and
there is no guarantee that the estimated reserves will be
recovered. Actual crude oil, natural gas and natural gas liquids
reserves may be greater or less than the estimates provided herein.
Reserves included herein are stated on a company gross basis
(working interest before deduction of royalties without including
any royalty interests) unless noted otherwise. See
"Forward-Looking Statements and Information and Cautionary
Statements" below for a statement of principal assumptions and
risks that may apply.
SUMMARY OF OIL AND
GAS RESERVES
|
as of June 30,
2017 (Deloitte)(3)
|
FORECAST PRICES
AND COSTS
|
|
CENTRAL ALBERTA
FOOTHILLS ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Light and
Medium
Crude Oil(6)
|
|
Conventional
Natural Gas(4)(6)
|
|
Liquids/NGLs(6)
|
|
Total(5)(6)
|
Reserves
Category
|
|
Gross(1)
(Mbbl)
|
|
Net(2)
(Mbbl)
|
|
Gross(1)
(Bcf)
|
|
Net(2)
(Bcf)
|
|
Gross(1)
(Mbbl)
|
|
Net(2)
(Mbbl)
|
|
Gross(1)
(MBOE)
|
|
Net(2)
(MBOE)
|
PROVED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Producing
|
|
351.3
|
|
274.7
|
|
170.6
|
|
153.2
|
|
184.5
|
|
110.2
|
|
28,972
|
|
25,925
|
|
Developed
Non‑Producing
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Undeveloped
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
TOTAL
PROVED
|
|
351.3
|
|
274.7
|
|
170.6
|
|
153.2
|
|
184.5
|
|
110.2
|
|
28,972
|
|
25,925
|
TOTAL
PROBABLE
|
|
113.3
|
|
83.0
|
|
52.9
|
|
45.2
|
|
54.8
|
|
32.7
|
|
8,976
|
|
7,646
|
TOTAL PROVED
PLUS PROBABLE
|
|
464.6
|
|
357.7
|
|
223.5
|
|
198.4
|
|
239.3
|
|
142.9
|
|
37,948
|
|
33,571
|
|
(1)
|
Reserves have been
presented on a "gross" basis which is defined as the Company's
working interest share in the reserves in the Central Alberta
Foothills Assets (operating and non-operating) before deduction of
royalties and without including any royalty interest receivable on
the Central Alberta Foothills Assets.
|
(2)
|
Net reserves are
defined as the gross working interest reserves in the Central
Alberta Foothills Assets (operating and non-operating) less all
Crown, freehold, and overriding royalties and interests owned by
others.
|
(3)
|
Based on the Deloitte
Price Forecast.
|
(4)
|
Includes solution
gas.
|
(5)
|
Oil equivalent
amounts have been calculated using a conversion rate of six
thousand cubic feet of natural gas to one barrel of oil.
|
(6)
|
Columns may not add
due to rounding.
|
SUMMARY OF OIL AND
GAS RESERVES
|
as of December 31,
2016 (GLJ)(2)
|
FORECAST PRICES
AND COSTS
|
|
BC AND OTHER
ALBERTA ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Light and
Medium
Crude Oil(6)
|
|
Conventional
Natural Gas(4)(6)
|
|
Liquids/NGLs(6)
|
|
Total(5)(6)
|
Reserves
Category
|
|
Gross(1)
(Mbbl)
|
|
Net(2)
(Mbbl)
|
|
Gross(1)
(MMcf)
|
|
Net(2)
(MMcf)
|
|
Gross(1)
(Mbbl)
|
|
Net(2)
(Mbbl)
|
|
Gross(1)
(MBOE)
|
|
Net(2)
(MBOE)
|
PROVED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Producing
|
|
-
|
|
-
|
|
26,152
|
|
23,659
|
|
249
|
|
175
|
|
4,607
|
|
4,117
|
|
Developed
Non‑Producing
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Undeveloped
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
TOTAL
PROVED
|
|
-
|
|
-
|
|
26,152
|
|
23,659
|
|
249
|
|
175
|
|
4,607
|
|
4,117
|
TOTAL
PROBABLE
|
|
-
|
|
-
|
|
7,583
|
|
6,864
|
|
66
|
|
50
|
|
1,331
|
|
1,195
|
TOTAL PROVED
PLUS PROBABLE
|
|
-
|
|
-
|
|
33,735
|
|
30,523
|
|
316
|
|
225
|
|
5,938
|
|
5,312
|
|
|
(1)
|
Reserves have been
presented on a "gross" basis which is defined as the Company's
working interest share in the reserves in the BC and Other Alberta
Assets (operating and non-operating) before deduction of royalties
and without including any royalty interest receivable on the BC and
Other Alberta Assets.
|
(2)
|
Net reserves are
defined as the gross working interest reserves in the BC and Other
Alberta Assets (operating and non-operating) less all Crown,
freehold, and overriding royalties and interests owned by
others.
|
(3)
|
Based on the GLJ
Price Forecast.
|
(4)
|
Includes solution
gas.
|
(5)
|
Oil equivalent
amounts have been calculated using a conversion rate of six
thousand cubic feet of natural gas to one barrel of oil.
|
(6)
|
Columns may not add
due to rounding.
|
SUMMARY OF OIL AND
GAS RESERVES
|
as of December 31,
2016 (GLJ); June 30, 2017 (Deloitte)(3)
|
FORECAST PRICES
AND COSTS
|
|
ALL
PROPERTIES
|
|
|
|
|
|
|
|
|
|
|
|
Light and
Medium
Crude Oil(6)
|
|
Conventional
Natural Gas(4)(6)
|
|
Liquids/NGLs
(6)
|
|
Total(5)(6)
|
Reserves
Category
|
|
Gross(1)
(Mbbl)
|
|
Net(2)
(Mbbl)
|
|
Gross(1)
(Bcf)
|
|
Net(2)
(Bcf)
|
|
Gross(1)
(Mbbl)
|
|
Net(2)
(Mbbl)
|
|
Gross(1)
(MBOE)
|
|
Net(2)
(MBOE)
|
PROVED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Producing
|
|
351
|
|
275
|
|
197
|
|
177
|
|
434
|
|
285
|
|
33,579
|
|
30,042
|
|
Developed
Non‑Producing
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Undeveloped
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
TOTAL
PROVED
|
|
351
|
|
275
|
|
197
|
|
177
|
|
434
|
|
285
|
|
33,579
|
|
30,042
|
TOTAL
PROBABLE
|
|
113
|
|
83
|
|
61
|
|
52
|
|
121
|
|
83
|
|
10,307
|
|
8,841
|
TOTAL PROVED PLUS
PROBABLE
|
|
465
|
|
358
|
|
257
|
|
229
|
|
555
|
|
368
|
|
43,886
|
|
38,883
|
|
|
(1)
|
Reserves have been
presented on a "gross" basis which is defined as the Company's
working interest share in the reserves in the Assets (operating and
non-operating) before deduction of royalties and without including
any royalty interest receivable on the Assets.
|
(2)
|
Net reserves are
defined as the gross working interest reserves in the Assets
(operating and non-operating) less all Crown, freehold, and
overriding royalties and interests owned by others.
|
(3)
|
In respect of
the BC and Other Alberta Assets, based on the GLJ Reports using the
GLJ Price Forecast and in respect of the Central Alberta Foothills
Assets, based on the Deloitte Report using the Deloitte Price
Forecast.
|
(4)
|
Includes solution
gas.
|
(5)
|
Oil equivalent
amounts have been calculated using a conversion rate of six
thousand cubic feet of natural gas to one barrel of oil.
|
(6)
|
Columns may not add
due to rounding.
|
SUMMARY OF NET
PRESENT VALUES OF FUTURE NET REVENUE
|
as of December 31,
2016 (GLJ)(1)
|
BC AND OTHER
ALBERTA ASSETS
|
|
FORECAST PRICES
AND COSTS
|
|
|
|
|
|
|
|
Before Income
Taxes
Discounted At (%/year)
|
|
Unit Value
Before
Income Tax
Discounted at
10%/year
$/BOE
|
Reserves
Category
|
|
0
(M$)
|
|
5
(M$)
|
|
10
(M$)
|
|
15
(M$)
|
|
20
(M$)
|
|
PROVED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Producing
|
|
42,856
|
|
33,431
|
|
27,406
|
|
23,286
|
|
20,316
|
|
6.66
|
|
Developed
Non‑Producing
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Undeveloped
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
TOTAL
PROVED
|
|
42,856
|
|
33,431
|
|
27,406
|
|
23,286
|
|
20,316
|
|
6.66
|
TOTAL
PROBABLE
|
|
13,659
|
|
7,892
|
|
5,097
|
|
3,572
|
|
2,660
|
|
4.24
|
TOTAL PROVED PLUS
PROBABLE
|
|
56,515
|
|
41,323
|
|
32,503
|
|
26,858
|
|
22,976
|
|
6.11
|
|
|
(1)
|
Based on the GLJ
Price Forecast.
|
SUMMARY OF NET
PRESENT VALUES OF FUTURE NET REVENUE
|
as of June 30,
2017 (Deloitte)(1)
|
CENTRAL ALBERTA
FOOTHILLS ASSETS
|
|
FORECAST PRICES
AND COSTS
|
|
|
|
|
|
|
|
Before Income
Taxes Discounted At
(%/year)
|
|
Unit Value
Before
Income Tax
Discounted at
10%/year $/BOE
|
Reserves
Category
|
|
0
(MM$)
|
|
5
(MM$)
|
|
10
(MM$)
|
|
15
(MM$)
|
|
20
(MM$)
|
|
PROVED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Producing
|
|
180
|
|
129
|
|
99
|
|
80
|
|
67
|
|
3.83
|
|
Developed
Non‑Producing
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Undeveloped
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
TOTAL
PROVED
|
|
180
|
|
129
|
|
99
|
|
80
|
|
67
|
|
3.83
|
TOTAL
PROBABLE
|
|
97
|
|
50
|
|
29
|
|
19
|
|
13
|
|
3.81
|
TOTAL PROVED PLUS
PROBABLE
|
|
277
|
|
179
|
|
129
|
|
99
|
|
81
|
|
3.83
|
|
(1)
|
Based on the Deloitte
Price Forecast.
|
SUMMARY OF NET
PRESENT VALUES OF FUTURE NET REVENUE
|
as of December 31,
2016 (GLJ); June 30, 2017 (Deloitte)(1)
|
ALL ACQUISITION
PROPERTIES
|
|
FORECAST PRICES
AND COSTS
|
|
|
|
|
|
|
|
Before Income
Taxes
Discounted At (%/year)
|
|
Unit Value
Before
Income Tax
Discounted at
10%/year
$/BOE
|
Reserves
Category
|
|
0
(M$)
|
|
5
(M$)
|
|
10
(M$)
|
|
15
(M$)
|
|
20
(M$)
|
|
PROVED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Producing
|
|
222.9
|
|
162.7
|
|
126.8
|
|
103.6
|
|
87.6
|
|
4.22
|
|
Developed
Non‑Producing
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
TOTAL
PROVED
|
|
222.9
|
|
162.7
|
|
126.8
|
|
103.6
|
|
87.6
|
|
4.22
|
TOTAL
PROBABLE
|
|
110.3
|
|
57.4
|
|
34.2
|
|
22.6
|
|
16.1
|
|
3.86
|
TOTAL PROVED PLUS
PROBABLE
|
|
333.1
|
|
220.1
|
|
161.0
|
|
126.2
|
|
103.7
|
|
4.14
|
|
|
(1)
|
In respect of
the BC and Other Alberta Assets, based on the GLJ Reports using the
GLJ Price Forecast and in respect of the Central Alberta Foothills
Assets, based on the Deloitte Report using the Deloitte Price
Forecast.
|
EQUITY FINANCING
The Corporation is also pleased to announce that it has
commenced a non-brokered private placement of 12,195,122
flow-through shares at a price of $0.82 per/share for gross
proceeds of $10 million (the
"Offering"). The Offering will consist of common
shares issued on a "flow-through" basis in respect of Canadian
exploration expenses under the Income Tax Act (Canada) (the "Flow-Through Shares").
The gross proceeds from the Offering will be used by Ikkuma to
incur eligible Canadian exploration expenses ("Qualifying
Expenditures") prior to December 31,
2018. Ikkuma will renounce the Qualifying Expenditures
to subscribers of the Flow-Through Shares for the fiscal year ended
December 31, 2017.
The completion of the Offering is subject to a number of
conditions, including, without limitation, receipt of all
regulatory approvals, including approval of the TSXV. Closing
of the Offering is expected to occur on or about September 1, 2017. The Flow-through Shares
issued pursuant to the Offering will be subject to a statutory hold
period of four months plus one day from the closing of the
Offering, in accordance with applicable securities legislation.
Advisory Services
Desjardins Capital Markets (and its partner Deloitte)., GMP
FirstEnergy and TD Securities Inc. acted as financial advisors to
Ikkuma with respect to the Acquisition.
About Ikkuma Resources Corp.
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. 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. In particular the press release
contains forward-looking statements and information relating to the
completion of the Acquisition and the timing thereof; the
completion of the Infrastructure Disposition and the timing
thereof; the completion of the Offering and the timing thereof; the
use of proceeds of the Offering; the funding of the purchase price
of the Assets; the Corporation's expectation that the borrowing
base under its credit facilities will be increased following the
completion of the Acquisition; the anticipated benefits to be
obtained as a result of the Acquisition; the performance
characteristics of the Assets and the anticipated potential of the
Asset; the anticipated shut-in of 4,400 BOE/d by the Vendor in
September 2017 (exclusive of the
14,351 production included among the Assets); and the impact of the
Acquisition on the Corporation's production, reserves, inventory
and financial condition. 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. The
forward-looking statements and information is based on certain key
expectations and assumptions made by management, including
expectations and assumptions concerning: the satisfaction of all
conditions to the closing of the Acquisition, Infrastructure
Disposition and Offering and on the time frames contemplated; the
Corporation's ability to develop the Assets and obtain the benefits
thereof; the ability to efficiently integrate the Assets;
prevailing and future commodity prices, exchange rate, interest
rates, inflation rates, applicable royalty rates and tax laws;
future production rates and estimates of operating costs;
performance of existing and future wells; reserves volumes;
anticipated timing and results of capital expenditures in carrying
out planned activities; the state of the economy and the
exploration and production business; the regulatory framework
regarding royalties, taxes and environmental laws; results of
operations; performance; business prospectus and opportunities.
Actual results could differ materially from those currently
anticipated due to a number of factors and risk. These
include but are not limited to: failure to complete the Acquisition
in all material respects in accordance with the Purchase and Sale
Agreement; failure to complete the Infrastructure Disposition in
all material respects in accordance with its related purchase and
sale agreement; failure to obtain in a timely manner, regulatory,
stock exchange and other required approvals in connection with the
Acquisition, the Infrastructure Disposition and the Offering; the
failure to realize the anticipated benefits of the Acquisition;
unforeseen difficulties in integrating the Assets in the
Corporation's operations, 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. The Corporation cautions that the foregoing list of
risks and uncertainties is not exhaustive. These risks and other
risks are set out in more detail in Ikkuma's Annual Information
Form for the year ended December 31,
2016. The recovery and reserve estimates contained in this
press release are estimates only and there is no guarantee that the
estimated reserves will be recovered.
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" or "future oriented financial information"
within the meaning of applicable securities laws. Financial
outlook or future oriented financial information in this press
release was made as of the date of this press release. 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. Operating netback, EBITDA and
Adjusted Debt are not recognized measures under IFRS. Management
uses certain industry benchmarks such as operating netback to
analyze financial and operating performance. This benchmark
as presented does not have any standardized meaning prescribed by
IFRS and therefore may not be comparable with the calculation of
similar measures for other entities. Operating netback equals
total petroleum and natural gas sales, realized gains and losses on
commodity contracts, less royalties, operating costs and
transportation costs calculated on a BOE basis. Management
considers operating netback an important measure to evaluate its
operational performance as it demonstrates its field level
profitability relative to current commodity prices. EBITDA is
comprised of earnings before interest, taxes depreciation and
amortization and adjustments for other non-cash items.
Adjusted Debt is the aggregate of the principal amount of the Term
Loan, drawn amounts on credit facilities, and outstanding letters
of credit with the bank less unrestricted cash. Reconciliations of
operating netback and debt to the most directly comparable measures
specified under IFRS are contained in the Corporation's management
discussion and analysis, copies of which are available on
SEDAR.
Oil and Gas Advisory
Certain pro forma reserve information has been presented
herein. The estimates of the Corporation's reserves and the
estimates of the reserves associated with the Central Alberta
Foothills Assets and the BC and Other Alberta Assets were estimated
at different dates and have been based on different assumptions in
respect of commodity pricing among other metrics. As a
result, the presentation of the Corporation's reserves on a
consolidated pro forma basis or the presentation of the Assets, as
a whole, would not reflect the actual combined estimated of the
Corporation's reserves and the Assets, or the Assets, as a whole,
at December 31, 2016 and should not
necessarily be viewed as predictive of the Corporation's reserves
and future production once the Acquisition is completed.
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). BOEs 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.