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 $10 million of eligible Canadian exploration expenses prior to December 31, 2017.
(Expressed in thousands of Canadian dollars except per boe and Share amounts) |
Three months ended March 31, |
|||||
2016 |
2015 |
|||||
OPERATIONS |
||||||
Average daily production |
||||||
Natural gas (mcf/d) |
44,220 |
41,629 |
||||
Light oil (bbls/d) |
– |
50 |
||||
NGL’s (bbl/d) |
127 |
134 |
||||
Total equivalent (boe/d) |
7,497 |
7,121 |
||||
Average prices and operating netback |
||||||
Natural gas ($/mcf) |
$ |
1.85 |
$ |
2.69 |
||
Light oil ($/bbl) |
– |
38.87 |
||||
NGL ($/bbl) |
19.62 |
18.06 |
||||
Revenue ($/boe) |
11.57 |
16.84 |
||||
Realized gain on commodity contracts ($/boe) |
4.52 |
0.80 |
||||
Royalties ($/boe) |
(1.00) |
(1.88) |
||||
Operating ($/boe) |
(8.00) |
(9.23) |
||||
Transportation costs ($/boe) |
(1.83) |
(1.53) |
||||
Operating netback (1) ($/boe) |
$ |
5.26 |
$ |
5.00 |
||
FINANCIAL |
||||||
Oil and natural gas sales |
$ |
7,896 |
$ |
10,793 |
||
Funds flow from operations (1) |
$ |
2,194 |
$ |
1,945 |
||
Per share – basic and diluted |
$ |
0.03 |
$ |
0.02 |
||
Net income (loss) |
$ |
2,427 |
$ |
(4,853) |
||
Per share – basic and diluted |
$ |
0.03 |
$ |
(0.06) |
||
Capital expenditures |
$ |
3,115 |
$ |
18,741 |
||
Property acquisitions (dispositions) |
$ |
21 |
$ |
25 |
||
Net debt (1) |
$ |
34,018 |
$ |
26,802 |
||
Bank loan |
$ |
29,232 |
$ |
14,933 |
||
Shares outstanding (000) |
80,159 |
80,159 |
||||
Weighted average shares outstanding |
||||||
Basic and diluted (000) |
80,159 |
80,159 |
(1)Funds flow from operations, operating netback and net debt are non-IFRS measures. See “Non- IFRS Measures”. |
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.