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 $2.7 million which increases the Corporation’s working interest in existing producing wells and facilities, allows Ikkuma to farm-in on lands strategic to Ikkuma’s development of its oil play and provides clear access to certain gas recompletions.
- Produced an average of 5,921 boe/d in Q2 2016, 75% of Ikkuma’s production capability of 7,900 boe/d, due to shut in uneconomic sour gas and downtime due to scheduled plant turnaround. Ikkuma had approximately 1,000 boe/d of uneconomic gas shut in for most of Q2 2016. Approximately 350 BOE/d of this gas was back on production in early July and further volumes may be returned under more favorable gas prices.
(Expressed in thousands of Canadian dollars except per boe and Share amounts; unaudited) |
Three months ended June 30, |
Six months ended June 30, |
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2016 |
2015 |
2016 |
2015 |
||||||
OPERATIONS |
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Average daily production |
|||||||||
Natural gas (mcf/d) |
35,361 |
39,552 |
39,790 |
40,585 |
|||||
Light Oil (bbls/d) |
– |
35 |
– |
42 |
|||||
NGL’s (bbl/d) |
27 |
141 |
77 |
137 |
|||||
Total equivalent (boe/d) |
5,921 |
6,769 |
6,709 |
6,944 |
|||||
Average prices and operating netback |
|||||||||
Natural gas ($/mcf) |
$ |
1.37 |
$ |
2.74 |
$ |
1.63 |
$ |
2.72 |
|
Light Oil ($/bbl) |
– |
47.76 |
– |
42.61 |
|||||
NGL ($/bbl) |
44.12 |
24.14 |
23.95 |
21.20 |
|||||
Revenue ($/boe) |
8.49 |
17.45 |
10.21 |
17.14 |
|||||
Realized gain on commodity contracts ($/boe) |
8.19 |
1.53 |
6.12 |
1.17 |
|||||
Royalties ($/boe) |
0.73 |
(1.50) |
(0.24) |
(1.69) |
|||||
Operating expenses ($/boe) |
(8.49) |
(7.99) |
(8.22) |
(8.62) |
|||||
Transportation costs ($/boe) |
(1.77) |
(1.55) |
(1.80) |
(1.54) |
|||||
Operating netback (1) ($/boe) |
$ |
7.15 |
$ |
7.94 |
$ |
6.07 |
$ |
6.46 |
|
FINANCIAL |
|||||||||
Oil and natural gas sales |
$ |
4,576 |
$ |
10,748 |
$ |
12,472 |
$ |
21,541 |
|
Funds flow from operations (1) |
$ |
2,397 |
$ |
3,428 |
$ |
4,591 |
$ |
5,373 |
|
Per share – basic and diluted |
$ |
0.03 |
$ |
0.04 |
$ |
0.05 |
$ |
0.07 |
|
Loss |
$ |
(9,441) |
$ |
(3,670) |
$ |
(7,014) |
$ |
(8,523) |
|
Per share – basic and diluted |
$ |
(0.11) |
$ |
(0.05) |
$ |
(0.08) |
$ |
(0.11) |
|
Capital expenditures |
$ |
694 |
$ |
3,852 |
$ |
3,809 |
$ |
22,593 |
|
Property acquisitions |
$ |
2,713 |
$ |
– |
$ |
25 |
$ |
– |
|
Net debt (1) |
$ |
25,819 |
$ |
27,325 |
$ |
25,819 |
$ |
27,325 |
|
Bank loan |
$ |
21,141 |
$ |
23,002 |
$ |
21,141 |
$ |
23,002 |
|
Shares outstanding (000) (2) |
94,244 |
80,159 |
94,244 |
80,159 |
|||||
Weighted average shares outstanding |
|||||||||
Basic and diluted (000) (2) |
87,743 |
80,159 |
83,951 |
80,159 |
|||||
(1)Funds flow from operations, operating netback and net debt are non-IFRS measures. See “Non- IFRS Measures”. |
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.