CALGARY, Aug. 24, 2017 /CNW/ – Ironhorse Oil & Gas Inc. (“Ironhorse” or the “Company”) (TSX-V: IOG) announces its financial and operating results for the three and six months ended June 30, 2017.
Financial and Operation Summary
The Company’s reported production remained flat at 165 boe/d in the second quarter of 2017 compared to 164 boe/d produced in the first quarter of 2017. The current quarter production was impacted by repair and maintenance work, third party outages downstream of the 13-2 Sinopec battery and reduced production rates for the Pembina 14-5 well due to an increase in water cut levels which occurred earlier than originally projected and is awaiting installation of an electric submersible pump scheduled for late Q3 2017.
Operating netbacks for Q2 2017 decreased 4.8% to $256,000 from $271,000 reported for Q1 2017 and corresponding with flat production and a 5.1% decrease in the Company’s realized oil price received compared to the prior quarter.
The Company realized a net loss of $1.5 million for the second quarter primarily resulting from a $1.9 million impairment charge at Pembina due to a reduction in the forward commodity prices and production estimates as compared to the 2016 year end reserve report forecast, offset by $0.6 million non-cash deferred tax recovery.
Quarterly funds from operations remained positive for the fourth consecutive quarter despite descending 45% to $99,000 in Q2 2017 compared to $180,000 for Q1 2017 due to 70% higher general and administrative costs incurred in connection with a potential corporate transaction.
The Pembina 14-5 well was shut-in intermittently during the latter half of Q2 due to water cut increases that caused the well to load up and required reservoir pressure to build up in order to continue to flow against the gathering system pressure. The Pembina 9-5 well has continued to produce with limited down time and low water cut during the quarter.
Updated Production Guidance:
Net production for Q3 2017 is estimated to be 100 to 125 boe/d due to continued well loading at Pembina 14-5. Q4 2017 is estimated at 160 to 180 boe/d due to the pump installation at the 14-5 well positively impacting the entire quarter.
On August 14, 2017, Ironhorse entered into a non-binding Letter of Intent with Pond Technologies Inc. (“Pond”) pursuant to which Ironhorse and Pond propose to complete a business combination by way of take-over bid (the “Proposed Transaction”). The Proposed Transaction, as currently contemplated, will constitute a reverse-takeover and change of business of Ironhorse pursuant to the policies of the TSX Venture Exchange (the “TSXV”) and is subject to the acceptance of the TSXV and the approval of the shareholders of Ironhorse. At this time, both Ironhorse and Pond are conducting due diligence with respect to finalizing a definitive agreement.
The Company continues to be well positioned financially with a positive working capital position of $3.1 million at June 30, 2017.
SELECTED INFORMATION |
For three months ended |
||||
June 30, |
March 31, |
June 30, |
|||
($ thousands except per share & unit amounts) |
2017 |
2017 |
2016 |
||
Financial |
|||||
Petroleum and natural gas revenues (1) |
734 |
758 |
16 |
||
Funds from operations (2) |
99 |
180 |
(94) |
||
Per share – basic and diluted |
– |
0.01 |
– |
||
Net loss |
(1,522) |
(33) |
(69) |
||
Per share – basic and diluted |
(0.05) |
– |
– |
||
Operation |
|||||
Production |
|||||
Light Oil & NGL (bbl/d) |
140 |
140 |
1 |
||
Gas (mcf/d) |
150 |
146 |
56 |
||
Total (boe/d) |
165 |
164 |
10 |
||
Petroleum and natural gas revenues ($/boe) |
48.74 |
51.42 |
16.91 |
||
Royalties ($/boe) |
18.03 |
21.86 |
(57.30) |
||
Operating expenses ($/boe) |
13.62 |
11.22 |
71.51 |
||
Operating netback ($/boe) |
17.09 |
18.34 |
2.70 |
(1) |
Petroleum and natural gas revenues are before royalty expense. |
|||||
(2) |
Funds from operations and net debt are non-GAAP measures as defined in the Advisory section of the MD&A. |
Additional Information
Ironhorse’s complete results for the three and six months ended June 30, 2017, including unaudited condensed financial statements and the management’s discussion and analysis are available on SEDAR or the Company’s web site at www.ihorse.ca
About Ironhorse:
Ironhorse Oil & Gas Inc. is a Calgary-based junior oil and natural gas production company trading on the TSX Venture Exchange under the symbol “IOG.”