Ikkuma Resources Corp. Provides Operations Update, Reduces its Capital Budget by 49%, and Exceeds its 2014 Forecast Exit Rate

CALGARY, Jan. 28, 2015 /CNW/ – Ikkuma Resources Corp. (“Ikkuma” or the “Corporation“) is pleased to announce that the Corporation achieved an average production rate of 7,150 boe/d for the month of December 2014, exceeding its previous guidance of 7,000 boe/d, due in part to a lower than expected corporate decline rate of 18%.

Due to the recent decline in commodity prices, the Corporation is reducing its 2015 capital program by 49%, to $23 million from $46 million. In light of Ikkuma’s successful recompletion program, the revised budget will reallocate drilling capital to the Corporation’s lower risk recompletion projects.  Despite the foregoing reduction in its 2015 capital program, operational successes to date have resulted in the Corporation now forecasting a 2015 exit rate of 8,700 boe/d to 9,000 boe/d, which represents a 22% to 26% increase over Ikkuma’s December 2014 average production rate, and to within 1% and 4% of the original 2015 exit guidance.

Operational Highlights

• Ikkuma averaged 7,150 boe/d for the month of December, exceeding its previously announced guidance exit rate of 7,000 boe/d.
• During Q4 2014, the Corporation completed a $17 million capital program, and exited the year on budget, with an estimated $11 million of net debt.
• The Corporation’s recompletion program has to date tested 1,667 boe/d net (100% natural gas). Tie-in of these volumes is not anticipated until late Q3 2015 due to regulatory delays related to caribou habitat protection.
• The first well successfully attained total depth on January 15, 2015, and intersected the anticipated two reservoir intervals. Completion and pressure analysis will commence shortly and continue over the next month.
• The second well in the Corporation’s drilling program was recently spud and is targeting multiple zones, including the Cardium, Dunvegan, Cadotte, Falher, Wilrich, and Gething reservoirs. This well will earn 17 (13.75 net) sections of land in the Corporation’s core foothills region.
• The Corporation’s land base has grown significantly through land sales and through drilling and completion operations:
  • The first well in the program will earn an additional 2.25 net offsetting sections;
  • The second well in the program will earn 17 gross (13.75 net) sections, to depth drilled;
  • The most successful recompletion operation earned an additional 3.5 net sections, which adds significantly to Ikkuma’s low risk drilling inventory;
  • Added 35.2 sections in 2014 at an average price of $114/acre through crown land sales; and
  • Ikkuma’s present land position is 68,424 net acres developed and 107,386 net acres undeveloped.

Guidance

• In order to maintain financial discipline in the current commodity price environment, the Board of Directors has approved a 49% reduction to the Corporation’s previous 12 month budget of $46 million; total capital spending for 2015 is now expected to be $23 million. Based on the revised budget, the Corporation has reallocated the majority of its capital to its recompletions and optimization projects, increasing the scope of these projects by approximately 57% to $11 million;
• The drilling program has been reduced to 1.2 net wells;
• Based on current commodity prices, the Corporation is anticipating $13 million of cash flow for 2015;
• Approximately 40% of current production volumes are hedged at a $3.00/MMbtu floor throughout 2015; and
• The Corporation anticipates that it will exit 2015 at approximately $21 million of net debt.

NOTES:

About Ikkuma Resources Corp.

Ikkuma Resources Corp. is a diversified junior public oil and gas company listed on the TSX-V 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.

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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, this press release contains forward-looking statements and information relating to the drilling inventory of the Corporation, the expected tie-in date for recompletion program production and expected time for completion and pressure analysis on certain wells, and the expected exit rate production, as well as guidance for 2015. 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 risk.  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.

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).  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.

For further information: Tim de Freitas, President and CEO, 403-478-0141, or Carrie Yuill, VP Finance & CFO, 403-510-8889; Ikkuma Resources Corp., 400, 540 – 5th Avenue SW, Calgary, AB T2P 0M2, Phone: 403-261-5900, Fax: 403-261-5902[/expand]