TSX Venture Exchange: IKM
CALGARY, March 2, 2016 /CNW/ – Ikkuma Resources Corp. (“Ikkuma” or the “Corporation“) is pleased to announce its 2015 year-end reserves.
2015 Highlights
- Ikkuma achieved relatively flat PDP reserves at 14.4 MMBoe, increased 1P reserves to 20.0 MMboe and increased 2P reserves 7% to 27.5 MMboe, even with reducing its 2015 capital spending by 25% in response to weakening commodity prices.
- Achieved 1P F&D of $8.95/boe and 2P F&D of $7.27/boe despite operational issues with the drilling program in the first quarter which consumed approximately 39% of total 2015 capital expenditures. All new reserves were attributed to the successful recompletion program. New recompletion operations will continue through 2016, as disclosed previously.
- Ikkuma divested 500 Mboe of 1P reserves and 745 Mboe of 2P reserves during the year for an aggregate of $3.3 million. As a result, the Corporation’s 1P and 2P FD&A (including changes in FDC, revisions and economic factors) was $9.22/boe and $7.76/boe, respectively.
- Ikkuma’s recompletion program accounted for $21.4 million or 61% of total exploration and development expenditures and resulted in adding 1,555 Mboe of PDP reserves and 2,274 Mboe of 2P reserves. Capex included a 12 km pipeline build, which will be used for up to six offset gas wells. A single offset PUD booked on one of the recompletions has been assigned 1,546 Mboe of 2P reserves.
- Total proved plus probable reserves value was relatively unchanged at $202 million (discounted at 10%) as compared to the $208 million reported last year, despite the 25-30% reduction in forecasted price decks.
- Ikkuma’s 2P net asset value at December 31, 2015 is estimated at $2.31/share, 282% above last 30 day average trading price.
Reserves
The detailed reserves data set forth below are based on an independent reserves assessment and evaluation prepared by Sproule Associated Limited (“Sproule”) with an effective date of December 31, 2015, the “Sproule Report”. The following presentation summarizes the Corporation’s crude oil, natural gas liquids and natural gas reserves and the net present values before income tax of future net revenue for the Corporation’s reserves using forecast prices and costs as set out in the Sproule Report. The Sproule Report has 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 reserves evaluation was based on the consensus forecast escalated pricing and foreign exchange rates at December 31, 2015 (“Consensus Price”) as outlined in the table herein entitled “Price Forecast”. This Consensus Price forecast is the average of the escalated price forecasts of three independent reserve evaluators, namely Sproule, GLJ Petroleum Consultants Ltd. and McDaniels & Associates Consultants Ltd.
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 recovery and reserve estimates of Ikkuma’s 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. In addition to the detailed information disclosed in this press release, more detailed information will be included in the Corporation’s Annual Information Form (“AIF”) which will be filed on the Corporation’s profile at www.sedar.com on or before April 30, 2016.
See “Forward Looking Information and Statements and Cautionary Statements” for a statement of principal assumptions and risks that may apply.
The preparation and audit of Ikkuma’s 2015 annual financial statements is not yet complete, and accordingly all financial amounts referred to in this press release are unaudited and represent management’s estimates. Readers are advised that these financial estimates may be subject to change.
Corporate Reserves (1,2,5)
Reserves Category |
Light and (Mbbl) |
Natural Gas (Mbbl) |
Non- Associated (Mmcf) |
Barrels of Equivalent(4) (Mbbl) |
Proved |
||||
Producing (“PDP”) |
1.0 |
432.2 |
83,962 |
14,426.8 |
Non-producing |
– |
6.6 |
8,043 |
1,347.1 |
Undeveloped |
– |
7.2 |
25,493 |
4,256.0 |
Total proved (1P) |
1.0 |
446.0 |
117,498 |
20,030.0 |
Probable |
0.5 |
71.6 |
44,635 |
7,511.3 |
Total proved plus probable (2P) |
1.5 |
517.6 |
162,133 |
27,541.3 |
Notes: |
|
(1) |
Reserves have been presented on a “gross” basis which is defined as Ikkuma’s working interest (operating and non-operating) share before deduction of royalties and without including any royalty interest of the Corporation. |
(2) |
Based on Sproule’s December 31, 2015 Consensus Price forecast. |
(3) |
Includes solution gas. |
(4) |
Oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil. |
(5) |
Columns may not add due to rounding. |
Reserve Values (1,2,3)
The estimated before tax net present value (“NPV”) of future net revenue associated with Ikkuma’s reserves effective December 31, 2015 and based on the Sproule Report and the Consensus Price forecast are summarized in the following table:
0% |
5% |
10% |
15% |
20% |
||
Reserves Category
|
(M$) |
(M$) |
(M$) |
(M$) |
(M$) |
|
Proved |
||||||
Developed Producing |
185,267 |
142,852 |
116,426 |
98,579 |
85.791 |
|
Developed Non-Producing |
16,467 |
12,734 |
10,110 |
8,231 |
6,847 |
|
Undeveloped |
41,452 |
28,225 |
19,554 |
13,698 |
9,619 |
|
Total Proved |
243,187 |
183,811 |
146,090 |
120,508 |
102,257 |
|
Probable |
127,122 |
80,272 |
56,315 |
42,326 |
33,370 |
|
Total proved plus probable |
370,309 |
264,083 |
202,406 |
162,834 |
135,627 |
|
Notes: |
||
(1) |
The estimated future net revenues are stated prior to provision for interest, debt service charges or general and administrative expenses and after deduction of royalties, operating costs, estimated well abandonment and reclamation costs and estimated future capital expenditures. |
|
(2) |
See the Corporation’s AIF, once filed, for the after-tax present values of future net revenue attributed to Ikkuma’s reserves. |
|
(3) |
Columns may not add due to rounding. |
Price Forecast (1)
Year |
Canadian Light Sweet Crude(1) 40° API ($C/Bbl) |
Western 20.5° API ($C/Bbl) |
Alberta AECO-C ($C/MMbtu) |
Edmonton Propane ($C/Bbl) |
Edmonton Butane ($C/Bbl) |
Edmonton Pentanes Plus ($C/Bbl) |
$US/$C Exchange |
2016 |
55.89 |
44.64 |
2.57 |
9.76 |
38.73 |
60.16 |
0.74 |
2017 |
66.47 |
54.52 |
3.14 |
15.88 |
46.91 |
70.95 |
0.77 |
2018 |
73.21 |
60.32 |
3.47 |
24.09 |
52.58 |
78.05 |
0.80 |
2019 |
81.35 |
67.42 |
3.80 |
30.49 |
59.42 |
86.58 |
0.82 |
2020 |
84.57 |
70.47 |
3.99 |
33.69 |
62.81 |
90.00 |
0.83 |
2021 |
87.88 |
73.50 |
4.13 |
34.95 |
65.25 |
93.46 |
0.84 |
2022 |
92.01 |
77.25 |
4.30 |
36.45 |
68.33 |
97.79 |
0.84 |
2023 |
96.24 |
80.95 |
4.48 |
38.06 |
71.46 |
102.23 |
0.84 |
2024 |
98.17 |
83.09 |
4.60 |
38.79 |
72.90 |
104.29 |
0.84 |
2025 |
99.94 |
84.56 |
4.70 |
39.50 |
74.22 |
106.16 |
0.84 |
2026 |
101.79 |
86.16 |
4.79 |
40.23 |
75.58 |
108.12 |
0.84 |
2027+ prices escalate at 1.5% thereafter |
Note: |
||
(1) |
This Consensus Price forecast is an average of three independent reserve evaluators’ forecasts at December 31, 2015 including Sproule, GLJ and McDaniels. |
Reserves Reconciliation (2)
TOTAL PROVED |
Light and |
Heavy Crude (Mbbl) |
Natural Gas (Mbbl) |
Associated and (Mmcf) |
Oil Equivalent (Mboe) |
December 31, 2014 |
8.2 |
57.9 |
639.8 |
104,747 |
18,163.7 |
Product type transfer |
0.9 |
(0.9) |
– |
– |
– |
Extensions & Improved Recovery |
– |
– |
– |
7,806 |
1,301 |
Infill Drilling |
– |
– |
– |
9,667 |
1,611.2 |
Technical Revisions |
0.3 |
11.3 |
(57.7) |
15,132 |
2,475.9 |
Acquisitions |
– |
– |
– |
– |
– |
Dispositions(1) |
(7.5) |
(57.0) |
(86.7) |
(2,093) |
(500) |
Economic factors |
(0.9) |
– |
– |
(2,961) |
(494.4) |
Production |
– |
(11.3) |
(49.3) |
(14,801) |
(2,527.5) |
December 31, 2015 |
1.0 |
0.0 |
446.1 |
117,498 |
20,030.1 |
TOTAL PROVED PLUS PROBABLE |
Light and |
Heavy Crude (Mbbl) |
Natural Gas (Mbbl) |
Associated and (Mmcf) |
Oil Equivalent (Mboe) |
December 31, 2014 |
56.2 |
123.0 |
749.6 |
149,537 |
25,851.6 |
Product type transfer |
1.2 |
(1.2) |
– |
– |
– |
Extensions & Improved Recovery |
– |
– |
– |
10,167 |
1,694.5 |
Infill Drilling |
– |
– |
– |
15,338 |
2,556.3 |
Technical Revisions |
– |
11.3 |
(70.8) |
8,394 |
1,339.5 |
Acquisitions |
– |
– |
– |
– |
– |
Dispositions(1) |
(55.0) |
(121.8) |
(111.9) |
(2,738) |
(745.0) |
Economic factors |
(0.9) |
– |
– |
(3,764) |
(628.2) |
Production |
– |
(11.3) |
(49.3) |
(14,801) |
(2,527.5) |
December 31, 2015 |
1.5 |
0.0 |
517.6 |
162,133 |
27,541.3 |
Notes: |
|
(1) |
Dispositions include the sale of Ikkuma’s non-core Deanne property and the sale of the legacy central Alberta properties. |
(2) |
Columns may not add due to rounding. |
Finding and Development Costs
PDP |
1P |
2P |
||
Expenditures (1)($000’s) |
||||
Exploration and Development Expenditures |
35,300 |
35,300 |
35,300 |
|
Acquisitions (Dispositions) |
(3,329) |
(3,329) |
(3,329) |
|
31,971 |
31,971 |
31,971 |
||
Change in future development capital (“FDC”)(1) ($000’s) |
– |
– |
– |
|
Exploration and Development |
5 |
8,520 |
754 |
|
Acquisitions (Dispositions) |
– |
– |
– |
|
5 |
8,520 |
754 |
||
Reserve additions with revisions and economic factors (mboe) |
||||
Exploration and Development |
2,584.1 |
4,893.7 |
4,962.1 |
|
Acquisitions (Dispositions) |
(500) |
(500) |
(745) |
|
2,084.1 |
4,393.9 |
4,217.2 |
||
Finding & Development Costs( “F&D”)(2) ($ per boe) |
||||
with revisions and economic factors |
13.66 |
8.95 |
7.27 |
|
Finding, Development & Acquisition Costs (“FD&A”)($ per boe) |
||||
with revisions and economic factors |
15.34 |
9.22 |
7.76 |
Notes: |
|
(1) |
The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development capital generally will not reflect total finding and development costs related to reserve additions for that year. |
(2) |
The calculation of F&D and FD&A costs incorporate the change in FDC required to bring proved undeveloped and developed reserves into production. In all cases, the F&D or DD&A number is calculated by dividing the identified capital expenditures by the applicable reserves additions after changes in FDC costs. |
Net Asset Value
Ikkuma’s net asset value per share at December 31, 2015 was $2.31 (P&NG reserves discounted at 10% BT) and $2.19 on a fully diluted basis, as set out in the following table:
NET ASSET VALUE PER SHARE |
|
10% NPV of 2P P&NG reserves, before tax ($000’s) |
$ 202,406 |
Undeveloped land (1) ($000’s) |
15,337 |
2015 YE Estimated Net Debt (Unaudited) ($000’s) |
(32,890) |
Net asset value ($000’s) |
$ 184,853 |
Undiluted common shares outstanding (000’s) |
80,159 |
Diluted common shares outstanding (000’s) |
84,336 |
Net asset value per share – undiluted |
$ 2.31 |
Net asset value per share -fully diluted |
$ 2.19 |
Note: |
|
(1) |
Estimated at $110/acre. |
About Ikkuma Resources Corp.
Ikkuma Resources Corp. is a diversified junior public oil and gas company listed on the TSX Venture Exchange 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.