CALGARY, Nov. 24, 2016 /CNW/ – Ikkuma Resources Corp. (“Ikkuma” or the “Corporation”) (TSXV: IKM) is pleased to report an operations update and its financial and operating results for the three months ended September 30, 2016.
OPERATIONS UPDATE
In October, the Corporation completed the stimulation of the 670 m horizontal Cardium oil well drilled in the first quarter of this year. The stimulation was a 16 stage slick-water fracture operation. After 28 days and under mechanical pump production operations, daily fluid rates have varied between 158 and 334 bbl/d. The proportion of frac water has decreased steadily and is currently approximately 40% of the total pumped fluid. As we move towards full recovery of the frac fluid, we expect the well will pump at about 150 – 250 boe/d, which includes about 40 – 45 boe/d gas. The balance of the production consists of approximately 500 API oil, attracting a premium price to Edmonton par. Ikkuma completed drilling the second (offset) horizontal Cardium oil well by mid-October. The lateral length of this well is 1.4 times longer than that of the first horizontal well drilled in the pool, and the Corporation anticipates executing a 25 stage slick-water frac before year end. The second well is in a more favourable structural position to encounter a higher number of natural fractures, which typically translates into higher initial production rates. Unfortunately, stimulation has been delayed due to unseasonable weather in the early fall and, more recently, to a backlog of fracture stimulation operations in the region.
This initial well result is the first in a light oil play which may include more than 150 well locations, net to Ikkuma. The current rates are comparable to those in the deep basin, despite having a horizontal section which is less than half of most deep basin Cardium wells. Once the second well has been stimulated, further delineation of the program will occur through early 2017, followed by a continuous pad-based operation, pending budgetary considerations and new well results. As the Corporation moves forward with this oil play, it will continue to make modifications to the drilling/completions “recipe” with the objective of improving well results.
Ikkuma’s gas recompletion operations have also been delayed by weather. The Corporation plans to execute one gas recompletion prior to year-end. In aggregate Ikkuma’s 2016 capital program is still forecasted to aggregate $15 – $17 million.
THIRD QUARTER 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 September 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.
Highlights
- Produced an average of 5,866 boe/d for the quarter with approximately 1,000 boe/d of shut-in gas production due to economics and third party curtailments.
- Achieved funds flow from operations of $2.6 million ($0.03/share) for the third quarter and $7.2 million ($0.08/share) for the nine months ended September 30, 2016.
- Resumed Foothills drilling and completion operations during the quarter spending $4.1 million; however, due to wet weather delays the stimulation of the Cardium horizontal oil well drilled in the first quarter and the second Cardium horizontal oil drill were in progress at quarter end rather than completed, as planned.
- Achieved top quartile per unit G&A costs of $1.67/boe for the third quarter and $1.73/boe for the nine months ended September 30, 2016.
(Expressed in thousands of Canadian dollars except per boe and Share amounts; unaudited) |
Three months ended September 30, |
Nine months ended September 30, |
||||||
2016 |
2015 |
2016 |
2015 |
|||||
OPERATIONS |
||||||||
Average daily production |
||||||||
Natural gas (mcf/d) |
34,487 |
38,248 |
38,009 |
39,797 |
||||
Light Oil (bbls/d) |
– |
32 |
– |
39 |
||||
NGL’s (bbl/d) |
118 |
135 |
91 |
136 |
||||
Total equivalent (boe/d) |
5,866 |
6,541 |
6,426 |
6,808 |
||||
Average prices and operating netback |
||||||||
Natural gas ($/mcf) |
$ |
2.34 |
$ |
2.92 |
$ |
1.85 |
$ |
2.77 |
Light Oil ($/bbl) |
– |
40.13 |
– |
41.92 |
||||
NGL ($/bbl) |
21.81 |
20.68 |
23.01 |
21.03 |
||||
Revenue ($/boe) |
14.21 |
18.37 |
11.44 |
17.54 |
||||
Realized gain on commodity contracts ($/boe) |
3.39 |
0.98 |
5.29 |
1.11 |
||||
Royalties ($/boe) |
0.41 |
(1.48) |
(0.04) |
(1.62) |
||||
Operating expenses ($/boe) |
(9.01) |
(9.39) |
(8.46) |
(8.87) |
||||
Transportation costs ($/boe) |
(1.72) |
(1.70) |
(1.78) |
(1.59) |
||||
Operating netback (1) ($/boe) |
$ |
7.28 |
$ |
6.78 |
$ |
6.45 |
$ |
6.57 |
(Expressed in thousands of Canadian dollars except per boe and Share amounts; unaudited) |
Three months ended September 30, |
Nine months ended September 30, |
||||||
2016 |
2015 |
2016 |
2015 |
|||||
FINANCIAL |
||||||||
Oil and natural gas sales |
$ |
7,670 |
$ |
11,054 |
$ |
20,142 |
$ |
32,595 |
Funds flow from operations (1) |
$ |
2,563 |
$ |
2,696 |
$ |
7,154 |
$ |
8,069 |
Per share – basic and diluted |
$ |
0.03 |
$ |
0.03 |
$ |
0.08 |
$ |
0.10 |
Loss |
$ |
1,952 |
$ |
3,662 |
$ |
8,966 |
$ |
12,185 |
Per share – basic and diluted |
$ |
0.02 |
$ |
0.05 |
$ |
0.10 |
$ |
0.15 |
Capital expenditures |
$ |
4,111 |
$ |
10,434 |
$ |
7,920 |
$ |
33,027 |
Property acquisitions (dispositions) |
$ |
27 |
$ |
(2,968) |
$ |
2,761 |
$ |
(2,943) |
Net debt (1) |
$ |
27,403 |
$ |
32,073 |
$ |
27,403 |
$ |
32,073 |
Bank loan |
$ |
21,965 |
$ |
26,603 |
$ |
21,965 |
$ |
26,603 |
Shares outstanding (000) (2) |
94,244 |
80,159 |
94,244 |
80,159 |
||||
Weighted average shares outstanding |
||||||||
Basic and diluted (000) (2) |
94,244 |
80,159 |
87,407 |
80,159 |
(1)Funds flow from operations, operating netback and net debt are non-IFRS measures. See “Non- IFRS Measures”. |
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.