CALGARY, April 25, 2018 /CNW/ – Ikkuma Resources Corp. (“Ikkuma” or the “Corporation”) (TSXV: IKM) is pleased to report its financial and operating results for the three months and year ended December 31, 2017. Financial and operational information is set out below and should be read in conjunction with Ikkuma’s December 31, 2017 audited annual financial statements and the related management’s discussion and analysis (“MD&A”). In addition, the Corporation today announces the filing of its Annual Information Form (“AIF”) for the year ended December 31, 2017 that contains the Corporation’s reserves and other oil and natural gas information, as required under National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities. The AIF, financial statements and MD&A are available for review at www.sedar.com and on the Corporation’s website at www.ikkumarescorp.com.
FINANCIAL AND OPERATING HIGHLIGHTS
- Successfully closed the acquisition of assets located in the Alberta Foothills and British Columbia Deep Basin (the “Foothills Acquisition”) on December 21, 2017 for cash consideration of $33.5 million.
- The Foothills Acquisition was transformational for Ikkuma as it more than tripled the Corporation’s production to a current average daily production in excess of 19,000 boe/d.
- The Foothills Acquisition further expanded Ikkuma’s proved plus probable reserves to 106.6 MMBOE and the existing crude oil development drilling inventory to more than 200 low-risk drilling locations.
- Completed the disposition of 51% of its trunk line and associated facilities in its existing northern Alberta Foothills properties (the “Infrastructure Disposition”) on October 23, 2017 for cash consideration of $20.1 million. The proceeds from the Infrastructure Disposition financed the majority of the cost of the Foothills Acquisition.
- Achieved average production for the fourth quarter of 2017 of 7,324 boe/d, an increase of 23% compared to the 5,967 boe/d reported in the fourth quarter of 2016. The increase was primarily due to production volumes related to the Foothills Acquisition.
- Capital expenditures for the year ended December 31, 2017 were $24.4 million.
- Proved and probable reserve additions of 81.4 MMBOE from the capital expenditure program and the Foothills Acquisition achieved a finding, development and acquisition cost of $1.50/boe and a recycle ratio of 3.3 times in 2017.
- Generated adjusted funds flow of $3.7 million for the year ended December 31, 2017, which included realized gains associated with the Corporation’s risk management program.
(Expressed in thousands of Canadian dollars except |
Three Months Ended December 31, |
Year Ended December 31, |
|||||||
2017 |
2016 |
2017 |
2016 |
||||||
OPERATIONS |
|||||||||
Average daily production |
|||||||||
Natural gas (mcf/d) |
42,760 |
34,734 |
37,121 |
37,186 |
|||||
Light oil (bbls/d) |
59 |
72 |
54 |
18 |
|||||
NGL’s (bbl/d) |
138 |
106 |
125 |
95 |
|||||
Total equivalent (boe/d) |
7,324 |
5,967 |
6,366 |
6,310 |
|||||
Average prices |
|||||||||
Natural gas ($/mcf) |
$ |
1.76 |
$ |
3.12 |
$ |
2.19 |
$ |
2.15 |
|
Light oil ($/bbl) |
57.96 |
56.30 |
57.41 |
56.30 |
|||||
NGL ($/bbl) |
38.57 |
34.96 |
34.83 |
26.37 |
|||||
Operating netback |
|||||||||
Revenue ($/boe) |
$ |
12.45 |
$ |
19.43 |
$ |
14.27 |
$ |
13.34 |
|
Realized gain (loss) on risk management contracts |
|||||||||
($/boe) |
3.33 |
(0.01) |
2.08 |
4.03 |
|||||
Royalties ($/boe) |
(0.42) |
(1.11) |
(0.35) |
(0.29) |
|||||
Operating expenses ($/boe) |
(11.22) |
(7.65) |
(9.36) |
(8.27) |
|||||
Transportation expenses ($/boe) |
(1.35) |
(2.06) |
(1.74) |
(1.85) |
|||||
Operating netback (1) ($/boe) |
$ |
2.79 |
$ |
8.60 |
$ |
4.90 |
$ |
6.96 |
|
FINANCIAL |
|||||||||
Petroleum and natural gas revenue (2) |
$ |
8,385 |
$ |
10,669 |
$ |
33,162 |
$ |
30,811 |
|
Cash (used in) provided by operating activities |
$ |
(4,826) |
$ |
3,665 |
$ |
1,617 |
$ |
9,105 |
|
Per share – basic and diluted |
$ |
(0.04) |
$ |
0.04 |
$ |
0.02 |
$ |
0.10 |
|
Funds flow from (used in) operations (1) |
$ |
(2,761) |
$ |
3,063 |
$ |
801 |
$ |
10,056 |
|
Per share – basic and diluted |
$ |
(0.03) |
$ |
0.03 |
$ |
0.01 |
$ |
0.11 |
|
Adjusted funds flow (1) |
$ |
(622) |
$ |
3,216 |
$ |
3,704 |
$ |
10,370 |
|
Per share – basic and diluted |
$ |
(0.01) |
$ |
0.03 |
$ |
0.04 |
$ |
0.12 |
|
Net loss and comprehensive loss |
$ |
(34,120) |
$ |
(8,971) |
$ |
(35,949) |
$ |
(17,937) |
|
Per share – basic and diluted |
$ |
(0.31) |
$ |
(0.10) |
$ |
(0.36) |
$ |
(0.20) |
|
Capital expenditures |
$ |
3,222 |
$ |
6,949 |
$ |
24,430 |
$ |
14,869 |
|
Property acquisitions |
$ |
33,541 |
$ |
– |
$ |
33,541 |
$ |
2,761 |
|
Property dispositions |
$ |
(20,082) |
$ |
– |
$ |
(20,082) |
$ |
– |
|
Net debt (1,3) |
$ |
57,955 |
$ |
32,465 |
$ |
57,955 |
$ |
32,465 |
|
Shares outstanding (‘000s) |
109,335 |
94,244 |
109,335 |
94,244 |
|||||
Weighted average shares outstanding |
|||||||||
Basic and diluted (‘000s) |
109,335 |
94,244 |
98,984 |
89,150 |
(1) |
Operating netback, funds flow from (used in) operations, adjusted funds and net debt are non-IFRS measures. See “Non- IFRS Measures”. |
(2) |
Before royalties. |
(3) |
Net debt includes bank debt under its Credit Facilities (as hereinafter defined), Term debt (as hereinafter defined) and working capital deficiency (surplus), excluding fair value of risk management contracts. |
LIQUIDITY
The Corporation strengthened its liquidity by completing a financing in May 2017 with Alberta Investment Management Corporation for a $45.0 million second lien senior secured term debt (“Term debt”), which bears interest at 7.25% and matures on March 31, 2022.
The Corporation completed a non-brokered private placement of 15,091,221 flow-through shares in September 2017 at a price of $0.82 per flow-through share, resulting in gross proceeds of $12.4 million.
For 2018, approximately 17% of the Corporation’s expected average daily natural gas production has been hedged at an average price of $2.55/GJ.
Pursuant to the Corporation’s credit agreement, Ikkuma anticipates a borrowing base re-determination by May 31, 2018.
GUIDANCE
Guidance for 2018 average daily production is expected to be in the range of 17,500 – 18,500 boe/d considering the impact of production declines throughout the year. Production guidance excludes potential non-core asset divestments. Ikkuma’s 2018 capital program will focus on fulfilling the Corporation’s commitment associated with the 2017 flow-through share issuance. The remainder of the capital expenditure program will be incurred on necessary maintenance, equipping, tie-in and low-cost/high-return optimization initiatives.
ABOUT IKKUMA
Ikkuma Resources Corp. is a diversified growth-oriented 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 Company is focused in the Foothills Region of Western Canada with a team that has extensive experience in the area with the unique skills at successfully exploiting a complex and potentially prolific play type. Corporate information can be found at: www.ikkumarescorp.com.