CALGARY, Aug. 24, 2017 /CNW/ - Ikkuma Resources
Corp. ("Ikkuma" or the "Corporation") (TSXV: IKM) is pleased
to report its financial and operating results for the three months
ended June 30, 2017. 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 June
30, 2017. 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.
SECOND QUARTER HIGHLIGHTS
- Production for the quarter averaged 5,861 BOE/d reflecting the
impact of planned facility outages. Planned and unplanned pipeline
and facility outages are expected to continue in the third quarter
resulting in a similar average production for the third quarter.
Production capacity remains at 6,500 to 7,500 BOE/d.
- Funds from operations totaled $2.1
million in the quarter and $4.9
million for the six months ended June
30, 2017, respectively, comparable to the same periods of
the prior year.
- Improved product pricing year over year combined with lower
royalties contributed to a 5% and 184% increase in operating
netback/BOE for the second quarter and six months ended
June 30, 2017, respectively.
OPERATIONS UPDATE
Completion of the two oil wells drilled in the first quarter
began in mid-July. Production operations have commenced recently on
these wells, and will continue until rates have stabilized, which
is likely to occur over the next one to two months.
(Expressed in
thousands of Canadian dollars except
per BOE and Share
amounts; unaudited)
|
Three months
ended
June
30,
|
Six months
ended
June
30,
|
|
2017
|
2016
|
2017
|
2016
|
OPERATIONS
|
|
|
|
|
|
|
|
|
Average daily
production
|
|
|
|
|
|
|
|
|
Natural gas
(mcf/d)
|
|
34,259
|
|
35,361
|
|
36,243
|
|
39,790
|
Light Oil
(bbls/d)
|
|
27
|
|
-
|
|
53
|
|
-
|
NGL's
(bbl/d)
|
|
125
|
|
27
|
|
121
|
|
77
|
Total equivalent
(BOE/d)
|
|
5,861
|
|
5,921
|
|
6,214
|
|
6,709
|
Average prices and
operating netback
|
|
|
|
|
|
|
|
|
Natural gas
($/mcf)
|
$
|
2.82
|
$
|
1.37
|
$
|
2.77
|
$
|
1.63
|
Light Oil
($/bbl)
|
|
56.26
|
|
-
|
|
59.17
|
|
-
|
NGL
($/bbl)
|
|
30.21
|
|
44.12
|
|
35.09
|
|
23.95
|
Revenue
($/BOE)
|
|
17.55
|
|
8.49
|
|
17.48
|
|
10.21
|
Realized gain on
commodity contracts ($/BOE)
|
|
0.36
|
|
8.19
|
|
0.24
|
|
6.12
|
Royalties
($/BOE)
|
|
(0.01)
|
|
0.73
|
|
(0.30)
|
|
(0.24)
|
Operating expenses
($/BOE)
|
|
(8.36)
|
|
(8.49)
|
|
(8.22)
|
|
(8.22)
|
Transportation costs
($/BOE)
|
|
(2.03)
|
|
(1.77)
|
|
(2.01)
|
|
(1.80)
|
Operating netback
(1) ($/BOE)
|
$
|
7.51
|
$
|
7.15
|
$
|
7.19
|
$
|
6.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL
|
|
|
|
|
|
|
|
|
Oil and natural gas
sales
|
$
|
9,362
|
$
|
4,576
|
$
|
19,657
|
$
|
12,472
|
Funds flow from
operations (1)
|
$
|
2,064
|
$
|
2,397
|
$
|
4,892
|
$
|
4,591
|
|
Per share – basic and
diluted
|
$
|
0.02
|
$
|
0.03
|
$
|
0.05
|
$
|
0.05
|
Income
(loss)
|
$
|
(898)
|
$
|
(9,441)
|
$
|
1,566
|
$
|
(7,014)
|
|
Per share – basic and
diluted
|
$
|
(0.01)
|
$
|
(0.11)
|
$
|
0.02
|
$
|
(0.08)
|
Capital
expenditures
|
$
|
2,388
|
$
|
694
|
$
|
11,157
|
$
|
3,809
|
Property
acquisitions
|
$
|
-
|
$
|
2,713
|
$
|
-
|
$
|
2,734
|
Adjusted debt
(1)
|
$
|
39,511
|
$
|
25,819
|
$
|
39,511
|
$
|
25,819
|
Shares outstanding
(000)
|
|
94,244
|
|
94,244
|
|
94,244
|
|
94,244
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic and diluted
(000)
|
|
94,244
|
|
87,743
|
|
94,244
|
|
83,951
|
(1)Funds flow from operations,
operating netback and adjusted debt are non-IFRS measures. See
"Non- IFRS
Measures".
|
SUBSEQUENT EVENTS
Subsequent to quarter end, Ikkuma announced a transformational
$34 million Foothills acquisition, a
$20 million infrastructure sale and a
$10 million flow-through equity
financing. These transactions, when completed, are estimated
to triple Ikkuma's production to 20,800 BOE/d, triple annualized
cash flow per share to $0.22/share
and triple Ikkuma's drilling and recompletion inventory.
Please see Ikkuma's press release of August
15, 2017 for a more detailed description of these
transactions. The following summarizes each of the
transactions:
Acquisition
On August 15, 2017, Ikkuma entered
into a purchase and sale agreement to acquire (the "Acquisition")
assets located in the Alberta Foothills and British Columbia Deep
Basin (the "Assets"), effective as of July
1, 2017, for cash consideration of $34 million subject to customary adjustments. The
Acquisition is subject to standard industry closing conditions,
approval by the TSX Venture Exchange ("TSXV") and the concurrent
sale of certain midstream assets by the vendor to a third party
purchaser. The Acquisition is expected to close on or about
November 1, 2017.
Infrastructure Disposition
The Corporation has entered into a separate purchase and sale
agreement to sell 51% of its trunk line and associated facilities
(the "Infrastructure Disposition") in its existing northern Alberta
Foothills properties to an undisclosed buyer, for a total cash
consideration of $20 million. The
Infrastructure Disposition has an effective date of September 1, 2017 and is expected to close
September 15, 2017, but in any event,
prior to the closing of the Acquisition.
Equity Issue
The Corporation announced a non-brokered private placement of
12,195,122 flow-through shares at a price of $0.82 per/share for gross proceeds of
$10 million (the "Offering").
The Offering will consist of common shares issued on a
"flow-through" basis in respect of Canadian exploration expenses
under the Income Tax Act (Canada) (the "Flow-Through Shares"). The gross
proceeds from the Offering will be used by Ikkuma to incur eligible
Canadian exploration expenses ("Qualifying Expenditures") prior to
December 31, 2018. Ikkuma will
renounce the Qualifying Expenditures to subscribers of the
Flow-Through Shares for the fiscal year ended December 31, 2017.
The completion of the Offering is subject to a number of
conditions, including, without limitation, receipt of all
regulatory approvals, including approval of the TSXV. Closing
of the Offering is expected to occur on or about September 1, 2017. The Flow-through Shares
issued pursuant to the Offering will be subject to a statutory hold
period of four months plus one day from the closing of the
Offering, in accordance with applicable securities legislation.
INCREASE TO EQUITY ISSUE
The Corporation is also pleased to announce that on August 23, 2017 it determined to increase the
Offering, whereby the Corporation will now issue 15,400,000
Flow-Through Shares at a price of $0.82 per/share for gross proceeds of
approximately $12.5 million (the
"Increased Offering"). The gross proceeds from the Increased
Offering will be used by Ikkuma to incur eligible Canadian
exploration expenses ("Qualifying Expenditures") prior to
December 31, 2018. Ikkuma will
renounce the Qualifying Expenditures to subscribers of the
Flow-Through Shares for the fiscal year ended December 31, 2017. All other terms and conditions
of the equity financing remain the same as previously
announced.
The completion of the Increased Offering is subject to a number
of conditions, including, without limitation, receipt of all
regulatory approvals, including approval of the TSX Venture
Exchange. Closing of the Increased Offering is expected to
occur on or about September 1,
2017. The Flow-Through Shares issued pursuant to the Increased
Offering will be subject to a statutory hold period of four months
plus one day from the closing of the Increased Offering, in
accordance with applicable securities legislation.
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.
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 including, without limitation, those listed under
"Risk Factors" and "Forward-looking Statements" in Ikkuma's Annual
Information Form and in its other filings available on SEDAR at
www.sedar.com. 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. Forward-looking statements and
information in this press release includes, but is not limited to,
the completion of the Acquisition and the timing thereof; the
completion of the Infrastructure Disposition and the timing
thereof; the completion of the Offering, including the Increased
Offering and the timing thereof; the use of proceeds of the
Increased Offering; the funding of the purchase price of the
Assets; the anticipated benefits to be obtained as a result of the
Acquisition; the performance characteristics of the Assets and the
anticipated potential of the Assets; and the impact of the
Acquisition on the Corporation's production, reserves, inventory
and financial condition. 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 risks. 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.
Non-IFRS Measures
This press release provides certain financial measures that
do not have a standardized meaning prescribed by IFRS. These
non-IFRS financial measures may not be comparable to similar
measures presented by other issuers. Funds flow from operations,
operating netback and adjusted debt are not recognized measures
under IFRS. Management believes that in addition to net income
(loss), funds flow from operations, operating netback and net debt
are useful supplemental measures that demonstrate the Corporation's
ability to generate the cash necessary to repay debt or fund future
capital investment. Investors are cautioned, however, that these
measures should not be construed as an alternative to net income
(loss), determined in accordance with IFRS, as an indication of
Ikkuma's performance. Funds flow from operations is calculated by
adjusting net income (loss) for depletion and depreciation,
exploration and evaluation expense, impairment, gain (loss) on sale
of petroleum, natural gas and equipment, share-based payments,
unrealized gain (loss) on financial instruments and accretion.
Operating netback equals the total of petroleum and natural gas
sales, realized gains or losses on commodity contracts, less
royalties, transportation and operating expenses Adjusted debt is
the aggregate of the principal amount of the Term Loan, drawn
amounts on credit facilities, and outstanding letters of credit
with the bank less unrestricted cash. Reconciliations of operating
netback and adjusted debt to the most directly comparable measures
specified under IFRS are contained in the Corporation's management
discussion and analysis, copies of which are available on
SEDAR.
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). BOE 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.