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 $3.7
million for the year ended December
31, 2017, which included realized gains associated with the
Corporation's risk management program.
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|
|
(Expressed in
thousands of Canadian dollars except
per boe and share amounts)
|
Three Months
Ended
December
31,
|
Year
Ended
December
31,
|
|
2017
|
2016
|
2017
|
2016
|
OPERATIONS
|
|
|
|
|
|
|
|
|
Average daily
production
|
|
|
|
|
|
|
|
|
Natural gas
(mcf/d)
|
|
42,760
|
|
34,734
|
|
37,121
|
|
37,186
|
Light oil
(bbls/d)
|
|
59
|
|
72
|
|
54
|
|
18
|
NGL's
(bbl/d)
|
|
138
|
|
106
|
|
125
|
|
95
|
Total equivalent
(boe/d)
|
|
7,324
|
|
5,967
|
|
6,366
|
|
6,310
|
Average
prices
|
|
|
|
|
|
|
|
|
Natural gas
($/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
|
|
|
|
|
|
|
|
|
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($/boe)
|
|
3.33
|
|
(0.01)
|
|
2.08
|
|
4.03
|
Royalties
($/boe)
|
|
(0.42)
|
|
(1.11)
|
|
(0.35)
|
|
(0.29)
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Operating expenses
($/boe)
|
|
(11.22)
|
|
(7.65)
|
|
(9.36)
|
|
(8.27)
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Transportation
expenses ($/boe)
|
|
(1.35)
|
|
(2.06)
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|
(1.74)
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|
(1.85)
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Operating netback
(1) ($/boe)
|
$
|
2.79
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$
|
8.60
|
$
|
4.90
|
$
|
6.96
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FINANCIAL
|
|
|
|
|
|
|
|
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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.
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 and Information" 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, potential non-core asset divestments, fulfilling
the Corporation's commitment associated with the 2017 flow-through
share issuance, the anticipation of a borrowing base
re-determination by May 31, 2018 and
the expected uses for the remainder of the 2018 capital
expenditures program. 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 net 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. Net debt is the total of cash and cash
equivalents plus accounts receivable, plus prepaids and deposits,
less accounts payable and accrued liabilities and bank debt.
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.