Ikkuma plans $65-million in capital spending

2014-10-06 06:34 ET - News Release

Mr. Tim de Freitas reports

IKKUMA RESOURCES CORP. ANNOUNCES A $65 MILLION CAPITAL EXPENDITURE BUDGET FOR Q4 2014 & 2015

Ikkuma Resources Corp.'s fourth-quarter 2014 and 2015 capital expenditure budget, in the amount of $65-million, has been approved by the corporation's board of directors. Ikkuma has built a drilling schedule consisting of approximately 25 (19 net) drill locations, based on bypass pay, which represents more than two years of drilling inventory.

Most of Ikkuma's operations are expected to be executed during 2015. The capital expenditure budget has been designed to exploit conventional bypass pay opportunities in the Canadian Foothills. Based on the nature of these conventional pools, Ikkuma is anticipating 2015 as a high-growth year and expects exit rate production to increase by approximately 34 per cent to approximately 8,000 barrels of oil equivalent per day (95 per cent natural gas).

2014-2015 guidance highlights:

• Anticipated 2015 year-end exit production of approximately 8,000 barrels of oil equivalent per day with liquids weighting increasing to approximately 5 per cent from an anticipated 2014 year-end exit production rate of 5,900 barrels of oil equivalent per day (100 per cent natural gas). (These production volumes do not include any production additions from the corporation's proposed asset acquisition previously announced on Aug. 20, 2014, since that acquisition has not yet closed.)
• Corporate decline is maintained at 20 per cent for 2014 year-end.
• The fourth-quarter 2014/2015 capital budget has been approved for $65-million and is planned to be financed through a combination of cash flow, available credit facilities and the corporation's current cash on hand.
• The Ikkuma technical team has built and scheduled a two-year drilling program, based on a single, continuously operating rig; Ikkuma anticipates that the drilling program will commence during late fourth quarter 2014 or early first quarter 2015.
• Approximately 40 per cent of the net wells will target oil-prone formations.
• As previously disclosed in the company's press release dated Aug. 21, 2014, the optimization and recompletion program is expected to commence in October, 2014. This program is planned to include the recompletion and, potentially, the fracture stimulation of known bypass zones, reservoir pressure measurement and production optimization on some facilities and/or well bores. Some of these data are expected to be used to further derisk the 2015 capital program.

  GUIDANCE FOR 2014-2015 (15 MONTHS) Production 2014 exit production rate(1) 5,900 boe/d (100% natural gas) 2015 exit production rate 8,000 boe/d (95% natural gas) 2015 average production rate 6,500-7,500 boe/d (96% natural gas) Financial Operating cash flow(2) $36-million ($11.67/boe) G&A and interest $6-million ($2.00/boe) 2015 year-end net debt $9-million Available credit facility(3) $46-million Capital expenditures Drilling, completion and equipping $45-million Land and seismic $13-million Recompletion and optimization $7-million ----------- Total $65-million Notes: (1) Assuming no unscheduled facilities and pipeline restrictions (2) Pricing assumptions: $98 per barrel Edmonton light; AECO price: $3.96 per thousand cubic feet (3) Estimated as of Dec. 31, 2015 

Discussion

Production volumes and associated cash flow which may result from Ikkuma's proposed asset acquisition announced on Aug. 20, 2014, have not been included in this guidance. Subject to the closing of that acquisition, including compliance with all rights of first refusals relating thereto, the corporation will revise its guidance in order to reflect additional volumes, higher cash flow and lower declines resulting therefrom.

Full article on Stockwatch.

PS.  Interesting prospects and cheap according to BNN marketcall top pick Hodgkins.

Cheers,
Dave.