Ironhorse Announces Q2 2017 Financial and Operating Results

CALGARY, Aug. 24, 2017 /CNW/ - Ironhorse Oil & Gas Inc. ("Ironhorse" or the "Company") (TSX-V: IOG) announces its financial and operating results for the three and six months ended June 30, 2017.

Financial and Operation Summary

The Company's reported production remained flat at 165 boe/d in the second quarter of 2017 compared to 164 boe/d produced in the first quarter of 2017.  The current quarter production was impacted by repair and maintenance work, third party outages downstream of the 13-2 Sinopec battery and reduced production rates for the Pembina 14-5 well due to an increase in water cut levels which occurred earlier than originally projected and is awaiting installation of an electric submersible pump scheduled for late Q3 2017.

Operating netbacks for Q2 2017 decreased 4.8% to $256,000 from $271,000 reported for Q1 2017 and corresponding with flat production and a 5.1% decrease in the Company's realized oil price received compared to the prior quarter. 

The Company realized a net loss of $1.5 million for the second quarter primarily resulting from a $1.9 million impairment charge at Pembina due to a reduction in the forward commodity prices and production estimates as compared to the 2016 year end reserve report forecast, offset by $0.6 million non-cash deferred tax recovery.

Quarterly funds from operations remained positive for the fourth consecutive quarter despite descending 45% to $99,000 in Q2 2017 compared to $180,000 for Q1 2017 due to 70% higher general and administrative costs incurred in connection with a  potential corporate transaction.

The Pembina 14-5 well was shut-in intermittently during the latter half of Q2 due to water cut increases that caused the well to load up and required reservoir pressure to build up in order to continue to flow against the gathering system pressure.  The Pembina 9-5 well has continued to produce with limited down time and low water cut during the quarter.

Updated Production Guidance:

Net production for Q3 2017 is estimated to be 100 to 125 boe/d due to continued well loading at Pembina 14-5. Q4 2017 is estimated at 160 to 180 boe/d due to the pump installation at the 14-5 well positively impacting the entire quarter.

On August 14, 2017, Ironhorse entered into a non-binding Letter of Intent with Pond Technologies Inc. ("Pond") pursuant to which Ironhorse and Pond propose to complete a business combination by way of take-over bid (the "Proposed Transaction"). The Proposed Transaction, as currently contemplated, will constitute a reverse-takeover and change of business of Ironhorse pursuant to the policies of the TSX Venture Exchange (the "TSXV") and is subject to the acceptance of the TSXV and the approval of the shareholders of Ironhorse.  At this time, both Ironhorse and Pond are conducting due diligence with respect to finalizing a definitive agreement.

The Company continues to be well positioned financially with a positive working capital position of $3.1 million at June 30, 2017.

Additional Information

Ironhorse's complete results for the three and six months ended June 30, 2017, including unaudited condensed financial statements and the management's discussion and analysis are available on SEDAR or the Company's web site at www.ihorse.ca

About Ironhorse:

Ironhorse Oil & Gas Inc. is a Calgary-based junior oil and natural gas production company trading on the TSX Venture Exchange under the symbol "IOG."

Forward-looking statements:

Statements throughout this release that are not historical facts may be considered to be "forward looking statements." These forward looking statements sometimes include words to the effect that management believes or expects a stated condition or result. All estimates and statements that describe the Company's objectives, goals, or future plans, including management's assessment of future plans and operations, drilling plans and timing thereof, expected production rates and additions and the expected levels of activities may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, volatility of commodity prices, imprecision of reserve estimates, environmental risks, competition from other producers, incorrect assessment of the value of acquisitions, failure to complete and/or realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources and changes in the regulatory and taxation environment. As a consequence, the Company's actual results may differ materially from those expressed in, or implied by, the forward-looking statements. Forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: the ability of the Company to obtain equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manor; pipeline restrictions; and field production rates and decline rates. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included elsewhere herein and in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Furthermore, the forward-looking statements contained in this release are made as at the date of this release and Ironhorse assumes no obligation to update or revise any forward-looking statements to reflect new events or circumstances, except as required by applicable laws.

Boe Conversion – Certain natural gas volumes have been converted to barrels of oil equivalent ("boe") whereby six thousand cubic feet (mcf) of natural gas is equal to one barrel (bbl) of oil. This conversion ratio is based on an energy equivalency conversion applicable at the burner tip and does not represent a value equivalency at the wellhead.

"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 Ironhorse Oil & Gas Inc.

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