Ikkuma Resources announces significant new Cardium Oil Pool Discovery

Ikkuma Resources has reported an operations update and its financial and operating results for the three months ended 30 September 2016.

OPERATIONS UPDATE

In October, the Corporation completed the stimulation of the 670 m horizontal Cardium oil well drilled in the first quarter of this year. The stimulation was a 16 stage slick-water fracture operation. After 28 days and under mechanical pump production operations, daily fluid rates have varied between 158 and 334 bbl/d. The proportion of frac water has decreased steadily and is currently approximately 40% of the total pumped fluid. As we move towards full recovery of the frac fluid, we expect the well will pump at about 150 – 250 boe/d, which includes about 40 – 45 boe/d gas. The balance of the production consists of approximately 500 API oil, attracting a premium price to Edmonton par. Ikkuma completed drilling the second (offset) horizontal Cardium oil well by mid-October. The lateral length of this well is 1.4 times longer than that of the first horizontal well drilled in the pool, and the Corporation anticipates executing a 25 stage slick-water frac before year end.  The second well is in a more favourable structural position to encounter a higher number of natural fractures, which typically translates into higher initial production rates. Unfortunately, stimulation has been delayed due to unseasonable weather in the early fall and, more recently, to a backlog of fracture stimulation operations in the region.

This initial well result is the first in a light oil play which may include more than 150 well locations, net to Ikkuma. The current rates are comparable to those in the deep basin, despite having a horizontal section which is less than half of most deep basin Cardium wells. Once the second well has been stimulated, further delineation of the program will occur through early 2017, followed by a continuous pad-based operation, pending budgetary considerations and new well results. As the Corporation moves forward with this oil play, it will continue to make modifications to the drilling/completions “recipe” with the objective of improving well results.

Ikkuma’s gas recompletion operations have also been delayed by weather. The Corporation plans to execute one gas recompletion prior to year-end. In aggregate Ikkuma’s 2016 capital program is still forecasted to aggregate $15 – $17 million.

THIRD QUARTER 2016

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 September 30, 2016.

Highlights

Produced an average of 5,866 boe/d for the quarter with approximately 1,000 boe/d of shut-in gas production due to economics and third party curtailments.

Achieved funds flow from operations of $2.6 million ($0.03/share) for the third quarter and $7.2 million ($0.08/share) for the nine months ended September 30, 2016.

Resumed Foothills drilling and completion operations during the quarter spending $4.1 million; however, due to wet weather delays the stimulation of the Cardium horizontal oil well drilled in the first quarter and the second Cardium horizontal oil drill were in progress at quarter end rather than completed, as planned.

Achieved top quartile per unit G&A costs of $1.67/boe for the third quarter and $1.73/boe for the nine months ended September 30, 2016.