Ikkuma Resources Announces Additional Light Oil Discovery and 2016 Year-end Reserves

CALGARY, March 16, 2017 /CNW/ - Ikkuma Resources Corp. ("Ikkuma" or the "Corporation") (TSXV: IKM) is pleased to announce its 2016 year-end reserves.

Operations Update

In Q1 2017, the Corporation completed drilling two additional Cardium horizontal wells in the northern part of the Narraway light oil pool.  The second well was drilled for $2 million, which represents a cost reduction of approximately 30% from the first three drills, primarily due to a continuous two well drilling program.  Further drilling cost reductions are anticipated in future operations.

Both wells intersected oil-charged Cardium sandstone with 6 – 12 % porosity.  The second exploratory well intersected a previously undiscovered oil-bearing Cardium thrust sheet, confirming a third oil pool discovery in Ikkuma's 49 gross interest sections (43.6 sections net) of Cardium reservoir.  Fracture stimulation is expected to commence in late Q2 or early Q3 2017, pending weather and equipment availability.  The Corporation's high confidence in regional oil charge and pool size has improved, based on the latest well result.

The Corporation's second Cardium discovery well, tested late in Q4 2016, has had limited run time due to frack sand production.  It produced initially under flow-restricted conditions at 250 - 350 boe/d (10 - 30% frack water, 50 – 60 boe/d of associated gas).  Recent sand cleanout operations on this well were successful and the well was placed on start up over the last week.

As part of the Corporation's ongoing winter operations, a single vertical well in a new oil pool outside the Narraway area was recompleted in order to confirm the presence of oil.  A brief test on the new thrust-repeated Cardium pool confirmed the presence of 50⁰ – 52⁰ API oil and associated gas.  Ikkuma anticipates spudding at least one exploration horizontal well in this new light pool within the next 12 months, pending further technical work.

As at January 1, 2016, the Corporation had 23,520 gross (19,868 net) acres in the Cardium oil play (85% WI).  As of March 1, 2017 Ikkuma has grown its Cardium land position by 43% to 31,840 gross (28,384 net) acres and increased its WI to 89%.

2016 Reserves

The Corporation spent approximately $14 million on exploration and development expenditures of which over 80% was directed towards the Cardium oil play.  During Q4 2016, Ikkuma drilled, completed, and put on production two Cardium oil wells.  Limited test or production data on these wells has resulted in relatively conservative reserve bookings, which the Corporation believes can be increased as more production data becomes available.

During 2016, Ikkuma also completed an acquisition of certain natural gas assets located in the Foothills of Alberta for net consideration of $2.7 million.  1.1 Mboe of proven reserves and 1.4 Mboe of proven plus probable reserves were assigned to this acquisition.  The Corporation also received the option to farmin on nine sections of Cardium mineral rights along with this acquisition.

The following are the highlights of Ikkuma's 2016 reserve report:

• Ikkuma achieved Cardium oil bookings in the reserve report of: 124 Mbbl PDP; 263.7 Mbbl proved; and 796.2 Mbbl proved plus probable despite the play being only recently put on production.
• Ikkuma had only a 5% reduction in PDP reserves to 13.6 MMboe and flat 1P and 2P reserves at 19.9 MMboe and 27.5 MMboe, respectively, reflecting a core natural gas asset base with low decline.
• Cost of the acquisition during the year was $2.51/boe for proved reserves and $1.94/boe for proved plus probable reserves.
• Total proved plus probable reserves value was 6% lower at $190 million (discounted at 10%) as compared to the $202 million reported last year, despite the 11% reduction in forecasted natural gas price decks.
• Ikkuma's 2P net asset value at December 31, 2016 is estimated at $1.91/share, 133% above the last 30 day average trading price.

Reserves

The detailed reserves data set forth below are based on an independent reserves assessment and evaluation prepared by Sproule Associated Limited ("Sproule") with an effective date of December 31, 2016, the "Sproule Report".  The following presentation summarizes the Corporation's crude oil, natural gas liquids and natural gas reserves and the net present values before income tax of future net revenue for the Corporation's reserves using forecast prices and costs as set out in the Sproule Report.  The Sproule Report has been prepared in accordance with definitions, standards, and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities ("NI-51-101").  The reserves evaluation was based on the consensus forecast escalated pricing and foreign exchange rates at December 31, 2016 ("Consensus Price") as outlined in the table herein entitled "Price Forecast".  This Consensus Price forecast is the average of the escalated price forecasts of three independent reserve evaluators, namely Sproule, GLJ Petroleum Consultants Ltd. ("GLJ") and McDaniel & Associates Consultants Ltd. ("McDaniel").

All evaluations and summaries of future net revenue are stated prior to provision for interest, debt service charges or general and administrative expenses and after deduction of royalties, operating costs, estimated well abandonment and reclamation costs and estimated future capital expenditures.  It should not be assumed that the estimates of future net revenues presented in the tables below represent the fair market value of reserves.  There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material.  The recovery and reserve estimates of Ikkuma's crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered.  Actual crude oil, natural gas and natural gas liquids reserves may be greater or less than the estimates provided herein.  Reserves included herein are stated on a company gross basis (working interest before deduction of royalties without including any royalty interests) unless noted otherwise.  In addition to the detailed information disclosed in this press release, more detailed information will be included in the Corporation's Annual Information Form ("AIF") which will be filed on the Corporation's profile at www.sedar.com on or before April 30, 2017.

See "Forward Looking Information and Statements and Cautionary Statements" for a statement of principal assumptions and risks that may apply.

The preparation and audit of Ikkuma's 2016 annual financial statements is not yet complete, and accordingly, all financial amounts referred to in this press release are unaudited.  Readers are advised that these financial estimates may be subject to change.

Corporate Reserves ^(1,2,4)

Reserve Values ^(1,2,3)

The estimated before tax net present value ("NPV") of future net revenue associated with Ikkuma's reserves effective December 31, 2016 and based on the Sproule Report and the Consensus Price forecast are summarized in the following table:

Price Forecast ⁽¹⁾

Reserves Reconciliation ⁽¹⁾

Finding and Development Costs

Net Asset Value

Ikkuma's net asset value per share at December 31, 2016 was $1.91 (P&NG reserves discounted at 10% BT) and $1.83 on a fully diluted basis, as set out in the following table:

About Ikkuma Resources Corp.

Ikkuma Resources Corp. is a diversified junior 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 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.  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.  In particular the press release contains forward-looking statements and information relating to the anticipated drilling cost reductions in future operations, the expected commencement in late Q2 or early Q3 2017 of fracture stimulation operations, spudding at least one exploratory horizontal well within the next 12 months, and increasing reserves bookings as more production data becomes available.  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 risk.  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.  The recovery and reserve estimates contained in this press release are estimates only and there is no guarantee that the estimated reserves will be recovered.

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.

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).  Boes 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.