Ironhorse Announces 2015 Fourth Quarter and Year End Results

CALGARY, April 11, 2016 /CNW/ - Ironhorse Oil & Gas Inc. ("Ironhorse" or the "Company") (TSX-V: IOG) announces its fourth quarter and full year 2015 financial and operating results and year-end reserves information. 

The Company's year-end reserves evaluation with the effective date of December 31, 2015 was prepared by Sproule Associates Limited in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and NI 51-101 "Standards of Disclosure for Oil & Gas Activities".  Reserves included herein are stated on a company gross basis (working interest before deduction of royalties without including any royalty interest) unless otherwise noted. 

Highlights of 2015:

  • Funds from operations decreased 57% to $228,000 for the year ended December 31, 2015 from $535,000 for the year ended December 2014.
  • Annual production from Pembina increased over 300% compared to 2014 and averaged 185 boe/d net, despite restricted production during 7-months of the current year.
  • Realized net loss of $5.7 million for 2015 primarily resulting from; $6.4 million impairment at Pembina, 67% decrease in operating netbacks on a boe basis compared to 2014, partially offset by $2 million non-cash deferred tax recovery.
  • General and administrative costs increased 45% to $688,000 compared to $473,000 for the year ended December 31, 2014, as the Company incurred $270,000 in fourth quarter costs in defense of the unsolicited take-over-bid by 1927297 Alberta Ltd. initiated on November 4, 2015. The bid expired on February 5, 2016 and 1927297 Alberta Ltd. did not take up any Ironhorse shares.
  • The Company's proved plus probable reserve volumes are 80% oil and natural gas liquids weighted, with 77% of reserve volumes being proved.
  • 2015 property impairments recorded were largely attributed to the significant decline in estimated future commodity prices provided by the Company's third party external reserve report evaluators.

Outlook for 2016:

Production from the Nisku L2L Pool (the "Pool"), the Company's primary source of cash flows, was shut-in January 19, 2016 because production is uneconomic under the current commodity price environment.  The Company believes that, with continued downward pressure on commodity prices, a temporary shut-in of the Pool production is a prudent decision that will preserve the value of oil and natural gas reserves.  The Company anticipates that the Pool will remain shut-in until there is a recovery in commodity prices.

Currently the Company does not have significant capital commitments authorized for 2016 and is well positioned financially to withstand the temporary shut-in of the Pool, with a positive working capital balance of $2.9 million as at December 31, 2015.

SELECTED INFORMATION

Three months ended December 31

Year ended December 31

($ thousands except per share & unit amounts)

2015

2014

2015

2014

Financial





Petroleum and natural gas revenues (1)

892

545

3,343

1,429

Funds from operations (2)

(144)

123

228

535

   Per share – basic and diluted

(0.01)

0.01

0.01

0.02

Net (loss)

(2,076)

(331)

(5,719)

(221)

   Per share – basic and diluted

(0.07)

(0.01)

(0.21)

(0.01)

Capital expenditures (3)

-

13

44

666

Operation





Production





  Gas (mcf/d)

202

150

192

129

  Oil & NGL (bbl/d)

197

77

164

40

  Total (boe/d)

231

102

196

62

Petroleum and natural gas revenues ($/boe)

42.08

57.84

46.83

63.16

Royalties ($/boe)

18.00

17.86

17.62

10.00

Operating expenses ($/boe)

12.55

17.50

16.60

14.58

Operating netback ($/boe)

11.53

22.48

12.61

38.58

(1)   Petroleum and natural gas revenues are before royalty expense.
(2)   Funds from operations and net debt are non-GAAP measures as defined in the Advisory section of the MD&A.
(3)   Capital expenditures are before acquisitions and dispositions.

 

Reserves Summary – Oil Equivalent (Mboe)

(Mboe)

Proved
Producing

Proved
Developed
Non-Producing

Proved
Undeveloped

Total
Proved

Total
Probable

Proved plus
Probable

2014

556

68

-

624

176

799

2015

483

89

-

572

175

747

 

Net Present Value Summary(1)

($ thousands)

Proved
Producing

Proved
Developed
Non-Producing

Proved
Undeveloped

Total

Proved

Total

Probable

Total

Proved plus
Probable

10%

7,427

588

-

8,015

2,523

10,538

15%

6,543

411

-

6,954

2,396

9,350

(1) Net present value summary is before income taxes

 

Reserves Reconciliation - Oil Equivalent (Mboe)

(Mboe)

Total
Proved

Total
Probable

Total
Proved plus
Probable

December 31, 2014

624

176

799

Technical Revisions

20

(1)

19

Dispositions

-

-

-

Economic Factors

(0.1)

0.1

-

Production

(72)

-

(72)

December 31, 2015

572

175

747

 

Net Asset Value ("NAV") before income tax – Discounted at 10%

($ thousands except share and per share data)


December 31, 2015

December 31, 2014

Net present value-proved and probable


10,538

18,383

Net working capital (1)


2,915

2,731

Net asset value


13,453

21,114

Common shares outstanding


27,885,824

27,885,824

NAV per share, December 31


0.48

0.76

 

Sproule Price Forecasts as of December 31, 2015 (1)

Year


Canadian Light Sweet Oil Price At Edmonton

40o API

($Cdn/bbl)

AECO/NIT   Spot Gas

Price

($Cdn/Mmbtu)

2016


55.20

2.25

2017


69.00

2.95

2018


78.43

3.42

2019


89.41

3.91

2020


91.71

4.20

2021


93.08

4.28

2022


94.48

4.35

2023


95.90

4.43

2024


97.34

4.51

2025


98.80

4.59

2026


100.28

4.67

Thereafter


+1.5%/year

+1.5%/year

(1)  This summary table identifies benchmark reference pricing schedules that might apply to a reporting issuer.

Additional Information

Ironhorse's complete results for the year ended December 31, 2015, including audited financial statements and the management's discussion and analysis, statement of reserves data and other oil and gas information 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; 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.

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.

For further information: Larry J. Parks, President & Chief Executive Officer, (403) 237-9600, lparks@grizzlyresources.com; Karen Hutson, VP Finance & Chief Financial Officer, (403) 237.9600, khutson@grizzlyresources.com, www.ihorse.ca

RELATED LINKS
www.ihorse.ca

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