Ikkuma Resources Corp. says it anticipates a minimum 2017 capital program of about $10 million as it expects to drill at least two wells focused in the Cardium oil play.

In the first quarter of 2017, crews drilled an exploratory well that intersected a previously-undiscovered oil-bearing Cardium thrust sheet at Narraway, confirming a third oil-pool discovery, the announced last month (DOB, March 16, 2017).

Primarily funded with funds flow from operations, any further capital program expansions depends on results of wells drilled to date, commodity prices, as well as Ikkuma’s ability to access capital said the company.

For the three and 12 months ended Dec. 31, 2016, capital expenditures totalled $6.95 million and $17.63 million, respectively.

According to the company’s Q4 financial and operational results, spending in the three-month period focused on two Cardium wells brought on production prior to year’s end.

The first well produced for most of the fourth quarter, accounting for an average 72 bbls per day in the three-month period. The second well came online on the last week of 2016. In aggregate, Ikkuma spend about 80 per cent of capital expenditures last year in Cardium oil play development.

Production in Q4 and full-year 2016 was 5,967 and 6,310 boe per day, respectively, which is 18- and- nine-per-cent less than during the same periods last year.

In the fourth quarter, natural gas production of 35 mmcf per day was down 19 per cent from the same 2015 period due to shut-in production, natural declines and third-party restrictions and curtailments. Reduced natural gas production affected the company’s revenue, despite higher gas prices.

Ikkuma generated $400,000 in revenue from Cardium oil wells last year due to minimal 2016 producing days. For the three and 12 months ended Dec. 31, 2016, the company achieved revenue of $10.67 million and $30.81 million, respectively, which is one-per-cent more and 29-per-cent less than during the comparative 2015 time periods.

The company’s net losses were $8.97 million and $17.94 million for the fourth quarter and full 12 months of 2016, respectively, compared to net losses of $16.59 million and $28.77 million for the same periods one year prior.

Operating expenses were $7.65 per boe and $8.27 per boe in Q4 and full-year 2016, respectively, which is 12- and- six-per-cent lower than in the previous year’s periods. According to management, Ikkuma had more sweet gas production last year due to sweet gas additions in the back half of 2015, as well as shutting in of uneconomic sour gas wells in 2016.

Last year, management completed a strategic acquisition of certain Foothills natural gas assets for $2.7 million, net of adjustments. This has increased Ikkuma’s working interest in existing producing gas wells and facilities, allowing the company to farm-in on lands strategic to development of its Cardium oil play, as well as providing clear access to certain gas recompletions.

Ikkuma’s land position grew by 15 per cent to 233,000 net acres (average 72 per cent working interest) in 2016. Over 70 per cent of the company’s net acres are currently undeveloped.