Ironhorse Announces Q3 2015 Financial and Operating Results

CALGARY, Nov. 27, 2015 /CNW/ - Ironhorse Oil & Gas Inc. ("Ironhorse" or the "Company") (TSX-V: IOG) announces its financial and operating results for the three and nine months ended September 30, 2015.

Financial and Operation Summary

The Company's reported production has decreased 15% to 216 boe/d in the third quarter of 2015 from 254 boe/d produced in the second quarter.  The decrease in production is attributed to ongoing TransCanada ("TCPL") pipeline restrictions and a planned third party gas plant turnaround that shut-in the two producing Pembina wells for a total of 20 days in September.    

Quarterly funds from operations decreased 90% to $0.04 million from $0.4 million in Q2 2015 as a result of lower production and continued declining realized oil sales prices that decreased 16% to $51.80/bbl compared to the prior quarter.  Operating netbacks for Q3 2015 decreased 73% from Q2 2015 impacted by lower revenues, higher royalties and increased operating costs mainly due to blend gas associated costs for the Pembina area.

The Company realized a net loss of $2.8 million for the third quarter primarily resulting from a $3.5 million impairment charge at Pembina due to continued low commodity prices as compared to the 2014 year end reserve report forecast, offset by $1.0 million non-cash deferred tax recovery.

Despite production limitations, third quarter production from the Pembina L2L pool averaged 1,472 boe/d (gross) and a new daily production milestone was achieved in August as production peaked at 2,550 boe/d (gross). 

Production in Q4 2015 will continue to be curtailed due to transportation interruptions as a result of ongoing TCPL pipeline restrictions in the James River Area.

SELECTED INFORMATION		For three months ended
		September 30,	June 30,	September 30,
($ thousands except per share & unit amounts)		2015	2015	2014
Financial
Petroleum and natural gas revenues ^(1)		941	1,262	593
Funds from operations ^(2)		39	401	358
Per share – basic and diluted		0.00	0.01	0.01
Net income (loss)		(2,850)	(634)	141
Per share – basic and diluted		(0.10)	(0.02)	0.01
Capital expenditures ^(3)		21	3	18
Operation
Production
Light Oil & NGL (bbl/d)		189	215	64
Gas (mcf/d)		162	233	130
Total (boe/d)		216	254	86
Petroleum and natural gas revenues ($/boe)		47.37	54.70	74.65
Royalties ($/boe)		(20.34)	(16.07)	(5.03)
Operating expenses ($/boe)		(20.99)	(16.44)	(13.11)
Operating netback ($/boe)		6.04	22.19	56.51

(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.

Unsolicited Take-over bid

On November 4, 2015, an unsolicited all cash take-over bid (the "Offer") was commenced by 1927297 Alberta Ltd., a corporation wholly-owned by the Timmerman Trust, to acquire the outstanding common shares of Ironhorse for $0.17 per share which represents a $4.7 million cash consideration based on the total shares currently outstanding.  At September 30, 2015 this "Offer" represents consideration for $3.0 million of net working capital, with $1.7 million attributed to the Company's oil and gas assets.

The Board of Directors has reviewed the Offer, with the benefit of advice from Ironhorse's financial and legal advisors.  The Company's Board of Directors unanimously recommends that Ironhorse shareholders reject the Offer.

The following is a summary of the principal reasons for the unanimous recommendation of the Board of Directors to Shareholders that they reject and not tender to the Offer;

• The Offer is not supported by Ironhorse's largest shareholders or its directors and officers holding approximately 45% of the outstanding Ironhorse common shares.
• The Offer is highly conditional and has substantial completion risk.
• The Offer significantly undervalues Ironhorse's assets and growth potential.
• The Offer is predatory and opportunistic.
• Superior proposals or other alternatives may emerge.
• Ironhorse's financial advisor has delivered a written opinion to the Board of Directors that the consideration offered under the Offer is inadequate, from a financial point of view, to shareholders.
• The Offer provides insufficient time to properly consider any take-over bid made for Ironhorse.

Additional information can be found in the Ironhorse Directors' Circular dated November 19, 2015, which has been sent to all Ironhorse shareholders. 

If shareholders of Ironhorse have any questions or require more information, they are encouraged to contact D.F. King Canada ("D.F. King"), a division of CST Investor Services Inc., the information agent retained by Ironhorse, by telephone at 1-800-294-3174 (Toll Free in North America) or 1-201-806-7301 (Banks, Brokers and Collect Calls), or by email at [email protected].

Additional Information

Ironhorse's complete results for the three and nine months ended September 30, 2015, including unaudited condensed financial statements and the management's discussion and analysis are available on SEDAR and the Company's web site at www.ihorse.ca.  As well, copies of the Shareholder Rights Plan, adopted on November 9, 2015 and the Directors' Circular are available on SEDAR and the Company's web site.

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.

Larry J. Parks, President & Chief Executive Officer, [phone], Karen Hutson, VP Finance & Chief Financial Officer, [phone], www.ihorse.ca