management’s discussion and...

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE QUARTERS ENDED SEPTEMBER 30, 2014 AND 2013

Q3 2014 MANAGEMENT’S DISCUSSION AND ANALYSIS Page | 2

The following Management’s Discussion and Analysis (“MD&A”) of financial results as provided by the management of Ikkuma Resources Corp. (“Ikkuma” or the “Corporation”) should be read in conjunction with the Corporation’s audited financial statements for the year ended December 31, 2013 and the unaudited condensed financial statements as at September 30, 2014 and for the three months and nine months ended September 30, 2014 and 2013. This MD&A is dated November 24, 2014 and based on information available to that date. Tabular numbers are expressed in thousands at Canadian dollars except per share amounts.

NAME CHANGE AND SHARE CONSOLIDATION

On September 17, 2014, the shareholders of the Corporation approved the change of the Corporation’s name to “Ikkuma Resources Corp.” from Panterra Resource Corp. In addition, the Shareholders approved a 10 for 1 share consolidation. The number of shares, warrants and options outstanding have been adjusted on a retroactive basis.

FORWARD-LOOKING STATEMENTS

Ikkuma is a Canadian-based corporation whose common shares are traded on the TSX Venture Exchange (TSX-V) under the symbol “IKM”. This MD&A contains forward-looking statements. Management’s assessment of future plans and operations, drilling plans, and the timing thereof, plans for the tie-in and completion of wells and the timing thereof, capital expenditures, timing of capital expenditures, and methods of financing capital expenditures and the ability to fund financial liabilities, production estimates, expected commodity mix and prices, future operating costs, future transportation costs, expected royalty rates, general and administrative expenses, interest rates, debt levels, funds from operations and the timing of and impact of implementing accounting policies, estimates regarding undeveloped land position and estimated future drilling, recompletion, or reactivation locations and anticipated impact on the Corporation’s forecasts in respect of production and cash flow for 2014 and resulting year-end net debt 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, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefit of acquisitions, the inability to fully realize the benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and inability to access sufficient capital from internal and external sources. As a consequence, the Corporation actual results may differ materially from those expressed in, or implied by, the forward-looking statements. Forward-looking statements or information is 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 Corporation believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements and information but which may prove to be incorrect. Although the Corporation 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 Corporation 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 and other documents filed by the Corporation, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which the Corporation operates; the ability of the Corporation to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Corporation has an interest in to operate the field in a safe, efficient and effective manner; the Corporation’s ability to obtain financing on acceptable terms; the anticipated increase to the Corporation’s banking facility; field production rates and decline rates; the ability to reduce operating costs; the ability to replace and expand oil and natural gas reserves through acquisition, development or exploration; the timing and costs of pipeline, storage and facility construction and expansion; the ability of the Corporation to secure adequate product transportation; future petroleum and natural gas prices; currency exchange and interest rates; the regulatory framework regarding royalties, taxes, and environmental matters in the jurisdictions in which the Corporation operates; and the Corporation’s ability to successfully market its petroleum and natural gas products. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Corporation’s operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) or at the Corporation’s website (www.Ikkumarescorp.com). Furthermore, the forward-looking statements contained in this document are made as at the date of this document and the Corporation does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable securities laws.

NON-IFRS MEASUREMENTS Certain financial measures referred to in this MD&A, such as "funds flow", “funds flow per boe”, "funds flow per share", “operating netback” , and “Net debt” do not have standardized meaning prescribed by Canadian generally accepted accounting principles (“GAAP”). Management believes that in addition to net income, funds flow from operations and netback are useful supplemental measures as they provide an indication of the results generated by the Corporation's principal business activities before the consideration of how those activities are financed or how the results are taxed. Investors are cautioned, however, that these measures should not be construed as alternatives to net income determined in accordance with IFRS, as an indication of Ikkuma's performance. These financial measures do not have a standardized meaning prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other issuers. “Funds flow” is calculated based on cash flows from operating activities before changes in non-cash working capital, transaction costs from acquisitions and decommissioning expenditures incurred. “Operating netback” is calculated by deducting royalties, production expenses and transportation expenses from oil and gas revenue. “Funds flow from

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operations per share” is calculated using weighted average number of shares outstanding consistent with the net income (loss) per share calculation. “Net debt” represents bank debt and accounts payable and accrued liabilities less accounts receivable and prepaid expenses and deposits.

BARRELS OF OIL EQUIVALENT CONVERSIONS

The oil and gas industry commonly expresses production volumes and reserves on a “barrel of oil equivalent” basis (“boe”) whereby natural gas volumes are converted at the ratio of six thousand cubic feet to one barrel of oil. The intention is to sum oil and natural gas measurement units into one basis for improved analysis of results and comparisons with other industry participants. Throughout this MD&A the Corporation has used the 6:1 boe measure which is the approximate energy equivalency of the two commodities at the burner tip. Boe does not represent a value equivalency at the wellhead nor at the plant gate which is where the Corporation sells its production volumes, and therefore, may be a misleading measure, particularly if used in isolation. 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 6:1, utilizing a 6:1 conversion may be misleading as an indication of value.

ASSET ACQUISITIONS

During the third quarter the Corporation completed two acquisitions of natural gas assets in the Canadian foothills. The first of which was completed on July 31, 2014 for natural gas assets located in the areas of Lynx/Palliser/Minnow and Ojay/Copton/Findley in Alberta and British Columbia foothills. The gross cost for this acquisition was $120 million ($108.3 million net of adjustments). Estimated production of these producing assets on closing was approximately 5,900 boe/d. The second acquisition was for natural gas assets located in the Copton and Narraway areas of the Alberta foothills which was completed on August 6, 2014. The gross cost of this acquisition was $2.4 million ($2.4 million net of adjustments). This acquisition added approximately 120 boe/d of production on closing. The two acquisitions totaled $110.7 million and were financed with the net proceeds of the Corporation’s two equity financings that were completed in May and July 2014. Please refer to the Liquidity and Capital Resources section of the MD&A. Ikkuma entered into an arm’s length purchase and sale agreement on August 19, 2014 to purchase certain petroleum and natural gas assets located in several areas of the Canadian Foothills for gross consideration of $23.2 million in cash. This acquisition has an effective date of July 1, 2014 and closed subsequent to quarter end on November 4, 2014.

CAPITAL EXPENDITURES

Ikkuma incurred $5.1 million of capital expenditures for Exploration and Evaluation (“E&E”) during the third quarter of 2014. These costs were primarily for crown land sales and seismic purchases essential for the upcoming 2014/2015 capital program. In 2013 the Corporation sold a 60% working interest in the Carrot Creek projects for total cash consideration of $3.4 million. The

transaction was completed in two tranches. The first tranche was the sale of the Proved Producing assets for proceeds of $1.1

million which was closed prior to June 30, 2013. A loss of $1.5 million was recorded on the first tranche. The second tranche for

the Probable Reserves which closed early in the third quarter of 2013 for the remaining $2.4 million proceeds. The disposition in

aggregate generated a gain on sale of $0.8 million.


PRODUCTION

Three months ended Sept 30, Nine months ended Sept 30,

2014 2013 2014 2013

Natural Gas (mcf/d) 22,453 75 7,734 72 Light Oil (bbls/d) 39 50 40 68 NGL (bbls/d) 9 1 6 1

Total boepd (6:1) 3,790 64 1,335 81

% Natural Gas 99 20 97 15

The Corporation’s third quarter average production was 3,790 boe/d and the average production for the nine months ended September 30, 2014 is 1,334 boe/d. The significant increase over comparable periods is due to the natural gas production of approximately 6,000 boe/d added by the two Foothills asset acquisitions from the closing dates of July 31, 2014 and August 6, 2014, respectively. The Corporation experienced down time in September due to scheduled turnaround at processing facilities and third party pipeline restrictions for maintenance. Average production for the quarter without the downtime would have been approximately 4,000 boe/d.

OIL AND GAS SALES


2014 2013 2014 2013 $ % $ % $ % $ %

Natural Gas 8,175 96 15 4 8,403 89 56 4 Light Oil 295 3 414 95 920 10 1,499 96 NGLs 90 1 5 1 140 1 13 0

Total 8,560 100 434 100 9,463 100 1,568 100

Average prices

Natural Gas ($/mcf) $ 3.96 $ 2.21 $ 3.98 $ 2.83 Light Oil ($/bbl) 81.76 90.23 84.61 80.80 NGLs ($/bbl) 82.51 51.37 75.07 53.05

$ per boe received $ 24.55 $ 74.37 $ 25.98 $ 71.00

Benchmark pricing

Crude Oil - WTI (US $/bbl) $ 97.25 $ 105.81 $ 99.62 $ 98.20 Crude Oil - Edmonton Par

(Cdn $/bbl) 97.20 105.01 100.81 95.36 Natural Gas - AECO Spot

(Cdn $/mcf) 4.22 2.82 4.55 3.16 Exchange Rate - (US/CAD) 1.09 1.04 1.09 1.02

Natural gas sales for the three and nine months ended September 30, 2014 were significantly higher due to the increase in gas production from the two Foothills asset acquisitions. Average gas price for the three months ended September 30, 2014 was $3.96/mcf which represented approximately 94% of the AECO benchmark as gas production from the Foothills is dry gas with a slightly lower heat content than the benchmark gas.


ROYALTIES

Three months ended Sept 30, Nine months ended Sept 30, 2014 2013 2014 2013

Royalties $ 2,009 $ 78 $ 2,167 $ 313 $ per BOE 5.76 13.38 5.95 14.19

Percentage of revenue (“Royalty Rate”) 23% 18% 23% 20%

Ikkuma’s royalty rate of 23% for the three months and nine months ended September 30, 2014 reflects the Corporation’s estimate of the royalty burden on the natural gas production acquired.

OPERATING & TRANSPORTATION EXPENSES


2014 2013 2014 2013

Operating expenses $ 2,603 $ 179 $ 3,153 $ 720 Transportation expenses 659 - 659 -

Total 3,262 179 3,812 720 ($ per boe) 9.35 30.77 10.46 32.59

The Corporation’s per unit operating and transportation expenses are $9.35/boe and $10.46/boe for the three months and nine months ended September 30, 2014, respectively. The significant decrease in per unit costs from prior periods is due to the much lower lifting costs of the acquired Foothills gas production and the economies of scale of a larger production base. Management expects future operating and transportation costs to be lower than the $9.35/boe reported in the third quarter as this per unit rate was impacted by a lower production base due to downtime during the month of September for scheduled facility turnaround and third party pipeline restrictions for maintenance.

GENERAL & ADMINISTRATIVE (“G&A”) EXPENSES

Three months ended Sept 30, Nine months ended Sept 30, 2014 2013 2014 2013

G&A expenses $ 1,225 $ 230 $ 1,887 $ 656

G&A expenses ($ per boe) 3.51 39.32 5.18 29.69

The significant increase in the Corporation’s G&A expenditures for the three months and nine months ended September 30, 2014 are primarily related to costs of growing the team of professionals and technological resources to manage the acquired Foothills operations and embark on an exploration and drilling program. G&A expense for the third quarter on a per unit basis was $3.51/boe and for the nine months ended September 30, 2014 was $5.18/boe. The gas production adds from the two Foothills acquisitions were only for two thirds of the quarter and September production volumes were impacted by down time. Accordingly, per unit G&A expenses are expected to be lower in future quarters.


TRANSACTION COSTS


2014 2013 2014 2013

$ 707 $ - $ 2,110 $ -

Transaction costs of $2.1 million are the non-recurring costs incurred to complete the recapitalization of Panterra Resource Corp. and include severance costs of former management and legal costs. Also included were the costs to complete the two acquisitions of the natural gas assets in the Foothills.

FINANCE EXPENSE


2014 2013 2014 2013

Interest (income) expense $ (163) $ 22 $ (148) $ 86 Accretion on decommissioning obligations 176 4 183 13

13 26 35 99

Ikkuma received interest income on the $130 million of proceeds from the subscription receipts financing that was held in escrow

from June 27, 2014 until closing on July 31, 2014. Prior to the recapitalization transaction in May 2014, the Corporation was

paying interest on a revolving demand facility.

Accretion expense increased significantly over prior periods due to the decommissioning liability recorded on the two acquisitions

of the Foothills natural gas assets and the subsequent change in discount rate on the liability.

NETBACKS


($ per boe) 2014 2013 2014 2013

Natural gas and light oil revenue $ 24.55 $ 74.37 $ 25.98 $ 71.00 Royalties (5.76) (13.38) (5.95) (14.19) Operating and transportation costs (9.35) (30.77) (10.46) (32.59)

Operating netback 9.44 30.22 9.57 24.22 G&A (3.51) (39.32) (5.18) (29.69) Transaction costs (2.03) - (5.79) - Finance expense (income) 0.47 (3.85) 0.41 (3.93)

Corporate netback $ 4.37 $ (12.95) $ (0.99) $ (9.40)

Corporate production is now 99% natural gas weighted which accounts for the reduction in per unit operating netback to $9.44/boe (2013 - $30.22/boe) for the third quarter and $9.57/boe for the nine months ended September 30, 2014 (2013 - $24.22/boe). Ikkuma realized positive corporate netback for the third quarter of $4.37/boe as the production base added by the two Foothills acquisitions is sufficient to cover G&A expenses, interest costs and the transaction costs incurred. The production base used in the per unit corporate netback for the third quarter included gas production from the two acquisitions from closing (only two thirds of the quarter) and September had lower production due to down time. Accordingly, per unit operating netback and corporate netback are expected to improve going forward as future quarters with a larger production base. The production base of the Corporation at the time of the recapitalization was not sufficient to cover G&A and interest costs resulting in negative corporate netbacks reported in the nine months ended September 30, 2014 and 2013.


DEPLETION & DEPRECIATION (“D&D”)


2014 2013 2014 2013

D&D expense $ 2,242 $ 58 $ 2,419 $ 281 D&D ($ per boe) $ 6.43 $ 9.97 $ 6.64 $ 12.74

Depletion and depreciation expense was $6.43/boe for the third quarter of 2014, a decrease of 36% from the same period last

year. D&D expense for the nine months ended September 30, 2014 is $6.64/boe as compared to $12.74/boe for the same nine

month period last year. The reduction in per unit depletion costs results from acquiring the long life reserves of the Foothills

assets at a reasonable cost yielding lower depletion rates.

EXPLORATION AND EVALUATION


2014 2013 2014 2013

Exploration and evaluation expense $ - $ - $ 2,330 $ -

The exploration and evaluation costs for the nine months ended of 2014 are for the Saskatchewan exploration assets that were previously held for sale and costs incurred during the nine months ended September 30, 2014. As management has no plans to develop these assets in the foreseeable future the costs related to these assets were expensed.

SHARE-BASED PAYMENTS


2014 2013 2014 2013

Share-based compensation expense $ 1,720 $ 38 $ 4,045 $ 38

At September 30, 2014 Ikkuma had 7,034,095 stock options outstanding at an average exercise price of $4.22. These stock

options were all issued during the third quarter and resulted in a share-based payments of $1.7 million. Share based payments

for the nine months ended September 30, 2014 incudes $2.3 million expensed for the issuance of the performance warrants in

May 2014.

The expense is driven by the timing and valuation of new stock option grants. Stock options granted have a five year term to

expiry and a three year vesting period from the date of grant.


CASH FROM OPERATIONS, FUNDS FLOW AND NET INCOME (LOSS)


2014 2013 2014 2013

Cash provided by operating activities $ 626 $ (1,114) $ (714) $ (712) Decommissioning obligation expenditures 360 - 360 - Changes in non-cash working capital balances relating to

operating activities 534 1,039 (11) 505

Funds flow $ 1,520 $ (75) $ (365) $ (207)

Per share –basic 0.02 (0.02) (0.01) (0.07)

Per share – diluted 0.02 (0.02) (0.01) (0.07)

Net income (loss) 1,499 2,068 (5,225) 215

Per share – diluted 0.02 0.72 (0.19) 0.07

Per share – diluted 0.02 0.72 (0.19) 0.07

The Corporation had positive funds flow for the third quarter of 2014 of $1.5 million ($0.02/share – basic and diluted) and cash

flow from operations of $0.6 million ($0.02/share - basic and diluted). The positive funds flow and cash flow from operations

for the third quarter are due to the increased corporate netback resulting from the two Foothills property acquisitions.

DECOMMISSIONING OBLIGATIONS

As at September 30, 2014, the decommissioning obligation of the Corporation was $41.7 million. Ikkuma recorded an obligation of $8.2 million (based on a fair value discount rate of 7%) for the two Foothills asset acquisitions which closed during the third quarter. The decommissioning obligation for the acquisitions was subsequently revalued using the risk-free rate of 2.5% resulting in an additional $30.6 million upward revision. In addition, the Corporation upwardly revised the estimates for certain facilities on the pre-existing producing property by $2 million based on new estimates derived from the acquisitions completed in the quarter.

DEFERRED INCOME TAX

The Corporation’s oil and natural gas reserves acquired generate sufficient future cash flows to make it probable that future

taxable profits will be available for which the Corporation can utilize the benefit of tax deductions. Accordingly, the Corporation

has recognized a deferred income tax asset of $6.6 million relating to deductible temporary differences.

Ikkuma has tax pools of approximately $145 million including $20 million of non-capital loss carry-forwards, available for deduction against future taxable income. Non-capital losses expire between 2014 and 2032.


LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2014, Ikkuma had working capital of $21.6 million, no debt and $55 million available on its credit facilities. On

November 4, 2014 Ikkuma used its working capital to close another foothills property acquisition. This acquisition led to a $20

million increase to the Corporation’s syndicated credit facilities to $75 million on November 24, 2014. Ikkuma expects to have

adequate liquidity to fund its $65 million 2014/2015 (15 month) capital expenditure budget through a combination of funds flow

from operations and the $75 million syndicated credit facility. The Corporation will make use of additional bank debt or equity

financing for any substantial expansion to the capital program or to finance any significant acquisitions. As the Corporation’s

capital expenditure program is directed to growth in reserves and production volumes, Ikkuma is readily able to adjust its

budgeted capital expenditures should the need arise.

Changes to share capital:

On May 22, 2014, Ikkuma issued 3,333,333 units (“Units”) at a price of $0.75 per Unit and 23,333,334 common shares of the Corporation at a price of $0.75 per common share for aggregate gross proceeds of $20 million. Each Unit is comprised of one common share and one common share purchase warrant (a “Warrant”). Based on the trading prices of the Corporation’s shares following the recapitalization transaction, the Warrants fully vested by June 30, 2014. Share issue costs on the private placement totaled $0.2 million.

On June 27, 2014, the Corporation completed a private placement of subscription receipts for total gross proceeds of

$130 million. Ikkuma issued a total of 50,000,000 subscription receipts at a price of $2.60 per subscription receipt. The

underwriters received a fee equal to 5.5% of the gross proceeds raised. The gross proceeds from the offering were held

in escrow until the escrow conditions were met upon closing of the Foothills acquisition on July 31, 2014. Each

subscription receipt holder received one common share and these shares were qualified for trading on August 12, 2014

upon the filing of a final prospectus. Share issue costs on the private placement totaled $7.8 million.

On September 4, 2014 the Corporation completed a rights offering announced on July 7, 2014 with a record date of

July 18, 2014. The rights offering was a condition of the reorganization agreement dated May 7, 2014. Each holder of

common shares on the record date received one transferable right for every common share held. Every eight rights

entitled the holder to purchase one common share at $0.75 until August 29, 2014. Common shares acquired on May

22, 2014 are excluded from the rights offering as each shareholder agreed not to participate in executing their

subscription agreements. The subscription receipts issued on June 27, 2014 are not eligible for the rights. The

Corporation issued 344,315 common shares for proceeds of $0.258 million.

Prior to the closing of the recapitalization transaction, all outstanding stock options were exercised for gross proceeds

of $0.2 million.

OUTLOOK

The Corporation has commenced its $65 million Q4 2014/2015 drilling and recompletion program. The capital program has been designed to exploit conventional by-pass pay opportunities on the Foothills lands. Exit production for 2014 is expected to be 7,000 boe/d and 9,100 boe/d for 2015.


RELATED PARTY TRANSACTIONS

The Corporation did not have any related party transactions in the nine months ended September 30, 2014.

COMMITMENTS AND CONTINGENCIES

The Corporation’s commitments for firm transportation and net operating lease commitments for office space are as follows:

2014 $ 708 2015 2,816 2016 990 2017 143 2018 10

COMMON SHARE INFORMATION

On September 17, 2014, the Corporation received approval to consolidate its shares on a 10:1 basis. The number of shares, warrants and options outstanding has been adjusted on a retroactive basis after giving effect to the 10:1 consolidation.


2014 2013 2014 2013

Outstanding common shares end of period 80,158,768 2,877,786 80,158,768 2,877,786 Weighted average outstanding common shares (1)

-Basic 63,063,932 2,877,786 27,023,227 2,877,786 -Diluted 65,535,338 2,877,786 28,971,938 2,877,786

(1)Diluted weighted average share information reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted to common shares. Diluted weighted average share information is calculated assuming that any proceeds received by the Company on exercise of in-the-money stock options or warrants plus the unamortized share based compensation expense would be used to buy back common shares at the average market price for the period.

At November 24, 2014, the Corporation had 80,158,768 shares, 7,034,095 stock options ($4.22 average strike price) and 3,333,333 million performance warrants ($1.00 strike price) outstanding.

OFF BALANCE SHEET ARRANGEMENTS

The Corporation has certain lease agreements that are entered into in the normal course of operations. All leases are treated as operating leases whereby lease payments are included in operating expenses or general and administrative expenses depending on the nature of the lease. No asset or liability value has been assigned to these leases in the financial statements as of September 30, 2014.


NEW ACCOUNTING PRONOUNCEMENTS AND CRITICAL ACCOUNTING POLICIES

Use of estimates and judgments The preparation of consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The reader is referred to Ikkuma’s December 31, 2013 audited financial statements and MD&A for a description of estimates and judgments.

Adoption of Accounting Standards On January 1, 2014, the Corporation adopted new standards with respect to IFRIC 21 – “Levies” which establishes guidelines for

the recognition and accounting treatment of a liability relating to a levy imposed by a government, and amendments to

“Offsetting Financial Assets and Financial Liabilities” addressed within IAS 32 – “Financial Instruments: Presentation”, which

provides guidance regarding when it is appropriate and permissible for an entity to disclose offsetting financial assets and

financial liabilities on a net basis. The new and amended standards are effective for annual periods beginning on or after January

1, 2014. The adoption of these standards has had no significant impact on the Corporation’s financial statements.

QUARTERLY INFORMATION

Quarterly

2014 2013 2012 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3

Average daily production (boe/d) 3,790 98 74 85 63 88 91 87 64 Oil & gas sales ($000) 8,560 516 387 405 434 578 555 556 351 Net income (loss)($000) 1,499 (4,496) (2,228) (183) 2,068 (1,711) (142) (1,449) (445) Net income (loss) per share – basic $ 0.02 $ (0.31) $ (0.77) $ (0.63) $ 0.72 $ (0.59) $ (0.05) $ (0.50) $ (0.15) Net income (loss) per share - diluted $ 0.02 $ (0.28) $ (0.77) $ (0.63) $ 0.72 $ (0.59) $ (0.05) $ (0.50) $ (0.15)

Average daily production, oil and gas sales and net income for Q3 2014 all reflect the impact of the recapitalization and the strategic foothills acquisitions of producing natural gas assets. Net income (loss) in Q4 2012 was impacted by an impairment loss. Q2 and Q3 2013 net income (loss) were impacted by gains (losses) on dispositions of oil and gas interests at Carrot Creek.

CONDENSED INTERIM

FINANCIAL STATEMENTS FOR THE QUARTERS ENDED SEPTEMBER 30, 2014 AND 2013

(unaudited)

Q 3 2 0 1 4 F I N A N C I A L S T A T E M E N T S P a g e | 2

CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION (Unaudited, expressed in thousands of Canadian dollars) September 30, December 31, 2014 2013

ASSETS

Current assets

Cash and cash equivalents $ 25,624 $ -

Accounts receivable 2,090 1,662

Prepaid expenses and deposits 988 17

Assets held for sale (note 5) - 1,960

28,702 3,639 Non-current assets

Property, plant, and equipment (Note 4) 154,882 5,181

Deposit on acquisition (Note 15) 2,400 -

Exploration & evaluation assets (Note 5) 5,796 719

Deferred income tax asset (note 8) 6,600 -

Total Assets $ 198,380 $ 9,539

LIABILITIES

Current Liabilities

Bank debt (Note 6) $ - $ 743

Accounts payable and accrued liabilities 7,111 2,153

Liabilities held for sale - 398

7,111 3,294 Non-current liabilities

Decommissioning obligations (Note 7) 41,655 703

Total Liabilities 48,766 3,997 SHAREHOLDERS' EQUITY

Share capital (note 10) 173,805 28,364

Warrants (note 12) 2,325 -

Contributed surplus 6,190 4,659

Deficit (32,706) (27,481)

149,614 5,542

Commitments (Note 14)

Subsequent events (Note 15)

Total Liabilities and Shareholders' Equity $ 198,380 $ 9,539

The accompanying notes are an integral part of these condensed interim financial statements.


CONDENSED INTERIM STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) Three months ended Nine months ended (Unaudited, expressed in thousands of Canadian dollars) September 30, September 30,

2014 2013 2014 2013

Revenues

Oil and gas sales $ 8,560 $ 434 $ 9,463 $ 1,568

Royalties (2,009) (78) (2,167) (313)

6,551 356 7,296 1,255

Expenses

Operating 2,603 179 3,153 720

Transportation 659 - 659 -

General and administrative 1,225 230 1,887 656

Transaction costs (Note 3 & 4) 707 - 2,110

Exploration and evaluation (Note 5) - - 2,330 -

Gain on sale of oil and gas properties - (2,243) - (754)

Share-based payments (Note 11) 1,720 38 4,045 38

Depletion and depreciation 2,242 58 2,419 281

9,156 (1,738) 16,603 941

Income (loss) from operations (2,605) 2,094 (9,307) 314 Finance expense

Finance expense (income) 13 26 35 99

Income (loss) before taxes (2,618) 2,068 (9,342) 215

Deferred income tax benefit (Note 8) 4,117 - 4,117 -

Net income (loss) and comprehensive income (loss) $ 1,499 $ 2,068 $ (5,225) $ 215

Net income (loss) per share – basic $ 0.02 $ 0.72 $ (0.19) $ 0.07 – diluted (Note 9) $ 0.02 $ 0.72 $ (0.19) $ 0.07



CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Share Contributed Total (Unaudited , expressed in thousands of Canadian Dollars) Capital Warrants Surplus Deficit Equity

Balance, January 1, 2013 $ 28,364 $ - $ 4,621 $ (27,513) $ 5,472 Share-based payments - - 38 - 38 Income for the period - - - 215 215

Balance, September 30, 2013 $ 28,364 $ - $ 4,659 $ (27,298) $ 5,725

Balance, January 1, 2014 $ 28,364 $ - $ 4,659 $ (27,481) $ 5,542 Exercise of options (note 11) 759 - (525) - 234 Issue of common shares (note 10) 150,258 - - - 150,258 Share issue costs (note 10) (8,059) - - - (8,059) Tax effect on share issue costs (note 10) 2,483 - - - 2,483 Warrants (note 12) - 2,325 - - 2,325 Share-based payments (note 11) - - 2,056 - 2,056 Loss for the period - - - (5,225) (5,225)

Balance, September 30, 2014 $ 173,805 $ 2,325 $ 6,190 $ (32,706) $ 149,614




CONDENSED INTERIM STATEMENTS OF CASH FLOWS Three months ended Nine months ended (Unaudited, expressed in thousands of Canadian dollars) September 30, September 30,

2014 2013 2014 2013

Operating Activities

Net income (loss) $ 1,499 $ 2,068 $ (5,225) $ 215

Depletion and depreciation (Note 4) 2,242 58 2,419 281

Exploration and evaluation expense (Note 5) - - 2,330 -

Gain on sale of oil and gas properties (Note 4) - (2,243) - (754)

Share-based payments 1,720 38 4,045 38

Accretion on decommissioning obligations (Note 7) 176 4 183 13

Deferred income tax benefit (Note 8) (4,117) - (4,117) -

Expenditures on decommissioning obligations (Note 7) (360) - (360) -

Changes in non-cash working capital (534) (1,039) 11 (505)

Cash provided by (used in) operating activities 626 (1,114) (714) (712)

Financing activities

Decrease in bank debt - (938) (743) (2,214)

Issuance of common shares,

net of share issue costs (Note 10) 122,425 - 142,199 -

Proceeds on exercise of stock options - - 234 -

Change in non-cash working capital 4,184 - - -

Cash provided by (used in) financing activities 126,609 (938) 141,690 (2,214) Investing activities

Property, plant, and equipment asset expenditures (191) (297) (379) (508)

Exploration & evaluation asset expenditures (5,094) (1) (5,447) (13)

Property, plant, and equipment acquired (Note 4) (110,674) - (110,674) -

Proceeds on sale of oil and gas properties (Note 4) - 2,350 - 3,447

Deposit paid for acquisition 9,600 - (2,400) -

Changes in non-cash working capital balances 3,590 - 3,548 -

Cash provided by (used in) investing activities (102,769) 2,052 (115,352) 2,926 Change in cash and cash equivalents 24,466 - 25,624 -

Cash and cash equivalents, beginning of period 1,158 - - -

Cash and cash equivalents, end of period $ 25,624 $ - $ 25,624 $ -



NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS As at September 30, 2014 and for the three and nine months ended September 30, 2014 and 2013 (Unaudited, expressed in thousands of Canadian dollars except per share amounts)

1. REPORTING ENTITY

Ikkuma Resources Corp. (the “Corporation” or “Ikkuma”) is an oil and gas exploration and production Corporation with

producing properties in the foothills of Alberta and British Columbia. On September 19, 2014, shareholders of the

Corporation agreed to rename the Corporation from PanTerra Resources Corp. to Ikkuma Resource Corp. The Corporation

is headquartered in Calgary and is an Alberta-based reporting entity whose shares are listed on the TSX Venture Exchange

under the symbol: IKM.V. The registered office and principal address is located at 400, 540 – 5th Avenue S.W. Calgary, AB,

T2P 0M2.

2. BASIS OF PRESENTATION

Statement of Compliance These condensed interim financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34 – Interim Financial Reporting using accounting policies consistent with the International Financial Reporting Standards (“IFRS”) and have been prepared following the same accounting policies and methods of computation in the Corporation’s annual financial statement for the year ended December 31, 2013, except as noted below. The condensed interim financial statements do not include certain disclosures that are required to be included in annual financial statements and they should be read in conjunction with the annual financial statements for the year ended December 31, 2013. These condensed interim financial statements were authorized for issuance by Ikkuma’s Board of Directors on November 24, 2014.

Change in accounting polices On January 1, 2014, the Corporation adopted several new IFRS interpretations and amendments in accordance with the transitional provisions of each standard. A brief description of each new accounting policy and its impact on the Corporation’s financial statements follows below:

IAS 32 - “Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32 Financial Instruments: Presentation

”), which clarifies the requirements for offsetting financial instruments such as the amounts receivable and payable

related to the Corporation’s commodity contracts. The amendments clarify when an entity has a legally enforceable

right to offset and certain other requirements that are necessary to present a net financial asset or liability. The

adoption of the amendments to IAS 32 have had no impact on the Corporation’s financial statements.

IFRIC 21 - “Levies”, which establishes guidelines for the recognition and accounting treatment of a liability relating to a

levy imposed by a government. This standard is effective for annual periods beginning on or after January 1, 2014. The

adoption of IFRIC 21 has had no significant impact on the Corporation’s financial statements.

Basis of Measurement These unaudited condensed interim financial statements have been prepared on the historical cost basis.

Presentation

Certain comparative numbers have been reclassified to conform to current presentation.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS


3. Reorganization

On May 7, 2014 the Corporation entered into a definitive reorganization and investment agreement which provided for a

non brokered private placement (note 10), appointment of a new management team and a future rights offering to current

shareholders (note 10). Total costs incurred to complete the reorganization of $1.4 million, including severance payments

to former management and legal costs, have been included in transaction costs.

4. PROPERTY, PLANT & EQUIPMENT

Cost: At January 1, 2013 $ 9,465

Additions 787 Dispositions (3,022) Change in decommissioning obligations (410)

At December 31, 2013 6,820

Additions 715 Acquisitions 118,826 Decommissioning costs 32,579

At September 30, 2014 $ 158,940

Accumulated depletion and depreciation: At January 1, 2013 $ 1,711

Depletion and depreciation 364 Dispositions (436)

At December 31, 2013 1,639

Depletion and depreciation 2,419

At September 30, 2014 $ 4,058

Net book value:

At December 31, 2013 $ 5,181 At September 30, 2014 $ 154,882

Acquisitions

Ikkuma closed the first of two purchases of certain natural gas assets located in the Western Canadian Foothills on July

31, 2014 for gross consideration of $120 million in cash. The acquisition had an effective date of April 1, 2014 and the

Corporation paid approximately $108.3 million net of interim adjustments on closing. The Corporation incurred $707

of costs to complete the acquisition which have been expensed and included in transaction costs.

On August 6, 2014, the Corporation closed a second acquisition of certain natural gas assets located in the Western

Canadian foothills areas for a purchase price of $2.4 million.



Depletion & Impairment

At September 30, 2014, future development costs of Ikkuma’s proved plus probable reserves of $21.2 million were included in the depletion calculations (December 31, 2013: $6.8 million). Residual value of $17.2 million (December 31, 2013: $nil) were excluded from the depletion calculations. As at September 30, 2014, the Corporation performed an impairment triggers assessment of its property, plant and

equipment on a CGU basis and determined there were no impairment triggers identified. As a result, no impairment

test was required as at September 30, 2014. As at December 31, 2013, the Corporation tested its cash-generating units

for impairment which resulted in no impairment being recognized.

5. EXPLORATION AND EVALUATION ASSETS

Intangible

Exploration & Evaluation Assets

At January 1, 2013 $ 810 Additions 17 Dispositions (108)

At December 31, 2013 719

Transfer from assets held for sale 1,960 Additions 5,447 Exploration and evaluation expense (2,330)

At September 30, 2014 $ 5,796

Assets held for sale

During 2014 the purchaser advised the Corporation that it would not be able to complete the acquisition of the

Saskatchewan exploration assets. As the planned sale was not completed and there are no negotiations ongoing with other

potential buyers, management has determined that the sale is no longer probable to occur within the next year and

accordingly the carrying amount has been reclassified from assets held for sale to exploration and evaluation assets. The

Corporation expensed the carrying value of the Saskatchewan exploration assets as there are no plans to develop these

assets in the foreseeable future.

6. BANK DEBT

The Corporation entered into a credit agreement dated July 31, 2014 with a syndicate of Canadian banks with respect to $55 million of credit facilities consisting of: (i) a syndicated $35 million committed secured, extendible, 364 day revolving plus one year term facility; and (ii) a $20 million committed secured, extendible 364 day revolving one plus one year term operating facility. Amounts borrowed under the credit facilities will bear interest at a floating rate based on the applicable Canadian prime rate, US Base Rate or LIBOR margin rate, plus 2% to 3.5%, depending on the type of borrowing and the Corporation’s debt to EBITDA ratio. A standby fee of 0.5 % to 0.875% is charged on the undrawn portion of the credit facilities, depending on the Corporation’s debt to EBITDA ratio. The credit facilities are secured by a floating charge demand debenture of $500 million and an undertaking to provide fixed charges on the major producing petroleum and natural gas properties at the request of the bank. Under the terms of the agreement, the Corporation is required to meet certain financial and engineering reporting requirements. As at September 30, 2014 the Corporation is in compliance with all covenants.



The credit facilities are subject to a semi-annual borrowing base review and accordingly the available lending limits of the facilities are based on the syndicate’s interpretation of the Corporation’s reserves and future commodity prices, there can be no assurance that the amount of the available facilities will not decrease at the next scheduled review on April 30, 2015. At September 30, 2014, the Corporation had outstanding letters of credit totaling $0.3 million that reduce the amount otherwise drawn on the facility. As at September 30, 2014 the Corporation had no borrowings drawn on the $55 million credit facilities. The Corporation’s previous revolving demand bank loan was paid out and terminated in May 2014 with the proceeds of the $20 million equity financing.

7. DECOMMISSIONING OBLIGATIONS

The Corporation’s decommissioning obligations result from net ownership interests in petroleum and natural gas assets including well sites, gathering systems and processing facilities. The Corporation estimates the total undiscounted amount of cash flows required to settle its decommissioning obligations is approximately $100 million (December 31, 2013 $1.1 million). These payments are expected to be made over the next 40 years with the majority of costs to be incurred between 2039 and 2049. A risk free rate of 2% (December 31, 2013 – 2.5%) and an inflation rate of 2% (December 31, 2013 – 1.5%) was used to calculate the fair value of the decommissioning obligations.

At January 1, 2012 $ 1,098 Liabilities incurred 29 Transfers to liabilities held for sale (0.8) Change in estimates (162) Decommissioning expenditures (276) Accretion expense 15

At December 31, 2013 703

Liabilities acquired 8,152 Transfer from assets held for sale 398 Decommissioning expenditures (360) Change in estimates 1,964 Change in discount rate on acquisition 30,615 Accretion expense 183

At September 30, 2014 $ 41,655

The decommissioning obligations acquired in the Foothills acquisitions (note 4) were initially recognized using fair value discount rate of 7%. They were subsequently revalued using the risk-free rate noted above resulting in the change in discount rate on acquisition in the above table with the offset to property, plant and equipment

8. DEFERRED INCOME TAX ASSET

The Corporation’s oil and natural gas reserves would generate sufficient future cash flows to make it probable that

future taxable profits will be available for which the Corporation can utilize the benefit of tax deductions. Accordingly,

the Corporation has recognized a deferred income tax asset relating to deductible temporary differences.



9. INCOME (LOSS) PER SHARE

Basic and diluted income (loss) per share was calculated as follows: Three months ended Nine months ended

September 30, September 30,

2014 2013 2014 2013

Net income (loss) for the period $ 1,499 $ 2,068 $ (5,225) $ 215

Weighted average number of common shares – basic 63,063,932 2,877,786 27,023,227 2,877,786 Weighted average number of common shares – diluted 65,535,338 2,877,786 28,971,938 2,877,786

The reconciling item between the basic and diluted average common shares outstanding for the three months ended September 30, 2014 are due to the outstanding warrants, however the warrants were antidilutive for the nine months ended September 30, 2014 due to the loss for the period. The Corporation’s outstanding stock options are antidilutive in all current and comparative periods.

10. SHARE CAPITAL

Nine months ended Year ended September 30, 2014 December 31, 2013

Shares Amount Shares Amount

Balance beginning of the period 2,877,786 $ 28,364 2,877,786 $ 28,364 Exercise of stock options 270,000 759 - - Issuance of common shares – rights offering 344,315 258 - - Issuance of units on recapitalization (I) 3,333,333 2,500 - - Issuance of common shares on recapitalization (I) 23,333,334 17,500 - - Issuance of common shares (II) 50,000,000 130,000 - - Share issue costs, net of taxes of $2.0 million - (6,044) - - Tax effect on share issue costs incurred in prior years - 468 - -

Balance end of the period 80,158,768 $ 173,805 2,877,786 $ 28,364

Share consolidation




Rights offering

On September 4, 2014 the Corporation completed a rights offering announced on July 7, 2014 with a record date of July 18, 2014. The rights offering was a condition of the reorganization agreement dated May 7, 2014. Each holder of common shares on the record date received one transferable right for every common share held. Every eight rights entitled the holder to purchase one common share at $0.75 until August 29, 2014. Common shares acquired on May 22, 2014 are excluded from the rights offering as each shareholder agreed not to participate in executing their subscription agreements. The subscription receipts issued on June 27, 2014 are not eligible for the rights. The Corporation issued 344,315 common shares for proceeds of $0.258 million. Equity financings

(I) On May 22, 2014, Ikkuma issued 3,333,333 units (“Units”) at a price of $0.75 per Unit and 23,333,334 common

shares of the Corporation at a price of $0.75 per common share for aggregate gross proceeds of approximately

$20 million. Each Unit is comprised of one common share and one common share purchase warrant (a

“Warrant”). Each Warrant will entitle the holder to purchase one common share at a price of $1.00 (post share

consolidation) for a period of five years. The Warrants vested and become exercisable as to one-third upon the

20-day weighted average trading price (pre-share consolidation) of the common shares equaling or exceeding

$1.50, an additional one-third upon the trading price equaling or exceeding $2.00 and a final one-third upon the

trading price equaling or exceeding $2.50. As at September 30, 2014 the warrants were fully vested. The warrants

were assigned a value of $ 2.3 million (note 12). Share issue costs on the private placement totaled $0.2 million.

(II) On June 27, 2014, the Corporation completed a private placement of subscription receipts for total gross

proceeds of $130 million. Ikkuma issued a total of 50 million subscription receipts at a price of $2.60 per

subscription receipt. The underwriters received a fee equal to 5.5% of the gross proceeds raised. The gross

proceeds from the offering were held in escrow until the escrow conditions were met upon closing of the Foothills

acquisition on July 31, 2014. Each subscription receipt holder received one common share and these shares were

qualified for trading on August 12, 2014 upon the filing of a final prospectus. Share issue costs on the private

placement totaled $7.8 million.

11. SHARE-BASED PAYMENTS

The Corporation has a stock option plan for directors, employees and service providers. Stock options granted under the stock option plan have a term of 5 years to expiry. One third of the options granted vest on each of the first, second and third anniversaries of the date of grant. At September 30, 2014 the Corporation had 7,034,095 options outstanding with a weighted average exercise price of $4.22.



The following tables summarize the information about the share options:

Nine months ended Year ended September 30, 2014 December 31, 2013

Weighted Avg Weighted Avg

Options exercise price Options exercise price

Outstanding beginning of the period 270,000 $ 0.90 251,500 $ 1.10 Granted 7,038,495 4.22 83,000 0.50 Exercised (270,000) 0.90 - - Forfeited (4,400) 5.60 (64,500) (1.20)

Outstanding end of the period 7,034,095 $ 4.22 270,000 $ 0.90

The fair market value of each option granted was estimated on the date of issue using the Black-Scholes option-pricing model with the following assumptions. Nine months ended

September 30, 2014

Inputs: Share price 4.22 Exercise price 4.22 Risk free interest rate (%) 1.56 Option life (years) 5.00 Forfeiture rate (%) 2.00 Volatility (%) 100.00

Results:

Weighted average fair value of each share option granted 3.15

The Corporation’s share-based payments for the three and nine months ended September 30, 2014 was $1.7 million (September 30, 2013 – $0.04 million) of which $0.3 million of the share based compensation was capitalized. On closing of the May 22, 2014 reorganization all the outstanding stock options (270 options) were exercised for gross proceeds of $0.2 million. Accordingly, the fair value of the options of $0.5 million was reclassified from contributed surplus.

12. WARRANTS

The fair value of the 3,333,333 warrants outstanding as at September 30, 2014 of $2,325 was determined using the Black-Scholes model using the following assumptions: exercise price $1.00; risk free rate of 1.47%; volatility of 100%; forfeiture rate of 0%; and life of 5 years. Based on the Corporation’s market price growth the warrants are fully vested. The $2.3 million of fair value has been expensed to earnings as share-based payments to recognize the implied benefit of equity issued to officers and directors.



13. FINANCIAL RISK MANAGEMENT

The Corporation manages its capital with the following objectives:

To ensure sufficient financial flexibility to achieve the ongoing business objectives including replacement of production, funding of future growth opportunities, and pursuit of accretive acquisitions; and

To maximize shareholder return through enhancing the share value. The Corporation monitors its capital structure and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business and industry in general. The capital structure of the Corporation is composed of working capital, share capital, and the undrawn component of the bank debt. The Corporation may manage its capital structure by issuing new shares, repurchasing outstanding shares, obtaining additional financing from the Corporation’s credit facility, issuing new debt instruments, other financial or equity-based instruments, adjusting capital spending, or disposing of assets. The capital structure is reviewed on an ongoing basis. The Corporation’s capital structure as at September 30, 2014 and December 31, 2013 is as follows:

September 30, December 31, 2014 2013

Current assets $ 28,702 $ 3,639 Current liabilities (7,111) (3,294)

Working capital 21,591 345

Share Capital 149,614 5,542 Undrawn component of bank credit facility 55,000 90

Total capital $ 204,614 $ 5,977

14. COMMITMENTS

The Corporation’s commitments for firm transportation and office space is as follows:

2014 $ 708 2015 2,816 2016 990 2017 143 2018 10

Total $ 4,667



15. SUBSEQUENT EVENTS

Ikkuma entered into an arm’s length purchase and sale agreement on August 19, 2014 to purchase certain petroleum and natural gas assets located in several areas of the Western Canadian Foothills for gross consideration of $23.2 million in cash. The Corporation paid a $2.4 million deposit in August 2014. This acquisition had an effective date of July 1, 2014 and closed on November 4, 2014 for $21.8 million net of interim adjustments. On November 24, 2014, the Corporation’s credit facilities were increased from $55 million to $75 million as a result of the increased borrowing base from this acquisition.

management’s discussion and...

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