CALGARY, ALBERTA--(Marketwire - Aug. 14, 2012) -
NOT FOR DISTRIBUTION ON U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Questerre Energy Corporation ("Questerre" or the "Company") (TSX:QEC) (OSLO:QEC) reported today on its operating and financial results for the second quarter of 2012.
Michael Binnion, President and Chief Executive Officer, commented, "We began working with Red Leaf on the scale up of their EcoShale process this quarter. It has been an eventful few months since our investment. Total E&P USA appointed their CEO, John Bannerman, to the Red Leaf Board and seconded three senior personnel including the deputy project manager. Red Leaf has also engaged the project manager for the joint venture. The work program is scheduled to begin before year-end and will include a series of key de-risking milestones necessary to achieve first production by early 2014."
He added, "We also made a significant discovery in the liquids-rich Montney in Resthaven, Alberta. This discovery bolsters our conventional assets that will provide a source of future capital for our oil shale assets and Quebec. Work has begun on a pipeline tie-in for our first well that tested at gross rates of over 2,500 boe/d. We plan to begin drilling our second well before year-end. At Antler, we began work on our pilot waterflood."
Commenting on Quebec, Mr. Binnion noted, "In the quarter, we also helped organize and sponsor a group of Quebec farmers to meet Alberta farmers that took place early in the third quarter. This tour not only had great media but materially shifted opinions of the participants. An independent survey of these participants can be found at blog.questerre.com/en. I am seeing a momentum shift in opinions in Quebec on oil and gas and this tour to Alberta was a breakthrough showing Quebecers that oil and gas mixes naturally with farming."
- Questerre invests with supermajor Total S.A. to commercialize Red Leaf's EcoShale In-Capsule process
- Completed and tested first Montney well with gross initial rates of over 2,500 boe/d
- Spring breakup suspended drilling program and shut-in production at Antler, Saskatchewan
- Production averaged 525 boe/d generating cash flow from operations of $1.22 million during the quarter
- Maintained financial strength with over $47 million in positive working capital and no debt
While spring breakup delayed completions and municipal road bans shut-in production in Antler, operating performance for the quarter was also affected by lower oil prices and the double differential from Brent oil. Production declined to 525 boe/d from 725 boe/d in the prior quarter and 586 boe/d in the second quarter of 2011. Lower oil prices and a pricing differential coupled with the shut-in volumes resulted in cash flow from operations of $1.22 million for the quarter (2011: $2.27 million). In addition to increasing its investment in oil shale assets by US$3 million to US$43 million, Questerre invested $5.19 million in the second quarter of 2012. Approximately 40% was invested in finalizing the drilling and completion of the Montney well in Alberta and the remainder primarily spent in Saskatchewan at Antler and the core hole program for our oil shale acreage in Pasquia Hills, Saskatchewan.
As at June 30, 2012, the Company reported a working capital surplus of $47.35 million.
The term "cash flow from operations" is an additional IFRS measure. Please see the reconciliation elsewhere in this press release.
Questerre Energy Corporation is an independent energy company focused on non-conventional oil and gas resources. The Company is currently developing a portfolio of oil shale assets in North America. It is also securing a social license to commercialize its Utica natural gas discovery in Quebec. The Company is underpinned by light oil assets and a strong balance sheet. Questerre is committed to the economic development of its resources in an environmentally conscious and socially responsible manner.
This media release contains certain statements which constitute forward-looking statements or information ("forward-looking statements"), including the results from our Montney well. Although Questerre believes that the expectations reflected in our forward-looking statements are reasonable, our forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information available to Questerre. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward looking information. As such, readers are cautioned not to place undue reliance on the forward looking information, as no assurance can be provided as to future results, levels of activity or achievements. The risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in our Annual Information Form and other documents available at www.sedar.com. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, Questerre does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.
This news release does not constitute an offer of securities for sale in the United States. These securities may not be offered or sold in the United States absent registration or an available exemption from registration under the United States Securities Act of 1933, as amended.
Barrel of oil equivalent ("boe") amounts may be misleading, particularly if used in isolation. A boe conversion ratio has been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil and is based on an energy equivalent conversion method application at the burner tip and does not necessarily represent an economic value equivalent at the wellhead.
This press release contains the term "cash flow from operations" which is an additional IFRS measure. Questerre uses this measure to help evaluate its performance. This press release also contains the terms "netbacks" and "working capital surplus" which are non-IFRS measures.
As an indicator of Questerre's performance, cash flow from operations should not be considered as an alternative to, or more meaningful than, net cash from operating activities as determined in accordance with IFRS. Questerre's determination of cash flow from operations may not be comparable to that reported by other companies. Questerre considers cash flow from operations to be a key measure as it demonstrates the Company's ability to generate the cash necessary to fund operations and support activities related to its major assets.
|For the three months ended June 30,
|Net cash from operating activities
|Change in non-cash operating working capital
|Cash flow from operations
The Company considers netbacks a key measure as it demonstrates its profitability relative to current commodity prices. Operating netbacks per boe equal total petroleum and natural gas sales per boe adjusted for royalties per boe and direct operating expenses per boe.
The Company also uses the term "working capital surplus". Working capital surplus, as presented, does not have any standardized meaning prescribed by IFRS and may not be comparable with the calculation of similar measures for other entities. Working capital surplus, as used by the Company, is calculated as current assets less current liabilities excluding the current portions of the share based compensation liability and risk management contracts.