CALGARY, ALBERTA--(Marketwired - Aug. 15, 2013) -
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 financial and operating results for the second quarter of 2013.
Michael Binnion, President and Chief Executive Officer, commented, "Our investment to build Kakwa-Resthaven into a new core area was endorsed by the results of the recent Montney resource assessment. We believe our acreage lies in the sweet spot of the play or the acreage that will be the most economic. Initial wells at the early part of the learning curve are already delivering promising results. We plan to further derisk our land by participating in up to three additional joint venture wells in the second half of 2013."
He added, "We are also finalizing our strategy to develop our acreage in this condensate-rich resource. Market access is proving to be a critical path issue. Questerre has been in negotiations with third party processing and pipeline companies to provide both the capital and necessary infrastructure to establish this access. This is a cornerstone of our financing plan to ramp up production."
- Liquids-rich Montney resource independently assessed at 130 million barrels of oil equivalent with over 40% condensate
- Concluded fishing operations on 15-01 well at Kakwa-Resthaven with damage to the formation
- Spring breakup suspended operations and shut-in production in Saskatchewan and Manitoba
- Increased financial flexibility with $26.5 million credit facility with Canadian chartered bank
- Cash flow from operations of approximately $3 million for the quarter with average daily production of 820 boe/d
Commenting on the Company's oil shale assets he added, "I am very pleased with Red Leaf's progress towards building their first commercial scale capsule. They have been finalizing the engineering and design as well as concluding the necessary contracts and government approvals. We have been working closely with their technical team and have recently seconded our VP Engineering to this project on a part time basis. We are expecting work to begin in the field this fall." He further added, "Analysis of core data from the second drilling program for our oil shale acreage at Pasquia Hills is complete and results are expected shortly."
Production during the second quarter of this year averaged 820 boe/d as compared to 525 boe/d in the second quarter of 2012 with the increase due to early production from the Kakwa-Resthaven area. With 73% of production from oil and natural gas liquids, Questerre reported cash flow from operations of $2.96 million (2012: $1.22 million) for the quarter. Spring breakup in Saskatchewan and Manitoba shut-in production primarily from single well batteries during the quarter. Wet weather in the first half of the third quarter has extended these shut-ins and also delayed further field work including the expansion of the pilot waterflood at Antler. As at June 30, 2013, the Company reported a working capital surplus of $10.61 million.
Questerre also updated the status of testing on the 15-01 Well in the Kakwa-Resthaven area. The wellbore was cleaned out in early August and small diameter production tubing installed in the horizontal leg. Initial cleanup suggests the high viscosity plugs used to maintain pressure during the fishing operations have damaged the formation and are now preventing contribution from the formation. The Company is evaluating a chemical program to treat the well and address this issue. Subject to the results, Questerre plans to resume testing late this fall.
Questerre Energy Corporation is leveraging its expertise gained through early exposure to shale and other non-conventional reservoirs. The Company has base production and reserves in the tight oil Bakken/Torquay of southeast Saskatchewan. It is bringing on production from its lands in the heart of the high-liquids Montney shale fairway. It is a leader on social license to operate issues for its Utica shale gas discovery in the St. Lawrence Lowlands, Quebec. In conjunction with a supermajor, it is at the leading edge of commercializing a proven process to unlock the massive resource potential of oil shale.
Questerre is a believer that the future success of the oil and gas industry depends on a balance of economics, environment and society. We are committed to being transparent and are respectful that the public must be part of making the important choices for our energy future.
This media release contains certain statements which constitute forward-looking statements or information ("forward-looking statements"), including the prospectivity of the Company's acreage, the commencement by Red Leaf of field work for its first commercial scale capsule and the prospectivity of the Company's oil shale acreage at Pasquia Hills, Saskatchewan and the expected production for the third quarter of 2013. 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") and billion cubic feet equivalent ("Bcfe") 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 the conversion ratio of one barrel to six thousand cubic feet 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. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalent of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
This press release contains the term "cash flow from operations", which is an additional IFRS measure and the terms "working capital surplus", and "netbacks" which are non-IFRS terms. Questerre uses these measures to help evaluate its performance.
As an indicator of Questerre's performance, cash flow from operations should not be considered as an alternative to, or more meaningful than, cash flows 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 quarter ended June 30,
|Net cash from operating activities
|Change in non-cash operating working capital
|Cash flows 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 revenue per boe adjusted for royalties per boe and 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.