/THIS NEWS RELEASE IS NOT FOR DISSEMINATION OR
DISTRIBUTION IN THE UNITED STATES OF
AMERICA TO UNITED
STATES NEWSWIRE SERVICES OR UNITED
STATES PERSONS/
CALGARY, Aug. 10, 2017 /CNW/ - Questerre Energy
Corporation ("Questerre" or the "Company") (TSX,OSE:QEC) reported
today on its financial and operating results for the quarter ended
June 30, 2017.
Michael Binnion, President and
Chief Executive Officer of Questerre, commented, "While we invested
in building reserves at Kakwa, we continued to move Quebec and Jordan forward during the quarter. In addition
to the infrastructure expansion at Kakwa, three joint venture wells
were completed. Capital costs are trending lower per metre of
horizontal drilled. In total, we are planning for up to seven (1.68
net) wells for 2017 including one (0.25 net) well that spud last
December."
Highlights
- Development at Kakwa continues with well completions and
infrastructure expansion
- Government of Quebec releases
Energy Policy's 2017-2020 Action Plan with natural gas key to the
province's energy transition
- Acquired minority interest in Red Leaf to accelerate
feasibility study of oil shale project in Jordan
- Average daily production of 1,037 boe/d and 490 boe/d currently
behind pipe with adjusted funds flow from operations of
$0.89 million(1)
(1)
|
Behind pipe volumes
based on production estimated under proved undeveloped reserve
category for wells drilled and completed as forecasted by
independent reserve evaluator at December 31, 2016
|
Commenting on Quebec, he noted,
"We are working on a path to zero emissions natural gas production
to support social acceptability for a pilot project. This dovetails
with the government's action plan for their energy policy with the
goal of reducing emissions. It includes promoting local natural gas
and a new approach to hydrocarbons. Based on this plan, we expect
the draft hydrocarbon regulations this summer and hopefully
finalized by year-end."
Updating developments on its oil shale assets, he further added,
"To accelerate the appraisal of our oil shale project in
Jordan, we made a strategic
investment in Red Leaf. They are optimizing the EcoShale process
which we are prioritizing for Jordan and, in particular, the use of reusable
capsules based on existing refining technology. This could
materially reduce break-even oil prices for this significant oil
shale deposit."
Due to limited participation in new drilling at Kakwa last year,
the Company reported that production from the Kakwa area declined
over the prior year to average 850 boe/d (2016: 1,081 boe/d) and
contributed to daily production of 1,037 boe/d for the Company
during the second quarter of 2017 (2016: 1,422 boe/d). Gross
revenue declined by 5% to $4.18
million with lower production volumes largely offset by
higher commodity prices in the period. Higher operating costs and
lower realized gains on hedging contributed to adjusted funds flow
from operations of $0.89 million in
the quarter (2016: $1.92 million).
The Company reported a net loss of $3.62
million for the current quarter compared to a loss of
$2.17 million for the second quarter
last year.
In addition to the acquisition of Red Leaf common shares for
$8.15 million, gross capital
investment for the first six months increased to $12.31 million from $4.90
million in 2016. Expenditures in 2017 were offset by the
sale of shallow exploration rights at Kakwa for net proceeds of
$4.45 million. The Company
anticipates incremental investment at Kakwa in 2017 could be up to
$10 million.
The Company also reported on the status of its credit facility
review that was conducted in the second quarter of 2017. The lender
has advised that the primary credit facility will be renewed at
$18 million from $23 million. The facility will include a
$17.9 million revolving operating
demand facility ("Credit Facility A"). Credit Facility A can be
used for general corporate purposes, ongoing operations and capital
expenditures within Canada.
The term "adjusted funds flow from operations" is a non-IFRS
measure. Please see the reconciliation elsewhere in this press
release.
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. It is pursuing
oil shale projects with the aim of commercially developing these
massive resources.
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.
Advisory Regarding Forward-Looking Statements
This media release contains certain statements which constitute
forward-looking statements or information ("forward-looking
statements") including the Company's plans to drill up to seven
(1.68 net) wells for 2017, its plans for 'zero emission natural gas
production', its expectation the draft hydrocarbon regulations in
Quebec will be released this
summer and finalized by year-end, its belief that the move to
reusable capsules by Red Leaf could materially reduce break-even
oil prices for its oil shale project in Jordan and the Company's anticipation that
incremental investment in the Kakwa area for 2017 could be up to
$10 million. 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
statements. 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.
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 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 terms "adjusted funds flow from
operations" and "working capital deficit" which are non-GAAP terms.
Questerre uses these measures to help evaluate its performance.
As an indicator of Questerre's performance, adjusted funds 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 GAAP. Questerre's determination of
adjusted funds flow from operations may not be comparable to that
reported by other companies. Questerre considers adjusted funds
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.
|
Three months ended
June 30,
|
($
thousands)
|
2017
|
2016
|
Net cash from
operating activities
|
$674
|
$730
|
Interest
paid
|
225
|
207
|
Change in non-cash
operating working capital
|
(19)
|
979
|
Adjusted Funds Flow
from Operations
|
$880
|
$1,916
|
Working capital surplus (deficit) is a non-GAAP measure
calculated as current assets less current liabilities excluding
risk management contracts.
SOURCE Questerre Energy Corporation