CALGARY, Alberta, May 11, 2018 (GLOBE NEWSWIRE) -- Questerre Energy Corporation (“Questerre” or the “Company”) (TSX: QEC ) (OSE: QEC ) reported today on its financial and operating results for the first quarter ended March 31, 2018.
Michael Binnion, President and Chief Executive Officer of Questerre, commented, “Our production and cash flow growth this quarter was primarily driven by the increased investment in Kakwa. Production from the joint venture acreage almost doubled from the first quarter of 2017. With additional drilling scheduled for later this summer at Kakwa, we could see production dip in the next few quarters before a further increase by year-end.”
He added, “Through a recent partnership with an experienced Montney operator, we plan to develop our immediately offsetting acreage. We are looking forward to the results from the first well given the strong condensate rates and low acid gas from our adjacent producing wells.”
Highlights
- Average daily production over 2,000 boe/d for the quarter
- Adjusted funds flow from operations more than doubled to $4.7 million
- Questerre partners with experienced operator to develop Kakwa North acreage
- Questerre commissions integration study for Jordan oil shale project
Commenting on Quebec, he noted, “We were encouraged by comments this May from the Minister of Environment noting that the Minister of Energy and Natural Resources will soon be tabling regulations for hydrocarbons. Once finalized, we will be meeting with the municipalities to secure the local acceptability we need. We are confident there is interest in our clean gas pilot and its environmental and economic benefits.”
Updating developments on its project in Jordan, he further added, “During the quarter, we engaged Hatch Ltd., a global engineering firm, to review the engineering and economics for our oil shale project in Jordan. The initial project will target production of approximately 50,000 bbls/d and will include the costs to upgrade the produced oil to diesel and gasoline. Once this study is completed, we plan to commission a more detailed pre-FEED study as we commence negotiations for a concession agreement.”
As a result of the increased capital investment in Kakwa last year, the Company reported higher production volumes over prior periods. Production averaged 2,013 boe/d for the quarter compared to 1,123 boe/d for the same period last year with Kakwa accounting for over three quarters of production during both periods. Gross revenue more than doubled to $9.54 million with higher production volumes benefitting from higher oil prices in the period. The higher revenue contributed to adjusted funds flow from operations of $4.65 million for the period compared to $1.41 million last year. The Company reported net income of $0.06 million for the current quarter compared to a loss of $0.52 million for the first quarter last year.
Capital investment for the quarter focused almost exclusively on Kakwa and totaled $8.66 million (2017: $5.32 million). The Company anticipates incremental investment at Kakwa in 2018 could be up to $21 million and include six (1.5 net) wells subject to the operator’s final plans and continued results.
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 news release contains certain statements which constitute forward-looking statements or information (“forward-looking statements”) including the expectation that additional drilling will be scheduled at Kakwa this summer, the expectations for a further increase in production by year-end, the Company’s plans to develop its offsetting acreage at Kakwa through its partnership with an experienced Montney operator, the expectation that the first well could spud by June, the expectation that the final oil and gas regulations in Quebec will be issued soon, the Company’s plan to meet with municipalities in Quebec to secure the local acceptability needed, the Company’s belief that there is interest in its clean gas pilot by the municipalities in Quebec, the Company’s plans to commission a more detailed pre-FEED study for its oil shale project in Jordan, its plans to commence negotiations for a concession agreement, and its plans for additional capital spending at Kakwa. 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 surplus” 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 March 31, | |||||
| ($ thousands) | 2018 | 2017 | |||
| Net cash (used in) from operating activities | (352 | ) | $ | 1,247 | |
| Interest paid | 78 | 183 | |||
| Change in non-cash operating working capital | 4,956 | (19 | ) | ||
| Adjusted Funds Flow from Operations | 4,652 | $ | 1,411 | ||
Working capital surplus is a non-GAAP measure calculated as current assets less current liabilities excluding risk management contracts.
For further information, please contact: Questerre Energy Corporation Jason D’Silva, Chief Financial Officer (403) 777-1185 | (403) 777-1578 (FAX) |Email:
