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CALGARY, Nov. 12, 2015 /CNW/ - Questerre Energy Corporation ("Questerre" or the "Company") (TSX,OSE:QEC) reported today on its financial and operating results for the third quarter ended September 30, 2015.
Michael Binnion, President and Chief Executive Officer, commented, "The development of our Kakwa joint venture acreage delivered another positive quarter. Three wells were tied-in to the recently expanded central facility which can now handle up to 30 MMcf/d of natural gas plus liquids. We also drilled and completed our ninth extended-reach well, with a lateral of 2000m. We intend to participate in additional wells, subject to prices and further results."
He added, "The recently announced acquisition of our partner at Kakwa is encouraging. It validates the potential of this asset and in our view supports our ongoing investment at current prices."
Highlights
Commenting on its oil shale assets, Mr. Binnion noted, "We are also prudently investing in our oil shale assets, specifically the new acreage in Jordan. This is at a very early stage, but quite prospective. We began a five-well core program in the quarter to verify existing government data and our preliminary resource assessment."
The Company reported that production from the Kakwa-Resthaven area contributed 1,570 boe/d, or just over 80% of corporate production in the third quarter of 2015. Corporate production averaged 1,934 boe/d in the quarter (2014: 849 boe/d) and 1,559 boe/d for the nine months ended September 30, 2015 (2014: 943 boe/d).
Condensate and light oil production increased by almost 80% over the prior year and offset the material decline in oil and liquids prices. Accounting for over 50% of production volumes, it contributed to cash flow from operations in the third quarter of $3.08 million compared to $2.56 million in the prior year. Cash flow also reflects the overhead reductions implemented earlier this year. In the fourth quarter, the Company moved to a four-day work week and further reduced office space. It is anticipated these cost-cutting measures will reduce gross overheads by almost 30% or $1.8 million on a go-forward basis compared to 2014.
Capital investment in the quarter was $6.21 million as compared to $23.36 million in the prior year. Consistent with the prior quarter, over 90% of the capital was directed to the Kakwa-Resthaven area.
The Company reported a net loss of $18.35 million for the quarter and a net loss of $17.48 million for the nine months ended September 30, 2015. This is primarily due to an impairment expense of $20.76 million for the quarter and $21.37 million for the year to date. For the quarter, the impairment expense includes $10.15 million relating to its investment in Red Leaf Resources Inc. and $9 million relating to its property, plant and equipment assets.
The term "cash 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.
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 Company's intent to participate in future wells in the Kakwa-Resthaven area, the Company's view that the recently announced acquisition of its joint venture partner validates the potential of this asset and supports continued investment at current prices, the prospectivity of its oil shale acreage in Jordan, and the anticipation that the overhead reductions will reduce gross overheads by almost 30% or $1.8 million on a go-forward basis compared to 2014. 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 "cash flow from operations" which is a non-IFRS term. 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 September 30, ($ thousands) |
2015 |
2014 |
| Cash flows from operations |
$ 3,080 |
$ 2,557 |
| Change in non-cash operating working capital |
282 |
571 |
| Net cash from operating activities |
$ 3,362 |
$ 3,128 |
SOURCE Questerre Energy Corporation
Image with caption: "Questerre Energy Corporation (CNW Group/Questerre Energy Corporation)". Image available at: http://photos.newswire.ca/images/download/20151112_C8111_PHOTO_EN_544327.jpg
Questerre Energy Corporation, Jason D'Silva, Chief Financial Officer, (403) 777-1185, (403) 777-1578 (FAX), Email: [email protected]
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