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CALGARY, Feb. 23, 2017 /CNW/ - Questerre Energy
Corporation ("Questerre" or the "Company") (TSX,OSE:QEC) reported
today on its fourth quarter 2016 results and preliminary financial
and operating results for the year ended December 31, 2016. The Company also reported
certain results of its December 31,
2016 Reserves Assessment and Evaluation of its oil and
natural gas properties, as evaluated by McDaniel & Associates
Consultants Ltd.("McDaniel") with an effective date of December 31, 2016, prepared in accordance with
the standards contained in the Canadian Oil and Gas Evaluation
Handbook and National Instrument 51-101 – Standards of
Disclosure for Oil and Gas Activities (the "Report").
Michael Binnion, President and
Chief Executive Officer, commented, "Despite a challenging start,
2016 turned out to be very good year. The passage of modern
hydrocarbon legislation in Quebec
after six years of public consultations and studies was a huge
breakthrough. The updated Quebec
resource assessment including the assignment of economic contingent
resources supports the significant economic potential of our
acreage."
He added, "We also saw positive results in the Montney. Although we selectively participated
in new wells to preserve liquidity last year, the results from
longer wells with improved completions have contributed to an
improvement in our type curves. Our proved and probable EUR
(expected ultimate recovery) for new locations, as estimated in the
Report, has increased to 1.01 MMboe from 0.93 MMBoe last year. The
results adjacent to our operated acreage at Kakwa North were also
very encouraging. They have resulted in additional locations being
booked on both our operated and non-operated acreage."
He further added, "Based on these results, we plan to
participate in up to 8 (2.0 net) additional wells at Kakwa in 2017.
In Quebec, we are looking forward
to the introduction of the new environmental law and the
hydrocarbon regulations. We also plan to continue our step by step
approach with a focus on local acceptability."
2016 Highlights
- Quebec government endorses new
hydrocarbon legislation
- Quebec resource assessment
includes best estimate of risked economic contingent resources of
314 Bcf (52 million boe) with a risked NPV-10 of $424 million(1)
- Jordan resource assessment
best estimate of discovered petroleum initially in place of between
7.8 billion barrels to 12.2 billion barrels(1)
- Corporate total proved plus probable reserves of 15.78 MMboe
with a before income tax NPV-10% of $155.59
million
- Adjusted funds flow from operations of $7.05 million with average daily production of
1,373 boe/d for the year
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(1)
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For more information
regarding the resource assessments, please see the Company's press
releases dated October 27, 2016 and February 8, 2017. There is no
certainty that it will be commercially viable to produce any
portion of the resources.
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Commenting on the Company's oil shale assets, he noted, "The
updated resource assessment for our oil shale acreage in
Jordan confirmed the existence of
a significant deposit. Our focus this year is to assess the
feasibility of commercially developing this acreage using well
established technologies."
Regarding the Company's 2016 year-end reserve assessment he
added, "Corporate total proved plus probable gross reserves grew by
over 20% or 3.4 MMBoe from 12.92 MMBoe to 15.78 MMBoe, net of
production during the year. This growth has been entirely in the
Montney which currently represents
approximately 90% of our total reserves. The before tax NPV-10%
estimated for the corporate proved and probable reserves using
McDaniel's year-end 2016 price forecast is $155.59 million."
For the year ended December 31,
2016, the Company reported adjusted funds flow from
operations of $7.05 million (2015:
$9.78 million) and $1.94 million for the fourth quarter (2015:
$2.27 million). Production averaged
1,373 boe/d for the year (2015: 1,582 boe/d) with a 58% oil and
liquids weighting unchanged from the prior year and 1,261 boe/d for
the fourth quarter (2015: 1,648 boe/d). As at December 31, 2016, the Company reported a working
capital deficit of $17.02 million
(2015: $21.48 million).
For the year ended December 31,
2016, the Company reported net income before taxes of
$0.61 million (2015: loss of
$71.41 million). The net income
before taxes for 2016 includes the reversal of the impairment
charge of $23.5 million incurred in
2015 relating to its Quebec assets
in light of the passage of the hydrocarbon legislation in the
province and its updated resource assessment. In 2015, the Company
incurred an impairment charge of $69.62
million reflecting write-downs in the value of its
investment in Red Leaf and impairments in the carrying value of its
producing assets and exploration and evaluation assets due to,
among other factors, commodity prices.
The Company also reported on the status of its credit facility
review that was conducted in the fourth quarter of 2016. The lender
has advised that the primary credit facility will be renewed at
$23 million from $25 million. The facility will include a
$22.9 million revolving operating
demand facility ("Credit Facility A"). Credit Facility A can be
used for general corporate purposes, ongoing operations, capital
expenditures within Canada, and
acquisition of petroleum and natural gas assets within Canada.
In accordance with the requirements of National Instrument
51-101, Standards of Disclosure for Oil and Gas Activities
of the Canadian Securities Administrators, the Company anticipates
filing its Annual Information Form that includes more detailed
disclosure relating to petroleum and natural gas activities for the
2016 fiscal year at the end of March
2017 as set out in the Report.
SUMMARY OF OIL AND
GAS RESERVES
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as of December 31,
2016
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FORECAST PRICES
AND COSTS
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LIGHT AND
MEDIUM CRUDE
OIL
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CONVENTIONAL
NATURAL
GAS
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SHALE
GAS
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NATURAL GAS
LIQUIDS
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RESERVES
CATEGORY
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Gross(1)
(Mbbl)
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Net(2)
(Mbbl)
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Gross(1)
(MMcf)
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Net(2
(MMcf)
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Gross(1)
(MMcf)
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Net(2)
(MMcf)
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Gross(1)
(Mbbl)
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Net(2)
(Mbbl)
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Proved
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Developed
Producing
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705.0
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669.2
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332.9
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317.5
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3,862.3
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3,585.9
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747.6
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576.0
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Developed
Non-Producing
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56.1
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46.6
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293.1
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261.5
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813.5
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743.3
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173.1
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138.4
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Undeveloped
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296.4
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280.9
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-
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-
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16,836.0
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15,062.0
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3,288.6
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2,712.6
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Total
Proved
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1,057.4
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996.7
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626.0
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579.0
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21,511.8
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19391.2
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4209.4
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3427.0
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Probable
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398.9
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375.1
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258.2
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232.4
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20,705.2
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18,583.1
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2936.1
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2285.8
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Total Proved Plus
Probable
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1,456.3
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1,371.9
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884.2
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811.4
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42,217.0
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37,974.3
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7145.5
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5712.8
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(1)
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Gross reserves are
working interest reserves before royalty deductions.
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(2)
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Net reserves are
working interest reserves after royalty deductions plus royalty
interest reserves.
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SUMMARY NET
PRESENT VALUES OF FUTURE NET REVENUE
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as of December 31,
2016
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FORECAST PRICES
AND COSTS
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BEFORE INCOME TAXES
DISCOUNTED AT
(%/YEAR)
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AFTER INCOME TAXES
DISCOUNTED AT
(%/YEAR)
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RESERVES
CATEGORY
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0%
(M$)
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5%
(M$)
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10%
(M$)
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15%
(M$)
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20%
(M$)
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0%
(M$)
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5%
(M$)
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10%
(M$)
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15%
(M$)
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20%
(M$)
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Proved
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Developed
Producing
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61.3
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48.9
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40.5
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34.6
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30.3
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61.3
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48.9
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40.5
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34.6
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30.3
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Developed
Non‑Producing
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9.9
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8.3
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7.3
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6.5
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5.9
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9.9
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8.3
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7.3
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6.5
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5.9
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Undeveloped
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95.7
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58.0
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35.1
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20.5
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10.8
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95.7
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58.0
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35.1
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20.5
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10.8
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Total
Proved
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166.9
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115.2
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82.8
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61.6
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47.1
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166.9
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115.2
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82.8
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61.6
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47.1
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Probable
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156.7
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103.1
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72.8
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54.1
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41.7
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140.8
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95.9
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69.3
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52.3
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40.8
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Total Proved Plus
Probable
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323.6
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218.3
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155.6
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115.7
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88.8
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307.7
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211.1
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152.1
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113.9
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87.9
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SUMMARY OF PRICE
FORECASTS
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Year
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2017
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2018
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2019
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2020
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2021
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2022
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2023
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2024
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2025
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AECO Spot Price
($C/MMBtu)
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3.40
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3.15
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3.30
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3.60
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3.90
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3.95
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4.10
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4.25
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4.30
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Edmonton Light Crude
Oil ($C/bbl)
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69.80
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72.70
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75.50
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81.10
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86.60
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88.30
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90.00
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91.80
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93.70
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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
significant 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 its estimated future net revenues, the
Company's drilling plans at Kakwa in 2017, the introduction of new
environmental and hydrocarbon laws and regulations in Quebec, the Company's focus on obtaining
social acceptability in Quebec,
its plans to assess the feasibility of commercial development in
Jordan and the filing of an Annual
Information Form. In addition, statements relating to reserves and
resources are deemed to be forward-looking information as they
involve the implied assessment, based on certain estimates and
assumptions, that the reserves and resources described exist in the
quantities predicted or estimated and can be profitably produced in
the future.
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.
All evaluations and reviews of future net revenue are stated
prior to any provision for interest costs or general and
administrative costs and after the deduction of estimated future
capital expenditures for wells to which reserves have been
assigned. The estimated future net revenue from the production of
disclosed oil and gas reserves does not represent the fair market
value of the Company's reserves. There is no assurance that such
price and cost assumptions will be attained and variances could be
material. The recovery and reserve estimates of crude oil, NGLs and
natural gas reserves provided herein are estimates only and there
is no guarantee that the estimated reserves will be recovered.
Actual light and medium crude oil, shale gas and natural gas
liquids reserves may be greater than or less than the estimates
provided herein. All of the Company's light and medium crude oil,
shale gas and natural gas liquids reserves are located in
Canada.
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.
The estimates of reserves and future net revenue for individual
properties may not reflect the same confidence level as estimates
of reserves and future net revenue for all properties, due to the
effects of aggregation.
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 flow 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.
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Quarter Ended
December 31
|
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Year Ended December
31
|
|
2016
|
2015
|
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2016
|
2015
|
($
thousands)
|
|
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|
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Cash flow from
operating activities
|
2,701
|
1,783
|
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6,719
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8,957
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Interest
paid
|
328
|
122
|
|
912
|
225
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Net change in
non-cash operating working capital
|
(1,086)
|
364
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|
(586)
|
596
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Adjusted funds flows
from operations
|
1,943
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2,269
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|
7,045
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9,778
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Working capital surplus (deficit) is a non-GAAP measure
calculated as current assets less current liabilities excluding the
current portion of the share based compensation liability and risk
management contracts.
SOURCE Questerre Energy Corporation