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, 2023.
Michael Binnion, President, and Chief Executive
Officer, commented, “We have been transforming ourselves into a
carbon technology company. This change in strategy is to allow us
to unlock the giant resources we have discovered but have been
blocked from producing in an increasingly ESG focused world. Our
initial approach to the use of carbon technology was as a cost
centre, or part of the new cost of doing business. With increasing
prices on carbon, we are now seeing the potential for this to be a
profit centre.”
He added, “Interest in carbon capture and
storage is growing in Quebec, and this business could be
independent of our Clean Gas production. We are pursuing a carbon
storage pilot project under the existing legislation as a step
towards a business and political solution in Quebec. We continue
our fiduciary obligations to preserve our legal rights before the
Court. Our motion to suspend key elements of Bill 21 was heard in
late October. We are awaiting the Court’s decision.”
Reporting on the Company’s 40% investment in Red
Leaf, he added, “Carbon storage is also integral to the development
of their assets in the Uintah Basin, Utah. In addition to their
permit for a wax processing facility, they own the rights for
carbon sequestration over 7,000 acres. Discussions are ongoing with
partners to assess this potential. They are also advancing the
design of a small-scale commercial project for their oil shale
technology with a consortium of Jordanian companies.”
Highlights
- Designing expanded carbon storage pilot project in Quebec
- Red Leaf designing small-scale commercial project in Jordan for
oil shale technology
- Average daily production of 1,830 boe/d with adjusted funds
flow from operations of $3 million
Consistent with prior periods, Kakwa continued
to account for 80% of corporate production. With the incremental
working interest volumes at Kakwa North and one (0.25 net) well at
Kakwa Central brought on production in the quarter, production
increased over the prior year. For the third quarter, daily
production averaged 1,830 boe/d (2022: 1,629 boe/d) and for the
nine months ended September 30, 2023, it averaged 1,866 boe/d
(2022: 1,609 boe/d).
The higher production volumes were offset by the
lower commodity prices in the current year. For the quarter,
petroleum and natural gas sales totaled $10.7 million compared to
$11.6 million last year and $32 million year to date compared to
$38.2 million in the prior year. Operating costs increased by an
additional $1 million in the period as two workovers went over
budget due to downhole operational problems. Combined with the
lower prices, this contributed to adjusted funds flow from
operations of $3 million (2022: $5.2 million) in the quarter and
$12.6 million for the first three quarters of the year (2022: $21.7
million).
The higher operating costs also contributed to a
net loss of $0.4 million for the quarter (2022: $2.8 million
profit) and a net profit of $2.3 million (2022: $14.2 million) for
the nine months ended September 30, 2023. Capital expenditures in
the quarter were $0.9 million (2022: $1.7 million) and $6.6 million
year to date (2022: $9.4 million).
As at September 30, 2023, effectively no amounts
were drawn on the facility and the Company held unrestricted cash
and term deposits of $33.3 million. The Company had a net working
capital surplus of $30.2 million (2022: $14.4 million surplus).
The term "adjusted funds flow from operations"
and “working capital surplus” are non-IFRS measures. Please see the
reconciliation elsewhere in this press release.
Questerre is an energy technology and innovation
company. It is leveraging its expertise gained through early
exposure to low permeability reservoirs to acquire significant
high-quality resources. We believe we can successfully transition
our energy portfolio. With new clean technologies and innovation to
responsibly produce and use energy, we can sustain both human
progress and our natural environment.
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 Company’s view that
this business could be independent of its Clean Gas production,
that a pilot could be a step towards a business and political
solution in Quebec and Red Leaf’s plans to advance the design of a
small-scale commercial project for its technology with partners.
Forward-looking statements are based on several material factors,
expectations, or assumptions of Questerre which have been used to
develop such statements and information, but which may prove to be
incorrect. Although Questerre believes that the expectations
reflected in these forward-looking statements are reasonable, undue
reliance should not be placed on them because Questerre can give no
assurance that they will prove to be correct. Since forward-looking
statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Further,
events or circumstances may cause actual results to differ
materially from those predicted as a result of numerous known and
unknown risks, uncertainties, and other factors, many of which are
beyond the control of the Company, including, without limitation:
the implementation of Bill 21 by the Government of Quebec and
certain other risks detailed from time-to-time in Questerre's
public disclosure documents. Additional information regarding some
of these risks, expectations or assumptions and other factors may
be found under in the Company's Annual Information Form for the
year ended December 31, 2022, and other documents available on the
Company’s profile at www.sedar.com. The reader is cautioned not to
place undue reliance on these forward-looking statements. The
forward-looking statements contained in this news release are made
as of the date hereof and Questerre undertakes no obligations to
update publicly or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, unless
so required by applicable securities laws.
Certain information set out herein may be
considered as “financial outlook” within the meaning of applicable
securities laws. The purpose of this financial outlook is to
provide readers with disclosure regarding Questerre’s reasonable
expectations as to the anticipated results of its proposed business
activities for the periods indicated. Readers are cautioned that
the financial outlook may not be appropriate for other
purposes.
(1) For the three-month period ended September
30, 2023, liquids production including light crude and natural gas
liquids accounted for 1,050 bbls/d (2022: 987 bbls/d) and natural
gas including conventional and shale gas accounted for 4,677 Mcf/d
(2022: 3,852 Mcf/d). For the nine-month period ended September 30,
2023, liquids production including light crude and natural gas
liquids accounted for 1,077 bbls/d (2022: 986 bbls/d) and natural
gas including conventional and shale gas accounted for 4,734 Mcf/d
(2022: 3,739 Mcf/d).
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 Sept 30, |
|
Nine months ended Sept 30, |
|
($ thousands) |
2023 |
2022 |
|
2023 |
2022 |
|
Net cash from operating activities |
2,382 |
8,413 |
|
11,163 |
23,477 |
|
Change in non-cash operating working capital |
652 |
(3,230 |
) |
1,483 |
(1,823 |
) |
Adjusted Funds Flow from Operations |
3,034 |
5,183 |
|
12,646 |
21,654 |
|
|
|
|
|
|
|
|
Working capital surplus is a non-GAAP measure
calculated as current assets less current liabilities excluding
risk management contracts and lease liabilities.
For further information, please contact:
Questerre Energy Corporation
Jason D’Silva, Chief Financial Officer
(403) 777-1185 | (403) 777-1578 (FAX) |Email: info@questerre.com
Questerre Energy (TSX:QEC)
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