Questerre Energy Corporation (“Questerre” or the “Company”)
(TSX,OSE:QEC) reported today on its financial and operating results
for the second quarter ended June 30, 2024.
Michael Binnion, President, and Chief Executive
Officer of Questerre, commented, “As we advance our high-impact
projects, we are growing our conventional assets. Three (0.75 net)
wells were completed at Kakwa Central this quarter and should be on
production in late August. A new completion design and improved
water handling lowered costs by 20% over last year to about $14
million per well. Using a similar approach, the operator at Kakwa
North plans to drill three (1.5 net) wells this fall. We will
review the final programs to assess our participation. With
success, these wells could materially grow our existing production
next year.”
Commenting on developments in Quebec, he added,
“Our carbon storage pilot application in Quebec is well-advanced. A
program to find government funding for this project is underway. In
what could be a positive development, the Government tabled Bill 69
on the responsible governance of energy resources in response to
the impending electric energy shortfall. It requires an integrated
plan for managing both electricity and natural gas supply in the
province. The added natural gas supply requirement appears very
positive and demonstrates a recognition of the long-term need for
natural gas supply in Quebec.”
Highlights
- Three (0.75 net) wells completed at Kakwa Central
- Government of Quebec introduces Bill 69 for the responsible
governance of energy resources in Quebec
- Average daily production of 1,559 boe per day(1) with adjusted
funds flow from operations of $4.5 million
Consistent with prior periods, Kakwa continued
to account for 80% of corporate production. Natural declines
contributed to lower production volumes this year compared to last
year when the Company tied-in one (0.25 net) well. Production
averaged 1,559 boe/d for the quarter (2023: 1,978 boe/d) and 1,612
boe/d for the first half of the year (2023: 1,884 boe/d). The three
(0.75 net) wells drilled and completed in the current year are
expected to increase production in the latter half of the third
quarter.
Lower production volumes and, to a lesser
extent, lower natural gas prices, offset the increase in realized
liquids prices resulting in lower revenue for the quarter and six
months ended June 30 compared to last year. For the quarter,
petroleum and natural gas sales totaled $8.8 million (2023: $10.7
million) and $17.8 million year to date (2023: $21.2 million). The
lower revenue contributed to adjusted funds flow from operations of
$4.5 million (2023: $5.3 million) in the quarter and $7.4 million
for the first six months of the year (2023: $9.6 million).
The revenue also contributed to net income of
$1.3 million for the quarter (2023: $1.7 million) and $1.1 million
(2023: $2.6 million) for the first half of the year. Capital
expenditures in the quarter were $7.0 million (2023: $2.5 million)
and $9.7 million year to date (2023: $5.7 million).
The Company also reported on the pending renewal
of its credit facility with a Canadian chartered bank. Following a
preliminary review conducted in the second quarter, the Company
anticipates its credit facilities will remain at $16 million. The
renewal will take effect upon receipt of the final requisite
approvals in the third quarter. The effective interest rate on the
facility for the first half of 2024 was 8.16% (2023: 7.74%). As at
June 30, 2024, effectively no amounts were drawn on the facility
and the Company held unrestricted cash and term deposits of $37
million. As of June 30, 2024, the Company had a net working capital
surplus of $27.6 million (2023: $28 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 commencement of
production from new wells from Kakwa, timing, participation and
expectation of production increases regarding proposed wells at
Kakwa North, the Company’s plans to seek government funding for its
carbon storage pilot in Quebec and its views on the inclusion of
natural gas supply in Bill 69. 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, 2023, 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 June 30,
2024, liquids production including light crude and natural gas
liquids accounted for 931 bbls/d (2023: 1,159 bbls/d) and natural
gas including conventional and shale gas accounted for 3,767 Mcf/d
(2023: 4,911 Mcf/d). For the six-month period ended June 30, 2024,
liquids production including light crude and natural gas liquids
accounted for 955 bbls/d (2023: 1,091 bbls/d) and natural gas
including conventional and shale gas accounted for 3,942 Mcf/d
(2023: 4,760 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 June 30, |
Six months ended June 30, |
($ thousands) |
2024 |
2023 |
2024 |
2023 |
Net cash from operating activities |
$ 3,141 |
$ 4,133 |
$ 5,769 |
$ 8,871 |
Change in non-cash operating working capital |
1,314 |
1,202 |
1,659 |
831 |
Adjusted Funds Flow from Operations |
$ 4,455 |
$ 5,335 |
$ 7,428 |
$ 9,612 |
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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