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, 2022.
Michael Binnion, President and Chief Executive
Officer of Questerre, commented, “Although Bill 21 was enacted
during the quarter, the Quebec election is now over. There could be
an opportunity for a less political approach to energy security by
the Quebec Government. We remain open to a political and business
solution as the growing demand for clean energy only highlights the
value of our project. Concurrently, to protect our legal rights, we
are advancing the claim for breach of contract and unjust
enrichment. A Superior Court judge was appointed last month to
separately manage all the claims related to Bill 21 and a hearing
date should be set shortly.”
He added, “Effective the end of the quarter, we
converted our royalty interest in the four original farm-in wells
at Kakwa North into a 50% working interest. This should add
approximately 500 boe/d over the remainder of this year. Based on
our discussions with the operator, we expect drilling on a three
well pad will commence late next year.”
Highlights
- Questerre converts Kakwa North royalty interest to working
interest adding 500 boe/d for remainder of the year
- Government of Quebec announced plans to enact Bill 21 and
revoke exploration licenses
- Average daily production of 1,629 boe/d and adjusted funds flow
from operations of $5.2 million
Consistent with prior periods, Kakwa continued
to account for 80% of corporate production. With three (0.75 net)
wells brought on production earlier this year, production increased
over the prior year. For the third quarter, daily production
averaged 1,629 boe/d (2021: 1,363 boe/d) and for the nine months
ended September 30, 2022, it averaged 1,609 boe/d (2021: 1,507
boe/d)(1). Production volumes declined over the second quarter
which included flush production from the new Kakwa wells.
Although prices declined from the second
quarter, higher commodity prices over the same period last year
improved revenue and adjusted funds flow from operations in 2021.
For the third quarter, petroleum and natural gas sales increased to
$11.6 million from $7.4 million last year and $38.2 million year to
date from $21.5 million in the prior year. The higher revenue
contributed to adjusted funds flow from operations of $5.2 million
(2021: $3.6 million) in the quarter and $21.6 million for the nine
months ended September 30 (2021: $10.7 million). Funds flow in the
current quarter was impacted by an incremental $1.5 million in
operating costs over last year, reflecting a successful workover
program in Saskatchewan and escalating fuel and water handling
costs at Kakwa.
The higher revenue also contributed to net
income of $2.8 million for the third quarter (2021: $2.0 million)
and $14.2 million (2021: $5.8 million) for the nine months ended
September 30. Capital expenditures in the quarter were $1.7 million
(2021: $0.5 million) and $9.4 million year to date (2021: $1.5
million). The Company posted a working capital surplus of $14.4
million at September 30, 2022 (2021: $1.7 million).
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 views on the
potential for less political and business solution to the issues
impacting its project in Quebec, the advancement of its legal
claims, the timing for a hearing date, its expectations about
production additions from the existing wells at Kakwa North and the
timing of a potential drilling program.
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, 2021, 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, 2022, liquids production including light crude and natural gas
liquids accounted for 987 bbl/d (2021: 833 bbl/d) and natural gas
including conventional and shale gas accounted for 3,852 Mcf/d
(2021: 3,178 Mcf/d). For the nine-month period ended September 30,
2022, liquids production including light crude and natural gas
liquids accounted for 986 bbl/d (2021: 898 bbl/d) and natural gas
including conventional and shale gas accounted for 3,739 Mcf/d
(2021: 3,655 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) |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Net cash from operating activities |
$ |
8,413 |
|
$ |
4,202 |
|
$ |
23,477 |
|
$ |
10,287 |
|
Interest
received |
|
(134 |
) |
|
(54 |
) |
|
(242 |
) |
|
(152 |
) |
Interest
paid |
|
2 |
|
|
111 |
|
|
41 |
|
|
367 |
|
Change in non-cash operating working capital |
|
(3,098 |
) |
|
(681 |
) |
|
(1,622 |
) |
|
185 |
|
Adjusted Funds Flow from Operations |
$ |
5,183 |
|
$ |
3,578 |
|
$ |
21,654 |
|
$ |
10,687 |
|
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
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