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, 2023.
Michael Binnion, President, and Chief Executive
Officer, commented, “As Quebec is holding public consultations on
hydroelectricity shortage in the next two to three years. We are
re-engaging with the Government on how our Clean Gas could be part
of the solution. Our scalable, shovel-ready project can help
mitigate the risks of curtailments and price spikes, all while
retaining Quebec’s competitiveness in attracting new industries and
helping meet their GHG emissions reductions targets. The Government
of Quebec also proposed a stay of enforcement related to Bill 21.
There is a hearing scheduled this October to extend this stay.”
Reporting on the Company’s 40% investment in Red
Leaf, he added, “Red Leaf also advanced both their technology and
the permitted wax processing facility in the Uintah Basin in Utah
during the quarter. A pre-FEED study on the facility was completed
and includes a Class IV capex estimate as well as an estimate to
incorporate carbon capture directly in the design. Collaborating
with local Jordanian companies, Red Leaf also began the design for
a scaled version of their commercial production facility.”
Highlights
- Hearing to suspend revocation of licenses under Bill 21 in
Quebec scheduled for October 2023
- Red Leaf completes pre-FEED study for wax processing facility
in Uintah Basin, Utah
- Average daily production of 1,978(1) boe/d with adjusted funds
flow from operation of $5.3 million
Consistent with prior periods, Kakwa continued
to account for 80% of corporate production. With one (0.25 net)
well brought on production in the quarter, production increased
over the prior year. For the second quarter, daily production
averaged 1,978 boe/d (2022: 1,909 boe/d) and for the six months
ended June 30, 2023, it averaged 1,884 boe/d (2022: 1,600
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
$17.0 million last year and $21.2 million year to date compared to
$26.6 million in the prior year. The lower revenue contributed to
adjusted funds flow from operations of $5.3 million (2022: $12.2
million) in the quarter and $9.6 million for the first six months
of the year (2022: $16.5 million).
The revenue also contributed to net income of
$1.7 million for the quarter (2022: $9.1 million) and $2.6 million
(2022: $11.5 million) for the first half of the year. Capital
expenditures in the quarter were $2.5 million (2022: $2.8 million)
and $5.7 million year to date (2022: $7.8 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 2023 was 7.74% (2022: 4.08%). As at
June 30, 2023, effectively no amounts were drawn on the facility
and the Company held unrestricted cash and term deposits of $35.2
million. The Company had a net working capital surplus of $28
million (2022: $10.6 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.
For further information, please contact:
Questerre Energy CorporationJason D’Silva, Chief Financial
Officer(403) 777-1185 | (403) 777-1578 (FAX) |Email:
info@questerre.com
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 plans to
re-engage with the Government of Quebec, its views on how its
project could mitigate the challenges from the anticipated
electricity shortage in the province, the timing of the next
hearing related to its legal claim against the Government, and Red
Leaf’s engineering for a small-scale commercial project in Jordan.
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 June 30,
2023, liquids production including light crude and natural gas
liquids accounted for 1,159 bbls/d (2022: 1,157 bbls/d) and natural
gas including conventional and shale gas accounted for 4,911 Mcf/d
(2022: 4,510 Mcf/d). For the six-month period ended June 30, 2023,
liquids production including light crude and natural gas liquids
accounted for 1,091 bbls/d (2022: 987 bbls/d) and natural gas
including conventional and shale gas accounted for 4,760 Mcf/d
(2022: 3,682 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) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net cash from operating activities |
$ |
4,133 |
|
$ |
10,162 |
|
$ |
8,871 |
|
$ |
15,066 |
|
Change in non-cash operating working capital |
|
1,202 |
|
|
2,021 |
|
|
831 |
|
|
1,407 |
|
Adjusted Funds Flow from Operations |
$ |
5,335 |
|
$ |
12,183 |
|
$ |
9,612 |
|
$ |
16,473 |
|
Working capital surplus is a non-GAAP measure
calculated as current assets less current liabilities excluding
risk management contracts and lease liabilities.
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