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CALGARY, Alberta, May 12, 2020 (GLOBE NEWSWIRE) -- Questerre Energy Corporation (“Questerre” or the “Company”) (TSX,OSE:QEC) reported today on its financial and operating results for the first quarter ended March 31, 2020.
Michael Binnion, President and Chief Executive Officer, commented, “With the fallout from the pandemic and collapse in oil prices, we are focused on preserving liquidity and the value of our long-term assets, particularly Quebec. As reported earlier, we eliminated all non-essential investment in early March. The operators at Kakwa are prudently suspending activity until prices improve. We are fortunate we can respond quickly given the relatively short time between spudding wells and putting them on production. We are also reducing operating costs, where possible, and cutting overheads.”
He added, “We are now more optimistic about our Clean Tech Energy project. The pandemic has stressed the importance of supply chains and self-sufficiency in Quebec. As the Government seeks projects to improve their independence and stimulate economic growth, we think the timing for our project could be getting much better.”
- Implementing cost-cutting measures to preserve liquidity following collapse in oil prices and coronavirus pandemic
- Received Government approvals for Quebec acquisition
- Decline in future oil prices impaired carrying value of assets by $113 million
- Average daily production of 2,078 boe/d with adjusted funds flow from operations of $2.5 million
Consistent with prior periods, Kakwa continued to account for over three quarters of corporate production. During the first quarter of 2020, daily production averaged 2,078 boe/d (2019: 1,944 boe/d). Despite materially lower oil prices in March 2020, petroleum and natural gas revenue declined marginally to $7 million from $7.1 million last year. As a result of the lower future oil prices, the Company incurred an impairment expense of $96.3 million related to the carrying value of its producing assets, with relatively no change in the volume of reserves compared to year-end. The Company also impaired an additional $14.4 million in exploration costs for Kakwa as well as a further $2.3 million for goodwill. These impairments resulted in a loss of $113.9 million for the quarter (2019: $0.9 million).
For the first quarter of 2020, the Company generated adjusted funds flow from operations of $2.5 million, unchanged from last year. Capital expenditures during the period were also unchanged and totaled $2.9 million. The Company anticipates that both these amounts will decrease materially in the next quarter and over the remainder of this year due to lower realized prices and the suspension of non-essential capital investment.
The term "adjusted funds flow from operations" is a non-IFRS measure. 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 focus on preserving liquidity and the long-term value of its assets, eliminating all non-essential investment, the suspension of activities by the operators at Kakwa until prices improve, the Company’s ability to adjust capital spending quickly in response to changing commodity prices, its efforts to reduce operating costs and overheads, its optimism about its Clean Tech Energy project, its belief that the timing for the project could be improving, and the Company’s anticipation that adjusted funds flow from operations and capital spending will decrease over the remainder of this year.
Forward-looking statements are based on a number of 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 effect of COVID-19 on the markets and the demand for oil and natural gas; commitments to cut oil production by OPEC and others; whether the Company's exploration and development activities respecting its prospects will be successful or that material volumes of petroleum and natural gas reserves will be encountered, or if encountered can be produced on a commercial basis; the ultimate size and scope of any hydrocarbon bearing formations on its lands; that drilling operations on its lands will be successful such that further development activities in these areas are warranted; that Questerre will continue to conduct its operations in a manner consistent with past operations; results from drilling and development activities will be consistent with past operations; the general stability of the economic and political environment in which Questerre operates; drilling results; field production rates and decline rates; the general continuance of current industry conditions; the timing and cost of pipeline, storage and facility construction and expansion and the ability of Questerre to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Questerre operates; and the ability of Questerre to successfully market its oil and natural gas products; changes in commodity prices; changes in the demand for or supply of the Company's products; unanticipated operating results or production declines; changes in tax or environmental laws, changes in development plans of Questerre or by third party operators of Questerre's properties, increased debt levels or debt service requirements; inaccurate estimation of Questerre's oil and gas reserve and resource volumes; limited, unfavourable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; 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, 2019 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.
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 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 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 March 31,|
|Net cash used in operating activities||$||4,561||$||(592||)|
|Change in non-cash operating working capital||(2,150||)||2,983|
|Adjusted Funds Flow from Operations||$||2,460||$||2,454|
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: email@example.com