CALGARY, ALBERTA–(Marketwired – Dec. 31, 2015) – Questfire Energy Corp. (the “Corporation” or “Questfire“) (TSX VENTURE:Q.A)(TSX VENTURE:Q.B) provides an operations update and announces amendments to its credit facilities.
Low Decline Production, Reduced Operating Costs
Questfire is pleased to announce that production curtailments due to Nova Gas Transmission (NGTL) restrictions at the Corporation’s core Open Lake property in West Central Alberta have recently been lifted. Questfire’s current production is now in the 5,200 boepd range and is comprised of 25 percent oil and natural gas liquids and 75 percent natural gas. Current production capability is estimated to be in the 5,300 to 5,400 boepd range.
Questfire estimates that production curtailments due to NGTL restrictions, which commenced in March, have averaged approximately 350 boepd for 2015. The current production rate of 5,200 boepd is essentially flat compared to first quarter average production of 5,203 boepd and illustrates the low decline nature of the Corporation’s production base. Only one 100 percent working interest well was drilled by Questfire this year in the Morningside field and commenced production in mid-October. This limited drilling along with a low base decline rate of less than 15 percent resulted in essentially flat production capability over the year.
Unit operating costs for 2015 averaged $12.00 per boe, a decline of 18 percent compared to 2014 unit costs. G&A costs year over year have seen a similar percentage reduction. Controllable costs are expected to continue declining due to the ongoing efforts of all field and office staff.
Capital Spending Within Cashflow
The Corporation met its goal for 2015 of maintaining capital and ARO spending within cashflow. Approximately $6.6 million was spent on capital and ARO of which roughly $3.0 million was spent on drilling and production optimization projects with the remainder being spent on ARO and maintenance capital projects.
Drilling and Recompletion Inventory
Based upon ongoing in-house technical work and offsetting industry activity Questfire continues to expand its inventory of drilling and recompletion prospects. The current inventory includes 479 gross (362 net) drilling locations and 200 gross (194 net) recompletions. The vast majority of these prospects are Questfire operated and all are on existing Questfire lands with very limited expiries in 2016. With improvement in commodity prices Questfire has the option of quickly increasing drilling and recompletion activity.
Questfire has completed the semi-annual review of its credit facilities with its bank syndicate. The Corporation’s credit facilities have been amended to $45 million, consisting of a $35 million revolving syndicated facility and a $10 million operating facility. The reduction of the total credit facilities from $55 million to $45 million reflects a $10 million reduction in the revolving syndicated facility that is being effected together with various other amendments to such facility, including amendments to the financial covenants therein.
Questfire will continue to operate within cashflow in order to maintain or reduce total debt levels with the goal of maintaining or modestly growing production. The Corporation has approved a 2016 capital budget of up to a maximum of $15 million subject to commodity prices and resulting cashflow. Questfire will also continue to focus on factors under its control, namely reducing controllable costs, maximizing production, selectively drilling the most economic prospects and exercising capital spending discipline.
Further details regarding the Corporation’s Credit Agreements can be found in the Corporation’s second amending agreement to the amended and restated credit agreement dated June 27, 2014 that will be filed on Questfire’s SEDAR profile at www.sedar.com.
About Questfire Energy Corp.
Questfire Energy Corp. is a junior oil and natural gas exploration and production company based in Calgary, Alberta.