CALGARY, AB–(Marketwired – May 18, 2016) – Marquee Energy Ltd. (“Marquee” or the “Company”) (TSX VENTURE: MQL) announces its first quarter operational results and financial for the three months ended March 31, 2016. The Company’s financial statements and Management’s Discussion and Analysis (“MD&A”) for the three months ended March 31, 2016 are available on SEDAR at www.sedar.com and on Marquee’s website at www.marquee-energy.com.
First Quarter 2016 Operational and Financial Highlights
- Reduced G&A expenses of $2.64 per boe representing a decrease of 22% from the $3.37 per boe from the first quarter of 2015;
- The Company’s hedging program generated $5.89 per boe of gains in the first quarter;
- First quarter exit net debt was reduced to $49.1 million, representing a decrease of 9% compared to the first quarter of 2015;
- Dramatic reduction in commodity prices resulted in first quarter funds flow from operations falling to $1.4 million or $0.01 per share, an 80% decrease as compared to $7.0 million generated in the first quarter of 2015;
- Realized average production volumes of 4,430 boe/d (46% oil and NGLs) representing a 10% decrease over the fourth quarter of 2015 and a 20% decrease from the first quarter of 2015;
- Approximately 600 boe/d shut-in non-core production in response to the decline in commodity prices in the first quarter;
Subsequent to quarter end, Marquee announced the sale of a non-core, shallow gas asset for total cash consideration of $4.5 million. The gross proceeds from the sale of the assets will be used to reduce the Company’s current debt and improve financial flexibility.
|FINANCIAL AND OPERATING HIGHLIGHTS|
|Three months ended
(000’s except per share and per boe amounts)
|Oil and natural gas sales (1)||$||7,749||$||14,110|
|Funds flow from operations (2)||$||1,392||$||7,004|
|Per share – basic and diluted||$||0.01||$||0.06|
|Per share – basic and diluted||$||(0.06)||$||(0.03)|
|Net debt (2)||$||49,058||$||54,064|
|Weighted average basic and diluted shares outstanding||123,165,652||120,340,685|
|Net wells drilled||–||2.0|
|Daily sales volumes|
|Oil (bbls per day)||1,457||1,749|
|Heavy Oil (bbls per day)||407||771|
|NGL’s (bbls per day)||157||227|
|Natural Gas (mcf per day)||14,451||16,733|
|Total (boe per day)||4,430||5,536|
|% Oil and NGL’s||46%||50%|
|Average realized prices|
|Light Oil ($/bbl)||$||31.11||$||42.74|
|Heavy Oil ($/bbl)||$||17.60||$||33.75|
|Natural Gas ($/mcf)||$||2.00||$||3.03|
|Operating and transportation costs ($/boe)||$||(16.46)||$||(14.78)|
|Operating netbacks prior to hedging (2)||$||1.42||$||11.42|
|Realized hedging gain ($/boe)||$||5.89||$||7.01|
|Operating netbacks ($/boe) (2)||$||7.31||$||18.43|
|(2)||Non-GAAP measure, defined under the Non-GAAP Measures section of this press release.|
Over the first four months of 2016, the oil and gas industry has faced its largest challenge in the last decade. The Company is fortunate to own a low-cost oil focused asset base which allows Marquee to mitigate some of its exposure to volatility in commodity prices, while also positioning it for potential growth as commodity pricing improves.
The current economic environment relating to the oil and gas industry has made access to capital, both debt and equity, challenging for many companies. The Company believes the current depressed commodity price environment and the recent disposition of non-core assets may lead to a reduction in the credit facility availability. The Company’s current bank lending review is anticipated to occur by May 31, 2016.
Marquee will continue to evaluate and prudently manage its 2016 capital program, and remain focused on balance sheet preservation and long-term value creation. The Company will also look to maintain its hedging program as opportunities present themselves, in an effort to continue to provide a base level of revenue to protect short-term capital programs. Marquee continues to pursue opportunities to monetize non-core assets as a means to further reduce indebtedness and future liabilities as seen in the recently announced shallow gas disposition.
With the current uncertainty in oil and natural gas prices, Marquee believes the most prudent course of action is to limit capital spending to free corporate cash flow, evaluate its production on a regular basis and shut-in non-economic wells where warranted. The Company currently expects to spend between $3.5 and $5.0 million on capital costs in 2016. The Company expects to provide updated production guidance for the remainder of 2016 subsequent to closing its shallow gas disposition, which is expected to occur on May 31, 2016. The focus on sustainability and proactive measures will position Marquee to realize the potential value that has been delineated at Michichi when commodity prices improve.
Management believes the Company strengths at Michichi include large oil in place, extensive drilling inventory, strong economics at current oil prices, ownership and control of infrastructure, high working interest ownership and an improving cost structure. Pursuant to the Contingent Resource Assessment generated by Sproule and Associates at December 31, 2015, there are 370 million barrels of Discovered Petroleum Initially In Place that can be mapped on Marquee’s lands at Michichi. The Company has identified more than 300 potential drilling locations within its multi-zone light oil fairway and recently received government approval for its Michichi water flood pilot which may be ready for implementation in the third quarter of 2016.
The Directors and management of Marquee continue to monitor changes to commodity pricing and the current economic environment, as it affects both the Company’s business and that of its suppliers. Changes in capital spending are dependent on projected cash flow and market conditions and are reviewed quarterly by the Board of Directors.
ANNUAL GENERAL MEETING OF SHAREHOLDERS
The Company’s Annual General Meeting of Shareholders is scheduled for 2:00 PM on Wednesday June 22, 2016 in the Altius Building, Second Floor, 500 4th Avenue SW, Calgary, AB.
Marquee Energy Ltd. is a Calgary based, junior energy company focused on high rate of return light oil development and production. Marquee is committed to growing the company through exploitation of existing opportunities and continued consolidation within its core area at Michichi. The Company’s shares are traded on the TSX Venture Exchange under the trading symbol “MQL.V” and on the OTCQX marketplace under the symbol “MQLXF”. An updated presentation and additional information about Marquee may be found on its website www.marquee-energy.com and in its continuous disclosure documents filed with Canadian securities regulators on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com.