Michael Binnion, President and Chief Executive Officer of Questerre, commented, “We had a good start to the year with progress on all our major assets in the quarter. At Kakwa we have now drilled four of the eight wells planned on our joint venture acreage, including one well that spud last December. Two of these have been completed with sand tonnage 25% higher than the average tonnage used last year. Based on results to date, this should incrementally improve well performance. After breakup, the remaining two wells will be completed and drilling will resume. We are also investing in expanding infrastructure including gas lift and central facilities.”
- Participated in three (0.67 net) horizontal wells at Kakwa
- Quebec Government ratifies new environmental legislation
- Evaluation of retorting technologies for Jordan oil shale project continues
- Completed equity placements for gross proceeds of $24.65 million
- Average daily production of 1,123 boe/d with 580 boe/d behind pipe and adjusted funds flow from operations of $1.41 million for the quarter(1)
Behind pipe volumes based on production estimated under proved undeveloped reserve category for wells drilled and completed as forecasted by independent reserve evaluator at December 31, 2016
Commenting on Quebec, he noted, “Our updated resource assessment confirmed the Lowlands could be among the lowest cost suppliers of natural gas to the province. While we wait for the hydrocarbon regulations, we are working on social acceptability. Part of this work is developing a ‘path to zero emissions natural gas production.’ Early feedback for this plan has been positive.”
Updating developments on its oil shale assets, he further added, “We are making headway with the engineering for our oil shale project in Jordan by looking at multiple retorting technologies, including Red Leaf’s EcoShale technology. Early in the second quarter, we entered into agreements to acquire about 25% of the common share capital of Red Leaf which currently holds about US$100 million in cash and no debt.”
Due to limited participation in new drilling at Kakwa last year, the Company reported that production from the Kakwa area declined over the prior year to average 844 boe/d (2016: 1,159 boe/d) and contributed to daily production of 1,123 boe/d for the Company during the first quarter of 2017 (2016: 1,538 boe/d). The increase in commodity prices in the quarter offset these lower production volumes resulting in gross revenue increasing by 10% to $4.43 million. Higher operating costs and lower realized gains on hedging contributed to adjusted funds flow from operations of $1.41 million in the quarter (2016: $1.74 million). The Company reported a net loss of $0.52 million for the quarter compared to a loss of $0.33 million for the first quarter last year.
Capital investment in the quarter increased to $5.32 million from $4.16 million in 2016. Consistent with prior quarters, over 80% of this amount was for the Kakwa area. The Company anticipates incremental investment in this area in 2017 could be up to $17 million.
The term “adjusted funds flow from operations” is a non-IFRS measure. Please see the reconciliation elsewhere in this press release.
Questerre Energy Corporation is leveraging its expertise gained through early exposure to shale and other non-conventional reservoirs. The Company has base production and reserves in the tight oil Bakken/Torquay of southeast Saskatchewan. It is bringing on production from its lands in the heart of the high-liquids Montney shale fairway. It is a leader on social license to operate issues for its Utica shale gas discovery in the St. Lawrence Lowlands, Quebec. It is pursuing oil shale projects with the aim of commercially developing these massive resources.
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.