CALGARY, Alberta, Dec. 19, 2018 (GLOBE NEWSWIRE) — Questerre Energy Corporation (“Questerre” or the “Company”) (TSX,OSE:QEC) reported on recent developments including the impact of a 325,000 barrel a day curtailment of oil production announced by the Government of Alberta. The curtailment does not apply to the Company’s condensate production in the province.
Michael Binnion, President and Chief Executive Officer of Questerre, noted, ”We’re very pleased that the discount between condensate prices in Alberta and the US benchmark West Texas Intermediate (“WTI”) has reduced by over 50% since the announcement of the mandatory curtailment.”
He added, “Record discounts before the announcement will impact our condensate pricing and, as a result, cash flow for the last quarter of this year. We expect residual impacts from these differentials on cash flow in the first half of 2019 that will also see some operational shut-ins in the first quarter. Differentials should continue to normalize throughout next year and the main factor for future cash flows will remain the benchmark WTI price. As a result, we still plan to participate in up to seven gross wells on our Kakwa joint venture acreage, but we are closely watching prices to ensure we still make a good return on our capital.”
Commenting on its Kakwa North acreage, Mr. Binnion further added, “Step Energy Services and NCS Multistage, the service companies that completed our wells here, recently announced the first well was a record setter for depth using a two inch coiled tubing rig-assisted completion. These wells tested at average rates of 2,800 boe/d and we have a 5% gross overriding royalty on production before payout of capital. They should be tied-in and on production early in the new year. We are looking forward to the operator’s plans for next year which could include up to two additional farm-in wells.”
The Company is also evaluating drilling locations for its recently acquired 34 (17 net) section block with its partner. The acquisition of this block closed last month and was financed by Questerre’s existing cash resources. The block lies adjacent to both its producing acreage in central Kakwa and Kakwa North.
In Quebec, issues regarding local natural gas development and importation of oil from the rest of Canada have recently garnered significant media coverage. Commenting on this media coverage, Mr. Binnion said, “We support the policy of requiring social license and the Quebec Oil & Gas Association’s best practice of 3% profit sharing with local communities. We have consistently indicated we do not intend to pursue development in communities that do not support it. In spite of polling that consistently shows a majority of Quebecers support local natural gas development, there still remains a significant requirement for consultation.”
He further noted, “We are also confident about our legal position and motion on the legality of the regulations announced and implemented by the previous government in the context of the election. Questerre and other industry players are open to a constructive resolution that respects the policy and law while giving confidence to the public.”
Reporting on its project in Jordan, he commented, “We are looking forward to negotiations with the Kingdom of Jordan for our concession early in the new year. In the meantime we are continuing the work with our partners on the engineering to improve the economics of developing this multi-billion barrel resource.”
In closing, he added, “It has been a very challenging time in markets for producers and service companies. We have maintained a strong working capital position heading in 2019 while making a material land acquisition and achieving excellent well results in Kakwa in the fourth quarter. We are very excited that a clean tech approach to natural gas development will be a game changer for Quebec and for social acceptability.”
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 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.