Questerre Energy Corporation (“Questerre” or the “Company”)
(TSX,OSE:QEC) reported today on its financial and operating results
for the third quarter ended September 30, 2021.
Michael Binnion, President and Chief Executive
Officer, commented, “The Quebec Premier’s announcement of plans to
ban oil and gas extraction was very disappointing. This is
particularly true for our shareholders, especially from Norway,
that believed in the potential of natural gas in Quebec and
financed the discovery over the last decade. He has been clear
there will be financial compensation though it can never fully
compensate us for the size of our giant discovery.”
He added, “While we strongly believe our project
is very beneficial to public utility, reconciliation, the global
environment, and the economic well-being of Quebecers, we still
respect the prerogative of the Government to decide on their
behalf. We will do our upmost to cooperate within our fiduciary
duties.”
Highlights
- Quebec Premier announces plans to renounce oil and gas
extraction
- Submitted application for carbon storage test in Quebec
- Wolinak of Abenaki First Nation in Quebec executes letter of
interest for Clean Gas project
- Average daily production of 1,363 boe/d and adjusted funds flow
from operations of $3.6 million in the quarter
Consistent with prior periods, Kakwa continued
to account for 80% of corporate production. With no drilling at
Kakwa since early last year, production declined over the prior
year. For the third quarter, daily production averaged 1,363 boe/d
(2020: 1,875 boe/d) and for the nine months ended September 30,
2021, it averaged 1,507 boe/d (2020: 2,004 boe/d).
Higher commodity prices over the same period
last year improved revenue and adjusted funds flow from operations
in 2021. For the third quarter, petroleum and natural gas sales
increased to $7.4 million from $5.4 million last year and $21.5
million year to date from $15.8 million in the prior year. The
higher revenue contributed to adjusted funds flow from operations
of $3.6 million (2020: $1.6 million) in the quarter and $10.7
million for the nine months ended September 30 (2020: $4.3
million).(1)
The higher revenue also contributed to net
income of $2.0 million for the third quarter (2020: $1.0 million
loss) and $5.8 million (2020: $117.5 million loss) for the nine
months ended September 30. In the prior year, the year-to-date loss
reflects the impairment expense of $113 million incurred in the
first quarter largely because of the lower future oil prices.
Capital expenditures in the quarter were $0.5 million (2020: $0.4
million) and $1.5 million year to date (2020: $3.7 million). The
Company posted a working capital surplus of $1.7 million at
September 30, 2021 (2020: $8.1 million deficit).
The term "adjusted funds flow from operations"
and “working capital surplus (deficit)” are non-IFRS measures.
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 belief that
its project is very beneficial to public utility, reconciliation,
the global environment, and the economic well-being of Quebecers
and the Company’s plans to cooperate with the Government within its
fiduciary duties.
Forward-looking statements are based on several
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; 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, 2020, 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.
(1) For the three-month period ended September
30, 2021, liquids production including light crude and natural gas
liquids accounted for 833 bbl/d (2020: 1,187 bbl/d) and natural gas
including conventional and shale gas accounted for 3,178 Mcf/d
(2020: 4,127 Mcf/d). For the nine-month period ended September 30,
2021, liquids production including light crude and natural gas
liquids accounted for 898 bbl/d (2020: 1,309 bbl/d) and natural gas
including conventional and shale gas accounted for 3,655 Mcf/d
(2020: 4,168 Mcf/d).
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 surplus (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 Sept 30 |
Nine months ended Sept 30 |
($ thousands) |
2021 |
|
2020 |
|
2021 |
|
2020 |
|
Net cash from operating activities |
4,202 |
|
76 |
|
10,287 |
|
3,846 |
|
Interest
received |
(54 |
) |
(89 |
) |
(152 |
) |
(261 |
) |
Interest
paid |
111 |
|
146 |
|
367 |
|
477 |
|
Change in non-cash operating working capital |
(681 |
) |
1,490 |
|
185 |
|
227 |
|
Adjusted Funds Flow from Operations |
3,578 |
|
1,623 |
|
10,687 |
|
4,289 |
|
Working capital surplus (deficit) 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: info@questerre.com
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