/NOT FOR DISTRIBUTION TO U.S. NEWS
SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES/
CALGARY, Aug. 29, 2018 /CNW/ - Marquee Energy Ltd.
("Marquee" or the "Company") (TSXV: "MQX") reports its operational
and financial results for the three months ended June 30, 2018. The Company's Financial
Statements as well as the corresponding Management's Discussion and
Analysis for the three months ended June 30,
2018 are available on its website www.marquee-energy.com as
well as on SEDAR at www.sedar.com.
HIGHLIGHTS
- Production in Q2 averaged 3,159 boe per day (boe/d) (53% oil
and liquids), a 4% increase to total boe per day production over Q2
2017, and a 9% absolute increase to oil and liquids weighting over
Q2 2017. The increase in production rate and oil and liquids
weighting is due to the addition of nine new Banff horizontal wells at Michichi since the
end of Q2 2017.
- Revenue increased 25% from the second quarter 2017 to
$11.5 million for the period due to
an increase in the liquids weighting of Company production from new
Banff horizontal well drilling, as
well as an increase in realized oil prices.
- Signed a purchase and sale agreement on August 29, 2018 to divest approximately 195 boe/d
of non-core assets for gross proceeds of $6.6 million.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
|
|
|
|
|
(thousands
of Canadian dollars,
|
Three months
ended
June
30,
|
Six months
ended
June
30,
|
except per share
and per boe amounts)
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
|
Financial
|
|
|
|
|
Oil and natural gas
sales and processing fee income (1)
|
$
|
11,521
|
$
|
9,187
|
$
|
20,342
|
$
|
16,790
|
Funds flow from
operations (2)
|
$
|
1,646
|
$
|
2,384
|
$
|
2,353
|
$
|
3,489
|
|
Per share - basic and
diluted
|
$
|
0.00
|
$
|
0.01
|
$
|
0.01
|
$
|
0.01
|
|
Per boe
|
$
|
5.73
|
$
|
8.66
|
$
|
7.39
|
$
|
7.00
|
Cash flow from
operating activities
|
$
|
2,835
|
$
|
12
|
$
|
4,098
|
$
|
259
|
Net income
(loss)
|
$
|
(4,671)
|
$
|
(1,956)
|
$
|
(9,583)
|
$
|
(5,618)
|
|
Per share - basic and
diluted
|
$
|
(0.01)
|
$
|
0.00
|
$
|
(0.02)
|
$
|
(0.01)
|
Capital
expenditures
|
$
|
276
|
$
|
1,246
|
$
|
11,321
|
$
|
7,486
|
|
|
|
|
|
Net debt
(2)
|
|
|
$
|
40,514
|
$
|
22,914
|
Total
Assets
|
|
|
$
|
166,319
|
$
|
175,458
|
Weighted average
basic shares outstanding
|
435,772,196
|
435,772,196
|
435,772,196
|
435,772,196
|
Weighted average
diluted shares outstanding
|
435,772,196
|
435,772,196
|
435,772,196
|
435,772,196
|
|
|
|
|
|
Operational
|
|
|
|
|
Net new wells on
production
|
-
|
-
|
5
|
3
|
Daily sales
volumes
|
|
|
|
|
|
Oil (bbls per
day)
|
1,521
|
1,174
|
1,398
|
1,088
|
|
NGL's (bbls per
day)
|
166
|
159
|
161
|
146
|
|
Natural Gas (mcf per
day)
|
8,835
|
10,141
|
8,434
|
9,117
|
|
Total (boe per
day)
|
3,159
|
3,024
|
2,964
|
2,754
|
|
% Oil and
NGL's
|
53%
|
44%
|
53%
|
45%
|
Average realized
prices
|
|
|
|
|
|
Light Oil
($/bbl)
|
$
|
68.87
|
$
|
52.11
|
$
|
62.77
|
$
|
52.36
|
|
NGL's
($/bbl)
|
$
|
51.46
|
$
|
40.71
|
$
|
51.31
|
$
|
41.02
|
|
Natural Gas
($/mcf)
|
$
|
1.27
|
$
|
3.07
|
$
|
1.75
|
$
|
3.04
|
Netback
|
|
|
|
|
|
Revenue
($/boe)
|
$
|
39.39
|
$
|
32.66
|
$
|
37.35
|
$
|
32.93
|
|
Royalties
($/boe)
|
$
|
(2.10)
|
$
|
(1.90)
|
$
|
(1.85)
|
$
|
(2.24)
|
|
Operating and
transportation costs ($/boe)
|
$
|
(21.52)
|
$
|
(16.18)
|
$
|
(21.48)
|
$
|
(16.79)
|
|
Operating netback
prior to hedging (2)
|
$
|
15.77
|
$
|
14.58
|
$
|
14.02
|
$
|
13.90
|
|
Realized hedging gain
(loss) ($/boe)
|
$
|
(3.21)
|
$
|
1.21
|
$
|
(2.38)
|
$
|
0.67
|
|
Operating netback
($/boe) (2)
|
$
|
12.56
|
$
|
15.79
|
$
|
11.64
|
$
|
14.57
|
(1)
|
Before
royalties
|
(2)
|
Non-IFRS
Measure. See Non-IFRS Measures advisory.
|
OPERATIONAL UPDATE
Current corporate average daily production is approximately
3,000 boe/d (52% oil and liquids). As part of the continued focus
on completion optimization, the five first quarter 2018 wells
received more frac stages and total proppant than previous
horizontal wells at Michichi. Production results from the wells to
date indicate that the increased fracture density may be
contributing to a lower decline than the previous wells drilled at
Michichi. Management will continue to evaluate these results and
incorporate the learnings into future frac designs.
|
|
|
|
|
IP60 Producing
Day
|
IP90 Producing
Day
|
IP120 Producing
Day
|
|
|
|
|
|
BOE/D
|
Oil
Weighting
|
BOE/D
|
Oil
Weighting
|
BOE/D
|
Oil
Weighting
|
2018 Five Well
Average
|
159
|
78%
|
155
|
76%
|
151
|
75%
|
The production rates and volumes shown are producing day field
estimates and over a short time period, therefore, are not
necessarily indicative of average daily production, long-term
performance or the ultimate recovery from the wells.
Due to water disposal restrictions at the Company's oil battery,
the increased fluid volumes generated from the larger completions
were handled at third party facilities. This increased trucking,
water disposal and emulsion treating costs, translating into higher
corporate operating expenses in the first six months of the year.
The Company performed a cleanout operation on its water disposal
well in May 2018, and as a result,
the incremental operating costs have been eliminated. Prior to the
end of 2018, the Company has plans to increase the injection
capacity of its water disposal system to handle any additional
volumes that may be added to the system from future drilling.
NON-CORE ASSET SALE
Marquee announces that it has entered into a purchase and sale
agreement for the sale of non-core Mannville assets for total cash consideration
of $6.6 million, prior to customary
closing adjustments (the "Transaction"). The Transaction is
expected to close on or about October 1,
2018, and is subject to applicable regulatory approvals and
additional environmental due diligence.
The asset includes approximately 70 gross / 69 net wells and
averaged approximately 195 boe/d (62% oil and liquids) in the first
six months of 2018. The Company expects the disposition to have a
positive impact on the Company's asset retirement obligations,
while maintaining all of the current upside and flexibility in the
extensive land base in the Banff
formation at Michichi. In the short term, the proceeds from
the sale of the assets will be used to reduce the Company's current
debt and improve financial flexibility. The disposition is
consistent with Marquee's strategy to divest of the Company's
non-core assets to further focus the Company on its Banff oil play at Michichi.
CORPORATE UPDATE
Marquee holds a significant land position at Michichi, and with
the near-term focus of the Company remaining on debt reduction, is
working towards various sources of funding to monetize the
extensive high-quality drilling inventory. Data from the Q4 2017
and Q1 2018 drilling program, which incorporated increased frac
sizes, will be invaluable as we continue to evaluate and adopt
technical applications to enhance economic results for new Michichi
Banff horizontal wells.
Earlier this year, Marquee commenced a review of strategic
alternatives to enhance shareholder value. We would confirm that
this process is ongoing as we continue to evaluate several viable
alternatives. Given the nature of the process, the Company does not
intend to provide updates with respect to the process until such
time as the Board of Directors approves a definitive transaction or
strategic alternatives, or otherwise determines that further
disclosure is advisable. The Company cautions that there are no
guarantees that the review of strategic alternatives will result in
a transaction or if a transaction is undertaken, as to its terms or
timing.
ABOUT MARQUEE
Marquee is a Calgary-based,
junior energy company focused on light oil development and
production in the Michichi area of eastern Alberta. Marquee's shares trade on the TSX
Venture Exchange under the trading symbol "MQX". 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 SEDAR at
www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
OIL AND GAS ADVISORIES
References to
BOE
Barrels of oil equivalent ("boe") may be misleading,
particularly if used in isolation. A boe conversion ratio of six
thousand cubic feet ("Mcf") to one bbl is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.
Given that the value ratio based on the current price of oil as
compared to natural gas is significantly different from the energy
equivalency conversion ratio of six to one, utilizing a boe
conversion ratio of six Mcf to one bbl may be misleading as an
indication of value.
Initial Production Rates
Any references herein to
production rates, test rates or initial production rates (including
IP60, IP90 and IP120) are useful in confirming the presence of
hydrocarbons, however, such rates are not determinative of the
rates at which such wells will continue production and decline
thereafter. Readers are cautioned not to place reliance on such
rates in calculating the aggregate production for Marquee. Initial
production or test rates may be estimated based on other
third-party estimates or limited data available at this time.
Well‐flow test result data should be considered to be preliminary
until a pressure transient analysis and/or well‐test interpretation
has been carried out. In all cases herein, initial production or
test results are not necessarily indicative of long‐term
performance of the relevant well or fields or of ultimate recovery
of hydrocarbons.
FORWARD‐LOOKING STATEMENTS AND CAUTIONARY
STATEMENTS
This press release contains forward‐looking
statements. Such forward‐looking statements typically contain
statements with words such as ""anticipate", "expect", "intend",
"estimate", "propose", or similar words suggesting future outcomes
or statements regarding an outlook. The forward‐looking statements
contained in this document, including statements related to
anticipated well production, are based on certain key expectations
and assumptions made by Marquee, all or any of which may prove
incorrect, including without limitation the remaining
forward‐looking statements, expectations and assumptions concerning
the timing and success of future drilling and development
activities.
Although Marquee believes that the expectations and
assumptions on which the forward‐looking statements are based are
reasonable, undue reliance should not be placed on the
forward‐looking statements because Marquee 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. Actual
results could differ materially from those currently anticipated
due to a number of factors and risks. These include, but are not
limited to, the failure to complete the proposed wells in a timely
manner, the failure to obtain necessary regulatory approvals, risks
associated with the oil and gas industry in general (e.g.
operational risks in development, exploration and production;
delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of
reserves estimates; the uncertainty of estimates and projections
relating to production, costs and expenses; and health, safety and
environmental risks), uncertainty as to the availability of labour
and services, commodity price and exchange rate fluctuations,
unexpected adverse weather conditions and changes to existing laws
and regulations. Certain of these risks are set out in more detail
in Marquee's current Annual Information Form, which is available on
Marquee's SEDAR profile at www.sedar.com.
Forward‐looking information is based on estimates and
opinions of management of Marquee at the time the information is
presented. Marquee may, as considered necessary in the
circumstances, update or revise such forward‐looking information,
whether as a result of new information, future events or otherwise,
but Marquee undertakes no obligation to update or revise any
forward‐looking information, except as required by applicable
securities laws.
SOURCE Marquee Energy Ltd.