CALGARY, Aug. 21, 2014 /CNW/ - Marquee Energy Ltd.
("Marquee" or the "Company") (TSXV: "MQL") (OTCQX: MQLXF) is
pleased to report record funds flow from operations and production
for the second quarter of 2014. The Company's financial statements
and Management's Discussion and Analysis ("MD&A") for the three
and six months ended June 30, 2014
are available on SEDAR at www.sedar.com and on Marquee's website at
www.marquee-energy.com.
Financial and Operational Highlights include:
- Achieved significant growth in both revenue and funds flow from
operations in the second quarter of 2014. Revenue increased 19% to
$25.6 million, compared to
$21.6 million in Q1-2014 and
$12.3 million in Q2-2013. Funds
flow from operations increased 36% to $9.3
million, compared to $6.8
million in Q1-2014, and $4.4
million in Q2-2013.
- Increased production to average 5,035 boe/d (43% oil and NGLs)
in the quarter, a 25% improvement over Q1-2014 and 138% higher than
Q4-2013.
- Closed a $20.1 million bought
deal equity financing on May 2,
2014
- The Company incurred $5.2 million
in capital expenditures in the quarter, mainly in the Company's
core Michichi area, and realized proceeds of $0.5 million from the sale of non-core
assets.
- Drilled one horizontal oil well and spud a second well in June
at Michichi. Both wells are now on production.
- Subsequent to the end of the quarter, entered into a syndicated
credit facility agreement with two Canadian chartered banks that
provides total credit availability of $95
million, comprising of a revolving and operating
facility of up to $80 million, plus
an acquisition facility of up to $15
million. The Company's net-debt at the end of the second
quarter was $56.9 million.
Financial and Operational Summary
Financial and operational details for the three and six month
periods ended June 30, 2014 with
comparative data for 2013 are set out below and should be read in
conjunction with the condensed interim financial statements and
related MD&A.
(unaudited)
|
|
|
|
|
|
Three months ended
June 30
|
Six Months ended June
30
|
|
2014
|
2013
|
2014
|
2013
|
Financial
(000's except per share and per boe amounts)
|
|
|
|
|
Oil and natural gas
sales (1)
|
$
|
25,625
|
$
|
12,317
|
$
|
47,201
|
$
|
22,712
|
Funds flow from
operations
|
$
|
9,273
|
$
|
4,420
|
$
|
16,093
|
$
|
7,448
|
Per share - basic and
diluted
|
$
|
0.08
|
$
|
0.08
|
$
|
0.16
|
$
|
0.14
|
Per boe
|
$
|
20.24
|
$
|
21.41
|
$
|
19.62
|
$
|
18.15
|
Net income
(loss)
|
$
|
900
|
$
|
484
|
$
|
(1,850)
|
$
|
(2,100)
|
Per share - basic and
diluted
|
$
|
0.01
|
$
|
0.01
|
$
|
(0.02)
|
$
|
(0.04)
|
Capital
expenditures
|
$
|
4,173
|
$
|
1,543
|
$
|
17,170
|
$
|
10,133
|
Asset acquisitions
including non-cash consideration
|
$
|
1,015
|
$
|
-
|
$
|
12,842
|
$
|
-
|
Dispositions
|
$
|
(501)
|
$
|
(688)
|
$
|
(529)
|
$
|
(786)
|
Net debt
(2)
|
|
|
$
|
56,911
|
$
|
45,735
|
Total
Assets
|
|
|
$
|
282,939
|
$
|
163,017
|
Weighted average
basic and diluted shares outstanding
|
112,534
|
54,661
|
100,482
|
54,661
|
|
|
|
|
|
Operational
|
|
|
|
|
Net wells
drilled
|
1.0
|
-
|
6.0
|
2.1
|
Daily sales
volumes
|
|
|
|
|
Oil (bbls per
day)
|
1,434
|
830
|
1,329
|
832
|
Heavy Oil (bbls per
day)
|
525
|
534
|
518
|
533
|
NGL's (bbls per
day)
|
195
|
80
|
188
|
69
|
Gas (mcf per
day)
|
17,285
|
4,942
|
14,983
|
4,998
|
Total (boe per
day)
|
5,035
|
2,268
|
4,532
|
2,267
|
% Oil and
NGL's
|
43%
|
64%
|
45%
|
63%
|
Average realized
prices
|
|
|
|
|
Oil ($/bbl)
|
$
|
100.12
|
$
|
88.10
|
$
|
97.49
|
$
|
84.12
|
Heavy Oil
($/bbl)
|
$
|
82.23
|
$
|
69.53
|
$
|
77.46
|
$
|
59.48
|
NGL's
($/bbl)
|
$
|
58.92
|
$
|
56.28
|
$
|
65.21
|
$
|
61.30
|
Gas ($/mcf)
|
$
|
4.82
|
$
|
3.80
|
$
|
5.26
|
$
|
3.63
|
Netbacks
|
|
|
|
|
Revenue
($/boe)
|
$
|
55.93
|
$
|
59.68
|
$
|
57.54
|
$
|
55.35
|
Royalties
($/boe)
|
$
|
7.31
|
$
|
5.41
|
$
|
6.45
|
$
|
4.67
|
Opex and
transportation ($/boe)
|
$
|
19.66
|
$
|
20.78
|
$
|
21.18
|
$
|
21.67
|
Field operating
netbacks
|
$
|
28.96
|
$
|
33.49
|
$
|
29.91
|
$
|
29.01
|
|
|
|
|
|
(1)
Before royalties.
|
(2)
Net debt is calculated as currents assets less current
liabilities, excluding commodity contracts and flow-through share
premiums.
|
|
SECOND QUARTER 2014 FINANCIAL AND OPERATING RESULTS
For the second consecutive quarter, Marquee achieved significant
increases in a number of financial and operating categories as a
result of the Company's recent drilling programs, together with the
acquisitions of the Sonde assets on December
31, 2013 and the Paramount assets on March 6, 2014:
- Production in Q2-2014 was 5,035 boe/d (43% oil and NGLs), a
122% increase from 2,268 boe/d in Q2-2013.
- Revenue from oil and natural gas sales was $25.6 million, more than double the $12.3 million in Q2-2013.
- Funds flow from operations was $9.3
million in the quarter, more than double the $4.4 million in Q2-2013.
- Net general and administrative expense ("G&A") was
$3.65/boe in the quarter, 48% less
than Q2-2013.
Field operating netbacks decreased slightly in the quarter to
$28.96/boe compared to Q2-2013 and
Q1-2014 primarily due to the increase in the proportion of the
Company's production from natural gas resulting from the
gas-weighted strategic acquisitions mentioned previously.
The Company incurred $5.2 million
in capital expenditures in the quarter, mainly in the Company's
core Michichi area, and realized proceeds of $0.5 million from the sale of non-core assets.
The capital expenditures included:
- Drilled one Michichi horizontal oil well, and spud a second
well.
- Recompletion and workover program in the greater
Michichi/Drumheller.
- Targeted land acquisition in the Michichi area.
The Company closed a common share bought-deal financing,
including a 15% over-allotment option for net proceeds of
$20.1 million. The significant
increase in production and contribution from the financing reduced
the Company's debt-to-cashflow ratio from 3.1 at the end of Q2-2013
to 1.8 times, based on the funds-flow from operations for the first
six months of the year, and net-debt at the end of June 2014.
OPERATIONS UPDATE
Michichi
Marquee has drilled eight horizontal wells at Michichi in 2014.
The first three wells have been on production for five months
and are now producing at stabilized levels. For the first 90 days,
the average production from each of these wells was 143 boe/d
(IP90), 76% oil and liquids. The next three wells have been on
production for less than a month. Initial results indicate that
production from these wells should meet or exceed Marquee's
published type curve expectations for Michichi. The seventh well
has been hydraulically fractured ("fracked") and is scheduled to be
on production before the end of August. Drilling operations
recently concluded on the eighth well which is being prepared for
completion operations. An additional four wells are planned for the
remainder of 2014 as part of the Company's 2014 drilling program of
twelve new Banff horizontal wells
at Michichi.
Construction of a multi-well battery has been completed to
support recent drilling activity which will lead to reduced
equipping and operating costs. Equipping costs for wells connected
by flowline to the battery are expected to decrease by
approximately $250,000 per well. The
battery will include separation and gas sweetening facilities and
has been designed to accommodate expansion and future drilling in
the vicinity.
The Company completed tie-in of all Sonde wells acquired at
Michichi into owned gas gathering infrastructure in the second
quarter.
Production in the Michichi area averaged 3,665 boe/d in Q2-2014
or 73% of corporate production.
Lloydminster
The Company has drilled one gross (one net) vertical heavy oil
well and one gross (one net) horizontal heavy oil well at
Lloydminster in Q3, both wells are
now on production. Marquee expects to drill one additional vertical
and one additional horizontal well here in Q4-2014.
Production in the Lloydminster
area averaged 525 bbl/d in Q2-2014 or 10% of corporate
production.
OUTLOOK
Marquee has built an extensive, contiguous, operated high
working interest land position in its core area of Michichi. The
Company further expanded its land holdings, infrastructure and
drilling inventory through its strategic acquisitions completed
earlier in 2014. The evolution of the Company's technical and
operating knowledge at Michichi continues, and is reflected in
improved well performance and cost efficiencies. Further
consolidation of lands will occur on a targeted basis, and the
growth of company owned and operated infrastructure is underway to
further reduce operating costs and improve netbacks.
Marquee expects to reach its forecast guidance of 5,600 boe/d by
the end of the year through completion of its planned twelve
Banff light oil well program at
Michichi and six heavy oil well program at Lloydminster.
Average production for the year is expected to be approximately
5,000 boe/d. Production growth in late Q2 and early Q3 was affected
by spring breakup and access issues at Lloydminster. All wells drilled in Q1 were
placed on production by early April. New production from drilling
that occurred since the capital program resumed in June was not
realized until early August. In the month of August, five new wells
have been tied in and placed on production, three at Michichi and
two at Lloydminster.
The Company expects to fund its capital program for the
remainder of 2014 out of cash flows from operations and its
existing credit facilities.
Subsequent to the quarter, the Company closed the disposition of
a non-core asset for proceeds of $1.2
million dollars, and continues to evaluate non-core asset
disposition opportunities.
The Company will be participating in the upcoming Peters &
Co. 2014 Energy Conference on September 10,
2014 in Toronto at the Ritz
Carlton Hotel. Marquee's CEO, Richard
Thompson will be presenting at 8:00
am (EST) in Room B. To register for the live webcast please
visit:
http://cc.talkpoint.com/pecl001/090914a_ae/?entity=25_3FM6ULR.
ABOUT MARQUEE
Marquee Energy Ltd. is a publicly traded Calgary-based growth oriented junior oil and
natural gas company currently focused on high rate of return 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. 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.
NON-GAAP MEASUREMENTS
This press release contains certain measures, including "funds
flow from operations", "net debt" and "field operating netbacks"
that do not have standardized meaning as prescribed by IFRS and,
therefore, are considered non-GAAP measures. Readers are cautioned
that this press release should be read in conjunction with
Marquee's disclosure under "Non-GAAP Measures" included at the end
of the MD&A at www.sedar.com.
Forward looking Statements or Information
Certain statements included or incorporated by reference in
this news release may constitute forward looking statements under
applicable securities legislation. Such forward looking
statements or information typically contain statements with words
such as "anticipate", "believe", "expect", "plan", "intend",
"estimate", "propose", or similar words suggesting future outcomes
or statements regarding an outlook. Forward looking
statements or information in this news release may include, but are
not limited to:
- 2014 capital budget and expenditures;
- business strategies, objectives and outlook;
- petroleum and natural gas sales;
- future production levels (including the timing thereof) and
rates of average annual production growth;
- exploration and development plans;
- acquisition and disposition plans and the timing and the
anticipated benefits thereof;
- anticipated cash flows;
- expected cost reductions and production efficiencies derived
from recently acquired assets;
- number and quality of future potential drilling locations
future drilling plans;
- expected debt levels;
- operating and other expenses;
- royalty and income tax rates; and
- the timing of regulatory proceedings and approvals.
Such forward-looking statements or information are based on a
number of assumptions all or any of which may prove to be
incorrect. In addition to any other assumptions identified in
this document, assumptions have been made regarding, among other
things:
- the ability of the Company to obtain equipment, services and
supplies in a timely manner to carry out its activities;
- the ability of the Company to market crude oil, natural gas
liquids and natural gas successfully to current and new
customers;
- the ability to secure adequate product
transportation;
- the timely receipt of required regulatory
approvals;
- the ability of the Company to obtain financing on acceptable
terms;
- interest rates;
- regulatory framework regarding taxes, royalties and
environmental matters;
- future crude oil, natural gas liquids and natural gas
prices; and
- Management's expectations relating to the timing and results
of development activities
Forward-looking information is based on current expectations,
estimates and projections that involve a number of risks and
uncertainties which could cause actual results to differ materially
from those anticipated by the Company and described in the
forward-looking information. The material risk factors affecting
the Company and its business are contained in Marquee's Annual
Information Form which is available under Marquee's issuer profile
on SEDAR at www.sedar.com.
The forward-looking information contained in this press
release is made as of the date hereof and the Company undertakes no
obligation to update publicly or revise any forward-looking
information, whether as a result of new information, future events
or otherwise, unless required by applicable securities laws. The
forward looking information contained in this press release is
expressly qualified by this cautionary statement.
Additional Advisories
Boes are presented on
the basis of one Boe for six Mcf of natural gas. Disclosure
provided herein in respect of Boe may be misleading, particularly
if used in isolation. A Boe conversion ratio of 6 Mcf:1 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 crude oil as compared to natural gas is
significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
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.
SOURCE Marquee Energy Ltd.