CALGARY, May 21, 2015 /CNW/ - Marquee Energy Ltd.
("Marquee" or the "Company") (TSXV: "MQL") announces record
production for the first quarter of 2015. First quarter production
increased 6% from the previous quarter to 5,536 boe/d. The
Company's financial statements and Management's Discussion and
Analysis ("MD&A") for the three months ended March 31, 2015 are available on SEDAR at
www.sedar.com and on Marquee's website at
www.marquee-energy.com.
2015 FIRST QUARTER HIGHLIGHTS
- Achieved record average quarterly production of 5,536 boe/d
(50% oil and NGLs) representing a 38% increase compared to Q1-2014
and 6% increase from Q4-2014.
- Maintained balance sheet strength with first quarter exit net
debt of $54.1 million, representing
2.0 times debt to annualized funds flow from operations.
- Completed a Production Volume Royalty ("PVR") arrangement on
the Company's Lloydminster
property for proceeds of $20 million.
The net proceeds from this arrangement were used to reduce
indebtedness, partially fund the property acquisition completed in
the quarter and for general corporate purposes.
- Acquired a 330 boe/d (79% oil and NGLs) light oil asset and
infrastructure in the core Michichi area for consideration of
$16.3 million, including $14.4 million in cash and the exchange of a
non-core, gas weighted asset valued at $2.0
million.
- Realized net proceeds of $3.6
million on a non-core disposition in Southeastern Saskatchewan.
- Decreased operating and transportation costs to $17.98/boe, a 22% improvement from the comparable
period in 2014.
- Reduced general and administrative costs ("G&A") to
$3.37/boe, a 25% decrease from
Q1-2014.
- Realized funds flow from operations of $7.0 million, a 5% decrease from Q1-2014 despite
a 47% decrease in realized commodity prices.
- Drilled one horizontal light oil well at Michichi and one
vertical heavy oil well at Lloydminster.
Summary of Quarterly Results
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Three Months ended
March 31
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2015
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2014
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Financial
(000's except per share and per boe amounts)
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Oil and natural gas
sales (1)
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$
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15,618
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$
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21,577
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Funds flow from
operations (3)
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$
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7,004
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$
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7,392
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Per share - basic and
diluted
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$
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0.06
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$
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0.08
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Per boe
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$
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14.06
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$
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18.83
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Net income
(loss)
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$
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(4,131)
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$
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(2,751)
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Per share - basic and
diluted
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$
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(0.03)
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$
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(0.03)
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Capital
expenditures
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$
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6,729
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$
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12,997
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Asset acquisitions
including non-cash consideration
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$
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16,701
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$
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11,076
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Property
Dispositions
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$
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(32,921)
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$
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(28)
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Net debt (2)
(3)
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$
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54,064
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$
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79,546
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Total
Assets
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$
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270,972
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$
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280,421
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Weighted average
basic and diluted shares outstanding
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120,341
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88,296
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Operational
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Net wells
drilled
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2.0
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5.0
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Daily sales
volumes
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Oil and NGLs (bbls
per day)
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2,747
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1,914
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Gas (mcf per
day)
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16,733
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12,657
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Total (boe per
day)
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5,536
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4,042
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% Oil and
NGL's
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50%
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48%
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Average realized
prices
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Oil
($/bbl)
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$
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51.36
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$
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94.36
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Heavy Oil
($/bbl)
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$
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35.91
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$
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72.49
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NGL's
($/bbl)
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$
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23.25
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$
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72.47
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Natural Gas
($/mcf)
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$
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3.03
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$
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5.87
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Netbacks
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Revenue
($/boe)
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$
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31.35
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$
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59.58
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Royalties
($/boe)
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$
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(2.12)
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$
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(5.37)
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Operating costs
($/boe)
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$
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(13.37)
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$
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(18.92)
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Transportation costs
($/boe)
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$
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(4.61)
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$
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(4.18)
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Field operating
netbacks before hedging(3)
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$
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11.25
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$
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31.11
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Realized hedge gains
(losses) ($/boe)
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$
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7.09
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$
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(3.59)
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Field operating
netbacks(3)
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$
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18.34
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$
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27.52
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(1)
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Before
royalties.
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(2)
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Net debt is
calculated as currents assets less current liabilities, excluding
commodity contracts and flow-through share premiums.
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(3)
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These measures are
non-GAAP and do not have a standardized meaning prescribed by IFRS
and, therefore may not be comparable with similar measures
presented by other entities. Please refer to the non-GAAP financial
measures section of this press release for further
information.
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CORPORATE UPDATE
Michichi
As previously announced, Marquee expanded its light oil
Banff/ Detrital fairway at
Michichi with the purchase of 34 net sections of land, 330 boe/d of
production and associated infrastructure. The southern extension is
characterized by higher oil as a percent of boe production and a
meaningful increase in the number of light oil drilling locations.
Of note, the 9-16-30-18 W4M well, acquired as part of this
strategic acquisition, has an IP60 rate of 263 boe/d and averaged
in excess of 220 boe/d (91% oil & NGLs) through its first ten
months of production.
The Company drilled a successful northern extension well to the
Banff oil resource fairway at
14-15-32-17 W4M which has recorded an IP60 rate of more than 300
boe/d (82% oil and NGLs). Both the 14-15 and 9-16 wells are
substantially outperforming Marquee's current type curve for the
area which is based on an IP60 rate of 175 boe/d. Production rates
in the area continue to improve for Marquee as drilling, completion
and production techniques are further refined.
Mapping supported by the wells mentioned above suggest that the
oil fairway measures more than 25 miles in length. Marquee controls
more than 80% of the oil rights involved and owns two oil
batteries, two gas plants and associated gas infrastructure which
will support continued development.
The Company has completed a review of the costs to drill a new
well into the Banff/Detrital play.
Based on current commodity prices, Marquee anticipates it can
deliver a producing well between $2 million
and $2.3 million including completion, equipping and tie-in
costs. Using this lower well cost in combination with current strip
pricing, the Company's current type curve delivers strong
economics, generating a return on revenue ("ROR") of 35 to 45% and
a payout of less than two years. As a result, the Company is
planning to drill up to six wells at Michichi in the second half of
2015, which is expected to be funded by cash flow. This program has
been designed to develop and delineate around the recent prolific
9-16 and 14-15 wells.
Marquee's technically driven Michichi drilling inventory has now
grown to more than 215 locations (with 29 proven undeveloped and 29
probable booked locations).
Lloydminster
The Company drilled one vertical oil well during the quarter at
1-11-48-1W4M, which it is currently completing. Marquee has a large
inventory of approximately 70 low cost drilling locations
supporting the continued development of long life production from
the heavy oil reserves at Lloydminster.
Corporate
The Company sold a Production Volume Royalty ("PVR") at
Lloydminster for proceeds of
$20 million and realized
approximately $5.5 million in value
for two non-core properties. Proceeds from the sales were used to
reduce debt, fund acquisitions and for general corporate
purposes. As a result, Marquee has reduced its net debt to
approximately $54 million at quarter
end, strengthening its balance sheet and increasing its financial
flexibility to take advantage of opportunities during the current
low commodity price environment. Marquee continues to pay down debt
through the second quarter of 2015 with minimal capital spending.
Non-core assets now account for less than 5% of Marquee's
production base.
Marquee continues to focus on reducing long-term operating costs
and has a number of initiatives in place to reduce infield
trucking, control chemical consumption, and improve equipment
maintenance and reliability. Oilfield service and supplier costs
are expected to follow falling commodity prices and add to field
cost savings. The Company's G&A costs continue to improve while
maintaining a strong technical focus on delivering productivity and
reserve growth.
OUTLOOK
The Company is uniquely positioned with its strong balance sheet
and low cost oil focused asset base which allow Marquee to mitigate
its exposure to volatility in commodity prices, while also
positioning it for strong growth as commodity pricing improves.
Marquee will continue its careful management of capital
expenditures and maintenance of prudent debt levels. The Company
has a hedging program in place to provide a base level of revenue
surety to protect short-term capital programs.
Marquee's Directors have approved an increase to the capital
budget that will support the drilling of six additional Michichi
wells which are expected to be on production by November
2015. The Directors and management continue to monitor
changes to commodity pricing and the current economic environment,
as it affects both Marquee's business and that of its suppliers.
Changes in capital spending are dependent on projected cash flow
and market conditions and are reviewed quarterly by the Board of
Directors.
ABOUT MARQUEE
Marquee Energy Ltd. is a Calgary based, junior energy company 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. The Company's shares are traded on the Toronto Stock
Exchange under the trading symbol "MQL.V" and on the OTCQX
marketplace under the symbol "MQLXF". 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.
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: reserves volumes and the net present value of future net
revenue in relation thereto; the number and quality of future
potential drilling and development opportunities; anticipated
capital budgets and expenditures; petroleum and natural gas sales;
the size and extent of the Michichi oil fairway; the Company's
forecasted future well performance and ability to maintain and
improve certain production levels on the Michichi and Lloydminster property, funded by free cash
flow properties; the expected benefits to be derived from
acquisitions; the expected use of proceeds from the PVR and
business strategies, objectives and outlook.
In addition, statements relating to "reserves" are by their
nature forward-looking information, as they involve an implied
assessment, based on certain estimates and assumptions that the
reserves described can be profitably produced in the future. The
recovery and reserves estimates provided herein are estimates only
and there is no guarantee that the estimated reserves will be
recovered. The estimated future net revenue from the production of
the disclosed oil and natural gas reserves does not represent the
fair market value of these reserves.
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:
that the Transaction and all required approvals will be completed
within the timeline anticipated by Marquee; that the parties will
be able to satisfy, in a timely manner, the other conditions to the
closing of the Transaction; 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; the ability to successfully integrate
acquisitions into Marquee's business 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. These risks and uncertainties include,
but are not limited to the failure to meet the conditions or
regulatory approvals required to close the Transaction and other
material risk factors affecting the Company and its business
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.
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.
NON-GAAP FINANCIAL MEASURES
This press release contains the term "field operating netbacks"
which does not have a standardized meaning prescribed by IFRS and,
therefore, may not be comparable with the calculation of similar
measures by other companies. Marquee uses field operating netbacks
to analyze operating performance. Marquee believes this benchmark
is a key measure of profitability and overall sustainability for
the Company and this term is commonly used in the oil and natural
gas industry. Field operating netbacks are not intended to
represent operating profits, net earnings or other measures of
financial performance calculated in accordance with IFRS.
Field operating netbacks are calculated by subtracting
royalties, production and operating and transportation expenses
from revenues before other income/losses.
The This press release also contains the term "funds flow from
operations" which should not be considered an alternative to, or
more meaningful than "cash flow from operating activities", as
determined in accordance with IFRS, as an indicator of the
Company's performance. Therefore reference to funds flow from
operations or funds flow from operations per share may not be
comparable with the calculation of similar measures for other
entities. Management uses funds flow from operations to analyze
operating performance and leverage and considers funds flow from
operations to be a key measure as it demonstrates the Company's
ability to generate cash necessary to fund future capital
investments and to repay debt. Funds flow from operations per share
is calculated using the weighted average number of shares for the
period.
In addition, the press release contains the term "net debt" and
"net debt to annualized funds flow from operations". Net debt
and net debt to annualized funds flow is calculated as net debt,
defined as current assets less current liabilities (excluding fair
value of commodity contracts and flow-through share premiums),
divided by cash flow from operating activities before
decommissioning expenditures and changes in non-cash working
capital. Management considers net debt and net debt to
annualized funds flow as important additional measures of the time
period it would take to pay off the debt if no further capital
expenditures were incurred and if funds flow from operating
activities remained constant.
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.