CALGARY,
Aug. 26, 2015
/CNW/ - Marquee Energy Ltd. ("Marquee" or the "Company")
(TSXV: "MQL") is pleased to release its financial and operational
results for the three and six months ended June 30, 2015 and provide an operations
update. The Company's financial statements and
Management's Discussion and Analysis ("MD&A") for the
three months ended June 30, 2015 are
available on SEDAR at www.sedar.com and on Marquee's
website at www.marquee-energy.com.
SECOND QUARTER HIGHLIGHTS
- Maintained Q2-2015 production of 5,118 boe/d (49% oil and
NGLs) representing a 2% increase compared to Q2-2014. For the six
months ended June 30, 2015 production
increased to 5,326 boe/d, an 18% increase over the comparable
period in 2014.
- Improved balance sheet strength with second quarter exit
net debt of $48.8 million,
representing 1.9 times debt to annualized funds flow from
operations. Q2-2015 exit net debt is down 23% from year end 2014
net debt of $63.1
million.
- Decreased Q2-2015 operating and transportation costs to
$15.94/boe, a 14% improvement from
the comparable period in 2014. Savings resulted from service cost
reductions and a strong focus on operating
efficiencies.
- Reduced general and administrative costs ("G&A")
costs to $3.59/boe, a 2% decrease
from Q2-2014. For the six months ending June
30, 2015 G&A costs have declined to $3.47/boe, a decrease of 14% from the comparable
period in 2014.
SUBSEQUENT EVENTS
On August 19, 2015 Marquee
closed a strategic acquisition (the "Acquisition") and accompanying
facility arrangement (the "Facility Agreement") to further
consolidate its core Michichi area. The Acquisition includes
approximately 550 boe/d, 21 net sections of land containing
Banff rights that are contiguous
with Marquee's existing light oil play, and extensive
infrastructure. The Facility Agreement enables the Company to
complete consolidation of available assets in its core Michichi
area without debt or dilution.
The Acquisition represents the fourth significant growth
transaction completed by the Company in its Michichi core area in
the last 20 months. Marquee now
owns approximately 270 net undeveloped sections of land in its
Michichi core area and has expanded its horizontal light oil
prospect inventory to more than 290 locations.
FINANCIAL AND OPERATING HIGHLIGHTS
|
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
|
2015
|
2014
|
2015
|
2014
|
Financial (000's except per share and per boe)
amounts)
|
|
|
|
|
Oil and natural gas sales
(1)
|
$
|
16,082
|
$
|
25,131
|
$
|
30,192
|
$
|
45,877
|
Funds flow from operations
(2)
|
$
|
6,316
|
$
|
9,274
|
$
|
13,320
|
$
|
16,665
|
|
Per share - basic and diluted
|
$
|
0.05
|
$
|
0.08
|
$
|
0.11
|
$
|
0.17
|
|
Per boe
|
$
|
13.56
|
$
|
20.24
|
$
|
13.82
|
$
|
20.32
|
Net income (loss)
|
$
|
(4,750)
|
$
|
900
|
$
|
(8,881)
|
$
|
(1,850)
|
|
Per share - basic and diluted
|
$
|
(0.04)
|
$
|
0.01
|
$
|
(0.07)
|
$
|
(0.02)
|
Capital expenditures
|
$
|
1,038
|
$
|
4,173
|
$
|
7,767
|
$
|
17,170
|
Asset acquisitions including non-cash
consideration
|
$
|
-
|
$
|
1,015
|
$
|
16,701
|
$
|
12,842
|
Dispositions
|
$
|
(35)
|
$
|
(501)
|
$
|
(27,956)
|
$
|
(529)
|
|
|
|
|
|
Net debt (2)
|
|
|
$
|
48,829
|
$
|
63,130
|
Total Assets
|
|
|
$
|
265,779
|
$
|
281,976
|
Weighted average basic and diluted shares
outstanding
|
120,341
|
112,534
|
120,341
|
100,482
|
|
|
|
|
|
Operational
|
|
|
|
|
Net wells drilled
|
-
|
1.0
|
2.0
|
6.0
|
Daily sales volumes
|
|
|
|
|
|
Oil (bbls per day)
|
1,711
|
1,434
|
1,730
|
1,329
|
|
Heavy Oil (bbls per day)
|
622
|
525
|
696
|
518
|
|
NGL's (bbls per day)
|
185
|
195
|
206
|
188
|
|
Natural Gas (mcf per day)
|
15,599
|
17,285
|
16,163
|
14,983
|
|
Total (boe per day)
|
5,118
|
5,035
|
5,326
|
4,532
|
|
% Oil and NGL's
|
49%
|
43%
|
49%
|
45%
|
Average realized prices
|
|
|
|
|
|
Oil ($/bbl)
|
$
|
56.18
|
$
|
100.12
|
$
|
49.42
|
$
|
97.49
|
|
Heavy Oil ($/bbl)
|
$
|
51.23
|
$
|
82.23
|
$
|
41.61
|
$
|
77.46
|
|
NGL's ($/bbl)
|
$
|
34.10
|
$
|
58.92
|
$
|
28.13
|
$
|
65.21
|
|
Natural Gas ($/mcf)
|
$
|
2.72
|
$
|
4.82
|
$
|
2.88
|
$
|
5.26
|
Netbacks
|
|
|
|
|
|
|
Combined ($/boe)
|
$
|
34.53
|
$
|
55.93
|
$
|
31.32
|
$
|
57.24
|
|
Royalties ($/boe)
|
$
|
(5.33)
|
$
|
(7.31)
|
$
|
(3.67)
|
$
|
(6.46)
|
|
Operating and transportation costs
($/boe)
|
$
|
(15.94)
|
$
|
(18.59)
|
$
|
(15.43)
|
$
|
(19.57)
|
|
Operating netbacks prior to hedging
(3)
|
$
|
13.26
|
$
|
30.03
|
$
|
12.22
|
$
|
31.51
|
|
Realized hedging gain (loss)
($/boe)
|
$
|
4.86
|
$
|
(3.01)
|
$
|
6.01
|
$
|
(3.27)
|
|
Operating netbacks ($/boe)
(3)
|
$
|
18.12
|
$
|
27.02
|
$
|
18.23
|
$
|
28.24
|
(1)
|
Before royalties.
|
(2)
|
Defined under the Additional-GAAP Measures section of
this press release.
|
(3)
|
Operating netback is a
non-GAAP measure, defined under the Non-GAAP Measures section of
this press release.
|
OPERATIONS UPDATE
Due to the current weakness in commodity prices, Marquee
has reduced its second half drilling program at Michichi from six
wells to four wells in order to maintain financial flexibility. The
first well was drilled in July and is now on production. The next
three wells are being drilled from a multi-well pad which reduces
capital costs and is expected to lower future operating costs. Two
of the wells have been drilled and the third well is currently
being drilled. Completions and tie in of the pad wells will occur
in September and all three wells are expected to be on production
in October. All four wells in the program demonstrate good
economics in the current low price environment.
Marquee continues to focus on reducing operating and
G&A expenses. The Company has reduced transportation and
processing costs of emulsion by utilizing owned and operated
facilities and reducing the use of third party facilities. Service
costs continue to decline and chemical costs have been reduced. The
recently announced transaction of oil and gas producing properties
has not resulted in any additional staff in either the field or
Calgary office.
OUTLOOK
The Company has a strong balance sheet and a 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 is uniquely positioned at Michichi with a dominant
operated land and infrastructure position, controlling the pace and
development of the Banff/Detrital
light oil play, while continuing to lower both capital and
operating costs. The Company's strong financial position provides
for stability throughout the changing commodity
environment.
The Directors and management of Marquee continue to
monitor changes to commodity pricing and the current economic
environment, as it affects both the Company'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: 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.
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; 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. 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.
DRILLING LOCATIONS
This press release discloses drilling
locations in three categories: (i) proved locations; (ii) probable
locations; and (iii) unbooked locations. Proved locations and
probable locations are derived from the Company's most recent
independent reserves report prepared by Sproule as at December 31, 2014 and account for drilling
locations that have associated proved and/or probable reserves, as
applicable. Unbooked locations are internal estimates based on the
Company's prospective acreage and assumptions as to the number of
wells that can be drilled per section based on industry practice
and internal review. Unbooked locations do not have attributed
reserves. Of the 290 (net) Michichi drilling locations identified
herein, 29 are proved locations, 29 are probable locations and the
remaining 200 are unbooked locations. Unbooked locations have been
identified by management as an estimation of our multi-year
drilling activities based on evaluation of applicable geologic,
seismic, engineering, production and reserves information. There is
no certainty that the Company will drill all unbooked drilling
locations and if drilled there is no certainty that such locations
will result in additional oil and gas reserves or production. The
drilling locations on which the Company will actually drill wells
will ultimately depend upon the availability of capital, regulatory
approvals, seasonal restrictions, oil and natural gas prices,
costs, actual drilling results, additional reservoir information
that is obtained and other factors. While certain of the unbooked
drilling locations have been de-risked by drilling existing wells
in relative close proximity to such unbooked drilling locations,
other unbooked drilling locations are farther away from existing
wells where management has less information about the
characteristics of the reservoir and therefore there is more
uncertainty whether wells will be drilled in such locations and if
drilled there is more uncertainty that such wells will result in
additional oil and gas reserves or production.
NON-GAAP FINANCIAL MEASURES
This press release contains the term "operating netbacks
prior to hedging" 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
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. Operating netbacks are
not intended to represent operating profits, net earnings or other
measures of financial performance calculated in accordance with
IFRS.
Operating netbacks prior to hedging are calculated by
subtracting royalties, production, and operating and transportation
expenses from revenues before other income/losses. Operating
netbacks include realized hedging gain (loss).
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.