/NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR
FOR DISSEMINATION IN THE UNITED
STATES/
CALGARY, Nov. 20, 2017 /CNW/ - Marquee Energy Ltd.
("Marquee" or the "Company") (TSXV: "MQX") announces its third
quarter operational and financial results for the three and nine
months ended September 30, 2017. The
Company's financial statements and Management's Discussion and
Analysis ("MD&A") for the three and nine months ended
September 30, 2017 are available on
the System for Electronic Document Analysis and Retrieval (SEDAR)
at www.sedar.com and on Marquee's website at
www.marquee-energy.com.
THIRD QUARTER 2017 HIGHLIGHTS
- Drilled and completed two horizontal development wells and two
horizontal exploration wells at Michichi. Over the last seven days,
the two development wells have averaged 248 boe/d per well,
approximately 30% above Marquee's type well forecasts; and
- Produced an average of 2,791 boe/d (44% oil and liquids), an
increase of 19 boe/d (1%) over the third quarter of 2016.
OPERATIONAL UPDATE
Marquee's field estimated
production averaged 3,050 boe/d (50% oil and liquids) during the
first 19 days of November. The four horizontal
wells drilled in the third quarter of 2017 incorporated a
monobore design to control costs, while completing the wells with a
47% increase to fracture density. Marquee was able to reduce the
average days from spud to rig release to eight days from 14 days,
and fractured each well successfully in late September with
approximately 460 tonnes of sand per well, an increase of 40% over
the previous design.
Marquee drilled two development wells on the southern portion of
the defined Banff development
fairway at Michichi. The two wells, brought on production in early
October, have averaged 225 boe/d per well (151 barrels per day
("bbl/d") of oil and liquids, 440 thousand cubic feet per day
("mcf/d") of gas) over the last 30 days and 248 boe/d per well (165
bbl/d, 500 mcf/d gas) over the last seven days. The recent
production is approximately 30% above Marquee's type well forecasts
on a BOE basis. With the increased fracture density and sand
volumes, average drilling and completion costs for the two
development wells were $1.6 million
per well. Marquee is encouraged with these early production results
in consideration of its modified drilling and completion design.
The wells have recovered approximately 30% of the total load fluid
to date and continue to clean up.
Marquee's two exploratory wells were drilled on a prospective
Banff trend west of the current
Michichi development fairway to satisfy the Company's 2017
flow-through share expenditure commitment. These wells continue to
produce to test facilities and the Company continues to evaluate
their potential.
CORPORATE UPDATE AND OUTLOOK
During the third quarter
of 2017, commodity prices faced downward pressure, resulting in the
decision to scale back the Company's second half of 2017 drilling
program from six wells to four. With this reduced activity, the
Company is projecting to be at the lower end of the previously
announced corporate exit rate of 3,000 to 3,300 boe/d. Along with
this, the second half 2017 capital spending forecast has been
reduced from $15 million to
$11 million.
With the commodity price improvement in the latter half of
October 2017, the Company has been
actively layering in hedges to support its balance sheet and
position itself to be active in the first quarter of 2018. The
Company's Board of Directors has approved a five-horizontal well
development drilling program at Michichi, with $9.7 million of capital committed for the first
half of 2018. Drilling is expected to begin in December 2017 to mitigate potential service
equipment shortages.
FINANCIAL AND OPERATIONAL RESULTS
|
|
|
(thousands
of Canadian dollars,
|
Three months
ended
September 30,
|
Nine months
ended
September 30,
|
except per share
and per boe amounts)
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
Financial
|
|
|
|
|
Oil and natural gas
sales (1)
|
$
|
6,569
|
$
|
7,432
|
$
|
22,980
|
$
|
23,525
|
Funds flow from
operations (2)
|
$
|
1,495
|
$
|
(532)
|
$
|
4,982
|
$
|
821
|
|
Per share - basic and
diluted
|
$
|
0.00
|
$
|
0.00
|
$
|
0.01
|
$
|
0.00
|
|
Per boe
|
$
|
5.58
|
$
|
(1.99)
|
$
|
6.47
|
$
|
1.05
|
Net income
(loss)
|
$
|
(2,937)
|
$
|
(5,247)
|
$
|
(8,555)
|
$
|
(12,122)
|
|
Per share - basic and
diluted
|
$
|
(0.01)
|
$
|
(0.03)
|
$
|
(0.02)
|
$
|
(0.06)
|
Capital
expenditures
|
$
|
7,529
|
$
|
210
|
$
|
15,375
|
$
|
687
|
|
|
|
|
|
Net debt
(2)
|
|
|
$
|
28,944
|
$
|
45,019
|
Total
Assets
|
|
|
$
|
171,620
|
$
|
178,553
|
Weighted average
basic shares outstanding
|
435,772,196
|
205,686,639
|
435,772,196
|
205,686,639
|
Weighted average
diluted shares outstanding
|
435,772,196
|
205,686,639
|
435,772,196
|
205,686,639
|
|
|
|
|
|
Operational
|
|
|
|
|
Net wells
drilled
|
4
|
-
|
7
|
-
|
Daily sales
volumes
|
|
|
|
|
|
Oil
(bbl/d)
|
1,069
|
1,240
|
1,082
|
1,320
|
|
Heavy Oil
(bbl/d)
|
-
|
10
|
-
|
225
|
|
NGL's
(bbl/d)
|
154
|
148
|
149
|
147
|
|
Natural Gas
(mcf/d)
|
9,408
|
8,241
|
9,216
|
11,861
|
|
Total
(boe/d)
|
2,791
|
2,772
|
2,767
|
3,669
|
|
% Oil and
NGL's
|
44%
|
50%
|
44%
|
46%
|
Average realized
prices
|
|
|
|
|
|
Light Oil
($/bbl)
|
$
|
47.84
|
$
|
44.19
|
$
|
50.83
|
$
|
40.27
|
|
Heavy Oil
($/bbl)
|
$
|
-
|
$
|
29.35
|
$
|
-
|
$
|
24.52
|
|
NGL's
($/bbl)
|
$
|
36.37
|
$
|
29.33
|
$
|
39.32
|
$
|
29.64
|
|
Natural Gas
($/mcf)
|
$
|
1.56
|
$
|
2.59
|
$
|
2.53
|
$
|
1.92
|
Netback
|
|
|
|
|
|
Revenue
($/boe)
|
$
|
25.58
|
$
|
29.14
|
$
|
30.42
|
$
|
23.40
|
|
Royalties
($/boe)
|
$
|
(1.25)
|
$
|
(1.51)
|
$
|
(1.90)
|
$
|
(2.05)
|
|
Operating and
transportation costs ($/boe)
|
$
|
(15.78)
|
$
|
(16.84)
|
$
|
(16.44)
|
$
|
(15.77)
|
|
Operating netback
prior to hedging (2)
|
$
|
8.55
|
$
|
10.79
|
$
|
12.08
|
$
|
5.58
|
|
Realized hedging gain
(loss) ($/boe)
|
$
|
3.80
|
$
|
(1.17)
|
$
|
1.74
|
$
|
2.02
|
|
Operating netback
($/boe) (2)
|
$
|
12.35
|
$
|
9.62
|
$
|
13.82
|
$
|
7.60
|
|
|
(1)
|
Before
royalties
|
(2)
|
Non-IFRS
Measure. See Non-IFRS Measures advisory.
|
Changes to Executive Management Team
The Company also wishes to announce the following changes to
Marquee's executive management team, effective today:
- Dr. William J.F. Roach has been
appointed as the Company's Interim Chief Executive Officer. Dr.
Roach will maintain his roles as Interim Executive Chairman of
Marquee's Board of Directors and as a member of the Company's
Reserves Committee;
- Mr. Howard Bolinger has been
promoted to Executive Vice President, Finance and Chief Financial
Officer. Mr. Bolinger has also been appointed as the Company's
Corporate Secretary;
- Mr. Adam Jenkins has been
promoted to Vice President, Corporate Development; and
- Mr. Steve Bradford, Vice
President, Land and Corporate Secretary is no longer with
Marquee.
Dr. Roach commented, "With the recent changes to Marquee's
executive management team and with its current production
portfolio, we are optimistic that we can deliver increased
shareholder value over the next several quarters."
CORPORATE PRESENTATION
Marquee's updated corporate
presentation will be available shortly at
www.marquee-energy.com.
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
are listed for trading 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.
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 estimates and the net present value of the future net
reserves related thereto; the number and quality of future
potential drilling and development opportunities; anticipated
capital budgets and expenditures; average production for 2017 and
beyond; 2017 exit production rates; the Company's development,
drilling and completion plan; and well performance.
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, drilling and completions 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 for the year ended December
31, 2016, 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.
NON-GAAP FINANCIAL MEASURES
This press release contains the term "operating netbacks prior
to hedging" and "operating netbacks" which do not have standardized
meanings prescribed by IFRS and, therefore, may not be comparable
with the calculation of similar measures presented 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. "Funds flow from operations" does not have
any standardized meaning prescribed by IFRS and therefore reference
to funds flow from operations or funds flow from operations per
share may not be comparable with the calculation of similar
measures presented by 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",
which does not have any standardized meaning under IFRS and
therefore may not be comparable to similar measures presented by
other issuers. Net debt is calculated as net debt, defined as
current assets less current liabilities (excluding fair value of
commodity contracts and flow-through share premiums).
Management considers net debt as an important additional measure to
monitor debt repayment requirements and track the financial
viability of the Company.
Please see the Company's MD&A for the year ended
December 31, 2016 and the Company's
MD&A for the three and nine months ended September 30, 2017 for a reconciliation
of certain Non-GAAP financial measures used in this press
release to their most directly comparable GAAP or IFRS
measures.
ADDITIONAL ADVISORIES
References to BOEs
Barrels of oil equivalent (boe) 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.
Type Well
This presentation provides indicative information regarding
"analogous information" as defined in NI 51-101. This analogous
information includes estimates of EUR, as defined in the COGEH, and
production type wells. Type well information reflects Marquee
Energy's current operating experience in relation to wells of the
indicated types. There is no assurance that actual well results
will be in accordance with those suggested by the type well
information. Actual results will differ, and the difference may be
material. Internally generated type well estimates are generated
from internal empirical data sources and publicly available
information, and are believed to be independent in nature. Some of
this data may not have been prepared by qualified reserves
evaluators or auditors, may have been prepared based on internal
estimates, and the preparation of any estimates may not be in
strict accordance with COGEH. Estimates by engineering and
geo-technical practitioners may vary and the differences may be
significant. EUR volumes are not reserves. There is no assurance
that EUR volumes are recoverable or that it will be commercially
viable to produce any portion thereof.
Initial Production Rates
Any references herein to production rates, test rates or initial
production rates (including IP 30) 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.
SOURCE Marquee Energy Ltd.