CALGARY, Aug. 21, 2014 /CNW/ - Marquee Energy Ltd. ("Marquee" or the "Company") (TSXV: "MQL") (OTCQX:MQLXF - News) 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.
Full article:
https://ca.finance.yahoo.com/news/marquee-energy-ltd-announces-second-235200277.html
PS. OK Q.
Cheers,
Dave.