Questerre Energy Corporation (TSX,OSE:QEC) reported on its preliminary financial and operating results for the year ended December 31, 2011.
Michael Binnion, President and Chief Executive Officer, commented, "We realigned our strategy in 2011. With development of our Utica shale gas discovery deferred during the environmental assessment in Quebec, we looked for new opportunities in unconventional oil to create value for our shareholders. We also committed to grow our conventional assets to create a reserve of capital. I am pleased to report we made excellent progress on both of these fronts during the year."
- Executed new oil shale strategy through Letter of Intent with Red Leaf Resources and acquisition of 100,000 net acres
- Grew conventional asset base with successful light oil drilling program in Antler, Saskatchewan
- Exploration licenses in St. Lawrence Lowlands, Quebec extended by up to three years to 2021 during strategic environmental assessment for shale gas development
- Increasing oil production leveraged higher prices and generated cash flow from operations of $10.06 million with average daily production of 646 boe/d
- Grew NPV-10 for our proved and probable reserves to $102 million
- Maintained financial strength with over $104 million in positive working capital and no debt
Mr. Binnion added, "Our proposed strategic investment in oil shale gives us the potential to benefit from another major shift in energy markets. With our portfolio of oil shale assets and the right to license Red Leaf's process, we are looking to add significant oil resources to complement our gas resources in Quebec. We expect this investment to close before the end of the first quarter of this year."
He further commented, "While we move the oil shale assets from assessment and piloting to commercial development over the next two to three years, our conventional assets and cash will provide a base of capital in the interim. During the year we grew our light oil assets in Antler through a successful drilling program and a property acquisition. We invested $40.77 million in our assets, approximately 80% in Antler, and added over 850,000 barrels in light oil reserves. The value of our proved and probable reserves on an NPV-10 basis grew from $67 million to $102 million with oil and liquids accounting for 92% of the reserve base. With spring breakup approaching, we are operating with one rig and will re-contract drilling and completion equipment this summer. We plan to grow production through a combination of continued drilling and a secondary recovery scheme at Antler as well as new projects like our liquids-rich Montney prospect. We are targeting production of 1,500 - 2,000 boe/d by 2013 to coincide with the environmental process in Quebec."
For the year ended December 31, 2011, the Company reported cash flow from operations of $10.06 million as compared to $4.74 million for the prior year. An increased proportion of light oil from Antler and higher oil prices were largely responsible for the increase in cash flow over the prior year. Questerre's production averaged 646 boe/d (2010: 619 boe/d) with oil and liquids accounting for 76% (2010: 53%) of the product mix. As at December 31, 2011, the Company reported a working capital surplus of $104.48 million (2010: $136.08 million).
The Company also reported on the evaluation of its proved and probable reserves as at December 31, 2011. The report was prepared in accordance with the COGE Handbook by McDaniel & Associates with an effective date of December 31, 2011.
In accordance with the requirements of National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities of the Canadian Securities Administrators, the Company anticipates filing its Annual Information Form that includes more detailed disclosure and reports relating to petroleum and natural gas activities for the 2011 fiscal year at the end of March 2012.
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