Marquee Energy Continues Transition to Oil Producer in 2012
CALGARY, March 21, 2013 /CNW/ – Marquee Energy Ltd. (“Marquee” or the
“Company”) (TSXV: “MQL”) is pleased to announce its fourth quarter and
annual operating and financial results and provide an update on recent
ACHIEVEMENTS AND HIGHLIGHTS
Marquee achieved its goal of transitioning from a gas weighted to an oil
and liquids weighted company in 2012. The significant growth in both
production and land base in the Company’s core Michichi area, together
with the acquisition and development of its Lloydminster assets, have
resulted in significant increases in the oil and natural gas liquids
(NGL) proportion of both its average daily production and year-end
reserves. The Company now has a deep inventory of oil focused drilling
opportunities at both Michichi and Lloydminster.
The oil and liquids proportion of Q4-2012 production increased to 56%,
compared to the 2011 exit rate of 42%. The proved component of year-end
reserves is 61% oil and NGL versus 51% in 2011, and the proved plus
probable component is 59% versus 47% in 2011. The proved producing
component of reserves increased 87% in 2012, over 40% per share.
The Company’s 2012 Finding and Development Costs, including changes in
future development capital, were $8.82 per boe for proved plus probable
barrels of oil equivalent (boe), and $17.92 per proved boe. Recycle
ratios are 2.4x for proved plus probable reserves, and 1.2x for proved
reserves. These results reflect the Company’s plan to target
opportunities with high oil and liquids weighting at capital costs that
provide strong economic returns. The development activities in the
Company’s core Michichi area in 2012 drove most of this performance,
and will be the target of over 85% of the 2013 capital program.
Q4 2012 Highlights:
-- Continued the shift in focus to lower cost, higher oil and liquids weighted production in Eastern Alberta. Q4-2012 oil and liquids weighting was 56% versus 41% in Q4-2011. The Company's oil and liquids weighting increased to approximately 63% in December following the sale of its Willesden Green assets -- Achieved quarter over quarter production growth of 35% in Q4-2012, despite the sale of the Willesden Green assets mid-quarter (approximately 496 boe/d), and year over year production growth of 47% -- Acquired key gas processing facilities in the Company's core Michichi area to support Marquee's rapid production growth in the area, reduce tie-in times and processing costs through control of infrastructure. Expansion and upgrade of the gas plant was complete on February 1, 2013 -- Completed the sale of gas weighted assets in the Willesden Green area for net proceeds of $20.6 million, resulting in the reduction of the Company's net debt and enhancement of the Company's ability to advance its drilling program at Michichi and pursue other strategic opportunities -- Funds flow from operations of $2.0 million for the quarter, versus $0.8 million in Q4-2011 -- Drilled two Michichi light oil wells, and spud a third which was rig released in January -- Drilled five Lloydminster heavy oil wells in the quarter
Financial and Operational Highlights (unaudited) Three months ended Twelve months ended December 31, 2012 December 31, 2012 2012 2011 2012 2011 Financial (000's except per share) Oil and natural gas sales (1) $9,720 $7,399 $37,405 $28,605 Funds flow from operations $2,003 $811 $9,238 $10,857 Per share - basic $0.04 $0.03 $0.18 $0.41 Per share - diluted $0.04 $0.03 $0.18 $0.41 Net Income (loss) ($2,911) ($26,549) ($10,529) ($25,906) Per share - basic and diluted ($0.05) ($0.89) ($0.21) ($0.98) Capital expenditures $14,522 $7,546 $47,445 $39,016 Dispositions ($21,001) - ($21,001) ($275) Corporate Acquisitions - $25,945 $19,885 $25,945 Net debt (2) ($43,852) ($24,982) Total Assets $162,645 $139,367 Weighted average basic shares outstanding (3) 52,953,993 29,906,183 50,565,982 26,463,666 Operational Daily sales volumes Oil (bbls per day) 651 533 667 513 Heavy Oil (bbls per - - day) 510 369 NGL (bbls per day) 96 153 158 125 Gas (mcf per day) 5,897 5,809 6,534 5,506 Total (boe per day) 2,240 1,654 2,283 1,556 Realized prices Oil ($/bbl) $78.45 $85.49 $82.09 $88.11 Heavy Oil ($/bbl) $57.29 - $58.98 - NGL ($/bbl) $50.83 $68.02 $57.06 $66.00 Gas ($/mcf) $3.51 $3.41 $2.51 $3.81 Combined ($/boe) $47.17 $48.63 $44.77 $50.36 Royalties ($/boe) $4.65 $3.18 $4.63 $4.42 Opex and transportation $21.29 $16.16 ($/boe) $24.37 $19.50 Field operating netbacks $18.15 $24.16 $20.64 $29.78 (1) Before royalties. (2) Net debt is calculated as current assets less current liabilities, excluding commodity contracts and flow-through share premiums. (3) The Company consolidated its shares on an 8:1 basis on December 5, 2011 and all figures have been restated to reflect this consolidation.
FOURTH QUARTER AND ANNUAL HIGHLIGHTS
Marquee reported funds flow from operations of $2.0 million for the
fourth quarter ended December 31, 2012, compared to $0.8 million for
the same period in 2011. A 35% growth in production in Q4-2012 over
Q4-2011 along with an increase in the oil and NGL weighting from 42% in
2011 to 56% in 2012 contributed to the growth in funds flow from
operations. Funds flow from operations for the year ended December 31,
2012 were $9.2 million compared to $10.9 million in 2011. The
significant increase in oil and natural gas sales in 2012 resulted from
the increase in total production together with the increase in oil and
liquids weighting. This sales increase was partially offset by a
combination of lower commodity prices and higher operating costs
associated with the growth in oil and liquids production, which grew
from an average of 513 boe per day in 2011 to 1,036 boe per day in
2012. Average realized selling prices declined by 11% to $44.77 per
boe in 2012.
The Company closed the sale of its gas weighted Cardium assets in the
Willesden Green area of western Alberta on November 15, 2012 for cash
consideration of approximately $21 million. In Q3 2012, the property
averaged production of 496 boe per day, weighted 68% to natural gas.
Capital expenditures for the quarter were $14.5 million, including $2.1
million to acquire key gas processing facilities in the Michichi area,
$7.0 million to drill and complete two wells at Michichi and five wells
at Lloydminster and $3.7 million to equip and tie-in these wells and
upgrade the new facilities. The remaining $1.7 million was spent on
seismic and land acquisitions in the Michichi area.
The Company’s financial statements and management’s discussion and
analysis for the fourth quarter and year ended December 31, 2012 are
available on SEDAR at www.sedar.com and on Marquee’s website at www.marquee-energy.com.
The Company’s activity in the fourth quarter was focused on drilling,
completion & tie-in operations at Michichi and Lloydminster along with
upgrading and expanding a newly acquired gas plant and gathering system
in the Michichi area.
Marquee drilled a total of seven horizontal wells at Michichi in 2012,
two of which were drilled and completed during the 4(th) quarter. An eighth well was spudded late in December and subsequently
rig released and completed during the 1(st) quarter of 2013. To date, Marquee has drilled 11 (11 net) successful
horizontal wells since late 2011 targeting oil prospects in the Banff,
Detrital and Ellerslie zones. Ten of these wells are now on production
with the 11 well expected to be on production in April.
IP30 test rates for two of the last 4 wells drilled at Michichi averaged
244 boe/d with oil cuts averaging 70%. The remaining two wells have
been on production for less than 30 days. The average tie-in times from
rig release for the same wells has been 50 days versus the average
tie-in time for the first 7 wells at Michichi of 100 days.
Marquee has continued to refine its drilling program with improvements
seen in capital expenditures and well productivity. The company has
begun drilling wells from multi-well pad sites generating savings in
surface equipment and tie-in costs. Where appropriate, Marquee has also
employed the use of acid fracturing instead of conventional multistage
sand fracturing, resulting in substantial savings in completion costs.
When warranted, short lateral horizontal wells have been drilled
resulting in lower drilling costs and little change in overall expected
The Company’s current 2013 capital plan includes drilling a minimum of
seven new horizontal wells at Michichi. The first was drilled in
February and was recently completed and is now awaiting tie-in. Marquee
expects to resume drilling in late Q2 after Spring breakup. The
enhanced drilling and completion techniques and multi-well pad drilling
is expected to be applied to the 2013 drilling program to optimize
productivity and minimize per well costs.
Expansion and upgrading of the gas plant acquired in early Q4 2012 at
Michichi was completed in early Q1 2013 and became operational on
February 1, 2013. The Company has now tied in six of its new horizontal
wells to this facility with additional tie-ins expected to be completed
in 2013. Ownership of this facility is expected to produce significant
operating cost savings and production efficiencies at Michichi in 2013
Marquee’s undeveloped land in the area now exceeds 110 net sections or
70,400 acres of primarily 100% owned and operated Crown lands,
representing a significant inventory of economic drilling
Marquee drilled 5.0 (4.9 net) successful wells in Q4-2012, and has now
drilled a total of 10 (net 9.9) successful wells since the acquisition
of the property on March 15, 2012. The new wells targeted heavy oil,
primarily in the Sparky formation with secondary targets in the
Cummings, McLaren and General Petroleum formations.
Proved plus probable reserves increased by 18% to 1,965 Mboe, and proved
reserves increase by 13% to1,044 Mboe in the 2012 year-end reserves
report for Lloydminster.
In an effort to offset wide differentials the company has an arrangement
to ship a portion of its Lloydminster heavy oil production by rail. The
first volumes were shipped in February 2013 and it is expected that
approximately 25% of its 2013 production will be delivered by rail. It
is expected that the Company will realize an additional netback of
$5/barrel for this oil.
Marquee expects to drill three wells at Lloydminster in the second half
Marquee expects to invest almost 85% of its $25.8 million 2013 capital
budget, announced on February 13, 2013, into its core Michichi area.
The facilities upgrade which became operational on February 1, 2013 has
resulted in expanded capacity for new gas, and reduced tie-in times on
Q4-2012 and Q1-2013 capital activity resulting in accelerated cash flow
from these activities.
The Company will continue to refine its selection of future locations as
well as drilling and completion techniques. Knowledge gained from the
11 horizontal wells drilled to date at Michichi in combination with
public well data will be used in conjunction with 2D and 3D data to
plan all future horizontal wells.
Marquee’s capital budget for 2013 includes:
-- Completion and tie-in of the two horizontal wells spud in December, and seven additional horizontal wells in the Company's core Michichi area; -- Completion of the upgrade and expansion of the Marquee gas plant to allow recovery of NGL from the Mannville and Banff gas, improve tie-in times and reduce operating costs; -- Drill three wells at Lloydminster; -- Additional land and seismic data.
Marquee confirms its previously disclosed production guidance for 2013
based on this capital program is:
-- Average 2,400 boe per day, weighted 64% oil and NGL; -- Exit 2,700 boe per day, weighted 65% oil and NGL
Management will continue to protect Marquee’s balance sheet. The
Company expects to continue to monetize non-core assets with proceeds
being used to pay down debt and fund additional opportunities on core
properties. The Company has protected approximately 45% of forecast
2013 oil production with WTI basis swaps at an average price of
CAD$91.76, and 33% of its forecast 2013 natural gas production with a
$3.40 per GJ AECO basis swap contract.
Marquee Energy Ltd. is a publicly traded Calgary-based growth oriented
junior oil and gas company currently focused on high rate of return oil
and liquids rich gas production in Alberta. Marquee intends to continue
to grow the company organically and through strategic acquisitions in
each of its core areas. Additional information about Marquee may be
found in its continuous disclosure documents filed with Canadian
securities regulators at www.sedar.com.
This press release contains certain measures, including “funds flow from
operations” that do not have standardized meaning as prescribed by IFRS
and, therefore, are considered non-GAAP measures. Readers are
cautioned that this press release should be read in conjunction with
Marquee’s disclosure under “Non-GAAP Measures” included at the end of
the MD&A 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:
-- capital expenditures; -- business strategies and objectives; -- estimated reserve quantities and the discounted present value of future net cash flows from such reserves; -- petroleum and natural gas sales; -- future production levels (including the timing thereof) and rates of average annual production growth; -- exploration and development plans; -- acquisition and disposition plans and the timing thereof; -- operating and other expenses; -- royalty and income tax rates; and -- the timing of regulatory proceedings and approvals.
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; -- future crude oil, natural gas liquids and natural gas prices; 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. The
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
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.
Finding and development costs, including changes in future development
costs have been calculated in accordance with NI 51-101. The aggregate
of the exploration and development costs incurred in the most recent
financial year and the change during that year in estimated future
development costs generally will not reflect total finding and
development costs related to reserves additions for that year.
Comparative information for the prior year is not presented as there
were no reserve additions in 2011.
SOURCE Marquee Energy Ltd.