Marquee Energy (MQL-V) earns $484,000 in Q2
Aug 22nd 2013 - News Release
Marquee Energy Ltd. is releasing its second quarter 2013 operating and financial results. The company's financial statements, and management's discussion and analysis, for the second quarter of 2013 are available on SEDAR and on Marquee's website.Achievements and highlights
The company achieved significant growth in funds flow from operations on both a barrel-of-oil-equivalent and per-share basis in the second quarter of 2013.
Second quarter 2013 highlights:
- Generated funds flow from operations of $4.4-million, an increase of $1.4-million, or 46 per cent over the first quarter of 2013, and an increase of $2.4-million, or 120 per cent over the same period in 2012;
- Generated funds flow from operations of $21.41 per barrel of oil equivalent, an increase of $6.56 per barrel of oil equivalent, or 44 per cent over the first quarter of 2013, and $12.19 per barrel of oil equivalent, or 132 per cent over the same period in 2012;
- Increased funds flow from operations per share to eight cents per share in the quarter, compared with six cents per share in the first quarter of 2013, and four cents per share in the second quarter of 2012;
- Increased field operating netbacks to $33.49 per barrel of oil equivalent for the second quarter of 2013, compared with $24.47 in the first quarter of 2013, and $19.34 in the same period of 2012; this represents a gain of 73 per cent over the second quarter of 2012, and 37 per cent over the first quarter of 2013, a direct result of the company's growth in oil and liquids weighting;
- Maintained, without drilling any new wells, average production of 2,268 barrels of oil equivalent per day for the quarter, with an oil and liquids weighting of 64 per cent; the company spudded the first of a planned six-well drilling program at Michichi on July 4 and expects to drill three wells at Lloydminster in the second half of 2013.
Operations update
Michichi
There were no new wells drilled at Michichi in the second quarter of 2013. The last of the horizontal wells drilled in the first quarter was put on production in April, subject to production optimization. Production for the area averaged 1,026 barrels of oil equivalent per day in the second quarter of 2013, a 9-per-cent increase over the first quarter of 2013, and a 78-per-cent increase over the same period in 2012.
Marquee spudded a horizontal well at Michichi on July 4 and followed this with a second location spud on July 24. These are the first two of a six-well program expected to be completed during the fourth quarter of 2013. Marquee selected the locations for this program based upon information from the company's detailed geologic and seismic mapping of the Michichi area, together with the knowledge gained from the first 11 horizontal wells drilled by the company in this area over the past year.
Lloydminster
Production in the area averaged 534 barrels of oil per day in the second quarter of 2013, compared with 533 barrels of oil per day in the first quarter of 2013. Based on field estimates, current production from the area continues to exceed 500 barrels of oil per day, which highlights the low decline nature of this property. The last new well was brought on production in December, 2012. Field netbacks averaged $38.35 per barrel for the second quarter of 2013. The company expects to drill three additional wells at Lloydminster in the second half of 2013.
Marquee continues to ship a portion of its heavy oil production by rail. Just over 30 per cent of the second quarter production was shipped by rail and the company expects to ship similar volumes by rail for the balance of the year. The company is realizing an additional netback of approximately $6 per barrel on these volumes.
Outlook
Marquee's capital plan for the second half of 2013 includes:
- Drill six horizontal wells at Michichi;
- Drill three wells at Lloydminster;
- Acquire additional land and seismic data.
Marquee confirms its previously disclosed production guidance for 2013 based on this capital program:
- Average 2,400 barrels of oil equivalent per day, weighted 64 per cent oil and NGL;
- Exit 2,700 barrels of oil equivalent per day, weighted 65 per cent oil and NGL.
Management plans to continue to strengthen Marquee's balance sheet. During the second quarter, Marquee sold a non-core property for $700,000. Marquee also engaged Sayer Energy Advisors to assist in the disposition of additional non-core assets and is now negotiating transactions with prospective purchasers on a number of the company's remaining non-core assets. Including transactions since the end of the second quarter, the company has received a total of $3.2-million year to date on the sale of 49 barrels of oil equivalent per day of non-core properties.
Marquee has established itself as a dominant interest holder and leader in the light oil Banff and Detrital resource play at Michichi. The company has now assembled a land position of more than 118 net sections of high-working-interest Crown lands, and identified a drilling inventory of more than 110 low-risk locations supported by geology and geophysics. Marquee will continue to focus on derisking the Banff and Detrital oil plays through selective delineation. At the same time, the company continues to refine drilling and completion practices to reduce costs and optimize production to further improve rates of return. Progress has been made in the area to reduce operating expenses aided in part by the purchase and upgrade of the gas plant at Michichi, which has been operating since February, 2013. The company is currently evaluating opportunities to reduce trucking, treating and related costs in the area.
We seek Safe Harbor.
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