12.05.2018 kl 00:13 6321

Questerre files 2018 Q1 Financial Statements & MD&A
- Average daily production over 2,000 boe/d for the quarter
- Adjusted funds flow from operations more than doubled to $4.7 million
- Questerre partners with experienced operator to develop Kakwa North acreage
- Questerre commissions integration study for Jordan oil shale project

Our production and cash flow growth this quarter was primarily driven by the increased investment in Kakwa.

Production from the joint venture acreage almost doubled from the first quarter of 2017. Including the light oil production acquired in Antler last fall, corporate volumes grew to just over 2,000 boe/d. With additional drilling scheduled for later this summer at Kakwa, we could see production dip in the next few quarters before a further increase by year-end.

Through a recent partnership with an experienced Montney operator, we plan to develop our immediately offsetting acreage. They are currently licensing drilling locations and the first well could spud by June. We are looking forward to these results given the strong condensate rates and low acid gas from our adjacent producing wells.

We were encouraged by comments this May from the Minister of Environment noting that the Minister of Energy and Natural Resources will soon be tabling regulations for hydrocarbons. Once finalized, we will be meeting with the municipalities to secure the local acceptability we need. We are confident there is interest in our clean gas pilot and its environmental and economic benefits.

During the quarter, we engaged Hatch Ltd., a global engineering firm, to review the engineering and economics for our oil shale project in Jordan. The initial project will target production of approximately 50,000 bbls/d and will include the costs to upgrade the produced oil to diesel and gasoline. Once this study is completed, we plan to commission a more detailed pre-FEED study as we commence negotiations for a concession agreement.

Over two-thirds of our corporate production is oil and liquids and the higher production this quarter benefitted from improving oil prices. We realized an average price of $52.56 per boe this year, up almost 20% from last year and our adjusted funds flow from operations was $4.7 million compared to $1.41 million last year.

Our capital spending for the quarter was $8.66 million focused almost exclusively on the Montney formation at Kakwa. Of this amount, about 50% was for field infrastructure including the installation of gas lift facilities, pipelines and to expand our central facility. Subject to the operator's plans and results, we estimate our total capital investment this year could be $30 million including up to six (1.5 net) wells.

We are looking forward to the new regulations in Quebec. They will mark the conclusion of over seven years of studies and public consultations and the beginning of local consultations. For us, this will validate our step by step approach of working with government and stakeholders. We are confident this approach will be key to securing the local social acceptability we need to move forward.

Michael Binnion
President and Chief Executive Officer

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