Questerre Energy (QEC) Q3 2024 earnings summary

Executive summary

• Average daily production reached 1,913 boe/d in Q3 2024, with adjusted funds flow from operations of $3.4 million, up from $3.0 million in Q3 2023.

• Three (0.75 net) new wells at Kakwa Central came on-stream, boosting production; a three (1.5 net) well program at Kakwa North commenced and is expected online in Q2 2025.

• Net loss for Q3 2024 was $0.3 million, similar to Q3 2023; year-to-date net income was $0.8 million, down from $2.3 million last year.

• Legal proceedings continue in Quebec regarding license revocation, with an expert report estimating potential economic losses between $700 million and $4.8 billion.

• Working capital surplus stood at $27.6 million at quarter-end, with minimal amounts drawn on $16 million credit facilities.

Financial highlights

• Petroleum and natural gas sales were $9.5 million in Q3 2024, down 12% year-over-year due to lower commodity prices despite higher production.

• Adjusted funds flow from operations was $3.4 million in Q3 2024 and $10.9 million year-to-date, both lower than prior year periods.

• Capital expenditures totaled $13.1 million year-to-date, mainly for Kakwa Central drilling and completions.

• Net income for the nine months ended September 30, 2024, was $0.8 million, compared to $2.3 million in 2023.

• Shareholders’ equity was $145.9 million at quarter-end, down from $169.6 million a year earlier.

Outlook and guidance

• New Kakwa North wells are expected to come on-stream in Q2 2025, supporting future production growth.

• Legal and political efforts continue to unlock value from the Quebec Utica discovery, with potential for local gas to address energy shortages and emissions goals.

• The company expects production volumes to decline over the next two quarters until new wells are online.

• Sufficient liquidity is anticipated to meet obligations over the next 12 months, with capital expenditures funded by operations and credit facilities.