Questerre Energy (QEC) Q2 2024 earnings summary

Executive summary

• Completed three (0.75 net) wells at Kakwa Central, with production expected to increase in late Q3 and H2 2024; well costs reduced by 20% year-over-year to $14 million.

• Government of Quebec introduced Bill 69, supporting integrated energy resource management and recognizing long-term natural gas needs.

• Carbon storage pilot application in Quebec is well-advanced, with efforts underway to secure government funding; legal proceedings ongoing regarding Bill 21.

• Average Q2 2024 production was 1,559 boe/d, down from 1,978 boe/d in Q2 2023 due to natural declines; new wells expected to add 500 net boe/d over the first year.

• Adjusted funds flow from operations was $4.5 million for Q2 and $7.4 million for H1 2024; net income was $1.3 million for Q2 and $1.1 million for H1.

Financial highlights

• Q2 2024 petroleum and natural gas sales were $8.8 million, down from $10.7 million in Q2 2023; H1 2024 sales were $17.8 million, down from $21.2 million year-over-year.

• Net income for Q2 2024 was $1.3 million (Q2 2023: $1.7 million); H1 2024 net income was $1.1 million (H1 2023: $2.6 million).

• Adjusted funds flow from operations for Q2 2024 was $4.5 million (Q2 2023: $5.3 million); H1 2024 was $7.4 million (H1 2023: $9.6 million).

• Capital expenditures for H1 2024 totaled $9.7 million, mainly for Kakwa Central drilling and completions.

• Working capital surplus at June 30, 2024, was $27.6 million (June 30, 2023: $28.0 million); unrestricted cash and term deposits totaled $37 million.

Outlook and guidance

• Three new wells at Kakwa Central expected to be on production in late August, with potential for material production growth next year.

• Operator at Kakwa North plans to drill three (1.5 net) wells in the fall, with participation under review.

• Cash reserves expected to fund 2024 programs and maintain financial flexibility for 2025, with a potential 3–5 well program next year.

• Advancement of Quebec carbon storage pilot depends on significant provincial and federal financial support.