Marquee Petroleum Ltd. Announces Its Financial and Operating Results For the Third Quarter

Symbol:  MQE: TSX Venture

CALGARY, Nov. 22, 2011 /CNW/ - Marquee Petroleum Ltd. ("Marquee" or the "Company") is pleased to announce its operating and financial results for the third quarter ended September 30, 2011.  Selected financial and operational information is outlined below and should be read in conjunction with the interim financial statements and related management's discussion and analysis ("MD&A") which have been filed on Sedar at www.sedar.com.

HIGHLIGHTS

Highlights for the quarter included:

  • Completion of a $16.8 million equity financing.  Including the full exercise of the agents' 10% over-allotment option, the Company issued 51,111,750 special warrants at $0.27 per warrant, and 9,375,000 flow-through common shares at $0.32 per share.  The special warrants were automatically converted into common shares.

  • Acquisition of a 100% working interest in 37 sections of crown land in the Provost area.  The acquisition provides a new core area for the Company containing access to shallow depth Viking and Mannville oil resource plays.  Management has identified numerous low-risk horizontal drilling locations in an area with extensive gas gathering and infrastructure in place with year round access and repeatable characteristics.

  • Established a second new core area with the purchase of oil and natural gas producing properties at Michichi in East Central Alberta.  The acquisition represents high quality light oil and liquids-rich natural gas production with a high working interest and more than 25,920 acres of land prospective for Mannville and Banff light oil horizontal targets.  This acquisition has added net production of approximately 118 boe/d, with an additional 85 boe/d expected to be added by end of year.  Acquisition of a 100% working interest at subsequent land sales of an additional 33 sections of oil and natural gas rights in the same East Central Alberta area.

  • Growth in production, resulting in a Q3 exit rate of approximately 200 boe per day.

  • Net working capital of $5.6 million at September 30, 2011, plus available bank credit facilities of $6.4 million provides the ability to fund production growth through existing cash and bank lines.

  • With the addition of the two new core areas in East Central Alberta the Company now has more than 53,640 acres of high working interest operated undeveloped land with resource type horizontal oil prospects in the Viking, Mannville and Banff formations. These opportunities are characterized by high rates of return and short term payouts with horizontal drilling costs ranging from one to two million dollars. Drilling operations commenced in November 2011 with a two-well horizontal well program at Michichi.  Additional drilling will commence at Provost in December, 2011.

Marquee expects to provide an operations update on planned drilling activity and the Company's outlook for 2012 after the business combination with SkyWest Energy Corp. ("SkyWest") is completed.  Closing for the business combination is scheduled for early December.

FINANCIAL AND OPERATING highlights

Three and Nine Months Ended September 30   Three Months Ended   Nine Months Ended
  2011 2010   2011 2010
Financial ($), except shares outstanding          
Production revenue 364,307 72,527   1,208,974 159,337
Operating netback 237,417 20,388   854,083 (26,746)
Funds from operations 7,690 (54,368)   359,477 (253,360)
Net earnings (loss) (217,625) (205,447)   (1,451,051) (419,865)
   Per share, basic and diluted (0.00) (0.01)   (0.04) (0.02)
Net working capital 5,569,922 311,017   5,569,922 311,017
Capital expenditures 8,434,541 1,615,801   9,015,016 3,187,641
New equity, net of issues costs 15,322,929 818,323   16,566,935 2,673,848
Total shares outstanding, end of period       96,092,630 23,563,044
 
Production          
Oil and NGL (bbls/d) 30 9   33 7
Natural gas (mcf/d) 381 55   459 28
Total (boe/d) 94 18   109 12
Total (boe) 8,616 1,657   29,776 3,152
 
Average realized prices          
Oil and NGL ($/bbl) 80.72 64.51   78.03 68.03
Natural gas ($/mcf) 4.00 3.95   4.10 4.19
Combined average ($/boe) 42.28 43.78   40.60 50.55
 
Royalties, operating costs and netback          
Royalties ($/boe) 2.68 4.37   2.05 2.25
Operating costs ($/boe) 11.77 27.10   9.87 56.79
Netback ($/boe)                    27.83 12.31   28.68 (8.71)

PROPOSED BUSINESS COMBINATION WITH SKYWEST ENERGY CORP.

On October 11, 2011 the Company entered into an Arrangement Agreement (the "Agreement") providing for the combination of the businesses of Marquee and SkyWest.   The transaction will establish a well capitalized, resource play focused, exploration and development company targeting primarily high netback oil production in east central and southern Alberta.  Under the terms of the Agreement and the plan of arrangement (the "Arrangement"), Marquee will amalgamate with a wholly-owned subsidiary of SkyWest and Marquee shareholders will receive 1.35 SkyWest common shares ("SkyWest Shares") for each Marquee common share ("Marquee Shares"). Upon completion of the Arrangement, the shares of the combined company ("New Marquee") will be consolidated on an 8:1 basis, and the name of SkyWest will be changed to Marquee Energy Ltd.  Pro forma the Transaction, New Marquee expects to have current production of approximately 2,000 boe/d, net debt of approximately $18 million and approximately 41.5 million common shares outstanding post-consolidation.  After completion of the Transaction, New Marquee will be led by the current management team of Marquee.  The full details of this proposed transaction are available in the joint management information circular of SkyWest and the Company dated November 4, 2011, which can be viewed on SEDAR at www.sedar.com or on the Company's website at www.marqueepl.com. The combination has been approved by the Boards of both Marquee and SkyWest, and requires the approval of the shareholders of both companies, as well as the option holders and warrant holders of Marquee.  The meeting for the Marquee security holders vote will occur on December 5, 2011.

Marquee Petroleum Ltd. is a Calgary based emerging oil and gas company, focused on the development of light oil and liquids rich natural gas reserves in the Western Canadian Sedimentary basin.  The Company's new areas of focus are operated light oil properties with resource development potential in at Michichi and Provost in East Central Alberta and at Coutts in Southern Alberta.

FORWARD-LOOKING STATEMENTS

Certain information regarding the Company set forth in this press release and in the documents incorporated by reference herein, including management of the Company's ("Management") assessment of the Company's future plans and operations contains forward-looking statements that involve substantial known and unknown risks and uncertainties. The use of any of the words "plan", "expect", "forecast", "project", "intend", "believe", "anticipate", "estimate" or other similar words, or statements that certain events or conditions "may" or "will" occur are intended to identify forward-looking statements. Such statements represent Marquee's internal projections, estimates or beliefs concerning, among other things, future growth, results of operations, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, plans for and results of drilling activity, environmental matters, business prospects and opportunities. These statements are only predictions and actual events or results may differ materially. Although Management believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Marquee.

In particular, forward-looking statements included in this release and in the documents incorporated by reference herein include, but are not limited to the completion and results of the business combination with SkyWest Energy Corp.; the impact of the East Central acquisition on the Company's operations, inventory and opportunities; statements with respect to the performance characteristics of the Company's oil and natural gas properties; supply and demand for oil and natural gas; treatment under governmental regulatory regimes and tax laws; financial and business prospects and financial outlook; results of operations, production, future costs, reserves and production estimates; drilling plans; activities to be undertaken in various areas including the fulfillment of exploration commitments; timing of drilling, completion and tie in of wells; tax horizon; access to infrastructure; timing of development of undeveloped reserves; planned capital expenditures, the timing thereof and the method of funding; financial condition, access to capital and overall strategy; development and drilling plans for the assets and transportation and infrastructure availability for the Company's properties; the performance characteristics of the Company's crude oil properties and for the Company's properties and the Company's oil and natural gas production levels and production levels associated with the Assets.

BOE's can be misleading, particularly if used in isolation.  A BOE conversion ratio of 6 mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

 

SOURCE Marquee Petroleum Ltd.

For further information:

Marquee Petroleum Ltd.

        Richard Thompson
President and Chief Executive Officer
(403) 384-0000
richardt@marqueepl.com   
    Roy Evans
VP Finance & CFO
(403) 384-0000
roye@marqueepl.com

or visit the Company's website at www.marqueepl.com.ca.

 

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Marquee Petroleum Ltd.

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