Questfire Energy Corp. (the "Corporation" or "Questfire") (TSX VENTURE:Q.A) is pleased to announce that it has filed on SEDAR its audited financial statements, related management's discussion and analysis ("MD&A") and Annual Information Form (AIF) for the year ended December 31, 2016. Included in the AIF are the Corporation's reserves data and other oil and gas information as of December 31, 2016 as prepared by GLJ Petroleum Consultants Ltd. (GLJ), the Corporation's independent reserves evaluator. The evaluation was prepared in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.
2016 Corporate Highlights
Two-thousand sixteen marked the third year of a significant downturn for the oil and natural gas industry, largely driven by weak commodity prices. Rather than experiencing a recovery in oil and gas prices as widely expected, the first half of 2016 saw prices for both oil and gas continue to drop to 20-year lows. This hit Questfire particularly hard as we had virtually no commodity price hedges for the first half of 2016. Along with reduced commodity prices came downward revisions to our senior bank borrowing base.
In response to these significant challenges our strategy, as always, was to work hard to make the best of a tough situation. Over the year we sold approximately 120 boe per day of non-core production, generating proceeds of approximately $10.6 million, all of which was applied to reduce debt. We minimized capital spending which resulted in no new drilling and only $650,489 of capital spending on mandatory maintenance and miscellaneous projects. We also continued to focus on cost reductions, achieving a 15 percent reduction in gross G&A costs and an 11 percent reduction in unit operating costs over 2015. The Questfire management and field operations team worked hard to reduce all downtime and maintain maximum production while minimizing spending. Along with the low-decline nature of our production base, this held the year-over-year decline in average annual production to just 5 percent. We are very satisfied with this result given no drilling, 120 boe per day of asset sales and very low capital spending.
The second half of 2016 saw slow and steady improvement in commodity prices and, as a result, essentially all $4.8 million of our funds flow from operations for the year was generated in the second half of 2016. In December, our bank facility was extended to May 31, 2017 with a $28 million conforming and an $8.1 million supplemental facility. With the fourth quarter's sharply improved operating netback, the continued nearly flat production, the higher realized pricing for all commodities and the essentially flat funds flow from operations from the fourth quarter of 2015, we are optimistic that Questfire's overall position will continue to improve.
The outlook for commodity prices is positive for 2017 and beyond. The improvement in pricing is happening at a slow pace compared to past recoveries, but the fundamentals are in place for further gains. Questfire's goals for 2017 include continued reduction in overall debt and achieving an extension of banking facilities beyond May 31, 2017. With continued debt reduction and improvement in commodity prices, we expect to return to drilling and growth in the second half of 2017.
Questfire Energy Corp. is an Alberta-based company formed to participate in oil and gas exploration, development and acquisitions focusing in the W4 and W5 regions of Alberta. The Corporation's shares trade on the TSX Venture exchange under the symbol Q.A. The Corporation currently has 22,822,401 Class A shares outstanding.
SOURCE: Questfire Energy Corp.
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