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Cequence Makes Management Changes

Share Print Bookmark    |    Wednesday,March 30,2016

Cequence Energy Ltd. announces that in light of the challenging environment that currently exists for natural gas weighted companies, the Board has determined to make certain changes to the Cequence management team. The rationalized and revitalized management team's expertise is engineering and financially focused, which the Board believes is ideally suited for the stage of development and attributes of the Company's asset base within the context of the current commodity price environment.

Management Team Changes

Todd Brown has been promoted to the position of CEO and David Gillis has been promoted to the position of Executive VP and CFO; with James Jackson , VP, Engineering; Erin Thorson , Controller; Dave Robinson (VP, Geology) and Chris Soby (VP, Land) each continuing in their respective roles with the Company. The employment of Messrs. Wanklyn (President and CEO), Stewart (VP, Operations) and Stretch (VP Geophysics) ceased effective today.

Operational and G&A Initiatives

A number of initiatives will be actively pursued by Cequence throughout 2016 with the goal of realizing tangible operational netback improvements in 2017. These initiatives include advancing transportation efficiencies, implementing a water disposal scheme, reducing field chemical costs, plus other operational efficiency projects. In addition, annualized G&A savings of approximately $2.7 million are expected to be achieved through a leaner management structure and other targeted savings throughout 2016. Cequence remains undrawn on its bank line of credit and, in an effort to protect its balance sheet, Cequence plans minimal capital spending in the near term until such time as the outlook for commodity prices improve.

The Company expects to provide an updated business plan and guidance reflecting the foregoing initiatives together with the release of its first quarter results scheduled for May 10, 2016 .

Strategic Alternatives Process

The Special Committee formed in connection with the previously announced strategic review process has evaluated all the proposals received during the process and is not currently pursuing any such proposals. The committee has determined that the changes to the management team and cost saving initiatives are the best course of action for the Company in the current environment. The Board and management of the Company will evaluate any proposals that may be subsequently received that could enhance shareholder value.

The Board stated: "Our decision to implement the changes to the management team was an extremely difficult decision to make and it was made after a fulsome review of the Company's available strategic alternatives in a weakening commodity price environment. The Board concluded that these changes were necessary to provide shareholders with the best opportunity to realize the inherent value of Cequence's primary asset in Simonette. We strongly believe that the stewardship of these assets needs to be focused on reducing costs and preserving value rather than growth, until such time as commodity prices justify growth with improved economics for drilling and further developing the asset. The Simonette reserve base is now well defined and recognized with 108 booked and 150 un-booked drilling locations and infrastructure in place to fuel future growth when natural gas and oil and natural gas liquids prices improve. The Company is financially sound, with no bank debt and approximately 2.5 years until maturity of the CPPIB notes and, as a result, we believe Cequence is well positioned to meet the challenges of the commodity cycle. The management team and the Board will continue to look for complementary opportunities to enhance shareholder value beyond the cost saving initiatives underway. Finally, we wish Paul, Mike and Steve all the best in their future endeavors as they apply their talents to finding new opportunities. The Board thanks them for their contribution in building the Company."