In the ongoing earnings season, the energy sector has been by far the worst performer. This does not come as a surprise. Oil prices have plunged since June 2014 amid oversupply.
However, the outlook for the energy sector has improved lately.
The improved outlook is mainly due to the fact that oil prices have recovered from their multi-year low levels hit earlier in the year. Indeed, prices are now well above $40.00 U.S. per barrel.
In today’s trading, oil prices rose further amid supply outages in Canada due to a massive fire around Fort McMurray, Alberta which is in the heart of Canada’s oil sands. There are supply-side issues in other parts of the world as well.
Meanwhile, in the U.S., crude oil production has dropped sharply from its peak as lower prices have made extracting oil from shale fields unviable. In this scenario, analysts expect the oil market to start to balance in the second half of this year.
In fact, if supply side issues persist, the market could even turn into a deficit. This augurs well for oil & gas companies, especially the
ones that are focused on bringing down costs, cutting capital spending and selling non-core assets.
One such company is Marquee Energy Ltd. (TSX-Venture: MQL). Based in Calgary, Alberta, MQL is a junior energy company focused on high rate of return oil development and production.
MQL is committed to growing through exploitation of existing opportunities and continued consolidation and development within its core area at Michichi.
MQL shares have risen in trading today. At last check, the stock was trading 4.35% higher at $0.360 on volume of 10,750, which is well below the daily average volume of 49,874. Despite the gains today, MQL shares are currently trading well below their 52-week high of $0.89. Year-to-date, MQL shares have fallen more than 11.11%.
MQL shares are gaining momentum in trading today after the company announced that it has entered into a purchase and sale agreement for the sale of a non-core, shallow gas asset. The company expects total proceeds of $4.5 million from the sale of this non-core asset. The transaction is expected to be completed on or about May 31.
The asset includes approximately 500 gross / 396 net wells and averaged approximately 5,700 mcf/d in Q1 2016. The Company expects the disposition to have a positive impact on operating costs, general and administration expenses and the company's asset retirement obligations, while having minimal impact on cash flow. In the short term, the gross proceeds from the sale of the assets will be used to reduce the company's current debt and improve financial flexibility.
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