Cequence Energy Ltd. provided an operational update and a capital budget for the first six months of 2015. The company expects 2014 production to average approximately 11,000 boepd. Following the start-up of the expanded 13-11 facility at Simonette in January, production has reached a rate of 12,000 boepd. Since the sale of Ansell in July, 2014, Cequence has had an active drilling program in Simonette with two rigs running continuously on three separate Montney pad locations. Cequence is encouraged by the results of its recent drilling program which is utilizing enhanced fracture design characteristics on the Montney formation similar to the practices implemented by other area operators. To date, eight Montney wells have been completed and have initially performed at, or above expectations. Longer term production performance is expected to validate the enhanced completion techniques being utilized by Cequence. The first three wells from the 1-32 pad (completed in October) have a combined average 30 day IP rate of 3,300 boepd (83% natural gas). Three additional Montney wells have been successfully completed from the 1-32-61-26W5 pad in early January, bringing the total number of wells from this pad to six. The three most recent wells are currently being tied in to the 1-32 surface facility and are expected to be on production by early February. Cost performance has been improving with the three most recent wells drilled and completed for an average cost of $8.0 MM per well. Two Montney wells were successfully completed in early December from the 12-26-61-27W5 pad. The two wells have produced for 16 days on restricted cleanup at a combined rate of 1,750 boepd (92% natural gas). Two additional Montney wells (1.0 net) from the winter program have been drilled from the 15-15-61-26W5 pad and are scheduled to be completed in February. The company's Dunvegan well at 11-12 has been producing with an average 90 day IP rate of 1,300 boepd. One additional Dunvegan well (0.65 net) has been drilled from the 2-12-61-2W6 pad on budget and the completion is expected to commence in late January. The company has had excellent execution and has successfully completed 14 consecutive wells, including 350 frac stages, in the past twelve months. Simonette 13-11 Facility Expansion. The Company completed the expansion of its 100 mmcfd facility at Simonette (13-11) and chose to move the commissioning of the facility from December, 2014 to January, 2015 to avoid higher costs and potential service quality issues over the Christmas season. Commissioning of the plant involved a full one week shut down of the entire Simonette field beginning on January 6th with a systematic one week step-up restart which commenced on January 13th. As of January 20th, total corporate production based on field estimates has ramped to 12,000 boepd with approximately 2,500 boepd to be turned on or restarted by February.

With the recent weakness in commodity prices, the company has decided to eliminate three wells from its first quarter of 2015 budget. As a result, budgeted capital expenditures for the first quarter have been reduced to $22 million from the previous $45 million. The company is forecasting funds flow to be approximately $12 million in the first quarter of 2015 based on estimates of AECO pricing of $2.70 CAD/GJ and WTI USD 50/bbl. March 31, 2015 net debt is budgeted to be approximately $85 million (1.8 times first quarter annualized funds flow).