Positive Q2 report. Up 10.8% in Oslo so far :-)

12/08-2011 02:06:24: (QEC) Questerre Energy 2Q 2011 Report

President's Message


With the shale gas environmental assessment underway

in Québec, we shifted our short term strategy to

unconventional oil. Accelerating development of our

Antler asset will be our first priority, both through

organic growth and accretive acquisitions.   

Although it will take longer than we expected,

commercializing our Utica shale gas discovery remains

our main long term priority. While the government

assesses the potential environmental impacts and

develops new regulations, we will focus on

communications with stakeholders to secure our social

license to operate. 

Highlights

·	Interim regulations for shale gas development

announced by the Government of Québec 

·	Oil and gas exploration licenses extended during

strategic environmental assessment 

·	Completed divestiture of interest in Beaver River

Field to Transeuro Energy 

·	Cash flow from operations of $2.27 million and

production of 586 boe/d with improved oil weighting

leveraging higher prices during the quarter 

·	Balance sheet strength preserved with over $131

million in positive working capital and no debt 

St. Lawrence Lowlands, Québec

Consistent with the BAPE recommendations, the

government of Québec commissioned a strategic

environmental assessment ("SEA") for shale gas

development in the second quarter. A multi-stakeholder

committee was appointed to conduct the SEA and new

regulations were enacted to govern operations during

this period. 

The announcement of the SEA materially impacted our

timeline for commercial development of the Utica.

During this time, the government mandated limited

activities while it increases its understanding of the

industry and develops the appropriate regulations. We

were pleased to learn that the Ministry of Natural

Resources acknowledged this impact and extended the

term of our exploration licenses up to three years.

Environmental assessments are common for large scale

resource projects, including shale gas development in

other jurisdictions. While we appreciate the

importance of assessing the local impacts, we are

hopeful that, rather than re-creating the proverbial

wheel, the committee will leverage the growing body of

research that corroborates the established industry

practices to safely develop shale gas. This includes

the 1,000 page preliminary Draft Supplemental Generic

Environmental Impact Study recently published by the

Department of Environmental Conversation in New York

on the development of shale resources in the state. It

confirms the safety and benefits of shale gas

development, including that it is highly unlikely that

groundwater contamination would occur by fluids pumped

into a wellbore for hydraulic fracturing.

Dispelling the persistent myths about shale gas

development such as groundwater contamination remains

an important part of our public relations efforts in

Québec. The reports emerging from a wide variety of

sources continue to validate our position. We are

optimistic that these will allow us to refocus the

debate on the real issues like water handling and

cementing practices that are common to all drilling

operations and unrelated to hydraulic fracturing. 

 

Antler, Saskatchewan

Accelerating activity at Antler is key to our strategy

of diversifying into unconventional light oil during

the environmental assessment in Québec. 

Our planned development of this light oil resource

will benefit from our learning curve over the last two

years. Refinements to our drilling and completion

programs, improved production practices and operating

efficiencies have contributed to increased recoveries

and lower operating costs. 

Notwithstanding the excellent fiscal terms in

Saskatchewan that enhance these economics, returns are

challenged by weather and equipment availability. 

Heavy rainfall this spring coupled with high snow pack

resulted in record flooding in southern Saskatchewan

that submerged well sites, access roads and highways.

The province, Canada's second largest oil producer,

reported that approximately 20,000 to 30,000 barrels

of oil production was shut-in as a result of this

flooding. We expect this will further constrain

available completion equipment during a very short

summer operating season.

Through a combination of geography and design, our

existing production was largely unaffected by the

inclement weather. The majority of our horizontal

wells are pipeline connected to our main battery

eliminating the trucking from well sites that were

flooded. Our main battery is located on drier ground

and proximate to open highways allowing trucking of

the produced oil to the sales terminal.

As weather conditions improve, we are resuming field

operations. Our plans for the remainder of this year

are to drill up to 10 (5.0 net) wells. As equipment

availability permits, we will look to a second rig to

achieve this plan. With an inventory of wells to be

drilled and awaiting completion, we anticipate

contracting frac equipment for a definitive period.

This will allow us to reduce the lag between drilling

and completion from six months to four months or less.

Subject to these constraints, we are targeting a

corporate exit production rate of 750 boe/d for 2011.

Early in the third quarter, we expanded our presence

in the area through an acquisition of producing assets

and undeveloped land for $13.25 million. The

acquisition of approximately 100 bbl/d of operated

production added a number of infill and step out

locations.  We continue to look for assets that will

complement our existing production at Antler.

Operational and Financial

The weather related delays and equipment shortages at

Antler lowered our production volumes as we were

unable to complete wells as planned. With the

disposition of the Beaver River Field, we also lost 70

boe/d for the last month of the quarter. Although

volumes were lower, the higher oil weighting realized

higher prices and improved our results. 

Cash flow from operations for the quarter was $2.27

million with average daily production of 586 boe/d and

an operating netback of $58.75/boe. Our operating

margins should improve over the remainder of the year

with the elimination of the fixed operating costs and

relatively minimal production volumes associated with

the Beaver River Field.

 

 

Outlook

Over the remainder of this year and next,

unconventional oil will be our main focus.

We will continue to actively develop Antler. This will

include organic growth as well as accretive

acquisitions. Our goal is to create a core area with a

value in excess of our current market capitalization.

Another goal is to create shareholder value through

scalable early stage unconventional projects targeting

light oil. We have the in-house expertise and balance

sheet strength to capitalize on the right

opportunities when they arise. 

Although the timeline has been extended, we remain

committed to the goal of commercializing our Utica

shale discovery. We have been very encouraged by the

growing body of evidence that endorses that shale gas

can be developed safely. We believe communicating this

and the benefits to local stakeholders will be

essential to securing our social license to operate.

Michael Binnion

President and Chief Executive Officer

Translated with Google

Arctic sees 210 percent upside

By: Jørn Arnesen - StockLink.no
Published: 19/05/2010 6:45:05
Investment firm remains bullish for Questerre after Q1 report.


Investment firm remains bullish for Questerre after Q1 report. (Questerre Energy Corporation)


Arctic securities brokerage reiterates his buy recommendation on Questerre Energy Corporation (QEC) in a recent analysis.

Brokerage makes no change in price target after Q1 report, even if the numbers came in lower than expected. The turnover was 3.4 million Canadian dollar against the expected 3.5 million Canadian dollars, while EBIT came in at - 4.8 million Canadian dollars on brokerage house's estimate - 4.4 million Canadian dollars.

Arctic indicate that the company has strengthened its financial position sharply after the completion of the placement of 128 million kanandiske dollars, 166 million Canadian dollars in positive working capital and no debt at the end of Q1.

Brokerage hoping for positive results from the wells to be drilled ahead, and repeat his 12-month rate target of 55 kroner per share. Based on the last traded, NOK 17.70, this represents a tremendous upside to 210 percent.

Link: http://stocklink.no/Article.aspx?id=67474 (Norwegian)

BR

splittogspleis

13/04-2010 08:04:30: (QEC) Questerre presents live in Oslo Norway, Thursday April 15, 2010

Questerre Energy Corporation cordially invites you to

attend a corporate presentation that will focus on the

results from the St. Edouard #1 well, along with the

Company's plans for 2010-2011 to commercialize the

Utica shale gas play.


The presentation will be held in Oslo, Norway on

Thursday April 15, 2010 at 15:00 CET.

Teatersalen

Hotel Continental

Stortingsgaten 24/26

N-0117 Oslo

The presenation will be web cast and available LIVE at

the Company's website:

www.questerre.com/investorcenter/presentations/

Viewers will be able to submit questions via email to

rodsten@hillandknowlton.no.

Please RSVP to Christopher Rodsten, Gambit Hill &

Knowlton Norway

T: +47 22 04 82 07

F: +47 22 04 82 01

rodsten@hillandknowlton.no

Anela Dido

Investor Relations

Questerre Energy Corporation

Ekstern link: http://www.newsweb.no/index.jsp?messageId=257754

Here's the news. Translated by Google :-)

Questerre Energy: - Huge upside if the findings can be developed

12:13
(SIX): Holberg funds are optimistic about Questerre Energy
entry into the large shale gas field in the Utica Shale
North America. Holberg Funds bought into Questerre via
Holberg Norden's Fund in March.

The Holberg consider the area one of the most promising for
shale gas in North America and believe there is great upside if they
initial findings confirmed and can be commercialized.

- The initial pilot wells have yielded results far beyond
company and market expectations with flow Rates
of 5-6 mmcf / d. More test wells must be drilled to
conclude on the field size and profitability, writes Holberg
The funds in return report for March.

At present, estimates a Questerre share of the Utica area to be
in the area around 700 million barrels of oil equivalent. A good part
uncertainties remain, however: Both of the remaining
test wells, flow rates, CAPEX / well and development in gas prices.

Questerre has risen close to 24 percent in the last three months, but
has fallen nearly 20 percent from the peak of 29.2 million 23 February
years.

23. February Questerre Energy announced that they achieved an initial
rate of six million cubic feet of gas a day on average
for the first month of production at one of the company
test wells on the St. Lawrence Lowlands project in Canada. The
was very much better than expected and led to a violent
price jump of 38 percent the same day.

Today Questerre fall by 1.3 percent to 23.5 million shares.

Marthe Skaar
marthe.skaar @ six.no
SIX News Norway
Tel: +47 23326651

Hi Rocco,

I'm from Norway. I am just about to watch the Cross-Country Skiing - Men's 4x10 km Relay C/F . Go Norway and good luck to Canada as well. They have a really good team this year.

Great games so far :-)

BR splittogspleis

http://www2.canada.com/calgaryherald/news/calgarybusiness/story.html?id=0a3c4395-613a-47fc-aa17-a30aa256fef3&p=1

P romising test results from a shale gas well in Quebec on Tuesday sent the shares of Calgary-based juniors sharply higher as investors sought to cash in on what could be Canada's newest natural gas producing region.

Tiny Questerre Energy reported that the St. Edouard No. 1A horizontal well in the St. Lawrence Lowlands flowed initial production rates of 12 million cubic feet (mmcf) per day before settling back to five mmcf per day. The news sent the company's shares sharply higher, where they gained $1.35 -- more than 36 per cent -- to close at $5.05.

"We're extremely pleased, as you might imagine," Questerre CEO Michael Binnion said in an interview. "It's much better than we had hoped . . . every bit of additional piece of data will add to proof this is commercial."

Binnion said the company expected a sustained initial monthly rate of two mmcf per day. However, he cautioned: "With one well we still have no idea what's average."

The St. Edouard well, which is being drilled in partnership with Talisman Energy, was completed with eight fracture stages in what marks Quebec's first horizontal well in the Utica shale.

The announcement pushed the share prices of other small companies with property in the area higher. Canadian Quantum Energy, which is partnered with Questerre and Talisman in three remaining wells to be drilled this summer, gained 54 cents, or 35 per cent, to finish the day at $2.08.

Montreal-based Junex Inc. added 56 cents, or 29 per cent, to $2.47, while Gastem Inc. rose 19 cents, or 33 per cent, to close at 77 cents on extraordinarily heavy volume of 5.8 million shares. Altai Resources, a Toronto-based nickel miner with shale rights in Quebec, popped for 29 cents, or 63 per cent, to close at 75 cents.

"It's lit up the whole play. This goes a long way down the path of taking this play commercial," said Canadian Quantum CEO Doug Brett. "It really is a confirmation of the whole trend."

Initial vertical wells tested 700,000 cubic feet per day and Brett said he had his fingers crossed for two mmcf per day, which compares with similar wells being drilled across the border in the Marcellus shales of Pennsylvania. "Anything more than that was gravy, as far as I'm concerned."

Ken Lin, an analyst with Mackie Research Capital in Calgary, said the results raised eyebrows in the financial world, suggesting that initial rates of about three mmcf per day would have been considered a positive result. "It really surprised a lot of people, they beat street expectations and they beat my expectations. That's why you saw the dramatic price moves today."

However, he cautioned against putting too much faith in the results of a single well. He agreed the euphoria could wear off if some of the subsequent results don't meet the same high hurdle.

"We will see variability," he said. "Even though this is positive, we're not going to see every single well test at the same rate."

Victor Rodberg with Clarus Securities in Calgary said the results mark "the start of an oil and gas industry in Quebec."

In a research note, he described the numbers as "spectacular" and increased his price target for Questerre shares by 30 per cent to $8.25.

"There is little doubt that the play will be commercial. The only question that remains is the ultimate value of the play, which will be determined with additional well results."

For its part, Talisman didn't make an effort to disclose the test numbers through a news release or on its website. Talisman, which will spend more than $1 billion this year in Pennsylvania to establish itself as a major shale gas player, has previously said Quebec could be a promising addition to its budding unconventional gas portfolio.

But spokesman David Mann cautioned against drawing too many conclusions until the balance of the drilling program is complete.

"It's still early days," he said. "These are encouraging results but it's wildly hypothetical to start speculating about commercial production. It's a nice idea, but still too soon."

Talisman shares rose modestly on Tuesday, gaining 31 cents, or two per cent, to close at $18.89.

spolczer@theherald.canwest.com

© Calgary Herald 2010