Questerre Energy Corporation
TSX : QEC
OSLO STOCK EXCHANGE : QEC

Questerre Energy Corporation

August 21, 2007 02:15 ET

Questerre Announces Corporate Acquisition

CALGARY, ALBERTA--(Marketwire - Aug. 21, 2007) - Questerre Energy Corporation ("Questerre" or the "Company")(TSX:QEC)(OSLO:QEC) is pleased to announce that it has entered into an agreement to acquire Magnus Energy Inc. ("Magnus")(TSX VENTURE:MEI), a junior exploration and production company.

Magnus' primary asset is a 50% working interest in over 80 square miles in southeastern Saskatchewan, known as the Antler area. The acreage is within a very large Torquay light, sweet oil pool at a depth of approximately 1,100m. Oil in this area receives a slight premium price to WTI and a royalty rate of only 2.5% on Crown lands. Magnus estimates the size of the portion of the Torquay oil pool underlying its acreage at over 70 million barrels of oil in place. As at December 31, 2006, an independent reserve report has assigned gross proved plus probable reserves to a small developed portion of Antler and other core areas to be acquired by Questerre at 851,000 barrels of oil equivalent with a net present value, discounted at 10%, of $17.91 million. Magnus' current production is approximately 210 boe/d. Magnus has a significant undeveloped land position and seismic database with an independent estimate of fair value of over $8 million.

Michael Binnion, President and Chief Executive Officer of Questerre, commented, "The proposed acquisition of Magnus represents a strategic addition to our existing portfolio of high-impact projects. The Torquay pool in the Antler area gives Questerre another large resource play and also an exposure to oil. This provides diversification within our portfolio and between gas and oil. We look forward to the meeting of the preconditions to this transaction, the subsequent closing and the commencement of a multi-well development drilling program at Antler later this year."

Pursuant to an Arrangement Agreement (the "Agreement"), Questerre will acquire all of the outstanding shares of Magnus on a fully diluted basis through the repayment of $15 million of Magnus' senior secured debt and the issuance of 11.09 million common shares of Questerre, subject to adjustments for Magnus' net working capital position. The value of the Company's common shares was based on the 20-day weighted average trading price of $1.04. Magnus's net working capital position at closing is expected to reflect adjustments for the ongoing settlement of trade payables and the anticipated proceeds of a private placement to finance its outstanding flow-through commitments for 2007.

Magnus shareholders will review and, if appropriate, approve the transaction at its Annual and Special Meeting of shareholders to be held on or about September 28, 2007. The transaction is expected to close shortly thereafter. It is subject to the approval of 66 2/3% of the votes cast by the Magnus shareholders, the Court of Queen's Bench of Alberta, and all other requisite approvals.

The directors of Questerre and Magnus have unanimously approved the proposed transaction. In addition, the Board of Directors of Magnus has concluded that the proposed transaction is fair and in the best interests of its shareholders and has agreed to recommend that Magnus shareholders vote in favor of the transaction. Holders of in excess of 25% of the issued and outstanding Magnus Class A Shares, including all directors, officers and major insiders of Magnus, have entered into lock-up agreements with Questerre whereby they have agreed to support and vote their shares in favor of the transaction.

Questerre has placed in trust with its legal counsel a deposit of $2.7 million that would be released to Magnus should Magnus meet all the prerequisite conditions and Questerre elect not to proceed with the transaction. Magnus has agreed to pay Questerre a break fee of $2.0 million should it elect not to proceed with this transaction.

In conjunction with this transaction, the companies have entered into a farm-in agreement for the A-8 well at the Beaver River Field (the "Field"). Magnus will pay 50% of the gross costs of the A-8 well, estimated at $8 million, to earn a 25% interest in the well and just under 1,000 acres of surrounding land.

Questerre Energy Corporation is a Calgary-based independent resource company actively engaged in the exploration, development and acquisition of high-impact exploration and development oil and gas projects in Canada.

This news release contains forward-looking information. Implicit in this information are assumptions regarding commodity pricing, production, royalties and expenses, that, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. These forward-looking statements are based on certain assumptions that involve a number of risks and uncertainties and are not guarantees of future performance. Actual results could differ materially as a result of changes in the Company's plans, commodity prices, equipment availability, general economic, market, regulatory and business conditions as well as production, development and operating performance and other risks associated with oil and gas operations. There is no guarantee made by the Company that the actual results achieved will be the same as those forecasted herein.

Barrel of oil equivalent ("boe") amounts may be misleading, particularly if used in isolation. A boe conversion ratio has been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel and is based on an energy equivalent conversion method application at the burner tip and does not necessarily represent an economic value equivalent at the wellhead.

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