Questerre Energy Corporation
TSX : QEC
OSLO STOCK EXCHANGE : QEC

Questerre Energy Corporation

February 25, 2011 00:15 ET

Questerre Announces Preliminary Year-End Results

CALGARY, ALBERTA--(Marketwire - Feb. 25, 2011) -

NOT FOR DISTRIBUTION ON U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Questerre Energy Corporation ("Questerre" or the "Company") (TSX:QEC) (OSLO:QEC) reported today on its preliminary financial and operating results for 2010.

Michael Binnion, President and Chief Executive Officer of Questerre, commented, "The initial results from our pilot horizontal well program in 2010 were excellent. They continued to validate our significant Utica discovery in the St. Lawrence Lowlands, Quebec. Notwithstanding the one year delay from our original timeline, I am confident that 2011 will be the year we make a break through on the prerequisites for commercial development."

Mr. Binnion added, "While we work on establishing new legislation and social acceptability in Quebec, we have been developing our light oil assets in Saskatchewan. During the year, we successfully completed a 13 (6.5 net) well program and more than doubled our landholdings in this area. Approximately 80% of our $38 million in net capital expenditures for 2010 was spent in Saskatchewan drilling and completing wells as well as acquiring additional acreage. We now hold over 41,000 net acres of undeveloped land in this high netback oil play. We will further grow this asset in 2011 as a potential source of future development capital for the Utica."

2010 Highlights

  • Initial horizontal wells for the Utica shale pilot program in the Lowlands met or exceeded expectations
  • Concluded pipeline agreement and preliminary work for a 3-D seismic program for the commercial demonstration project targeting the St. Edouard area in the Lowlands
  • Establishing new hydrocarbon legislation, social acceptability and a local service sector has delayed commercialization of the Utica shale by one year
  • Successful drilling program in Antler, Saskatchewan contributes to growing light oil reserves
  • Completed $128 million equity issue for early commercialization of Utica shale in Quebec
  • Improved oil weighting and crude oil prices generated cash flow from operations of $4.74 million with average daily production of 619 boe/d
  • Strengthened balance sheet with $136 million in positive working capital and no debt

For the year ended December 31, 2010, the Company reported cash flow from operations of $4.74 million as compared to $2.88 million for the prior year. Higher oil prices and an increased proportion of light oil from Antler offset the decline in production volumes. Questerre's production averaged 619 boe/d (2009: 810 boe/d) with oil and liquids accounting for 53% of volumes (2009: 47%). As at December 31, 2010, the Company reported a net working capital surplus of $136.08 million (2009: $46.50 million).

The term "cash flow from operations" is a non-GAAP measure. Please see the reconciliation elsewhere in this press release.

Questerre Energy Corporation is an independent energy company focused on shale gas in North America. The Company is concentrated on establishing commerciality of its Utica shale gas discovery in the St. Lawrence Lowlands, Québec. Questerre is committed to the economic development of its resources in an environmentally conscious and socially responsible manner.

This news release contains certain statements which constitute forward-looking statements or information ("forward-looking statements"), including the results from our horizontal wells and the timing and scope of future operations. Although the Company believes that the expectations reflected in our forward-looking statements are reasonable, our forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information available to the Company. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward looking statements. As such, readers are cautioned not to place undue reliance on the forward looking statements, as no assurance can be provided as to future results, levels of activity or achievements. The risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in our Annual Information Form and other documents available at www.sedar.com. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, the Company does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

This news release does not constitute an offer of securities for sale in the United States. These securities may not be offered or sold in the United States absent registration or an available exemption from registration under the United States Securities Act of 1933, as amended.

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 of oil 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.

This press release contains the terms "cash flow from operations" and "netbacks" which are non-GAAP terms. Questerre uses these measures to help evaluate its performance.

As an indicator of Questerre's performance, cash flow from operations should not be considered as an alternative to, or more meaningful than, cash flows from operating activities as determined in accordance with Canadian GAAP. Questerre's determination of cash flow from operations may not be comparable to that reported by other companies. Questerre considers cash flow from operations to be a key measure as it demonstrates the Company's ability to generate the cash necessary to fund operations and support activities.

Cash Flow from Operations Reconciliation

For the year ended December 31,     2010     2009  
Cash flows from operating activities   $ 3,629,524   $ (26,529 )
Net change in non-cash operating working capital     1,115,036     2,905,105  
Cash flow from operations   $ 4,744,560   $ 2,878,576  

The Company considers netbacks a key measure as it demonstrates its profitability relative to current commodity prices. Operating netbacks per boe equal total petroleum and natural gas revenue per boe adjusted for royalties per boe and operating expenses per boe.

Contact Information

  • Questerre Energy Corporation
    Anela Dido
    Investor Relations
    (403) 777-1185
    (403) 777-1578 (FAX)
    info@questerre.com