Questerre Energy Corporation
TSX : QEC

Questerre Energy Corporation

November 15, 2005 00:19 ET

Questerre Announces Third Quarter Results

CALGARY, ALBERTA--(CCNMatthews - Nov. 15, 2005) - Questerre Energy Corporation ("Questerre" or the "Company") (TSX:QEC) reported today on its operating and financial results for the third quarter of 2005.

During the third quarter, the Company participated in the drilling of 11 gross wells (2.9 net wells). Nine were cased as gas producers, one as an oil producer and one suspended for a 90% success rate. To date, nine of the wells have been production tested. On a combined basis the wells tested at stabilized rates of 425 boe/d net to Questerre. Currently regulatory and other approvals are being sought to tie these wells in and place them on production.

The Company reported petroleum and natural gas revenue net of royalties of $1.25 million for the nine months ended September 30, 2005, unchanged from the comparative period in 2004. Cash flow from operations for this period in 2005 improved to $0.06 million from a loss of $1.06 million in 2004. The Company's working capital position at the end of the quarter also improved substantially to over $12 million from $0.23 million in 2004.

Michael Binnion, President and Chief Executive Officer, commented, "I am very pleased with our third quarter drilling results. Despite delays with all aspects of our operations, we now have over 700 boe/d of tested production, currently either behind pipe or shut-in. Subject to pipeline tie-ins, this tested production combined with existing production of over 150 boe/d exceeds our year-end goal of 500 boe/d. In addition, we are well positioned to meet our target of 1,000 boe/d by year-end 2006."

Operations Overview

Vulcan

Two wells in the delineation program at Vulcan were drilled during the quarter. The first well flowed at a stabilized rate of over 740 boe/d. The second well did not encounter commercial hydrocarbons in the target formation. It is currently suspended pending an evaluation of prospective uphole formations.

The delineation program includes one additional well to further define the extent and nature of the pool. Subject to EUB approval of the development plan, Questerre expects production will commence in early 2006. To this end, a gas pipeline is under construction and is scheduled to be completed prior to year-end.

Based on the preliminary results from this delineation program and a 3-D seismic survey, Questerre has identified five additional locations for the primary formation and three additional locations for a potential secondary target.

Drumheller

Questerre participated in an eight-well program in Drumheller with EOG Resources Canada, Inc., a US based independent. The program yielded eight successful gas wells that could triple the Company's existing production of 23 boe/d in the area to over 70 boe/d.

Hector/Westlock

The Company participated for a 30% interest in an oil well that was placed on production at the end of the quarter. A previously announced gas well that tested at 230 boe/d. (69 boe/d net) was also placed on-stream. Production in this area has grown from 50 boe/d in June to over 120 boe/d at present. Questerre expects to participate in two additional wells in these areas during the fourth quarter.

Beaver River Field

The re-entry of the first well in the four-well Mattson program was successfully completed and the well is ready for fracture stimulation. An evaluation of the second well confirmed the integrity of the casing to the deeper Nahanni formation. This well will be evaluated as a re-entry candidate for the Nahanni instead of the shallower Mattson.

Operations are presently underway on the third Mattson well. We expect this to be finalized by year-end with work commencing on the fourth well in early 2006. To optimize productive capability, the Mattson wells will be fracture stimulated during the first quarter of 2006.

St. Lawrence Lowlands

Questerre executed a definitive agreement with Talisman Energy Canada for its existing 711,000 acres in the St. Lawrence Lowlands early in the fourth quarter.

At its sole cost Talisman will commence a 2-D seismic program over two Questerre prospects prior to December 2005, subject to receipt of regulatory approval. Based on the results of the program, Talisman has the right to drill up to four wells to earn on all the acreage.

Questerre and its partners may retain a 25% working interest in the acreage and receive a 5% gross overriding royalty from Talisman. The Company and its partners will be responsible for 15% of the drilling costs with Talisman funding all of the remaining costs.

The Company expanded its land holdings in Quebec through a farm-in agreement with Gastem Inc. Pursuant to this agreement, Questerre will earn a 50% interest in over 311,000 acres by funding a prescribed work program.

Corporate Overview

Upon receipt of regulatory and shareholder approval received earlier this year, a total of 3,150,000 Common Shares were issued on November 14, 2005 as follows:

- 2,000,000 Common Shares were issued on the conversion of the $0.6 million promissory note due to Rupert's Crossing, an Investment Corporation ("Rupert's"). The conversion price of $0.30 per Common Share was established on November 11, 2004, representing a 30% premium to the closing price on that day. Rupert's is a private investment holding company controlled by the President and Chief Executive Officer of Questerre.

- 300,000 Common Shares were issued to Terrenex Acquisition Corporation ("Terrenex"), pursuant to the Liquidity Option Agreement.

- 850,000 Common Shares were issued to employees of the Company pursuant to the Employee Retention Plan (the "Plan") adopted May 31, 2004. No additional Common Shares are to be issued in connection with the Plan. The Plan was implemented in 2004 in connection with the corporate restructuring completed in October 2004.

Following the appointment of Jason D'Silva as VP Finance and Treasurer, the Company reported that it has accepted the resignation of David Mallory as interim Chief Financial Officer. Mr. Mallory will continue to contribute to the Company as a member of the Board of Directors.

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, 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.

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