Questerre Energy Corporation: Liquids-Rich Montney to Provide Growth in Near-Term

CALGARY, ALBERTA--(Marketwire - Nov. 14, 2012) -

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 operating and financial results for the third quarter of 2012.

Michael Binnion, President and Chief Executive Officer, commented, "We made progress on both our conventional and non-conventional assets in the quarter. We validated our discovery in the liquids-rich Montney in the Kakwa-Resthaven area of Alberta with our second well. It was completed in October and tested at gross rates of 1800 boe/d. Based on our results and industry activity nearby, our acreage lies in the heart of the fairway for this emerging resource play. We plan to invest additional capital here over the remainder of this year as we await the results from our ongoing pilot waterflood in Antler. We expect both these areas will provide growth in reserves, production and cash flow in the near term."

He added, "Red Leaf is transitioning from a research and development to a project execution focused company. A new Chief Executive Officer was recently appointed and they are building the organization needed to commercially scale up the EcoShale process. They also began work in the field with Total S.A. in advance of constructing the first large scale capsule next year. During the quarter, we also completed our second core hole program in Pasquia Hills, Saskatchewan, to further assess our oil shale acreage."

Highlights

• Spud second horizontal well targeting liquids-rich natural gas in the Kakwa-Resthaven area of Alberta
• Red Leaf and supermajor Total S.A. began in-field testing and engineering work to commercialize EcoShale In-Capsule process
• Commenced second core hole program for oil shale acreage in Pasquia Hills, Saskatchewan
• Cash flow from operations of $2.8 million for the quarter with average daily production of 696 boe/d
• Over $40 million in positive working capital and no debt

Lifting of road bans and better ground conditions at Antler improved financial and operating results over the prior quarter. Production for the quarter averaged 696 boe/d (2011: 604 boe/d) compared to 525 boe/d in the second quarter and benefitted from the decreasing differential between the realized oil price and the WTI benchmark price. Cash flow from operations totaled $2.83 million for the quarter (2011: $3.01 million) and $7.35 million for the nine months ending September 30, 2012 (2011: $6.91 million). Capital investment of $9.38 million in the quarter included $3.06 million invested in the Montney, $2.67 million invested in Antler and $1.92 million incurred on the core hole programs in Pasquia Hills.

As at September 30, 2012, the Company reported a working capital surplus of $40.60 million.

The term "cash flow from operations" is an additional IFRS measure. Please see the reconciliation elsewhere in this press release.

Questerre Energy Corporation is leveraging its expertise gained through early exposure to shale and other non-conventional reservoirs. The Company has base production and reserves in the tight oil Bakken/Torquay of southeast Saskatchewan. It is bringing on production from its lands in the heart of the high-liquids Montney shale fairway. It is a leader on social license to operate issues for its Utica shale gas discovery in the St. Lawrence Lowlands, Quebec. In conjunction with a supermajor, it is at the leading edge of commercializing a proven process to unlock the massive resource potential of oil shale.

Questerre is a believer that the future success of the oil and gas industry depends on a balance of economics, environment and society. We are committed to being transparent and are respectful that the public must be part of making the important choices for our energy future.

This media release contains certain statements which constitute forward-looking statements or information ("forward-looking statements"), including the results from our Montney well, the prospectivity of our acreage in the Kakwa-Resthaven area and the potential of this area and Antler to add reserves, production and cash flow in the near term. Although Questerre 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 Questerre. 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 information. As such, readers are cautioned not to place undue reliance on the forward looking information, 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, Questerre 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 term "cash flow from operations" which is an additional IFRS measure. Questerre uses this measure to help evaluate its performance. This press release also contains the terms "netbacks" and "working capital surplus" which are non-IFRS measures.

As an indicator of Questerre's performance, cash flow from operations should not be considered as an alternative to, or more meaningful than, net cash from operating activities as determined in accordance with IFRS. 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 related to its major assets.

		Three months ended September 30					Nine months ended September 30
		2012			2011		2012			2011
Net cash from operating activities	$	3,507,278		$	2,397,426	$	7,786,860		$	6,511,134
Change in non-cash operating working capital		(672,985	)		611,139		(440,640	)		402,057
Cash flow from operations	$	2,834,293		$	3,008,565	$	7,346,220		$	6,913,191

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 sales per boe adjusted for royalties per boe and direct operating expenses per boe.

The Company also uses the term "working capital surplus". Working capital surplus, as presented, does not have any standardized meaning prescribed by IFRS and may not be comparable with the calculation of similar measures for other entities. Working capital surplus, as used by the Company, is calculated as current assets less current liabilities excluding the current portions of the share based compensation liability and risk management contracts.