Questerre Energy Corporation
TSX : QEC
OSLO STOCK EXCHANGE : QEC

Questerre Energy Corporation

March 17, 2011 21:25 ET

Questerre Energy Corporation: Quebec Finance Ministry Announces New Fiscal Regime

CALGARY, ALBERTA--(Marketwire - March 17, 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) (OSE:QEC) reported today that the Ministry of Finance in Quebec has published its 2011-2012 Budget. The Budget includes a report entitled "A Fair and Competitive Royalty System for Responsible Shale Gas Production." The 52-page report is available in English at http://www.budget.finances.gouv.qc.ca/Budget/2011-2012/en/documents/Schisteen.pdf.

The Minister of Finance, Raymond Bachand, in his budget speech commented, "Our action is focused on shale gas. It is now reasonable to believe that Quebec's subsoil holds substantial shale gas potential."

Following the report of the Bureau d'audiences publiques sur l'environment (BAPE) that recommended a strategic environmental assessment of shale gas development, the Minister of Finance announced a budget of $7 million to conduct this assessment. An additional investment of $6 million over three years will also be made to enhance the inspection of wells and facilities.

The report notes that significant economic benefits will arise from the full-scale development of the Utica shale. These include estimated royalties of $275 million to nearly $400 million annually, the creation and support of over 11,000 jobs annually and a $2 billion increase in the provincial GDP based on reductions in natural gas imports. The Minister also announced that local municipalities will receive a payment of $100,000 over ten years for every shale gas well operated in the municipality.

The report states that the new royalty regime will come into effect once the strategic environmental assessment recommended by the BAPE has been completed and the legal and regulatory framework has been adapted to its conclusions. This regime includes a commodity price and productivity component and varies between 5% and 35%. The intention of the new system is for total Government take, including corporate taxes, to be 50% in mature development as compared to their estimate of 33% under the current system. It has been modeled on the royalty regimes in Alberta and British Columbia for conventional production.

In recognition that the Utica shale is not yet mature, the Minister also announced the introduction of a "Gas Development Program" modeled on the Net Profit Royalty Program that is used in northeast British Columbia. The progressive royalty rate starts at 2% and varies through a four-tiered scale based on the recovery of capital invested and returns achieved.

Michael Binnion, President and Chief Executive Officer of Questerre, commented, "We appreciate the Minister specifically acknowledged the past risks and investment made to discover the Utica shale gas field. We plan to review and analyze the budget in conjunction with the Quebec Oil & Gas Association."

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 implementation of regulations and fiscal regimes, 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.

Contact Information

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