Questerre Energy Corporation

Questerre Energy Corporation

October 24, 2007 00:15 ET

Questerre Updates Activities

CALGARY, ALBERTA--(Marketwire - Oct. 24, 2007) - Questerre Energy Corporation ("Questerre" or the "Company") (TSX:QEC) (OSLO:QEC) reported today on recent developments and updated activities at the Beaver River Field (the "Field") in British Columbia.

In connection with the proposed acquisition of Magnus Energy Inc. ("Magnus"), Questerre acquired Magnus' senior secured debt for cash at its face value of $7.4 million. The debt bears interest at CIBC prime plus 3% and is secured by a first priority fixed and floating charge on Magnus's assets. Subject to the approval of Magnus' shareholders on October 31, 2007, Magnus will become a wholly owned subsidiary of Questerre. Accordingly, post closing of the transaction, on a consolidated basis, Questerre will have no debt outstanding.

Questerre also updated drilling operations on the A-8 well at the Field. The well experienced a significant gas kick at approximately 1720m shortly after drilling out of the casing shoe into the Mattson horizon. Drilling was proceeding at rates of up to 16 metres per hour, unusually fast for this area. Controlling the gas kick took longer than expected. During this time, excess drill cuttings wedged in the bottom hole assembly after which mud circulation could not be reestablished. Over the past week, most of the bottom hole assembly was recovered and the well successfully side tracked around the remaining equipment left in the hole. Drilling is progressing at approximately 2200m in the Mattson zone. Based on its prognosis, Questerre expects to encounter the same Mattson interval responsible for production in the A-2 well at a depth of just over 2500m.

Questerre plans to release its third quarter results on or around November 12, 2007. Based on preliminary information, Questerre expects its production and cash flow for the third quarter to be lower than the first two quarters. Delays in the Company's proposed Vulcan oil pool development, the initial results from the B-3 and A-7 wells at the Field, the timing of the Magnus acquisition, longer than expected plant turnarounds and natural declines all contributed to lower production than forecasted. This has been compounded by lower natural gas prices in the second half of this year.

The Alberta Government Royalty Review Panel recently released recommendations to increase royalties in Alberta. Approximately 800 boe/d of the Company's production is from high rate wells in Alberta, primarily at Vulcan, and would likely be affected. However, Questerre's main projects are in British Columbia, Quebec and Saskatchewan and thus will not be affected.

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.

Contact Information