Questerre Energy




Questerre’s oil shale assets include its project in the Kingdom of Jordan (“Jordan”) and its investment in Red Leaf Resources Inc. (“Red Leaf”). Red Leaf is a private Utah based company whose principal assets include the EcoShale process to produce oil and shale and oil shale leases in the state of Utah. Questerre currently owns approximately 30% of the common share capital of Red Leaf.

The Company acquired the Jordanian project in 2015 through a Memorandum of Understanding (“MOU”) for the appraisal and development of oil shale with the Ministry of Energy and Mineral Resources in Jordan (the “MEMR”). The MOU covered an area of over 380 km2 in the Isfir-Jafr area, approximately 200 km south of the capital Amman. The Company holds a 100% working interest in the MOU and the resources. The term of the MOU was extended to May 22, 2018. Upon the completion of the MOU and the submission of the required documentation to the MEMR, the Company anticipates it will enter into negotiations with the MEMR for a concession agreement. The Company will continue to hold an exclusive right to the acreage under the MOU during the term of these negotiations. In 2017, the Company high graded its acreage and reduced the area under the MOU to 265 km2.

Following an independent resource assessment prepared by Millcreek Mining Group (“Millcreek”) in accordance with NI 51-101 and the COGE Handbook effective October 1, 2016, the Company’s primary objective for 2017 was to evaluate the feasibility of commercial development. For more information on the resources assessment, please refer to the Company’s 2016 AIF dated March 24, 2017 and press release dated October 27, 2016 available on the Company’s website at and

The economic feasibility work involves assessing multiple retorting processes specifically for the Jordanian oil shale. This includes two processes that have been proven at commercial scale. Also under evaluation is the EcoShale process developed by Red Leaf. With Questerre, Red Leaf has been redesigning the EcoShale process to focus on reusable capsules. Red Leaf estimates that using large steel vessels similar to those used in coker facilities in refineries instead of the original single use earthen capsule could materially reduce costs.

In addition to assessing the retorting component of production, Questerre commissioned engineering studies to evaluate the three other components - mining and preparation of the ore, infrastructure, including power and other utilities, and upgrading of the produced oil including a marketing study.

Questerre recently completed an internal review of the retorting processes and the engineering studies. Based on the unique characteristics of the Jordanian shale, the Company believes the re-designed EcoShale process could be the most efficient. Early in 2018, the Company engaged a third party engineering firm to integrate all the studies and validate its work. Questerre anticipates this report will be completed in the third quarter of 2018.

During the year, Questerre acquired additional Red Leaf common shares for US$7.52 million. The Company currently holds 132,293 common shares, representing approximately 30% of the common share capital of Red Leaf. Questerre also acquired 288 Series A Preferred Shares, representing less than 0.5% of the issued and outstanding preferred share capital of Red Leaf, for US$0.16 million. For more information, see Note 7 to the Financial Statements.

In addition to its EcoShale process and its oil shale leases in Utah, Red Leaf holds US$104 million in cash and no debt as of December 31, 2017. In addition to common shares, Red Leaf’s equity capital includes convertible preferred shares with dividends accruing at 8% per annum compounded annually. As at December 31, 2017, the preferred shares are entitled to a priority amount of US$83.5 million on the occurrence of a defined liquidation event, including certain reorganizations, takeovers, the sale of all or substantially all the assets of the company and shareholder distributions.






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