Montney drilling to accelerate in second half of 2014

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Michael Binnion, President and Chief Executive Officer, commented, “In the quarter we began executing the Montney development plan to achieve our production target of 6,000 boe/d by the second half of 2015. Our first 100% well was spud in the quarter. It will be completed after breakup to prove up the condensate rates on our 10-section block in Kakwa South. At the same time, our next 100% well will spud on the 7-section block in Kakwa North, adjacent to our joint venture acreage. We plan to drill up to three more wells on these two blocks in 2014.”

He added, “Two wells were also drilled this quarter on our joint venture block with encouraging results. The first tested the upper Montney interval with condensate rates of over 200 bbls/MMcf. The second well, with a lateral of approximately one and a half miles, was drilled in 35 days, or about the same time it takes to drill a well with a one mile lateral. The joint venture intends to drill up to five additional wells this year.”

Commenting on the Company’s financial performance, he noted, “This activity is starting to show results with us achieving record cash flow of $5.5 million in the quarter. The second quarter will reflect a pause for spring breakup with growth in production continuing in the second half of this year.”


  • Spud 100% working interest Montney well at Kakwa South
  • Commissioned joint venture central facility at Kakwa with capacity for 15 MMcf/d of natural gas and 3,000 bbls/d of condensate
  • First upper Montney well tests at gross rates of 1,076 boe/d with 227 bbls/MMcf of condensate
  • Cash flow from operations of $5.5 million and average daily production of 1,133 boe/d for the quarter

Updating developments on its oil shale assets, he further added, “Over the remainder of 2014, we should see a similar ramp-up in activity with the Red Leaf/Total joint venture for the EcoShale process. The final construction permit should be issued in the second quarter and work scheduled to start in the field this summer to construct the mine and the first large-scale capsule. We are also working with Red Leaf to appraise our own oil shale acreage at Pasquia Hills. They are currently testing our shale to determine the yield and quality of oil under the EcoShale process.”

The commissioning of the new joint venture facilities at Kakwa contributed to production in the first quarter of 2014 averaging 1,133 boe/d as compared to 841 boe/d in the prior quarter and 1,000 boe/d in the first quarter of 2013. Oil and liquids continued to represent almost three quarters of production volumes and resulted in cash flow from operations of $5.54 million (2013: $3.65 million). The Company expects that production in the second quarter will be lower due to the recent shut-in at Antler for road bans during spring break-up. Additionally, lower volumes from Kakwa are expected due to a scheduled turnaround at the third party processing facility this June.

Capital expenditures during the first quarter of 2014 were $12.36 million. Over 90% of the capital was directed to the Montney development, drilling the Company’s 100% operated well and participating in the drilling and completion of three (0.75 net) wells on the joint venture acreage. As at March 31, 2014, the Company reported a working capital surplus of $25.17 million and had no amounts drawn on its existing credit facility.

The term “cash flow from operations” is a non-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.

For further information, please contact:

Questerre Energy Corporation

Anela Dido, Investor Relations

(403) 777-1185 | (403) 777-1578 (FAX) |Email:

This media release contains certain statements which constitute forward-looking statements or information (“forward-looking statements”) including the execution of the Montney development plan to achieve a production target of 6,000 boe/d by the second half of 2015, the timing of completion for the Company’s first operated well, the spud of its first well on the 7-section block in Kakwa North, the Company and joint venture’s plans to drill up to three more wells and five more wells respectively, the expected ramp-up of activity with the Red Leaf/Total joint venture, the issuance of the construction permits to Red Leaf and the commencement of work in the field this summer to construct the first large scale capsule. 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, including the timing of pricing and terms of the placement, the placement results and closing, the use of net proceeds, the timing of receipt of required regulatory approvals and assumptions concerning the success of future drilling activities. 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 statements.  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  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 is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States or to or for the account or benefit of US persons (as such terms are defined in Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”)), absent registration or an exemption from registration. The securities offered have not been and will not be registered under the U.S. Securities Act or any state securities laws and, therefore, may not be offered for sale in the United States, except in transactions exempt from registration under the U.S. Securities Act and applicable state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

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 the conversion ratio of one barrel to six thousand cubic feet 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. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalent of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

This press release contains the terms “cash flow from operations”, “working capital surplus”, and “netbacks” which are non-IFRS terms. Questerre uses these measures to help evaluate its performance.

As an indicator of Questerre’s performance, cash flow from operations should not be considered as an alternative to, or more meaningful than, cash flows 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.

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 revenue per boe adjusted for royalties per boe and 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, risk management contracts and the flow-through share liability.