Oil Shale Mining

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. 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 is 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 www.questerre.com and www.sedar.com.

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 third quarter of 2018, Questerre continued its work with Hatch Ltd. (“Hatch”), a global engineering firm, on the technical and economic feasibility of its oil shale project in the Kingdom of Jordan.

This follows the study completed by Hatch in the second quarter which estimated capital costs, including a 20% contingency, of US$18 to US$20 per barrel and operating costs of approximately US$18 per barrel assuming an initial project capable of production of 50,000 bbl/d. These costs include upgrading the produced oil to low sulphur diesel and gasoline that, based on a marketing study, typically realizes a US$10 to US$12 per barrel premium to Brent benchmark pricing. These costs are AACE Class 5 cost estimates which have an average accuracy of +100%/-50%.

Hatch is developing the design basis for the next phase of contract engineering which will identify opportunities to optimize the engineering and potentially economic returns. It is also designed to improve the accuracy of cost estimates from Class 5 to Class 4 which have an average accuracy of +30%/-20%.

Questerre also continued its discussions with the Minister of Energy and Mineral Resources (“MEMR”) regarding its submissions under its Memorandum of Understanding (“MOU”) including its work program, technology assessment and proposed pre-development program. Upon acceptance, the Company anticipates it will enter into negotiations with MEMR for a concession agreement to include the fiscal and other terms essential to the overall project economics. The Company continues to hold the exclusive right to the acreage under the MOU following its expiry on May 22, 2018 and during the term of the negotiations.