Questerre Energy Corporation Class A · TSX:QEC
Questerre Energy Corporation Class A — Investor Presentation (March 2010)
33 slides from Questerre Energy Corporation Class A's investor presentation, March 2010
Slide 1: Corporate Presentation
Corporate Presentation March 2010 Questerre Energy Corporation 1
Slide 2: Presentation outline
Presentation outline • Company Overview • Natural gas market • Shale Gas • St. Lawrence Lowlands, Quebec • Investment summary • Appendix 2
Slide 3: Commercializing the Quebec shale gas discovery
Commercializing the Quebec shale gas discovery • First mover in Quebec with 1 million acre land position taken in 1998 • 17.99 Tcf recoverable resource discovery in the Quebec Utica shale on Questerre lands • Excellent fiscal terms enhance economics • Strong balance sheet, good joint venture partner
Slide 4: Asset overview
Asset overview St. Lawrence Lowlands, Quebec • Giant Utica & Lorraine shale gas discoveries being commercialized with partners Northeast British Columbia • Recently acquired acreage prospective for Horn River shale gas • Evaluating Liard shale gas potential at Beaver River Field • Significant land b
Slide 5: Operating and financial results
Operating and financial results Twelve Months Ended December 31 2009 2008 Cash Flow $2.88 million $17.29 million Production Crude Oil and Natural Gas Liquids (bbls/d) 378 (47%) 385 (29%) Natural Gas (mcf/d) 2,591 (53%) 4,761 (71%) Total (boe/d) 810 1,178 Revenue ($/boe) 43.75 69.13 Royalties ($/boe)
Slide 6: Capitalization & liquidity
Capitalization & liquidity Insiders 20,795,682 10% Free Float 177,603,461 89% Total 199,722,143 Options (Average exercise price $1.53) 18,618,753 Average 3 month daily trading volume 6,366,117 (OSE plus TSX) Research Coverage 6
Slide 7: Natural gas market
Natural gas market • Positive medium term outlook for gas price recovery North American Natural Gas Production Source: EIA, NEB, EnCana Source: EnCana Corp Aug 09 Corporate Presentation • New drilling down due to low prices Source: Baker Hughes/GMP 7
Slide 8: Natural gas market
Natural gas market • Gas at over 60% discount to oil on energy equivalent basis – Conventional gas production is rapidly declining with high marginal costs of supply Source: Encana Corp. presentation January 26, 2010 by Kevin Smith • Clean, abundant, reliable, cost‐effective and efficient supply of
Slide 9: Impact on LNG market
Impact on LNG market • LNG imports to North America expected to stay low • New LNG regas terminals have been cancelled or deferred (eg. Rabaska) • Canada expected to become LNG exporter by 2014 9
Slide 10: Shale Gas
Shale Gas “All Hail the Triumphant” Copyright 2008 Daedalus Designs Inc. Courtesy Kinsman Robinson Galleries, Toronto in association with Master’s Gallery Ltd., Calgary 10
Slide 11: Shale gas basins in North America
Shale gas basins in North America Dramatic advances in completion technology and improvements in commodity prices are the driving forces behind shale gas development Source: Regional Geochemical Evaluation of the Ordovician Utica Shale Gas Play in Québec by Robert Thériault 11
Slide 12: What is shale
What is shale • Organic shale is typically a source rock that charges conventional reservoirs over geologic time – Shale must be source, seal and trap – Gas/oil is in pore spaces (free) and on surface of particles (adsorbed) – Gas can be generated by biogenic or thermogenic means • Organic shale aro
Slide 13: How is shale different
How is shale different • Gas is extracted from the rock, not drained from it • Shale gas molecules move five meters in five years so the rock must be shattered underground by hydraulic fracturing • The objective is to maximize recovery and minimize the cost per frac Source: EnCana Corp Jan 10 Corpor
Slide 14: St. Lawrence Lowlands, Quebec
St. Lawrence Lowlands, Quebec “All Hail the Triumphant” Copyright 2008 Daedalus Designs Inc. Courtesy Kinsman Robinson Galleries, Toronto in association with Master’s Gallery Ltd., Calgary 14
Slide 15: Shale gas in Quebec
Shale gas in Quebec • Favorable fiscal terms • Geologically well‐defined deep fairway • Large land position with drilling inventory measured in decades • “IGIP” (incredible gas in place) with proven rock properties 15
Slide 16: Favorable fiscal terms
Favorable fiscal terms • Robust economics – Crown royalties of 10‐12½% – Realized prices of NYMEX + $0.50 premium • Minimal investment to connect to local market of 0.5 Bcf/d and larger regional markets Pipeline infrastructure in Lowlands Source: GazMetro • Founding member of the Quebec Oil & Gas As
Slide 17: Well defined geological fairway
Well defined geological fairway Utica Structure Map Schematic cross section of Lowlands Play Fairway Unstructured Structured 17
Slide 18: Dominant land position in fairway
Dominant land position in fairway Quebec City Montreal Acreage Gross Net Questerre ‐ TLM (~25% + 4.25% GORR) 719,788 206,746 Yamaska – FST/GMR (20% working interest) 113,453 22,691 St. Jean – GMR (59% working interest) 181,255 107,003 Total Acres 1,014,496 336,440 18
Slide 19: Multi-tcf potential independently validated
Multi‐tcf potential independently validated OGIP (Bcf/section) Total OGIP (Bcf) Low Best High Low Best High Prospective OGIP Volume Estimate Estimate Estimate Estimate Estimate Estimate Billion Cubic Feet (BCF) 102 158 220 117,070 181,329 252,184 Million barrels of oil equivalent (mmboe) 17 26 37 19
Slide 20: Measuring up to a proven shale play
Measuring up to a proven shale play Quebec shale compared to SWN Fayetville shale 7 6 Daily Gas Rate (mmcf/d) 5 4 3 2 1 0 Year 1 Year 2 Year 3 Year 4 an an an an an an an an -J -J -J -J -J -J -J -J 01 01 01 01 01 01 01 01 Quebec Southwestern Trend Line Trend Line Results are moving in to third year
Slide 21: Looking forward 2010
Looking forward 2010 • St. Edouard horizontal well “simply excellent” initial result of 6mmcf/d • Three horizontal wells to be completed and tested in late spring: – Gentilly drilled and frac completion plans being developed – Currently reviewing drilling and Frac completion operations on St. Edouar
Slide 22: Pilot horizontal well program 2010
Pilot horizontal well program 2010 • Horizontals estimated to be 800m in length with 8 stage fracs • Drilling and completion design based on local stress regime and successful frac programs to date – Numerous variables Images courtesy of BJ Services Company Canada Ltd involved including type of frac
Slide 23: Commercial development 2010-2011
Commercial development 2010‐2011 • Multi‐well pads planned based on results from pilot horizontals – Pilot pad locations already identified with 2‐D seismic survey • Obtain regulatory approval to commence drilling of multi‐ well production pad • Evaluate different completion techniques – simofracs,
Slide 24: Expected timeline
Expected timeline 2008 2009 2010 2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Optimization Commercial Development Pilot Project Rock Properties Investigation Resource Identification 24
Slide 25: Investment summary
Investment summary • Mega discovery in Utica shale Strong • Extensive land position in Quebec with multiple opportunities portfolio • New shale gas plays in Horn River and Liard basin • Light oil development at Antler in Saskatchewan • Large retained interest and running room in Utica discovery Larg
Slide 26: Management & Board
Management & Board Management Board Michael Binnion, President & Chief Executive Les Beddoes, Jr. Officer International explorationist John Brodylo, VP Exploration (Nexen) Former VP Exploration, Bow Valley Energy Inc.; Victoria, BC Peter Coldham, VP Engineering & Operations Michael Binnion, Presiden
Slide 27: Forward looking information
Forward looking information This presentation contains certain forward–looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" an
Slide 28: Appendix
Appendix 28
Slide 29: Harnessing the learning curve
Harnessing the learning curve Barnett Shale (Texas) • Every shale play has its own 7,000 F ir st Y e a r A v g G a s R a te (M C F P D ) 6,000 learning curve and requires 5,000 unique, innovative solutions 4,000 3,000 2,000 1,000 • Acquire a statistically - significant set of results and 5/7/1990 1/
Slide 30: Extensive technical database
Extensive technical database Utica and Lorraine unstimulated DSTs • Over 5,000 km of seismic data • Over 275 wells drilled in basin with core, logs or production tests in Utica and Lorraine • Bow Valley/Terrenex study in early 1990s Source: Molopo Australia Limited 2008 Corporate Presentation valida
Slide 31: Utica Depth Structure
Utica Depth Structure HE Shallow: 0-800m 8 Medium: 800-1700m I) Deep tested: 1700-3000m Ml Deep overthrust: > 3000m Deep tested unknown: 1700-3000m !) Deep unknown thermal maturity oO 6 2 be ow 2 31
Slide 32: Quebec Utica well results
1. Farnham No 1 (2009) 6. St-Francois du Lac No 1 (2008) 12. Gentilly No 1 (2008) 15. St-Augustin de Desmaures No 1 (2008) Operator: Canbriam Operator: Forest Oil Operator: Talisman Operator: Junex Spud Date: July 9, 2009 Spud Date: August 6, 2008 Spud Date: July 18, 2008 Spud Date: June 16, 2008 De
Slide 33: Contact details
1650 AMEC Place 801 Sixth Avenue SW Calgary, Alberta T2P 3W2 Canada Tel: (403) 777 1185 Fax: (403) 777 1578 www.questerre.com info@questerre.com 33
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