Questerre Energy Corporation Class A · TSX:QEC
Questerre Energy Corporation Class A — Investor Presentation (September 2018)
34 slides from Questerre Energy Corporation Class A's investor presentation, September 2018
Slide 1: Corporate Presentation
CORPORATE PRESENTATION 1
Slide 2: Outline
OUTLINE 1. Company Strategy & Overview 2. Condensate-Rich Montney, Alberta 3. Isfir Jafr Oil Shale Project, Jordan 4. St. Lawrence Lowlands, Quebec 5. Outlook 2
Slide 3: Company Strategy
COMPANY STRATEGY Leverage extensive tight rock/shale rock expertise to acquire resources early and high grade to prove up reserves • Understanding the rocks to capture the economic sweet spot – 4% of acreage with the best economics • Acquiring acreage positions with potential for scalable projects B
Slide 4: Asset Overview
ASSET OVERVIEW Western Alberta Condensate-rich Montney natural gas resource play with attractive economics SE Saskatchewan/ SW Manitoba Proven Torquay/Spearfish tight oil production with strong netbacks St. Lawrence Lowlands, Quebec Giant Utica shale gas discovered resource Lorraine shale upside Kin
Slide 5: Financial & Operational Overview
FINANCIAL & OPERATIONAL OVERVIEW Operating and Financial Results Capitalization and Liquidity For the quarter ended June 30, 2018 Working Capital Surplus ($) $1.24 million (Sept. 7, 2018) $171 million Funds Flow from Operations ($) $6.01 million Credit Facility Limit ($) $18 million 22,738,804 6% 36
Slide 6: Condensate-Rich Montney, Kakwa, Alberta
CONDENSATE-RICH MONTNEY KAKWA, ALBERTA 6
Slide 7: Condensate-Rich Montney
CONDENSATE-RICH MONTNEY • One of the largest oil and gas fields in world • ~500km long by 200 km wide • 449 TCF of marketable gas, 14.5 billion barrels of NGLs and 1.12 billion barrels of oil(1) • Gas, oil and liquids-rich windows similar to Eagleford shale in Texas • Among best economics in Canada(
Slide 8: The Sweet Spot
THE SWEET SPOT Sweet spot of the play is overpressured, liquids-rich area • High liquids, particularly condensate key to strong play economics Questerre has built a significant land position in the sweet spot of this Kakwa North fairway • Recent farmout minimizes initial capital investment Kakwa JV
Slide 9: Moving Up the Learning Curve
MOVING UP THE LEARNING CURVE • Realizing improvements in drilling and completions • Lateral length increased 10% to ~2400m with sand concentration up to 1.7-2 tonnes per m from 1.5 tonnes per m of horizontal last year 9
Slide 10: Moving Up the Learning Curve
MOVING UP THE LEARNING CURVE • Evolving completion designs suggesting meaningful improvements in IP rates • Most recent wells with one year of production completed with ~80 stage fracs as compared to first well with 15 stages • Next step is close to 200 frac stages with over 2 tonnes per m of sand 1
Slide 11: Running Room
RUNNING ROOM • Significant number of drilling locations with two operators advancing development • Approx. 76 gross (~19 net) drilling locations on Kakwa acreage(1) • Estimated gross proved + probable reserves per location of 1.0 MMboe and gross proved reserves of 0.76 MMboe per independent reserve
Slide 12: 2019 Outlook
2019 OUTLOOK • Drilling program to ramp up in 2019 • Plan to participate in up to 9 (2.25 net) wells on Kakwa beginning Q4 2018 - $25 million • Infrastructure – central facility expansion up to 60 MMcf/d - $2-5 million • Drilling on Kakwa North acreage to ramp up based on results from initial wells
Slide 13: Isfir Jafr Oil Shale, Jordan
ISFIR JAFR OIL SHALE JORDAN 13
Slide 14: Isfir Jafr Oil Shale
ISFIR JAFR OIL SHALE • Assessing very high yield acreage in Jordan • Best estimate of unrisked discovered petroleum initially in place of 7.8 billion barrels(1) • MOU covers 264 sq. km area with over 35 core holes drilled • Core holes indicate yields over ~40m intervals of approximately 23 gallons/t
Slide 15: Economic Feasibility
ECONOMIC FEASABILITY • Feasibility study by Hatch estimates capital costs (with 20% contingency) of US$18- US$20 per barrel and operating costs of ~US$20 per barrel for a 50,000 bbl/d initial project(1) • Costs include upgrading to low sulphur diesel and gasoline which receive US$10 to US$12 per bar
Slide 16: St. Lawrence Lowlands, Quebec
ST. LAWRENCE LOWLANDS QUEBEC 16
Slide 17: St. Lawrence Lowlands
ST. LAWRENCE LOWLANDS • Despite uncertain regulatory environment, compelling economics remain and social acceptability is improving • CERI report estimates Utica in Quebec could be second lowest supply gas cost in North America(1) • Natural gas prices 2-3 times prices of Western Canada • 60%+ of Que
Slide 18: Building Social Acceptability
BUILDING SOCIAL ACCEPABILITY • Support in key regions of Quebec for local development based on IPSOS polling data • 60% of Quebecers in favor of local natural gas development • Over 50% support pilot projects in their own communities • Clean gas pilot to address concerns about emissions and water us
Slide 19: Regulatory and Legal Developments
REGULATORY AND LEGAL DEVELOPMENTS • Government implements the Hydrocarbon Act and publishes regulations in Quebec • Hydrocarbon legislation and regulations scheduled to come into force on September 20, 2018 • Questerre filed a legal motion with the Superior Court of Quebec to stay and set aside spec
Slide 20: Quebec Clean Gas 2030
QUEBEC CLEAN GAS 2030 • Vision of cleanest natural gas production in the world • Leverage Quebec’s hydro-power advantage • Zero emissions and zero fresh water usage • 100% biodegradable chemical usage by 2030 Chesapeake Energy presentation 2012 • Path to Quebec Clean Gas based on credible engineerin
Slide 21: Quebec Clean Gas 2030
QUEBEC CLEAN GAS 2030 Phase 1 Electrify compressors (target electrifying all production equipment using zero emissions hydro) Phase 2 Capture and recycle flow back water (target 100% recycling and reuse of all water in production) Phase 3 Non toxic frac fluids (future target of 100% biodegradable fr
Slide 22: Utica Could Be Among Most Economic Plays
UTICA COULD BE AMONG MOST ECONOMIC PLAYS • Ohio Utica production has grown to over 4 Bcf/d (~25% of Canada’s total production) in 4 years with well test rates over 30 MMcf/d (1) • Rock properties in Quebec Utica similar to Ohio Utica based on Questerre management assessment • Potential for significa
Slide 23: Resource Assessment
RESOURCE ASSESSMENT • Quebec resource assessment estimates prospective resources (unrisked) of 5.79 Tcf (21.25 Tcf gross) and economic contingent resources (unrisked) of 870 Bcf (3.89 Tcf gross) (1) • NPV-10% of acreage classified as Economic Contingent Resources estimated at $301 million(1) (Develo
Slide 24: Outlook
OUTLOOK • Accelerate Montney development on both Kakwa and Kakwa North acreages • Commence concession negotiations with Government of Jordan for oil shale project • Ongoing work with Hatch and Red Leaf to further optimize EcoShale process with goal of improving economics • Proceed with legal action
Slide 25: Management & Board
MANAGEMENT & BOARD Board Management Michael Binnion, President & Chief Executive Officer Michael Binnion, President & Chief Executive Officer Bjorn Inge Tonnessen, Chairman John Brodylo, VP Exploration (Nexen) Oil & Gas E&P experience & former senior equity research analyst CEO & President, Edge Pet
Slide 26: 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“, “
Slide 27: Forward-Looking Information
FORWARD-LOOKING INFORMATION Past performance of Questerre or other entities referred to in this presentation is shown for illustrative purposes only, does not guarantee future results of Questerre and is not meant to forecast, imply or guarantee the future performance of Questerre, which will vary.
Slide 28: Forward-Looking Information
FORWARD-LOOKING INFORMATION St, Lawrence Lowlands, Quebec The GLJ Report used probabilistic methods to generate low, best and high estimates of total petroleum initially in place ("TPIIP"), both discovered and undiscovered. Recoverable Contingent and Prospective Resources over Questerre's acreage we
Slide 29: Resource Definitions
RESOURCE DEFINITIONS Resource Definitions Resources encompasses all petroleum quantities that originally existed on or within the earth's crust in naturally occurring accumulations, including Discovered and Undiscovered (recoverable and unrecoverable) plus quantities already produced. "Total resourc
Slide 30: Appendix
APPENDIX 30
Slide 31: 2018 IPSOS Polling Results
2018 IPSOS POLLING RESULTS 31
Slide 32: 2018 IPSOS Polling Results
2018 IPSOS POLLING RESULTS 32
Slide 33: 2018 IPSOS Polling Results
2018 IPSOS POLLING RESULTS 33
Slide 34: Contact
www.blog.questerre.com www.facebook.com/Questerre Twitter: @Questerre_utica 1650 AMEC Place 801 Sixth Avenue SW Calgary, Alberta T2P 3W2 Canada Tel: (403) 777 1185 / Fax: (403) 777 1578 34
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