Questerre Energy Corporation Class A · TSX:QEC
Questerre Energy Corporation Class A — Investor Presentation (December 2009)
35 slides from Questerre Energy Corporation Class A's investor presentation, December 2009
Slide 1: Corporate Presentation
Corporate Presentation December 2009 Questerre Energy Corporation
Slide 2: Presentation outline
Presentation outline • Company Overview – Business strategy & asset overview – Operating & financial results – Capitalization – Natural gas market • Area Overview – St. Lawrence Lowlands, Quebec – Northeast British Columbia – Conventional assets • Outlook – Near‐term goals – Investment summary • App
Slide 3: Business strategy
Business strategy Commercializing the Quebec shale gas discovery • Incredible resource potential in Utica shale with high leverage to natural gas prices • Middle Utica rock properties proven through vertical pre‐pilot program • Commercial factors to be established by horizontal pilot programs commen
Slide 4: Asset overview
Asset overview St. Lawrence Lowlands, Quebec • Potentially 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 • Signif
Slide 5: Operating and financial results
Operating and financial results Nine Months Ended September 30 2009 2008 Cash Flow $2.28 million $14.49 million Production Crude Oil and Natural Gas Liquids (bbls/d) 391 (47%) 372 (29%) Natural Gas (mcf/d) 2,623 (53%) 5,382 (71%) Total (boe/d) 828 1,269 Revenue ($/boe) 41.97 72.34 Royalties ($/boe)
Slide 6: Capitalization & liquidity
Capitalization & liquidity Insiders 21,581,182 11% Free Float 177,603,461 89% Total 199,184,643 Options (Average exercise price $1.36) 16,701,253 Average daily trading volume (OSE plus TSX) 3,226,091 Research Coverage
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/Schachter Asset Management
Slide 8: Natural gas market
Natural gas market • Gas at a 70% discount to oil on energy equivalent basis – Conventional gas production is rapidly declining with high marginal costs of supply • Clean, abundant, reliable, cost‐effective and efficient supply of energy – New sources of demand being considered – Natural gas produce
Slide 9: 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
Slide 10: Shale gas in Quebec
Shale gas in Quebec • Favorable fiscal terms • Geologically well‐defined deep fairway • Large land position with Lorraine Shale drilling inventory measured in decades • “IGIP” (incredible gas in place) with proven rock properties
Slide 11: 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 12: Well defined geological fairway
Well defined geological fairway Utica Structure Map Schematic cross section of Lowlands Play Fairway Unstructured Structured
Slide 13: 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 (56% working interest) 181,255 107,003 Total Acres 1,014,496 336,440
Slide 14: Multi-tcf potential independently validated
Multi‐tcf potential independently validated • Preliminary resource assessment of Utica completed by Netherland, Sewell & Associates in August 2009 • Does not include 4¼% overriding royalty payable by Talisman nor Lorraine formation with estimated OGIP of 120 Bcf/section One trillion cubic feet (Tcf)
Slide 15: Measuring up to a proven shale play
Measuring up to a proven shale play Quebec shale compared to Southwestern Fayetteville shale 4 3.5 Daily Gas Rate (mmcf/d) 3 2.5 2 1.5 1 0.5 0 an an an an an an an an Year 1 Year 2 Year 3 Year 4 -J -J -J -J -J -J -J -J 01 01 01 01 01 01 01 01 Quebec Southwestern Trend Line Trend Line Results are mov
Slide 16: Looking forward 2009-2011
Looking forward 2009‐2011 • Rock properties proven this summer based on consistent middle Utica results • Accelerated plans for two pilot horizontal wells – First middle Utica horizontal well was spud in fourth Images courtesy of BJ Services Company Canada Ltd quarter 2009 – Second horizontal well s
Slide 17: Pilot horizontal wells 2009-2010
Pilot horizontal wells 2009‐2010 • Horizontals estimated to be 800‐1000m in length with 8‐ 10 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
Slide 18: 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 Simultaneous fracs on three wells in Barnett, Texas • Ev
Slide 19: 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
Slide 20: Northeast British Columbia
Northeast British Columbia
Slide 21: Liard shale
Liard shale • Land position of over 23,000 acres (11,500 net) • Harness and apply learning curve from Quebec • A‐5 well has encouraging results – Initial production of 5 Mississippian shale/siltstone mmcf/d sequence • Seeking partners to gather base data to rigorously evaluate Liard shale potential
Slide 22: Horn River shale
Horn River shale • 18,700 (13,200 net) acres prospective for Horn River shale • On trend with horizontal drilling by PetroCanada, Apache, EnCana • Additional prospectivity for reef anomalies adjacent to Sierra Yoyo reef complex and up‐hole Jean Marie target • Planning first test well for multi‐zone
Slide 23: Conventional assets
Conventional assets Antler, Saskatchewan • Validated horizontal multistage wells to increase recovery – Evaluate new drilling and completion ideas • Over 50 drilling locations • Flexibility to accelerate development drilling based on higher commodity prices Oil Battery at Antler Greater Sierra, Nort
Slide 24: Company Outlook
Company Outlook
Slide 25: Outlook
Outlook • Quebec – Drill and complete two pilot horizontal wells with Talisman this fall – Evaluate completion design to maximize frac effectiveness – Commence initial work for multi‐well pad • Northeast British Columbia – Develop program to test Horn River shale and deeper reef target – Validate Li
Slide 26: 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 Lar
Slide 27: 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 28: 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 29: 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 [email protected]
Slide 30: Appendix
Appendix
Slide 31: 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 32: 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 33: Comparison of Canadian Gas Shales
Table 1: Comparison of Canadian Gas Shales Horn River Montney Colorado Utica Horton Bluff Depth (m) 2500 to 3000 1700 to 4000 300 500 to 3300 1120 to 2000+ Thickness (m) 150 up to 300 17 to 350 90 to 300 150+ Gas‐filled porosity (%) 3.2 to 6.2 1.0 to 6.0 less than 10 2.2 to 3.7 2 Total organic conte
Slide 34: Utica Depth Structure
Utica Depth Structure auenec CY ay ME Shallow: 0-800m ™) Medium: 800-1700m > Deep tested: 1700-3000m 8) Deep overthrust: >» 3000m Deep tested unknown: 1700-3000m ©) Deep unknown thermal maturity a N Oo 6 2 8 2% 30 Mi a a —— a ———— 0 10 20 30 40 50 KM
Slide 35: Quebec Lowlands well list
Farnham No 1 (2009) Operator: Canbriam Spud Date: July 9, 2009 Depth: 2567m KB St-Jean sur Richelieu No 1 (2008) Operator: Questerre Spud Date: September 7, 2008 Depth: 442m KB Test Rate: <100 mcf/d St-Antoine sur Richelieu No 1 (2008) Operator: Junex Spud Date: June 27, 2008 Depth: 1475m KB Estimat
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