Questerre Energy Corporation Class A · TSX:QEC
Questerre Energy Corporation Class A — Pareto Oil & Offshore Conference 2012
49 slides from Questerre Energy Corporation Class A's conference presentation, Sep 11, 2012
Slide 1: Corporate Presentation
Corporate Presentation Pareto Oil & Offshore Conference September 11‐12, 2012 Oslo, Norway
Slide 2: Presentation outline
Presentation outline • Company & Market Overview • Oil Shale – Red Leaf & EcoShale Process • Liquids Rich Montney, Resthaven, Alberta • Light Oil Bakken/Torquay, Antler, Saskatchewan • St. Lawrence Lowlands, Quebec • Outlook • Investment Summary 2
Slide 3: Company overview
Company overview • Developing oil shale to create shareholder value – Three existing projects with goal of adding net recoverable resources in excess of several hundred million barrels – Licensing proprietary process to recover oil from shale a competitive advantage • Developing conventional product
Slide 4: Asset overview
Asset overview Nonconventional Oil • Utah & Wyoming – Commercialization project in Utah with Total – Early stage project in Wyoming • Eastern Saskatchewan – 100,000 net acres overlying an established deposit Conventional • Southeast Saskatchewan – Proven Bakken/Torquay light oil resource style play
Slide 5: Financial overview
Financial overview Operating and Financial Results Six months ended June 30, 2012 Working capital ($) 47.4 million Debt Nil Cash Flow from operations ($) 4.5 million Production (boe/d) 625 Oil weighting 85% Revenue ($/boe) 77.08 Operating Netback ($/boe) 54.22 All financial amounts in C$ Capitalizat
Slide 6: Market overview
Market overview • Nonconventional has become the new conventional – Conventional production in North America being replaced by nonconventional oil and gas – Resource capture has become a priority for super majors and international conglomerates – Improving technology will continue to increase recove
Slide 7: Market overview
Market overview • Energy paradigm shift has created engineering innovation – Steam Assisted Gravity Drainage (“SAGD”) process invented in early 1970s has revolutionized oilsands recovery over the last ten years – Provincial energy agency credits SAGD with increasing Alberta’s proven reserves to 179
Slide 8: Oil Shale
Oil Shale 8
Slide 9: Oil shale
Oil shale • Fine grained sedimentary rock rich in organic matter known as kerogen – Kerogen formed from decaying organic material by heat and pressure in environment similar to conventional oil – Different from shale oil (i.e. where greater depth, pressure and geologic time has already converted ker
Slide 10: Oil shale
Oil shale • Heating in absence of air to produce oil from kerogen known as retorting – Produces natural gas, hydrogen, condensate, oil and spent shale – Either done on surface or subsurface • Processes to extract oil from shale are well established – Dates back to the 10th century – Currently in com
Slide 11: EcoShale - In-situ capsule process
EcoShale ‐ In‐situ capsule process • Innovative approach that moves the machines to the rocks instead of moving the rocks to the machines – Incorporates benefits and avoids challenges of both surface and subsurface processes • Dramatically improves economics – Modeling indicates economics are better
Slide 12: EcoShale - Mine plan
EcoShale – Mine plan • Strip Mining Process – Preliminary site preparation – Overburden is stripped, sorted and stockpiled for construction material (design requires overburden) – Ore bench is stripped to base of the ore – Stripped site used for capsule construction – Designed to minimize handling a
Slide 13: Saskatchewan oil shale
Saskatchewan oil shale • 100% interest in over 100,000 acres • Drilled 10 wells on Arborfield block this winter – Analysis of core indicates recoveries between 10‐20 gallons/ton with select intervals of up to 16‐20 gallons/ton within a 20‐35 m section • 10 more wells to be drilled on Wildcat Hills b
Slide 14: Wyoming oil shale
Wyoming oil shale • Questerre to earn 20% on 5,120 acre farm‐in on private lands with Red Leaf holding a 80% interest • Red Leaf estimates 800 million barrels of oil in place ̶ Approximately 100 million barrels in place per square mile with average yield of 16‐18 gallons/ton • Begun scoping work for
Slide 15: Red Leaf investment
Red Leaf investment • US$40 million investment in Red Leaf’s equity financing – Additional $3 million investment made recently – Represents approximately 6% of the equity; company has no debt • Non‐exclusive option to license Red Leaf process and technology but exclusive for any Questerre initiated
Slide 16: Total joint venture
Total joint venture • Total to fund 80% of costs estimated at US$200 million to demonstrate commercial scalability of EcoShale In‐Capsule Process on Red Leaf’s Utah acreage (“EPS Phase”) • Total to fund an additional 80% of costs estimated at US$200 million for advanced commercial project on approx.
Slide 17: Scaling from pilot to commercial by 2014
Scaling from pilot to commercial by 2014 • Targeting first oil production from a large scale capsule by 2014 • Several key risk mitigation activities planned in four main categories to be completed by Q2 2013: ̶ Capsule Construction • Test all aspects of capsule construction from moving material to
Slide 18: Scaling from pilot to commercial by 2014
Scaling from pilot to commercial by 2014 18
Slide 19: Rationale for strategy
Rationale for strategy • Opportunity fits corporate strategy of high impact unconventional oil – License to proprietary process is a competitive advantage to capturing large oil resources at low cost • Risk mitigation through partners and diversification – Diversified exposure through interest in th
Slide 20: Liquids Rich Montney, Resthaven, Alberta
Liquids Rich Montney Resthaven, Alberta 20
Slide 21: Resthaven
Resthaven • New core area in west central Alberta acquired through farm‐in and Crown land sales at competitive prices ̶ Acquisition cost of ~$1,800/ha with recent land sales at ~$4,500/ha • Montney play is approximately 500 km long and 90 km wide ̶ The liquids window is key to economics • 25% workin
Slide 22: Discovery well
Discovery well • Results from first tested interval in the Montney zone in line with industry activity ̶ 40% condensate and NGL ‐ rates better than expected • Production test supports robust economics for play ̶ Type well projected at 4.5 Bcf and 500,000 bbls ̶ NPV‐10 estimated at $15.5 million per
Slide 23: Growth potential
Growth potential • Questerre is currently targeting one of three prospective intervals in the Upper Montney ̶ Each interval estimated at 18 Bcf and 2 million barrels recoverable resource ̶ Entire zone is approximately 100m thick • All three intervals have been reported by industry as productive in t
Slide 24: Bakken/Torquay Light Oil, Antler, Saskatchewan
Bakken/Torquay Light Oil Antler, Saskatchewan 24
Slide 25: Antler
Antler • Established light oil asset targeting Wawota Torquay/Bakken resource play Exploration Area – NPV‐10/bbl as at December 31, 2011 of ~20,000 acres $45.60/bbl based on 2P reserves of 2.1 million barrels and $96.3 million NPV10 ̶ Netbacks of $70/bbl based on $90/bbl oil prices • Average royalti
Slide 26: Waterflood
Waterflood MAIN • Secondary recovery scheme has POOL been successfully applied in adjacent Bakken/Torquay pool in SINCLAIR Manitoba with a projected WATERFLOOD ONGOING increase in recovery from 9% to between 16%‐24% ̶ Low energy reservoir (no gas or water drive) at Antler ideal candidate for waterfl
Slide 27: Conventional asset strategy
Conventional asset strategy • Goal is to increase production from conventional assets to achieve target of 1,500 boe/d by end of Strategic Environmental Assessment in Quebec Grow conventional assets to $225‐$450 million in value to provide a potential source of future development capital for non con
Slide 28: St. Lawrence Lowlands, Quebec
St. Lawrence Lowlands, Quebec 28
Slide 29: Where Questerre is currently
Where Questerre is currently • 18 Tcf prospective recoverable resource on acreage – 4.4 Tcf net to Questerre • Premium gas market – industrial consumers paying $5.50/mcf • Tenure recently extended to 2021 • In advanced piloting phase 29
Slide 30: Prerequisites for development
Prerequisites for development • Strategic Environmental Assessment underway over next eighteen months • Complete advanced piloting phase and sweet spot identification • Establish hydrocarbon legislation • Achieve social acceptability • Develop local service sector Begin discussions with recently ele
Slide 31: Outlook
Outlook 31
Slide 32: Outlook
Outlook • Advance oil shale projects – Red Leaf scheduled to begin field work on Utah pilot with Total later this year – Evaluation of Pasquia Hills core data to assess oil shale potential of acreage – Commence field work and resource assessment for Wyoming acreage in early 2013 • Develop convention
Slide 33: Investment summary
Investment summary • Oil shale projects offer opportunity to capture significant oil resources Strong • Mega discovery in Utica shale with long land tenure portfolio • Nonconventional light oil resource play in Saskatchewan and liquids rich play in Alberta to provide base of capital value • Licensed
Slide 34: Appendix
Appendix 34
Slide 35: Management and Board
Management and Board Management Board Michael Binnion, President & Chief Executive Les Beddoes, Jr. Officer International explorationist Former VP Exploration, Bow Valley Energy Inc.; Victoria, John Brodylo, VP Exploration (Nexen) BC Peter Coldham, VP Engineering & Operations Michael Binnion, Presid
Slide 36: EcoShale Process - Excavation
EcoShale Process ‐ Excavation Initial excavation for laboratory assay samples and material for bench scale process assessment. Tan colored band in photo center is the Mahogany Marker, a volcanic tuft deposit just above the richest oil shale in Utah, Wyoming and Colorado. 36
Slide 37: EcoShale Process - Excavation
EcoShale Process ‐ Excavation Excavation for field pilot. The near portion of the excavation provides a space for excavated shale to be returned, encapsulated and roasted. The center of the shot shows the start of a steel bulkhead support for experimental equipment (not used for production). The far
Slide 38: EcoShale Process - Excavation
EcoShale Process ‐ Excavation Early stage of pilot construction with steel bulkhead nearly completed, Bentonite Amended Soil (BAS) encapsulation layer around perimeter, and Flex Crete insulation blocks (not used in production). A drain system is about to be installed in the floor of the structure. 3
Slide 39: EcoShale Process - Capsule Construction
EcoShale Process – Capsule Construction Partially completed capsule construction showing shale to be roasted (from excavation), heating pipes, and thermocouple placement on/in heating pipes and in shale (under mounds of shale parallel to heating pipes). More than 700 thermocouples used for thermal d
Slide 40: EcoShale Process - Capsule Construction
EcoShale Process – Capsule Construction Top of shale to be roasted, with perforated gas recovery pipe system. The shale bed in the capsule contains, from the bottom up, a liquid drain system, 4 feet of shale, a layer of 2 heating pipe loops, 8 more feet of shale, a second layer of 2 heating pipe loo
Slide 41: EcoShale Process - Capsule Construction
EcoShale Process – Capsule Construction The shale to be roasted is covered with insulation, as on the sides and bottom of the capsule (Flex Crete Insulation block shown here in the field pilot, shale gravel insulation to be used in production). BAS sealing material is then placed over the top to com
Slide 42: EcoShale Process - Finished Site
Ecoshale Process – Finished Site Steel bulkhead support structure showing burners, blowers, liquid and gas recovery external system components, combustion air and fuel (propane) supply and mixing systems, and instrumentation external components. 42
Slide 43: EcoShale Process - Finished Site
EcoShale Process – Finished Site Tank farm for storage of produced shale oil and fire protection water. Tanks are insulated, heated and oil contents are protected by replenished internal nitrogen atmosphere. 43
Slide 44: EcoShale Process - Finished Site
EcoShale Process – Finished Site Additional site features are visible in this overview, including equipment for condensing liquids from produced gas, separating water from produced shale oil liquids, and flaring of produced non‐condensable gas. A large shop building and a combined office and control
Slide 45: EcoShale Process
EcoShale Process RETORTS IN-SITU IN-CAPSULE * Surface mining * Oil shale in place * Surface mining * Surface retort facilities * Sub-surface retorting * Sub-surface retort process id (YVKG EGCOSHALE PETROBRAS Eesti Energia ‘ Pros Cons Pros Cons Pros Cons » Rapid pyrolysis | » Fines » More + Potentia
Slide 46: EcoShale Process
EcoShale Process Comparative Process Capital Costs $240,000 css SAGD Integrated Oil Shale Pi oe a oe =a oT ar H $160,000 A $120,000 @ som is ose Pa LEE SPPEECEL LIES CBIPIEE AP! LG f GES OLE 5 LPs e AS = Uptrort Capex =Total Capex Notes: ‘Source: Wood Mackenzie (figures nominal to 2009 and real (in
Slide 47: EcoShale Process
EcoShale Process Emissions Reclamation Water Usage Ground Water Contamination Surface Retorts Significant air pollution from burning oil shale coke Particulates produced during processing Handling and reclamation of spent shale a substantial environmental liability Used for spent shale cooling and o
Slide 48: Forward looking information
Forward looking information This presentation contains certain forward–looking information and statements (“forward‐looking statements”) within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "
Slide 49: Questerre 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] www.blog.questerre.com www.facebook.com/Questerre Twitter: @Questerre_utica
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