Questerre Energy Corporation Class A · TSX:QEC
Questerre Energy Corporation Class A — Pareto E&P Independents Conference (January 2009)
35 slides from Questerre Energy Corporation Class A's conference presentation, Jan 21, 2009
Slide 1: Corporate Presentation
Corporate Presentation Pareto E&P Independents Conference January 21, 2009 Questerre Energy Corporation
Slide 2: Forward Looking Statement
Forward Looking Statement This presentation contains forward-looking information. Implicit in this information are assumptions regarding oil and natural gas prices, production, royalties and expenses that, although considered reasonable by Questerre at the time of preparation, may prove to be incorr
Slide 3: Presentation Outline
Presentation Outline • Company Overview – Strategy & asset overview – Management & Board – Third quarter overview – Capitalization • Areas of Operation – St. Lawrence Lowlands, Quebec – Northeast British Columbia – Antler, Saskatchewan • Outlook – Near term goals – Investment summary
Slide 4: Business Strategy
Business Strategy Commercializing the Quebec shale plays • Incredible resource potential for Questerre in Quebec shales through successful execution of original business strategy • Commercialization pilot programs underway to unlock value for shareholders • Continued risk mitigation through leveragi
Slide 5: Asset Overview
Asset Overview Northeast Southeast St. Lawrence Lowlands, Quebec Saskatchewan British Columbia • Potentially giant Utica & Lorraine shale gas discoveries being evaluated by Forest Oil & Talisman Northeast British Columbia • Significant land base for established Jean Marie resource play with EnCana B
Slide 6: Management
Management Michael Binnion, President & Chief Executive Officer John Brodylo, VP Exploration (Nexen) Peter Coldham, VP Engineering & Operations (Chevron) Jason D’Silva, Chief Financial Officer (CanArgo, Flowing) Paul Harrington, VP Finance (Zargon Energy Trust) Jason Kaluski, Operations Manager (Ric
Slide 7: Board of Directors
Board of Directors Les Beddoes, Jr. • International explorationist • Former VP Exploration, Bow Valley Energy Inc.; Victoria, BC Michael Binnion, President & Chief Executive Officer Pierre Boivin • Experienced Quebec-based business leader • President, Montreal Canadiens; Montreal, QC Russ Hammond •
Slide 8: Capitalization
Capitalization Insiders 27,116,564 14% Free Float 170,183,078 86% Total (1) 197,299,642 Options (Average exercise price $1.26) 17,645,421 Average daily trading volume (OSE plus TSX) 5,398,993
Slide 9: Q3 2008 Financial Overview
Q3 2008 Financial Overview 2008 2007 Average daily production (boe/d) 1,292 1,443 Cash flow from operations $5.41 million $3.18 million Average sales price ($/boe) $74.74 $49.91 Operating netback ($/boe) $48.51 $28.11 Working capital $67.83 million $29.91 million Debt Nil Nil Available credit facili
Slide 10: St. Lawrence Lowlands, Quebec
St. Lawrence Lowlands Quebec
Slide 11: Why Shale Gas in Quebec
Why Shale Gas in Quebec • Well defined deep fairway • Drilling inventory measured in decades Lorraine Shale • IGIP “incredible gas in place” • Favorable fiscal terms
Slide 12: Well Defined Play Fairway
Well Defined Play Fairway Play Fairway Logan’s Line Unstructured Structured Yamaska growth fault
Slide 13: Questerre Dominates Fairway
Questerre Dominates Fairway 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 1,014,496 336,440
Slide 14: Drilling Inventory Measured in Decades
Drilling Inventory Measured in Decades 2009 Activity • 8 of 12 deep test wells on Questerre acreage • Several thousand wells based on full development of Utica and Lorraine
Slide 15: Rock Properties
Rock Properties Forest Talisman Forest Utica Utica Lorraine Barnett Depth (ft) 2,300 – 6,000 1,500 – 10,000 1,500 – 11,000 4,500 – 9,000 Thickness (ft) 500 300 – 1,000 1,500 – 6,500 150 – 700 Clay content (%) 15 – 26 15 – 51 30 – 38 15 – 30 TOC (%) 1.0 – 3.1 0.3 – 2.5 0.1 – 1.5 3.5 – 5.0 Gas-filled
Slide 16: Multi Tcf Potential
Multi Tcf Potential Assumptions 1. Estimated discovered resource of 93 Bcf/section for Utica and 120 Bcf/section for Lorraine based on TLM, FST & QEC estimates 2. Recovery factors based on 100 acre spacing for Utica and 80 acre spacing for Lorraine 3. Potential contingent resource based on 70% prosp
Slide 17: 1 Bcf in Quebec is Worth 2 Bcf in Alberta
1 Bcf in Quebec is Worth 2 Bcf in Alberta Pipeline infrastructure in Lowlands • Canada’s second largest natural gas market • Estimated 200-400 mmcf/d capacity on TCPL (seasonal) • Realized natural gas prices at border are at a $1 premium to NYMEX due to proximity to markets • Royalties of 10% to 12.
Slide 18: Robust Economics
Robust Economics • Utica and Lorraine horizontal wells estimated NPV-10% of $2.4 million based on following parameters: – Initial 30-day rate : 2 mmcf/d – First year decline : 63% – Recoverable reserves: 2.4 Bcf/well – Capital costs: $3 million – Operating Costs: $1.50/mcf – Price: US$6/mcf NYMEX •
Slide 19: Current Activity
Current Activity • Talisman program – Gentilly #1 - Successful frac and 800 mcf/d test from Utica; frac results from Lorraine expected in spring – La Visitation frac of Utica and Lorraine currently underway; results expected in late March – Fourth well, St. Edouard, to spud in March and frac of St.
Slide 20: Northeast British Columbia
Northeast British Columbia
Slide 21: Beaver River - Liard Shale Play
Beaver River - Liard Shale Play • Over 1 Tcf of discovered resource potential per square mile for Mississippian age shale/siltstone • Currently evaluating this potential with recompletion of A-5 well based on expertise acquired in Quebec Mississippian shale/siltstone • Questerre holds a 50% interest
Slide 22: Greater Sierra - Jean Marie Play
Greater Sierra - Jean Marie Play • Farm-in with EnCana adds a proven Jean Marie play covering over 52 square miles– long life reserves leveraged to gas prices • Questerre drilled two successful wells last winter and acquired 46 sq. mile 3-D survey • 6-8 locations to be drilled in 2010 based on resul
Slide 23: Antler, Saskatchewan
Antler, Saskatchewan
Slide 24: Antler – Bakken/Torquay Play
Antler – Bakken/Torquay Play • Twenty horizontal wells drilled to date with 90% success rate and reserves of approximately 90,000 barrels per well • Multi-stage fracs carried out with initial stabilized production of over 70 bbl/d per well on average • 50% interest in significant land position – dri
Slide 25: Company Outlook
Company Outlook
Slide 26: Near Term Goals
Near Term Goals • St. Lawrence Lowlands, Quebec ̶ Early results from fracture stimulation of La Visitation and Gentilly #1 in first quarter and St. David and St. Edouard in second quarter ̶ Forest Oil program – preliminary test results from two stimulated horizontal wells ̶ Evaluate results from sti
Slide 27: Investment Summary
Investment Summary • Multiple opportunities in Lowlands including recent discoveries Strong • New shale play being tested in Liard basin portfolio • Long-life Jean Marie gas in northeast British Columbia • Significant light oil development at Antler in Saskatchewan • Large retained interest in poten
Slide 28: Contact details
1650 AMEC Place 801 Sixth Avenue SW Calgary, Alberta T2P 3W2 Canada Tel : (403) 777-1185 Fax : (403) 777-1578 Web: www.questerre.com Email : [email protected]
Slide 29: Appendix: Shale Gas
Appendix Shale Gas
Slide 30: North American Shale Gas
North American Shale Gas • Shale gas has potential to grow from 7 Bcf to 24 Bcf over next decade – Estimated risked recoverable shale gas of 261 Tcf equal to 2007 North American proved reserves (Source: Tristone Capital) US Gas Production Forecast • StatoilHydro, BP, Shell and others have recently m
Slide 31: Gas Shales in North America
Gas Shales in North America Source: Talisman Energy November 2008 Presentation
Slide 32: Gas Shales
Gas Shales • Fine grained reservoirs with very low permeability Lorraine Shale • Rock is self sourcing and self sealing • Natural gas is stored in adsorbed and free state • In addition to shale, other Utica Shale minerals are present
Slide 33: Gas Shales
Gas Shales Lorraine Shale • Geographically widespread • Large variations in porosity, permeability, gas in place, natural fractures and ability to artificially fracture Utica Shale • Technically challenging and most shale does not produce gas
Slide 34: Artificial Fracturing
Artificial Fracturing • Fracturability very dependent on presence of brittle minerals such as silica and carbonates • Fracture patterns dependent on tectonic stresses now and in the past • Some shales fracture like a glass which enhances flow rates and some like a sponge which does not
Slide 35: Multi-stage Fracture Stimulation
Multi-stage Fracture Stimulation • Relatively new technique to combine benefits of horizontal wells with fracture stimulation • Allows controlled stimulation of entire horizontal section to maximize production • Stimulation technique has successfully increased production in many plays by 3 to 20 tim
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