Questerre Energy Corp (C-QEC) - News Release

Questerre to issue Q3 results Nov. 12

2007-10-24 02:44 PT - News Release
Shares issued 155,191,750
QEC Close 2007-10-23 C$ 0.85

Mr. Michael Binnion reports

QUESTERRE UPDATES ACTIVITIES

Questerre Energy Corp. is providing an update today on recent developments and updated activities at the Beaver River field in British Columbia.

In connection with the proposed acquisition of Magnus Energy Inc., Questerre acquired Magnus's senior secured debt for cash at its face value of $7.4-million. The debt bears interest at prime plus 3 per cent and is secured by a first priority fixed and floating charge on Magnus's assets. Subject to the approval of Magnus's shareholders on Oct. 31, 2007, Magnus will become a wholly owned subsidiary of Questerre. Accordingly, post closing of the transaction, on a consolidated basis, Questerre will have no debt outstanding.

Questerre also updated drilling operations on the A-8 well at the field. The well experienced a significant gas kick at approximately 1,720 metres shortly after drilling out of the casing shoe into the Mattson horizon. Drilling was proceeding at rates of up to 16 metres per hour, unusually fast for this area. Controlling the gas kick took longer than expected. During this time, excess drill cuttings wedged in the bottom-hole assembly after which mud circulation could not be reestablished. Over the past week, most of the bottom-hole assembly was recovered and the well successfully side-tracked around the remaining equipment left in the hole. Drilling is progressing at approximately 2,200 metres in the Mattson zone. Based on its prognosis, Questerre expects to encounter the same Mattson interval responsible for production in the A-2 well at a depth of just over 2,500 metres.

Questerre plans to release its third quarter results on or around Nov. 12, 2007. Based on preliminary information, Questerre expects its production and cash flow for the third quarter to be lower than the first two quarters. Delays in the company's proposed Vulcan oil pool development, the initial results from the B-3 and A-7 wells at the field, the timing of the Magnus acquisition, longer-than-expected plant turnarounds, and natural declines all contributed to lower production than forecasted. This has been compounded by lower natural gas prices in the second half of this year.

The Alberta Government Royalty Review Panel recently released recommendations to increase royalties in Alberta. Approximately 800 barrels of oil equivalent per day of the company's production is from high rate wells in Alberta, primarily at Vulcan and would likely be affected. However, Questerre's main projects are in British Columbia, Quebec and Saskatchewan, and thus will not be affected.

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