At Greater Sierra, based on EnCana's experience in developing this play with two horizontal wells per sq. mile and our 54 square miles, there could be a total of 64 wells drilled (assuming a 60% success rate). With initial production of 100 boe/d net to Questerre from these wells, total production could be (64 wells*50%*100boe/d)=3,200 boe/d. Using a market value of $50,000 per producing barrel and less the $70 million in capital ($2.2 million/well*64*50%) results in a undiscounted, unrisked value of $90 million or $0.50/share. This does not include any potential for any of the deeper horizons or the exploration potential on the land.

The potential of Quebec for the Trenton Black River and Utica shale could be substantial. Based on 40 acre spacing and 300,000 acres of land prospective for the shales, there could be over 7,000 wells drilled just for the shales. At stabilized rates of 200 mcf/d per well (33 boe/d) and a 25% working interest on average, even if 50% of the wells are successful, the potential production to Questerre is significant. The work being completed by Forest Oil on the shale gas wells will give us a good indication of the productivity. The Talisman wells will also test the shales and the deeper Trenton Black River formation.

We are also finalizing the drilling of our first horizontal well into the oil pool in Vulcan and should have the results the later this month."

Cheers,

Rocco:)