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Rocco90

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posted on Apr 28, 2008 11:16PM

So here is the reply from Jason! So it would make sense that we would have to pay our own way...but I think everyone expected that....but the interest is higher....who knows...it may work out to the same thing.

Questerre currently has a 7.5% gross overriding royalty on the Yamaska permits convertible at our option into a 20% working interest. While it holds a royalty, Questerre does not have to fund any of the capital costs but rather receives a 7.5% royalty on the production.

Upon the completion of the $10 million work program by Forest Oil, Gastem can force Questerre to convert the royalty into the working interest. Thus in the case of full scale development at Yamaska, it is likely that Questerre will be in a working interest position (Forest and Gastem would likely want Questerre to pay its share of the costs) and have to pay its share of the capital costs.

Regarding the AMI which covers the entire Lowlands, for any permits acquired by Questerre, Gastem has the right to acquire a 20% interest in these permits by paying its 20% share of costs with Questerre holding the remaining 80% working interest. If Gastem acquires any permits, the same applies i.e. Questerre has the right to acquire an 20% interest in these permits.