Nordea gives short-term "buy" on Questerre

Jan 08, 2010 (M2 PRESSWIRE via COMTEX) --

Company: Questerre Energy Corp (QTEYF)

8 January 2010 - Nordea has given a short-term "buy" recommendation on Oslo-listed Questerre Energy Corporation (OSL: QEC).

The main part of the values in Questerre are related to gas licences in Quebec, in Canada -- namely shale-gas plays, which are expected to be a key source for future gas deliveries to the USA.

"The focus on shale gas has strengthened after US Exxon Mobil (NYSE: XOM) purchased gas giant XTO Energy (NYSE: XTO) and the French Total (EPA: FP) acquired 25% of the shale gas portfolio of US Chesapeake Energy Corporation (NYSE: CHK)", the stockbroker said. The parties in this cooperation also said they were looking at other takeover options within shale gas, Nordea added.

Based on earlier transaction values for shale gas areas, Nordea found the value of Questerre' share of 336,000 acres in St Lawrence Lowlands in Quebec, or the Utica shale, as very attractive.

"The stock was traded at around 45% of the average transaction value over the past two years. Questerre and Canadian partner Talisman Energy Inc (NYSE: TLM) have jointly drilled vertical wells with promising results and the companies are now spudding horizontal wells to investigate whether the gas reserves are commercially viable," Nordea said.

"The results from these two drillings (St Edouard and Gentilly) are expected in the first quarter of 2010. News about them will have especially big impact on the valuation of the company and we find the risk/reward ratio attractive ahead of the results. A strong and rising gas price also supports our positive view of the share," Nordea said.

Nordea has set the share price target at NOK26, implying a 33% upside in the short term. The broker also set the stop loss at NOK17.

By 11:17 CET on Friday, the share in Questerre had added 0.53% to NOK19.10 on the Oslo Stock Exchange.

(EUR1 = NOK8.2)

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Company: Questerre Energy Corp (QTEYF)