CALGARY, ALBERTA–(Marketwired – July 4, 2013) –
NOT FOR DISTRIBUTION ON U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Questerre Energy Corporation (“Questerre” or the “Company”) (TSX:QEC)(OSLO:QEC) announced today the results of the resource assessment of its Montney acreage in the Kakwa-Resthaven area. The best estimate by the Company’s independent reserve engineers of Prospective Resources (“PR”) is 100 million barrels of oil equivalent and of Economic Contingent Resources (“ECR”) is 32 million barrels of oil equivalent.
Michael Binnion, President and Chief Executive Officer of Questerre, commented, “We are very pleased that the report puts a significant value on the dense resource we have captured in the Kakwa-Resthaven area over the last year. Economic Contingent Resources were assigned to just over 15% of our total acreage based on proximity to tested or producing Montney wells. We expect that as additional wells are drilled and tested on and adjacent to our lands, the majority of the prospective resources will be reclassified as economically contingent resources and ultimately reserves.”
Conducted by McDaniel & Associates Consultants Ltd. (“McDaniel”), the report assessed the resources associated with the in place petroleum and natural gas on a portion of the Company’s 28,800 net acres in the area. In specific, the assessment was conducted on 12,800 net acres or approximately 44% of the Company’s total acreage in the area. No assessment was conducted of the Company’s 16,000 net acres held in the Wapiti area, approximately 12 miles northwest of the Kakwa-Resthaven area.
The report estimates PR net to Questerre to range between a low of 291 Bcfe (49 MMboe) and a high of 774 Bcfe (129 MMboe) with a best estimate of 598 Bcfe (100 MMboe) that includes over 40% condensate.
In addition, ECR, attributed to only 15% of the Company’s 28,800 net acres, have been assigned a best estimate of 190 Bcfe (32 MMboe) with a range from a low of 95 Bcfe (16 MMboe) to a high of 245 Bcfe (41 MMboe). Approximately 50% of this best estimate or 16 million barrels of oil equivalent are natural gas liquids with condensate accounting for over 83% of this amount. Using their April 2013 price forecast, McDaniel’s best estimate of ECR has a net present value discounted at 10% before tax of $267 million.
The PR and ECR are in addition to the proved and probable reserves of 26 Bcfe (4 MMboe) as at December 31, 2012 with a net present value discounted at 10% before tax of $44 million.
The assessment of the resources by McDaniel includes Discovered and Undiscovered Petroleum Initially in Place (“PIIP”), Prospective Resources (“PR”), a subset of Undiscovered PIIP, and Economic Contingent Resources (“ECR”), a subset of Discovered PIIP. The evaluation was performed in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”) and is effective April 1, 2013. See Reserve and Resource Definitions section of this press release.
The evaluation conducted by McDaniel included detailed geological and petrophysical analysis of Questerre and adjacent industry Montney wells. It focused on the Upper and Middle Montney intervals. McDaniel assumed a Montney development plan based on an average of eight wells per section (Four wells for each of the Upper and Middle Montney intervals). Total PIIP on average was estimated at approximately 60 Bcf per section with recovery factors estimated to range from 20% to 55% with a best estimate of approximately 40%.
The recoveries of natural gas liquids estimated by the resource assessment are based on the Company securing shallow cut processing capacity. Questerre is currently in negotiations to secure processing, transportation and fractionating capacity for its production in the area.
Contingent resources were assigned to the Company’s acreage within a three mile radius of a tested or producing Montney well. There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
|Natural Gas Liquids||MMbbls||8.71||15.72||20.18||26.78||49.11||63.12|
|Total Natural Gas and Natural Gas Liquids||Bcfe||94.81||189.92||245.46||291.38||598.17||774.06|
|Net Present Value Before Income Tax (MM$)
|Natural Gas Liquids
|Resource Categories (Company Share, Best Estimate, Raw)||Bcf|
|Total Petroleum Initially In Place (TPIIP)||1,156.8|
|Discovered Petroleum Initially In Place (DPIIP)
Undiscovered Petroleum Initially In Place (UPIIP)
- With respect to discovered resources or any subcategory of discovered resources other than reserves, there is no certainty that it will be commercially viable to produce any portion of the resources.
- With respect to undiscovered resources, there is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
- All unrisked estimates of resources in the above tables represent Questerre’s gross resources before the deduction of any royalties.
- All of Questerre’s Contingent Resources are considered economic using McDaniel’s April 1, 2013 forecast prices. There is no certainty that it will be commercially viable to produce any portion of the resources.
- The primary contingencies which prevent the classification of the ECR as reserves are classified as non-technical as follows: the current early stage of development, the Company’s current capital constraints, timing of development, regulatory requirements for government spacing and land expiries. Additional drilling, completion, and testing data will be required before Questerre can commit to the development of the ECR. Proven and Probable Reserves are assigned to areas in proximity to proven producing Montney wells. ECR are assigned to areas that extend beyond the limits of Reserves and are interpreted to be less certain. As continued delineation drilling occurs, more ECR are expected to be re-classified as Reserves.
- For further information regarding the previously reported reserves numbers, see Questerre’s Annual Information Form dated March 28, 2013 available at www.sedar.com.
Reserve and Resource Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis of drilling, geological, geophysical and engineering data; the use of established technology; and specified economic conditions, which are generally accepted as being reasonable. Reserves are classified according to the degree of certainty associated with the estimates as follows:
Proved Reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
Probable Reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
Possible Reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves. Questerre has not been assigned any possible reserves.
Resources encompasses all petroleum quantities that originally existed on or within the earth’s crust in naturally occurring accumulations, including Discovered and Undiscovered (recoverable and unrecoverable) plus quantities already produced. “Total resources” is equivalent to “Total Petroleum Initially In Place”. Resources are classified in the following categories:
Total Petroleum Initially In Place (“TPIIP”) is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered.
Discovered Petroleum Initially In Place (“DPIIP”) is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially in place includes production, reserves, and Contingent Resources; the remainder is unrecoverable.
Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development but which are not currently considered to be commercially recoverable due to one or more contingencies.
Undiscovered Petroleum Initially In Place (“UPIIP”) is that quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of undiscovered petroleum initially in place is referred to as “prospective resources” and the remainder as “unrecoverable.”
Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects.
Unrecoverable is that portion of DPIIP and UPIIP quantities which is estimated, as of a given date, not to be recoverable by future development projects. A portion of these quantities may become recoverable in the future as commercial circumstances change or technological developments occur; the remaining portion may never be recovered due to the physical/chemical constraints represented by subsurface interaction of fluids and reservoir rocks.
Uncertainty Ranges are described by the Canadian Oil and Gas Evaluation Handbook as low, best, and high estimates for reserves and resources as follows:
Low Estimate: This is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.
Best Estimate: This is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.
High Estimate: This is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.
Questerre Energy Corporation is leveraging its expertise gained through early exposure to shale and other non-conventional reservoirs. The Company has base production and reserves in the tight oil Bakken/Torquay of southeast Saskatchewan. It is bringing on production from its lands in the heart of the high-liquids Montney shale fairway. It is a leader on social license to operate issues for its Utica shale gas discovery in the St. Lawrence Lowlands, Quebec. In conjunction with a supermajor, it is at the leading edge of commercializing a proven process to unlock the massive resource potential of oil shale.
Questerre is a believer that the future success of the oil and gas industry depends on a balance of economics, environment and society. We are committed to being transparent and are respectful that the public must be part of making the important choices for our energy future.
This media release contains certain statements which constitute forward-looking statements or information (“forward-looking statements”), including statements regarding reserves, resources, economic considerations, contingencies, reclassification of resources and the potential and future development of the Kakwa-Resthaven area. Although Questerre believes that the expectations reflected in our forward-looking statements are reasonable, our forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information available to Questerre. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking statements. As such, readers are cautioned not to place undue reliance on the forward looking information, as no assurance can be provided as to future results, levels of activity or achievements. The risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in our Annual Information Form and other documents available at www.sedar.com. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, Questerre does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.
This news release does not constitute an offer of securities for sale in the United States. These securities may not be offered or sold in the United States absent registration or an available exemption from registration under the United States Securities Act of 1933, as amended.
Barrel of oil equivalent (“boe”) and billion cubic feet equivalent (“Bcfe”) amounts may be misleading, particularly if used in isolation. A boe conversion ratio has been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil and the conversion ratio of one barrel to six thousand cubic feet is based on an energy equivalent conversion method application at the burner tip and does not necessarily represent an economic value equivalent at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalent of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
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