Corporate Presentation CAPP Investment Symposium December 10 12, 2012
Presentation outline Company Overview Light Oil Bakken/Torquay, Antler, Saskatchewan Liquids Rich Montney, KakwaResthaven, Alberta Oil Shale Red Leaf & EcoShale Process St. Lawrence Lowlands, Quebec Outlook Investment…
Company overview Developing conventional production to create reserve of capital Bakken/Torquay light oil pool in Saskatchewan with focus on secondary recovery potential to add 2 million barrels net to Questerre Drilling success for…
Asset overview Conventional Southeast Saskatchewan Proven Bakken/Torquay light oil resource style play with strong netbacks Western Alberta Liquidsrich Montney resource play Nonconventional Oil Utah & Wyoming Commercialization…
Financial overview Operating and Financial Results Three months ended September 30, 2012 Working capital () 40.6 million Debt Nil Cash Flow from operations () 2.8 million Production (boe/d) 696 Oil weighting 86% Revenue (/boe)…
Bakken/Torquay Light Oil Antler, Saskatchewan 6
Antler Established light oil asset targeting Torquay/Bakken resource play NPV10/bbl as at December 31, 2011 of 45.60/bbl based on 2P reserves of 2.1 million barrels and 96.3 million NPV10 2012 YTD netbacks of 68/bbl based on…
Waterflood Secondary recovery scheme has been MAIN successfully applied in adjacent POOL Bakken/Torquay pool in Manitoba with a projected increase in recovery SINCLAIR from 9% to between 16%24% WATERFLOOD Low energy reservoir…
Liquids Rich Montney KakwaResthaven, Alberta 9
KakwaResthaven 2500 boe/d discovery well creates new core area in west central Alberta Montney play is approximately 500 km long and 90 km wide one of the largest oil and gas fields in world The liquids window is key to…
Area Activity Test results based on published company data 11
Well results First two wells tested same interval in the upper Montney and results in line with industry activity 40%+ condensate and NGL rates better than expected Production tests support robust economics for play Reserves…
Growth potential Questerre is currently targeting one of three prospective intervals in the Upper Montney Each interval estimated at 1220 Bcf and 1.22 million barrels recoverable resource Entire zone is approximately 100m thick…
Conventional asset strategy Goal is to increase production from conventional assets to achieve target of 1,500 boe/d by end of Strategic Environmental Assessment in Quebec Conventional assets value to provide a source of future…
Oil Shale 15
New Energy Market Paradigm Nonconventional has become the new conventional Conventional production in North America being replaced by nonconventional oil and gas Resource capture has become a priority for super majors and…
New Energy Market Paradigm Market changes led to engineering innovation which created a new paradigm Steam Assisted Gravity Drainage (SAGD) process invented in early 1970s has revolutionized oilsands recovery over the last…
Oil shale Fine grained sedimentary rock rich in organic matter known as kerogen Kerogen formed from decaying organic material by heat and pressure in environment similar to conventional oil Different from shale oil (i.e. where…
Oil shale Heating in absence of air to produce oil from kerogen known as retorting Produces natural gas, hydrogen, condensate, oil and spent shale Either done on surface or subsurface Processes to extract oil from shale are…
EcoShale Insitu capsule process Innovative approach that moves the process to the rocks instead of moving the rocks to the process Incorporates benefits and avoids challenges of both surface and subsurface processes Dramatically…
EcoShale Mine plan Strip Mining Process Preliminary site preparation Overburden is stripped, sorted and stockpiled for construction material (design requires overburden) Ore bench is stripped to base of the ore Stripped site…
Saskatchewan oil shale 100% interest in over 100,000 acres Drilled 10 wells on Arborfield block this winter Analysis of core indicates recoveries between 1020 gallons/ton with select intervals of up to 1620 gallons/ton within…
Wyoming oil shale Questerre to earn 20% on 5,120 acre farmin on private lands with Red Leaf holding a 80% interest Red Leaf estimates 800 million barrels of oil in place Approximately 100 million barrels in place per square…
Red Leaf investment US40 million investment in Red Leafs equity financing Additional 3 million investment made recently Represents approximately 6% of the equity; company has no debt Nonexclusive option to license Red Leaf…
Total joint venture Total to fund 80% of costs estimated at US200 million to demonstrate commercial scalability of EcoShale In Capsule Process on Red Leafs Utah acreage (EPS Phase) Total to fund an additional 80% of costs…
Scaling from pilot to commercial by 2014 Targeting first oil production from a large scale capsule by 2014 Field work underway on several key risk mitigation activities planned in four main categories to be completed by Q2…
Rationale for strategy Opportunity fits corporate strategy of high impact unconventional oil License to proprietary process is a competitive advantage to capturing large oil resources at low cost Risk mitigation through partners and…
St. Lawrence Lowlands, Quebec 28
Where Questerre is currently 18 Tcf prospective recoverable resource on acreage 4.4 Tcf net to Questerre Premium gas market Tenure recently extended to 2021 In advanced piloting phase 29
Prerequisites for development Strategic Environmental Assessment underway over next eighteen months Complete advanced piloting phase and sweet spot identification Establish hydrocarbon legislation Achieve social acceptability…
Outlook 31
Outlook Develop conventional assets with production goal of 1,500 boe/d and value of 1 2 per share Implement waterflood at Antler Accelerate appraisal and development of KakwaResthaven with tiein and further drilling Advance oil…
Investment summary Oil shale projects offer opportunity to capture significant oil resources Strong Mega discovery in Utica shale with long land tenure portfolio Nonconventional light oil resource play in Saskatchewan and liquids rich…
Appendix 34
Management and Board Management Board Michael Binnion, President & Chief Executive Les Beddoes, Jr. Officer International explorationist Former VP Exploration, Bow Valley Energy Inc.; Victoria, John Brodylo, VP Exploration (Nexen)…
EcoShale Process Excavation Initial excavation for laboratory assay samples and material for bench scale process assessment. Tan colored band in photo center is the Mahogany Marker, a volcanic tuft deposit just above the richest oil…
EcoShale Process Excavation Excavation for field pilot. The near portion of the excavation provides a space for excavated shale to be returned, encapsulated and roasted. The center of the shot shows the start of a steel bulkhead…
EcoShale Process Excavation Early stage of pilot construction with steel bulkhead nearly completed, Bentonite Amended Soil (BAS) encapsulation layer around perimeter, and Flex Crete insulation blocks (not used in production). A…
EcoShale Process Capsule Construction Partially completed capsule construction showing shale to be roasted (from excavation), heating pipes, and thermocouple placement on/in heating pipes and in shale (under mounds of shale…
EcoShale Process Capsule Construction Top of shale to be roasted, with perforated gas recovery pipe system. The shale bed in the capsule contains, from the bottom up, a liquid drain system, 4 feet of shale, a layer of 2 heating pipe…
EcoShale Process Capsule Construction The shale to be roasted is covered with insulation, as on the sides and bottom of the capsule (Flex Crete Insulation block shown here in the field pilot, shale gravel insulation to be used in…
EcoShale Process Finished Site Steel bulkhead support structure showing burners, blowers, liquid and gas recovery external system components, combustion air and fuel (propane) supply and mixing systems, and instrumentation external…
EcoShale Process Finished Site Tank farm for storage of produced shale oil and fire protection water. Tanks are insulated, heated and oil contents are protected by replenished internal nitrogen atmosphere. 43
EcoShale Process Finished Site Additional site features are visible in this overview, including equipment for condensing liquids from produced gas, separating water from produced shale oil liquids, and flaring of produced…
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