Mr. Michael Binnion reports

QUESTERRE REPORTS SECOND QUARTER 2023 RESULTS

Questerre Energy Corp. has released its financial and operating results for the second quarter ended June 30, 2023.

Michael Binnion, president and chief executive officer, commented: "As Quebec is holding public consultations on hydroelectricity shortage in the next two to three years. We are re-engaging with the government on how our clean gas could be part of the solution. Our scalable, shovel-ready project can help mitigate the risks of curtailments and price spikes, all while retaining Quebec's competitiveness in attracting new industries and helping meet their GHG emissions reductions targets. The government of Quebec also proposed a stay of enforcement related to Bill 21. There is a hearing scheduled this October to extend this stay."

Reporting on the company's 40-per-cent investment in Red Leaf, he added: "Red Leaf also advanced both their technology and the permitted wax processing facility in the Uintah basin in Utah during the quarter. A pre-FEED study on the facility was completed and includes a Class IV capex estimate as well as an estimate to incorporate carbon capture directly in the design. Collaborating with local Jordanian companies, Red Leaf also began the design for a scaled version of their commercial production facility."

Highlights

• Hearing to suspend revocation of licenses under Bill 21 in Quebec scheduled for October, 2023;
• Red Leaf completes pre-FEED study for wax processing facility in Uintah basin, Utah;
• Average daily production of 1,978 boe/d (barrels of oil equivalent per day) with adjusted funds flow from operation of $5.3-million.

Consistent with prior periods, Kakwa continued to account for 80 per cent of corporate production. With one (0.25 net) well brought on production in the quarter, production increased over the prior year. For the second quarter, daily production averaged 1,978 boe/d (2022: 1,909 boe/d) and for the six months ended June 30, 2023, it averaged 1,884 boe/d (2022: 1,600 boe/d).

The higher production volumes were offset by the lower commodity prices in the current year. For the quarter, petroleum and natural gas sales totalled $10.7-million compared with $17.0-million last year and $21.2-million year to date compared with $26.6-million in the prior year. The lower revenue contributed to adjusted funds flow from operations of $5.3-million (2022: $12.2-million) in the quarter and $9.6-million for the first six months of the year (2022: $16.5-million).

The revenue also contributed to net income of $1.7-million for the quarter (2022: $9.1-million) and $2.6-million (2022: $11.5-million) for the first half of the year. Capital expenditures in the quarter were $2.5-million (2022: $2.8-million) and $5.7-million year to date (2022: $7.8-million).

The company also reported on the pending renewal of its credit facility with a Canadian chartered bank. Following a preliminary review conducted in the second quarter, the company anticipates its credit facilities will remain at $16-million. The renewal will take effect upon receipt of the final requisite approvals in the third quarter. The effective interest rate on the facility for the first half of 2023 was 7.74 per cent (2022: 4.08 per cent). As at June 30, 2023, effectively no amounts were drawn on the facility and the company held unrestricted cash and term deposits of $35.2-million. The company had a net working capital surplus of $28-million (2022: $10.6-million surplus).

About Questerre Energy Corp.

Questerre is an energy technology and innovation company. It is leveraging its expertise gained through early exposure to low permeability reservoirs to acquire significant high-quality resources. The company believes it can successfully transition its energy portfolio. With new clean technologies and innovation to responsibly produce and use energy, the company can sustain both human progress and its natural environment.

Questerre is a believer that the future success of the oil and gas industry depends on a balance of economics, environment and society. The company is committed to being transparent and is respectful that the public must be part of making the important choices for the energy future.

We seek Safe Harbor.