Mr. Michael Binnion reports

QUESTERRE REPORTS THIRD QUARTER 2023 RESULTS

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

Michael Binnion, president and chief executive officer, commented: "We have been transforming ourselves into a carbon technology company. This change in strategy is to allow us to unlock the giant resources we have discovered but have been blocked from producing in an increasingly ESG-focused world. Our initial approach to the use of carbon technology was as a cost centre or part of the new cost of doing business. With increasing prices on carbon, we are now seeing the potential for this to be a profit centre."

He added: "Interest in carbon capture and storage is growing in Quebec and this business could be independent of our clean gas production. We are pursuing a carbon storage pilot project under the existing legislation as a step towards a business and political solution in Quebec. We continue our fiduciary obligations to preserve our legal rights before the court. Our motion to suspend key elements of Bill 21 was heard in late October. We are awaiting the court's decision."

Reporting on the company's 40-per-cent investment in Red Leaf, he added: "Carbon storage is also integral to the development of their assets in the Uintah basin, Utah. In addition to their permit for a wax processing facility, they own the rights for carbon sequestration over 7,000 acres. Discussions are ongoing with partners to assess this potential. They are also advancing the design of a small-scale commercial project for their oil shale technology with a consortium of Jordanian companies."

Highlights:

• Designing expanded carbon storage pilot project in Quebec;
• Red Leaf designing small-scale commercial project in Jordan for oil shale technology;
• Average daily production of 1,830 barrels of oil equivalent per day (boe/d), with adjusted funds flow from operations of $3-million.

Consistent with prior periods, Kakwa continued to account for 80 per cent of corporate production. With the incremental working interest volumes at Kakwa North and one (0.25 net) well at Kakwa Central brought on production in the quarter, production increased over the prior year. For the third quarter, daily production averaged 1,830 boe/d (2022: 1,629 boe/d) and for the nine months ended Sept. 30, 2023, it averaged 1,866 boe/d (2022: 1,609 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 $11.6-million last year, and $32-million year to date, compared with $38.2-million in the prior year. Operating costs increased by an additional $1-million in the period as two workovers went over budget due to downhole operational problems. Combined with the lower prices, this contributed to adjusted funds flow from operations of $3-million (2022: $5.2-million) in the quarter and $12.6-million for the first three quarters of the year (2022: $21.7-million).

The higher operating costs also contributed to a net loss of $400,000 for the quarter (2022: $2.8-million profit) and a net profit of $2.3-million (2022: $14.2-million) for the nine months ended Sept. 30, 2023. Capital expenditures in the quarter were $900,000 (2022: $1.7-million) and $6.6-million year to date (2022: $9.4-million).

As at Sept. 30, 2023, effectively no amounts were drawn on the facility and the company held unrestricted cash and term deposits of $33.3-million. The company had a net working capital surplus of $30.2-million (2022: $14.4-million surplus).

The term adjusted funds flow from operations and working capital surplus are non-IFRS (international financial reporting standards) measures.

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 its energy future.

(1) For the three-month period ended Sept. 30, 2023, liquids production, including light crude and natural gas liquids, accounted for 1,050 barrels per day (bbl/d) (2022: 987 bbl/d) and natural gas, including conventional and shale gas, accounted for 4,677,000 cubic feet per day (2022: 3,852,000 cubic feet per day). For the nine-month period ended Sept. 30, 2023, liquids production, including light crude and natural gas liquids, accounted for 1,077 bbl/d (2022: 986 bbl/d) and natural gas, including conventional and shale gas, accounted for 4,734,000 cubic feet per day (2022: 3,739,000 cubic feet per day).

This news release contains the terms adjusted funds flow from operations and working capital surplus, which are non-GAAP (generally accepted accounting principles) terms. Questerre uses these measures to help evaluate its performance.

As an indicator of Questerre's performance, adjusted funds flow from operations should not be considered as an alternative to, or more meaningful than, cash flows from operating activities as determined in accordance with GAAP. Questerre's determination of adjusted funds flow from operations may not be comparable with that reported by other companies. Questerre considers adjusted funds flow from operations to be a key measure as it demonstrates the company's ability to generate the cash necessary to finance operations and support activities related to its major assets.

Working capital surplus is a non-GAAP measure calculated as current assets less current liabilities, excluding risk management contracts and lease liabilities.

We seek Safe Harbor.