10th November 2009. 09:32 am

We expect Questerre to report EBITDA of -1.8 CADm when it
presents Q3 figures Friday 13 November. Although the average
realized price per barrel of oil equivalent is anticipated to have
increased from last quarter, the result will be affected by a decline
in production. The daily production during the third quarter is
expected to average 545 barrels of oil equivalent, with an oil ratio
of 51%.
• For the coming months the two horizontal wells on the company's
acreage in Quebec will by far be the most important triggers. The
first should be completed by the end of this year, meaning that we
can expect results in January. The second well which will spud back
to back with the first one will probably be completed before the end
of first quarter next year.
• Although there is considerable risk attached to the two future wells,
we believe the current share price clearly understates the
probability of a positive outcome. Initial production rates of
~2mmcf/d or more will probably lead to increased drilling in the
area in 2010 (both by Talisman and Forest Oil) and lift the share
price to levels not witnessed since 2008.
• We reiterate our BUY recommendation on Questerre with a target
price of 23 NOK per share (approx 4.5 CAD using the current exchange rate).