Closing in on the big event

Questerre will report Q4 figures Friday 26 February. We expect EBITDA of -0.8 CADm and a net loss of -3.9 CADm. The main focus will be test results from the St. Edouard horizontal well which are anticipated to be around the corner. Our BUY recommendation with target price of 29 NOK per share is reiterated.

- We expect Questerre to report EBITDA of -0.8 CADm and a net loss of -3.9 CADm when it presents Q4 figures Friday 26 February. Production during the quarter is anticipated to have been fairly stable relative to the Q3 level (640 boepd in Q4 versus 632 in Q3).

- Main focus in the report will be testing of the St. Edouard horizontal well in Quebec. It is currently ongoing with results expected late February, meaning that the company probably will announce something either at the same day or just prior to the Q4 report. A long term flow rate higher than 1.5 mmcf/d will be positive for the share price in our view, but we will probably need to see at least 2 mmcf/d before we get a major share price reaction.

- Talisman recently announced that it expects to drill an additional horizontal well in Quebec this year. Location is not confirmed yet, but we believe there is a high chance it will be on Questerre's acreage. This means that we will get test results from four horizontal wells either on or close to Questerre's land this year. Following the first well with results expected late February, the three others will most likely be fraced and tested back to back in Q2/Q3.

- We reiterate our BUY recommendation on Questerre with target price of 29 NOK per share, and argue that risk-reward is attractive before the upcoming test results in Quebec this year.