* Says Utica horizontal well in Quebec tests 12 mmcf/d

* Evaluating pipeline options to tie-in location

* Test exceeds internal threshold for commercial production

* Shares up as much as 46 pct (Adds details, analyst comment, updates share movement)

By Ashutosh Joshi

BANGALORE, Feb 23 (Reuters) - Questerre Energy Corp <QEC.TO> shares rose 46 percent to hit a 20-month high on Tuesday, after the junior energy company found significant gas volumes at a key shale well in Quebec.

The company achieved initial rates of 12 million cubic feet (mmcf) per day at a horizontal well, and said these rates exceeded its estimates for commercial production on a per-well basis, based on targeted development costs.

Questerre, which is looking to commercially explore natural gas at its Utica shale property in the St. Lawrence Lowlands, Quebec, said it was evaluating pipeline options to tie-in the location of the well.

At least, two brokerages increased their price targets on Questerre stock, saying the results were better than their expectations.

Dundee Capital Markets analyst Grant Daunheimer raised his price target on Questerre stock to C$8 from C$4.50 and said he was expecting rates in the range of 1.5 to 3 mmcf/d.

Industrial Alliance Securities analyst Adam Marchionni said the gas production at Utica would be low-cost, compared with other projects such as Horn river, which are located in extremely remote areas, increasing operational costs.

"Utica gas is of such a high quality that it is almost pipeline gas, and very little refinement needs to be done. It is right in the middle of one of the largest markets for the natural gas, so the infrastructure related costs are going to be very low," he said by phone.

However, analyst Daunheimer said in a note that this was the only long-reach horizontal well tested in the Utica play to date, and that decline rates cannot be determined and long-term well costs were still subjective.

Questerre shares were up 35 percent, or C$1.30, at C$5.00 in afternoon trade on the Toronto Stock Exchange. They touched a high of C$5.40 earlier in the day. (Reporting by Ashutosh Joshi in Bangalore; Editing by Ratul Ray Chaudhuri)