If either Forest Oil or Talisman moves the Yamaska or Gentilly property, respectively, into commercial development, Questerre’s capital expenditures could be considerable, depending, of course, on the pace at which the respective operators move the play forward. If full development should occur, Questerre will have to keep a scaled pace with the majors, which could prove to be very capital intensive.

Assuming four rigs would be utilized at the outset and that each well takes approximately 55 days (including mobilization), 75 gross wells could be drilled and competed within the first two years of development. We estimate that this could cost Questerre approximately $60 million, assuming that its capital requirements would be partially satisfied from cash flow from the preliminary wells. Assuming a decision by Talisman and/or Forest Oil to move into development would be reflected favourably in Questerre’s stock price, and that the Company finances its shares of the bill with equity consisting of two tranches, we estimated that current shareholders would be diluted by ~6%.