The news was well recieved by Pareto in Norway...

Questerre (“QEC”) just announced it has closed an acquisition of producing Bakken/Torquay oil assets and undeveloped land in the Antler area of southeast Saskatchewan for CAD 13.25m (USD 13.75m). The acquisition will increase QEC’s production with approximately 100 bbl/d of light oil and add 6,942 net acres of undeveloped land with verified 2P reserves of 0.419 mmboe located approximately 18 km southeast of its existing field at Antler. The 2P reserves represents only 6% of the oil in place and as such we see a significant potential for increased reserves as the area is further developed.

} QEC is continuing to execute on strategy to develop Antler as a new core area for the company

} Transaction price of USD 2,000/acres is well below our current valuation for QEC’s Antler acreage of USD 3,600/boe

} On a reserve based basis the transaction price of USD 31.6/boe, just above our current valuation for QEC’s existing Antler reserves. However this fails to reflect the large upside potential in the acreage from increasing the recovery factor above 6%

} Before we get further information on the acquired asset, we assume that QEC has paid a fair price for the asset and do not make any changes to our valuation

} After the transaction QEC has net cash of NOK 3.0/share, while we value the producing assets at NOK 1.9/share, for a total of NOK 4.9/share

} We estimate the potential (unrisked) value of the shale gas acreage of Questerre in Quebec is around NOK 60/share

} At present, it seems little of this potential is recognised in the QEC share price of NOK 5.2

} We reiterate our BUY recommendation and NOK 15 Target Price on QEC