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Questerre settles Quebec dispute

From Upstream
Upstream the International Oil & Gas Newspaper, June 4, 2018, http://www.upstreamonline.com. All articles provided by Upstream are protected by copyright. Any unauthorized reproduction is strictly prohibited.

Canadian player to buy out Repsol in St Lawrence Lowlands shale acreage in Quebec

Canadian independent Questerre Energy has settled a legal dispute by buying out its partner Repsol from the Utica shale play in the St Lawrence Lowlands area of Quebec.

Under a letter of intent, Calgary-based Questerre has agreed to buy exploration rights to 753,000 net acres in the Lowlands, along with associated wells, equipment and geological data.

Questerre will pay $16.1 million for the assets, including abandonment liabilities, and will become operator of the acreage.

A final sales and purchase agreement will be signed once the ministry of energy and natural resources in Quebec approves new regulations for oil and gas activities in Quebec, which is expected to take place in about four to six weeks.

Upon closing of the transaction, both parties will release each other from all claims related to the outstanding litigation, Questerre said. The dispute relates to drilling costs incurred in 2010.

"We are confident that, with success, this project will help Quebec greatly reduce its hydrocarbon import problem and meet its 2030 energy policy targets," Questerre chief executive Michael Binnion said.

"We will continue our step-by-step approach of working with the government and municipalities."

The announcement was well received by investors, who sent Questerre's shares up more than 12% in early trading on the Oslo Stock Exchange.

"Through the acquisition of Repsol’s acreage, Questerre increases its exposure towards the enormous upside potential for the Lowlands acreage in the scenario of a commercial development," analyst Teodor Sveen-Nilsen at Oslo-based SpareBank1 markets said in a note.

The relatively low purchase price reflects several uncertainty factors, including the litigation, Quebec's ongoing work to set up regulations for oil and gas activity, and signs that Repsol has been prioritising other investments, Sveen-Nilsen said.

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