Transeuro, Questerre Test Deeper Shales in Canada's Liard Basin

Transeuro Energy Corp. and Questerre Energy Corporation have announced that joint operations are under way to test the deeper shales in the Liard basin, northeast British Columbia, Canada. These shales are Mississippian in age and are located approximately 100 km to the east of the Horn River shale play.

There are two existing producing tight gas/shale wells (A2 and A7) which Transeuro and Questerre both have 50% ownership and that Questerre has operated for over two years with relatively low decline rates. Compression was recently added to A2 with very promising initial results. Production from the A2 increased to over 4.0mmcf per day which is near its original peak production rate of 4.5mmcf per day.

The continued good production performance of these shallower wells together with recent work by Questerre and Transeuro indicate that there is also strong potential for the deeper Devonian shales. Gas in place numbers for this area for the Mississippian siltstone/shale sequence are confirmed at over 1 tcf per section (discovered resource) based on independent work by Nederland, Sewel & Associates Inc. Transeuro has a 50% interest in 35 sections with take away capacity in place.

The current operation is a re-entry of the A5 well. Three intervals will be perforated and minor stimulations will be conducted to evaluate reservoir and rock mechanical properties prior to an inflow test. The gross thickness of these prospective deeper shales that are confirmed with good gas shows are in excess of 500m and these tests will assist in identifying the net productive reservoir intervals. If the results of the inflow tests are promising, a full stimulation will be carried out in a future operation to test for commercial flow rates.

Michael Binnion, President of Questerre, commented "We have great control of land and infrastructure in this area. Expertise gained from our Quebec shale play has allowed us to re-evaluate our past results. We believe we have been able to correlate the results to particular shale qualities which greatly encourage us that a predictive model can be created. The very high gas in place numbers and promising production results from our two wells in the Liard shale's make this test very interesting."

Hal Hemmerich, President of Transeuro, added, "We are excited about the prospects of the Liard basin shale and we see the similarities to the Horn River shale. The license has six existing well bores, the surface
infrastructure and the export line that all add significant commercial advantage. We also see the value in the
continuation of the development of the upper shales which have produced strongly over the past two years and
believe this work program will highlight the shale commerciality in the Liard Basin."

This resource is not classified as reserves, contingent resources or unrecoverable resources at this time until
determination of the appropriate completion and stimulation techniques and the determining of areas of maximum natural fracturing to maximize recovery of this discovered resource. There is no certainty that it will be
economically viable or technically feasible to produce any portion of the reported discovered resource.

Discovered resources are defined in the COGE Handbook, "Discovered resources are those quantities of oil and gas estimated on a given date to be remaining in, plus those quantities already produced from, known accumulations. Discovered resources are divided into economic and uneconomic categories, with the estimated future recoverable portion classified as reserves and contingent resources, respectively."


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