Questerre Farms Out Interest in Simonette Well

Questerre Energy reports that a major independent oil and gas company has farmed in on an interest in its Simonette project. Pursuant to the terms of the farm-in agreement, the Partner will fund 26.667% of the costs of this well to earn an after payout working interest of 20% in the well and surrounding acreage, subject to a before payout 5% GORR payable to Questerre. The Partner will also have an option until February 28, 2005 to fund an additional 13.333% of the costs of this well to earn on the same terms.

This exploratory well was spud earlier this week and is targeting oil in the Swan Hills formation at a depth of approximately 3700m. Drilling is expected to take between 8-10 weeks to complete with total costs estimated at $4.4 million.

As a result of this agreement and subject to the Partner's option, Questerre will hold a 23.333% working interest (30% after payout) in this well and 10 sections of contiguous land in the Simonette area. This acreage lies adjacent to two discovered oilfields - the Simonette and Ante Creek fields - that have produced over 28 million barrels and 18 million barrels respectively from the Swan Hills formation.