Questerre Energy (QEC) Status update summary

Strategic Asset Update and Governance

• Quebec asset is a major natural gas discovery, estimated at 3.0 billion BOE and up to 23 trillion cu ft, now subject to expropriation efforts by the Quebec government.

• Preferred shares were created to isolate the Quebec asset, enabling price discovery, liquidity, and protecting shareholder value, with strong governance including an oversight committee and veto rights for preferred shareholders.

• Dual class share structure allows separate strategies for oil shale and Quebec gas, with preferred shares structured to participate in value realization under both development and settlement scenarios.

• Listing of preferred shares addresses historical undervaluation from sum-of-the-parts analysis.

• If compensation is awarded, preferred shareholders will receive value via a tax-efficient conversion into common shares.

Legal and Political Developments

• Legal challenge ongoing against Quebec's Bill 21, arguing unconstitutional expropriation; company selected as lead case, with a key hearing expected before year-end and trial expected in late 2027 or early 2028.

• Damages report values economic loss at CAD 4 billion (discounted), with alternative methodologies suggesting up to CAD 40 billion; expert report estimates losses from C$700 million to C$4.8 billion depending on scenario.

• Compensation, if awarded, would be compounded at 5% per year under Quebec court rules.

• Political landscape in Quebec is shifting, with only one major party unconditionally opposed to gas development and growing public support for local gas production.

• Recent engagement with the government has improved, especially following a carbon sequestration pilot proposal.

Operational and Market Context

• Quebec asset could supply 6,000 permanent jobs and significantly reduce emissions by replacing imports with local gas.

• Project is shovel-ready, with sweet spots identified, proximity to major industrial consumers, and offers a competitive advantage for LNG exports due to proximity to tidewater ports.

• Extensive geological data and investment (nearly CAD 200 million) support the asset's value and readiness.

• Project includes low-emission gas, carbon recycling, and permanent carbon storage; carbon sequestration pilot is at a late stage with the government, with a C$40M application submitted.

• Energy shortages and rising electricity prices in Quebec are driving renewed interest in local energy solutions.