QUESTERRE ENERGY CORPORATION Michael Binnion , President and Chief Executive Officer of Questerre, commented, "Though it has not yet come into force, theNational Assembly inQuebec passed Bill 21 banning oil and gas development in the province last month. We are still keen to work with the people ofQuebec who have shown support for ourClean Gas project. The Government's decision left us no choice but to take legal action to protect the rights of our shareholders. We have filed a statement of claim and we anticipate a pre-trial hearing could be held within the next few months." He added, "As we follow the legal process inQuebec , we have three priorities - continue development of Kakwa and Antler to capitalize on higher prices, assist Red Leaf in commercializing their EcoShale technology, ultimately for our project inJordan , and evaluate opportunities to employ new carbon technologies." Highlights o Government ofQuebec passes Bill 21 to ban oil and gas development inQuebec o Three (0.75 net) wells completed at Kakwa Central and brought on stream in second quarter o Current production over 2,000 boe/d with average daily production of 1,288 boe/d and adjusted funds flow from operations of$4.3 million for the quarter With the completion and tie-in of three (0.75 net) wells at Kakwa Central, current production is over 2,000 boe/d(1). Production in first quarter averaged 1,288 boe/d (2021: 1,679 boe/d)(1) as no new wells were brought on production since the fall of 2020. Consistent with the industry at large, higher commodity prices more than offset the decline in production and petroleum and natural gas revenue totaled$9.6 million in the period compared to$7.0 million for the same period last year. The Company generated net income of$2.4 million for quarter (2021:$0.9 million ) and adjusted funds flow from operations of$4.3 million (2021:$2.9 million ). The Company incurred capital expenditures of$4.9 million for the period (2021:$0.5 million ) and reported a working capital surplus of$1.2 million as atMarch 31, 2022 (March 31, 2021 :$5.4 million deficit). The term "adjusted funds flow from operations" is a non-IFRS measure. Please see the reconciliation elsewhere in this press release. Questerre is an energy technology and innovation company. It is leveraging its expertise gained through early exposure to low permeability reservoirs to acquire significant high-quality resources. We believe we can successfully transition our energy portfolio. With new clean technologies and innovation to responsibly produce and use energy, we can sustain both human progress and our natural environment. Questerre is a believer that the future success of the oil and gas industry depends on a balance of economics, environment, and society. We are committed to being transparent and are respectful that the public must be part of making the important choices for our energy future. For further information, please contact:Questerre Energy Corporation Jason D'Silva , Chief Financial Officer (403) 777-1185 | (403) 777-1578 (FAX) | Email: info@questerre.com Advisory Regarding Forward-Looking Statements This news release contains certain statements which constitute forward-looking statements or information ("forward-looking statements") including the Company's plans to focus on development of Kakwa and Antler, assist Red Leaf in commercializing their EcoShale technology, ultimately for its project inJordan , and evaluate opportunities to employ new carbon technologies while it follows the legal process inQuebec . Forward-looking statements are based on several material factors, expectations or assumptions of Questerre which have been used to develop such statements and information, but which may prove to be incorrect. Although Questerre believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because Questerre can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Further, events or circumstances may cause actual results to differ materially from those predicted as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including, without limitation: the implementation of Bill 21 by the Government ofQuebec and certain other risks detailed from time-to-time in Questerre's public disclosure documents. Additional information regarding some of these risks, expectations or assumptions and other factors may be found under in the Company's Annual Information Form for the year endedDecember 31, 2021 , and other documents available on the Company's profile at www.sedar.com. The reader is cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements contained in this news release are made as of the date hereof and Questerre undertakes no obligations to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. (1) For the period endedMarch 31, 2022 , liquids production including light crude and natural gas liquids accounted for 814 bbl/d (2021: 971 bbl/d) and natural gas including conventional and shale gas accounted for 2,843 Mcf/d (2021: 4,250 Mcf/d). Current production of over 2,000 boe/d includes light crude and natural gas liquids of 1,255 bbl/d and natural gas including conventional and shale gas production of 4,755 Mcf/d. Barrel of oil equivalent ("boe") amounts may be misleading, particularly if used in isolation. A boe conversion ratio has been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil and the conversion ratio of one barrel to six thousand cubic feet is based on an energy equivalent conversion method application at the burner tip and does not necessarily represent an economic value equivalent at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalent of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value. This press release contains the terms "adjusted funds flow from operations" and "working capital deficit" which are non-GAAP terms. Questerre uses these measures to help evaluate its performance. As an indicator of Questerre's performance, adjusted funds flow from operations should not be considered as an alternative to, or more meaningful than, cash flows from operating activities as determined in accordance with GAAP. Questerre's determination of adjusted funds flow from operations may not be comparable to that reported by other companies. Questerre considers adjusted funds flow from operations to be a key measure as it demonstrates the Company's ability to generate the cash necessary to fund operations and support activities related to its major assets. Three Months EndedMarch 31 , ($ thousands) 2022 2021 Net cash used in operating activities$ 4,904 $ 3,079 Interest received (39) (50) Interest paid 29 133 Change in non-cash operating working capital (604) (277) Adjusted Funds Flow from Operations$ 4,290 $ 2,885 Working capital surplus is a non-GAAP measure calculated as current assets less current liabilities excluding risk management contracts and lease liabilities.
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