Questerre Energy

Earnings Release • Nov 13, 2025

Questerre Energy Q3 2025 Report

Questerre Energy Q3 2025 Report

We are one step closer to our goal of commercially developing oil shale with the acquisition of PX Energy. Their production platform and refining assets round out our portfolio of upstream assets including resources and access to the next generation of technology through our investment in Red Leaf. We are now a vertically integrated oil shale company with assets across the entire value chain.

We joint ventured with a subsidiary of Nimofast, one of the largest private fuel distributors in Brazil, to develop this opportunity. Their expertise in logistics and distribution will be vital to improving product margins and profitability. They will be able to leverage PX Energy’s other assets including ownership of one among ten private refinery licenses issued in the country.

The acquisition also prompted us to sidecar our Quebec assets. We expect to finalize the structure of this arrangement shortly. Our plan is to distribute to existing shareholders, on a one for one basis, a new security, a tracking share, representing ownership in these assets.

We are continuing our work in Quebec towards a business and political solution while protecting our shareholder rights. We are working with the Government on the approvals for our pilot carbon storage project. We are also consulting on proposed legislation for carbon storage in the province. On the legal front, we completed the examination of key Government witnesses in advance of our trial on the merits of the case.

Highlights

• Questerre closes PX Energy acquisition with over 4,000 boe per day of oil shale production

• Questerre to form a 50/50 joint venture for PX Energy with a subsidiary of Nimofast, a leading private fuel distribution company in Brazil

• Examination of key witnesses underway to protect legal rights in Quebec

• Average daily production of 2,926 boe per day and net cash flow from operating activities of $1.3 million and adjusted funds flow from operations of $2.8 million

PX Energy

We have two primary ways to realize value from this acquisition. First, financially restructure the business to go from essentially operating at a breakeven at US$65 per barrel to profitability at current prices. Second, utilize the production platform to advance Red Leaf’s technology through a commercial scale pilot.

This was reflected in our consideration for the acquisition that was completed through a wholly owned subsidiary. Equity to be issued is Common Shares representing 15% of our share capital, largely subject to the achievement of cash flow targets from the business. Additionally, this included the assumption by relevant entities of a working capital deficit and non-recourse debt obligations including US$80 million in senior secured bonds and US$11 million in convertible notes subject to the applicable conditions precedent.

Increasing the volume of oil produced from the facility is a top priority as most of the operating costs are fixed in nature. In addition to the oil produced from shale, PX Energy also processes large volumes of oil sludge from adjacent refineries. This accounts for one third of their production volumes and much more on a margin basis. As a result, most of the growth capex projects are targeting this oil sludge processing to increase production to an estimated 6,000 boe per day.

We are eager to work with Nimofast on renegotiating PX Energy’s existing sales contracts and forward sales to reflect market prices. Previously, these have been primarily optimized to generate financial liquidity. We are also looking forward to expanding into new business lines including fuel imports and blending to become a fuel production company in Brazil.

Concurrently, together with Red Leaf, we have begun the engineering work for a small-scale demonstration project for their HCCO technology in Brazil. PX Energy’s production facilities include existing mining operations, utilities and other infrastructure necessary for a pilot project. On a proforma basis, a full scale commercial HCCO facility could double production at a cost materially below the replacement cost of the current facilities.

Quebec

In June, the Government of Quebec enacted Bill 69 under closure to address the impending energy shortage in the province. We understand the provincial utility is still assessing the natural gas fired Bécancour power plant as part of its supply inventory, specifically during peak demand periods. We continue to advocate for our discovery, less than ten kilometres from this plant, as a more cost-effective and reliable source of supply both in the short term and long term.

We were recently approached by the Government to consult on new legislation for carbon storage in Quebec. This is an encouraging development given our existing application for a carbon storage pilot project. We are hopeful using sequestration as a tool to reduce emissions opens the door to the production of local gas with low emissions.

Although the Supreme Court of Canada declined to hear our motion to appeal the decision from the Quebec Court of Appeal which overturned the Superior Court’s decision on the stay of application of Bill 21 at the interim stage, we are moving forward on the merits of the main case regarding, inter alia, the constitutionality of Bill 21. Over the last two months, we completed the pre-trial examination of key Government witnesses. The evidence, in our view, strongly supports our legal position. Our next step is to request a trial date for the hearing.

Operating & Financial

Production for the quarter averaged just over 2,900 boe per day, down slightly from the prior quarter. The three (1.5 net) new wells at Kakwa North contributed to our year to date production averaging 2,500 boe per day compared to 1,700 boe per day last year.

Consistent with the second quarter, lower commodity prices largely blunted the benefit of these higher production volumes. Excluding transaction costs related to the PX Energy acquisition, our adjusted funds flow from operations was $2.8 million compared to $3.4 million last year.

Our capital expenditures in the quarter were $2.2 million and year to date totaled $21.2 million, reflecting the costs of the three (1.5 net) Kakwa North wells. Subject to the closing of our joint venture agreement with Nimofast, we plan to fund any growth capital required by PX Energy through our existing financial resources. Our working capital deficit at the quarter end was $40 million and reflects the working capital deficit of $52 million acquired through PX Energy.

Outlook

The PX Energy acquisition has revitalized our strategy to commercialize oil shale, one of the last undeveloped oil resources globally with trillions of barrels of oil in place. For the remainder of this year, we are focused on concluding our joint venture agreement with Nimofast and integrating the management of PX Energy.