Questerre Energy - Capital/Financing Update 2010

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This short form prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities. These securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “ 1933 Act ”), or any state securities laws. Accordingly, these securities may not be offered or sold within the United States except in transactions exempt from the registration requirements of the 1933 Act and applicable state securities laws. This short form prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of these securities within the United States of America. See “Plan of Distribution”.

SHORT FORM PROSPECTUS

New Issue

March 10, 2010

==> picture [160 x 88] intentionally omitted <==

QUESTERRE ENERGY CORPORATION

Up to $43,120,400

Up to 10,028,000 Common Shares

This short form prospectus qualifies the distribution of up to 10,028,000 Class “A” common voting shares (the “ Offered Shares ”) in the capital of Questerre Energy Corporation (“ Questerre ” or the “ Corporation ”) at a price of $4.30 per Offered Share (the “ Offering ”). The issued and outstanding Class “A” common voting shares in the capital of the Corporation (the “ Common Shares ”) are listed on the Toronto Stock Exchange (the “ TSX ”) and the Oslo Stock Exchange (the “ OSE ”) under the symbol “QEC”. On March 1, 2010, the last trading day prior to the public announcement of this Offering, the closing price of the Common Shares was $4.39 per share on the TSX and NOK 25.10 per share on the OSE. On March 9, 2010, the last trading day prior to the filing of this short form prospectus, the closing price of the Common Shares was $4.33 per share on the TSX and NOK 25.00 per share on the OSE. The offering price of the Offered Shares offered under this short form prospectus was determined by negotiation between the Corporation and Dundee Securities Corporation (“ Dundee ”), on its own behalf and on behalf of Cormark Securities Inc, Mackie Research Capital Corporation, Industrial Alliance Securities Inc., Fraser Mackenzie Limited, Clarus Securities Inc., National Bank Financial Inc. and Maison Placements Canada Inc. (collectively, the “ Agents ”). The TSX and OSE have each conditionally approved the listing of the Offered Shares distributed under this short form prospectus on the TSX and the OSE. Listing on the TSX is subject to the Corporation fulfilling all of the listing requirements of the TSX on or before May 31, 2010 and listing on the OSE is subject to the Corporation fulfilling all of the listing requirements of the OSE. See “Plan of Distribution” .

Price: $4.30 per Offered Share

Per Offered Share ...................................... Total .........................................................	Price to the Public $4.30 $43,120,400	Agents’ Fee(1) $0.215 $2,156,020	Net Proceeds to the Corporation(2)
			$4.085 $40,964,380

Notes:

(1) The Corporation has agreed to pay the Agents an aggregate fee equal to 5% of the gross proceeds of the Offering. See “ Plan of Distribution ”.

(2) Before deducting the expenses of the Offering, estimated to be $300,000.

The Agents, conditionally offer the Offered Shares on a “reasonable commercial efforts” basis and, subject to prior sale, if, as and when issued by Questerre and delivered and accepted by the Agents in accordance with the conditions contained in the Agency Agreement referred to under “ Plan of Distribution ” and subject to approval of certain legal matters relating to the Offering on behalf of the Corporation by Borden Ladner Gervais LLP and on behalf of the Agents by Burnet, Duckworth & Palmer LLP.

Subscriptions for the Offered Shares will be received subject to rejection or allotment in whole or in part and the right is reserved to close the subscription books at any time without notice. It is expected that definitive certificates representing the Offered Shares will be available for delivery at closing, which is expected to occur on or about March 17, 2010, or such other date as the Corporation and the Agents may agree, but in any event, not later than April 30, 2010. See “Plan of Distribution”.

Subject to applicable laws, the Agents may, in connection with the Offering, effect transactions which stabilize or maintain the market price of the Common Shares at levels other than those which might otherwise prevail on the open market. Such transactions, if commenced, may be discontinued at any time. See “Plan of Distribution”.

An investment in the securities offered hereunder is speculative and involves a high degree of risk and is only suitable for those investors who are willing to risk a loss of their entire investment. The risk factors identified under the heading “Risk Factors” and “ Special Note Regarding Forward-Looking Statements ” in this short form prospectus and in the AIF (as defined below) should be carefully reviewed and evaluated by prospective subscribers before purchasing the securities being offered hereunder.

The principal, head and registered office of the Corporation is located at Suite 1650, 801 – 6[th] Avenue S.W., Calgary, Alberta T2P 3W2.

All references herein to “$” are to Canadian dollars unless otherwise specified.

ii -

ABBREVIATIONS ................................................................................................................................................1 PRESENTATION OF OIL AND GAS INFORMATION ........................................................................................1 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS.............................................................2 CURRENCY AND EXCHANGE RATE INFORMATION.....................................................................................4 DOCUMENTS INCORPORATED BY REFERENCE............................................................................................4 FOREIGN JURISDICTION....................................................................................................................................5 QUESTERRE ENERGY CORPORATION.............................................................................................................5 BUSINESS OF THE CORPORATION...................................................................................................................6 RECENT DEVELOPMENTS.................................................................................................................................6 CONSOLIDATED CAPITALIZATION OF THE CORPORATION.......................................................................8 DESCRIPTION OF SHARE CAPITAL..................................................................................................................8 PRIOR SALES.......................................................................................................................................................9 PRICE RANGE AND VOLUME OF TRADING OF COMMON SHARES ..........................................................10 USE OF PROCEEDS ...........................................................................................................................................10 PLAN OF DISTRIBUTION..................................................................................................................................11 ELIGIBILITY FOR INVESTMENT.....................................................................................................................12 RISK FACTORS..................................................................................................................................................12 AUDITORS, TRANSFER AGENT AND REGISTRAR .......................................................................................16 INTERESTS OF EXPERTS .................................................................................................................................16 EXEMPTIONS FROM NATIONAL INSTRUMENT 44-101 ...............................................................................16 PURCHASERS’ STATUTORY RIGHTS.............................................................................................................16 AUDITORS’ CONSENT......................................................................................................................................17 CERTIFICATE OF QUESTERRE ENERGY CORPORATION..........................................................................C-1 CERTIFICATE OF THE AGENTS ....................................................................................................................C-2

iii -

ABBREVIATIONS

Oil and Natural Gas Liquids

Natural Gas

bbl barrels mcf thousand cubic feet mbbls thousand barrels MMcf million cubic feet mmbbl million barrels mcf/d thousand cubic feet per day bbl/d barrels of oil per day MMcf/d million cubic feet per day API American Petroleum Institute MMbtu million British thermal units NGLs natural gas liquids GJ gigajoule stb standard stock tank barrel GJ/d gigajoules per day mstb thousand standard stock tank barrels Tcf trillion cubic feet

Other

boe barrel of oil equivalent converting six mcf of natural gas to one barrel of oil (6:1) boe/d barrels of oil equivalent per day mboe thousand of barrels of oil equivalent M$ thousands of dollars MM$ millions of dollars NPV net present value

In this short form prospectus and the documents incorporated by reference herein, the calculation of barrels of oil equivalent (boe) is calculated at a conversion rate of six thousand cubic feet (6 mcf) of natural gas for one barrel (bbl) of oil based on an energy equivalency conversion method. Boes may be misleading particularly if used in isolation. A boe conversion ratio of 6 mcf : 1 bbl is based on an energy equivalency conversion method primarily applicable to the burner tip and does not represent a value equivalency at the wellhead.

PRESENTATION OF OIL AND GAS INFORMATION

All oil and gas information contained in this short form prospectus and the documents incorporated by reference herein, has been prepared and presented in accordance with NI 51-101. The actual oil and gas reserves and future production will be greater than or less than the estimates provided herein. The estimated value of future net revenue from the production of the disclosed oil and gas reserves does not represent the fair market value of these reserves. There is no assurance that the forecast prices and costs or other assumptions made in connection with the reserves disclosed herein will be attained and variances could be material.

Estimates of resources always involve uncertainty, and the degree of uncertainty can vary widely between accumulations/projects and over the life of a project if discovered. Resources herein have been provided as low, best and high estimates as follows:

Low Estimate : This is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability that the quantities actually recovered will equal or exceed the low estimate.
Best Estimate : This is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability that the quantities actually recovered will equal or exceed the best estimate.
High Estimate : This is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability that the quantities actually recovered will equal or exceed the high estimate.
1 -

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This short form prospectus and the documents incorporated by reference herein contain certain forward-looking statements and forward-looking information (collectively referred to as “ forward-looking statements ”) which are based upon the Corporation’s current internal expectations, estimates, projections, assumptions and beliefs. These statements relate to future events or the Corporation’s future performance. All statements other than statements of historical fact may be forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, or the negative of these terms or other comparable terminology. These statements are only predictions. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated in the forward-looking statements. In addition, this short form prospectus and the documents incorporated by reference herein may contain forward-looking statements attributed to third party industry sources. Undue reliance should not be placed on these forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By its nature, forward-looking information involves numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forwardlooking statements will not occur. Such forward-looking statements in this short form prospectus or the documents incorporated by reference herein speak only as of the date of this short form prospectus or as of the date specified in the documents incorporated by reference herein.

Forward-looking statements in this short form prospectus and the documents incorporated by reference herein include, but are not limited to, statements with respect to:

the closing of the Offering and the timing thereof;
the use of net proceeds from the Offering;
the Corporation’s resource estimates;
any estimate of present value or future net cashflow;
drilling inventory, drilling plans and timing of drilling, re-completion and tie-in of wells;
plans for facilities construction and completion and the timing and method of funding thereof;
productive capacity of wells, anticipated or expected production rates and anticipated dates of commencement of production;
drilling, completion and facilities costs;
results of various projects of the Corporation;
timing of receipt of regulatory approvals;
effect of production increases on operating costs per barrel of oil equivalent;
ability to lower cost structure in certain projects of the Corporation;
growth expectations within the Corporation;
timing of development of undeveloped reserves;
the tax horizon and taxability of the Corporation;
supply and demand for oil, natural gas liquids and natural gas;
oil and natural gas production levels;
the performance and characteristics of the Corporation's oil and natural gas properties;
the Corporation's acquisition strategy, the criteria to be considered in connection therewith and the benefits to be derived therefrom;
the impact of Canadian federal and provincial governmental regulation on the Corporation relative to other oil and gas issuers of similar size;
realization of the anticipated benefits of acquisitions and dispositions;
weighting of production between different commodities;
the quantity and quality of the oil and natural gas reserves and resources and the anticipated future cash flows from the Corporation’s reserves;
projections of commodity prices and costs;
expectations regarding the ability to raise capital and to continually add to reserves through acquisitions and development;
2 -
expected levels of royalty rates, operating costs, general and administrative costs, costs of services and other costs and expenses;
timing and extent of work programs by Talisman Energy Inc. and Forest Oil Corporation in the St. Lawrence Lowlands, Québec;
capital expenditure programs and the timing and method of financing thereof; and
• treatment under government regulation and taxation regimes.

Although the Corporation believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Neither the Corporation nor the Agents can guarantee future results, levels of activity, performance, or achievements. Moreover, neither the Corporation nor any other person assumes responsibility for the outcome of the forward-looking statements. Consequently, there is no representation by the Corporation that actual results achieved will be the same in whole or part as those set out in the forward-looking statements. Many of the risks and other factors are beyond the Corporation’s control, which could cause results to differ materially from those expressed in the forward-looking statements contained in this short form prospectus and the documents incorporated by reference herein. The risks and other factors include, but are not limited to:

general economic conditions in Canada, the United States and globally including reduced availability of debt and equity financing generally;
industry conditions, including fluctuations in the price of oil, natural gas liquids and natural gas;
governmental regulation of the oil and gas industry, including environmental regulation;
• fluctuation in foreign exchange or interest rates;
liabilities inherent in oil and natural gas operations;
geological, technical, drilling and processing problems and other difficulties in producing reserves;
uncertainties associated with estimating oil and natural gas reserves;
uncertainties in the estimates of the Corporation’s resources;
incorrect assessments of the value of acquisitions;
unanticipated operating events which can reduce production or cause production to be shut in or delayed;
failure to realize anticipated benefits of acquisitions;
failure to obtain industry partner and other third party consents and approvals, when required;
stock market volatility and market valuations;
availability of capital on acceptable terms;
competition for, among other things, capital, acquisitions or reserves, undeveloped land and skilled personnel;
competition for and inability to retain drilling rigs and other services;
rights to surface access;
the need to obtain required approvals from regulatory authorities;
general business and market conditions; and
the other factors considered under “Risk Factors” in this short form prospectus and in the AIF (as defined below), which is incorporated by reference herein, and the other risk factors identified in the other documents incorporated herein by reference.

These factors should not be considered as exhaustive. Statements relating to “reserves” or “resources” are by their nature forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the resources and reserves described can be profitably produced in the future. In addition, this short form prospectus contains forward-looking statements concerning the anticipated closing date of the Offering and anticipated use of the net proceeds of the Offering. The closing of the Offering could be delayed if Questerre is not able to obtain the necessary stock exchange approval or any other approvals required for completion of the time lines it has planned. The Offering will not be completed at all if these approvals are not obtained or, unless waived, some other condition to the closing is not satisfied. Accordingly there is a risk that the Offering will not be completed within the anticipated time or at all. Questerre intends to use the net proceeds of the Offering: (i) to finance Questerre’s planned exploration and appraisal program in the St. Lawrence Lowlands, Québec; (ii) for

acquisition opportunities; and (iii) for the development of Questerre’s other core areas, including Antler, Saskatchewan. See “ Use of Proceeds ”. There may be circumstances that are not known to Questerre at this time where reallocations of net proceeds from the Offering may be advisable for business reasons that management believes are in Questerre’s best interest.

With respect to forward-looking statements contained or incorporated by reference in this short form prospectus, the Corporation has made assumptions regarding, among other things: that the Corporation will be able to satisfy all third party approvals for the Offering; that the Corporation will be able to obtain equity and debt financing on satisfactory terms; that oil and natural gas prices will be substantially in line with the current price forecasts of its independent engineers; that well production rates and reserve volumes will be consistent with past performance; that the Corporation will be able to add production and reserves through its exploration and development activities; that capital expenditure levels will be consistent with the Corporation’s disclosed capital expenditure program; that the Corporation will be able to obtain labour and other industry services at reasonable rates; that interest and foreign exchange rates will not vary materially from current levels; and that existing royalty regimes will continue without material modification. In addition, forward-looking statements in documents incorporated by reference herein may be based on additional assumptions as disclosed in such documents. Readers are cautioned that the foregoing list of factors is not exhaustive.

Management has included the above summary of assumptions and risks related to forward-looking information provided in this short form prospectus and the documents incorporated by reference herein in order to provide potential purchasers of the Offered Shares with a more complete perspective on the Corporation’s future operations. Readers are cautioned that this information may not be appropriate for other purposes.

The forward-looking statements contained in this short form prospectus and the documents incorporated by reference herein are expressly qualified by this cautionary statement. Neither the Corporation nor the Agents are under any duty to update or revise any of the forward-looking statements after the date of this short form prospectus or to conform such statements to actual results or changes in the Corporation’s expectations and the Corporation disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as expressly required by applicable securities laws.

CURRENCY AND EXCHANGE RATE INFORMATION

All dollar amounts in this short form prospectus are in Canadian dollars unless otherwise stated.

The closing exchange rate on March 9, 2010, as reported by the Bank of Canada for the conversion of Norwegian kroners (NOK) to Canadian dollars ($), was one krone equals 0.1739 of a Canadian dollar.

DOCUMENTS INCORPORATED BY REFERENCE

Information has been incorporated by reference in this short form prospectus from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Chief Financial Officer of the Corporation at Suite 1650, 801 – 6[th] Avenue S.W., Calgary, Alberta T2P 3W2, telephone: (403) 777-1185. In addition, copies of the documents incorporated herein by reference may be obtained from the securities commissions or similar authorities in the provinces and territories of Canada through the System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedar.com.

The following documents of the Corporation, filed with the various provincial securities commissions or similar authorities in Canada, are specifically incorporated into and form an integral part of this short form prospectus:

(a) the annual information form of the Corporation dated March 30, 2009 for the year ended December 31, 2008 (the “ AIF ”);
(b) the audited consolidated comparative financial statements of the Corporation and the notes thereto as at and for the years ended December 31, 2008 and 2007, and the auditors’ report thereon;
4 -
(c) the management’s discussion and analysis of the financial condition and results of operations of the Corporation for the year ended December 31, 2008;
(d) the unaudited interim consolidated comparative financial statements of the Corporation and the notes thereto as at and for the three month and nine month periods ended September 30, 2009 and 2008;
(e) the management’s discussion and analysis of the financial condition and results of operations of the Corporation for the three month and nine month periods ended September 30, 2009;
(f) the unaudited interim consolidated comparative financial statements of the Corporation and the notes thereto as at and for the three month and twelve month periods ended December 31, 2009 and 2008;
(g) the Corporation’s management information circular dated May 14, 2009 prepared in connection with the annual and special meeting of shareholders of the Corporation held on June 9, 2009;
(h) the Corporation’s management information circular dated May 15, 2008 prepared in connection with the annual and special meeting of shareholders of the Corporation held on June 9, 2008; and
(i) the Corporation’s material change report dated March 8, 2010 filed in connection with the Offering and the Norwegian Offering.

Any documents of the type referred to in National Instrument 44-101 - Short Form Prospectus Distributions to be incorporated by reference in a short form prospectus, including any annual information forms, material change reports (except confidential material change reports), financial statements and related management’s discussion and analysis, business acquisition reports and information circulars, if filed by the Corporation with the provincial securities commissions or similar authorities in Canada after the date of this short form prospectus and before the termination of the Offering, are deemed to be incorporated by reference in this short form prospectus.

Any statement contained in this short form prospectus or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this short form prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is, or is deemed to be, incorporated by reference herein, modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it is made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this short form prospectus.

FOREIGN JURISDICTION

Certain of the directors of the Corporation, including directors that have signed this short form prospectus, reside outside of Canada. Although the directors of the Corporation that have signed this short form prospectus have appointed Borden Ladner Gervais LLP at 1000, 400 Third Avenue S.W., Calgary, Alberta, Canada T2P 4H2 as their agent for service of process in Canada, it may not be possible for investors to enforce judgments obtained in Canada against the directors that reside outside of Canada that have signed this short form prospectus.

QUESTERRE ENERGY CORPORATION

Name, Address and Incorporation

The Corporation was incorporated under the Companies Act (Alberta) on October 25, 1971 under the name “Westpro Equipment Ltd.” and continued under the Business Corporations Act (Alberta) (the “ ABCA ”) on

December 13, 1982. On July 13, 1990, the Corporation was continued under the Companies Act (British Columbia). On December 5, 2000, the Corporation was continued from British Columbia to Alberta under the ABCA and its name was changed to “Questerre Energy Corporation”. On June 26, 2003, the issued Common Shares were subdivided into three new Common Shares for each old Common Share.

The principal, head and registered office of the Corporation is located at Suite 1650, 801 - 6[th] Avenue S.W., Calgary, Alberta T2P 3W2.

Intercorporate Relationships

The Corporation has three direct wholly-owned subsidiaries, Questerre Beaver River Inc. and Magnus Energy Inc. (“ Magnus ”), each incorporated under the ABCA and 6058931 Canada Inc., which was incorporated under the Canada Business Corporations Act . Magnus has one wholly-owned subsidiary, Magnus One Energy Corp., which was incorporated under the ABCA.

BUSINESS OF THE CORPORATION

Questerre is actively engaged in the exploration for, and the development, production and acquisition of oil and gas projects, particularly shale gas in North America. Management of Questerre intends to leverage its knowledge of unconventional gas reservoirs to develop these projects. Questerre is currently working to establish commerciality of its Utica shale gas play in Québec.

To mitigate the financial and operational risks associated with these projects, the Corporation often seeks industry partners to jointly participate in their development. The Corporation plans to further diversify risk through the acquisition and development of a portfolio of lower risk projects. It is expected these lower risk projects will provide near-term cash flow and growth. Questerre holds assets in British Columbia, Alberta, Saskatchewan, Manitoba and Québec.

Further details concerning the Corporation, including information with respect to the Corporation’s assets, operations and development history, are provided in the AIF and the other documents incorporated by reference into this short form prospectus. The contents of the AIF are incorporated by reference into this short form prospectus. Readers are encouraged to thoroughly review these documents, including the AIF, as they contain important information concerning the Corporation.

RECENT DEVELOPMENTS

On February 23, 2010, Questerre announced test results from the St. Edouard No. 1A horizontal well in the St. Lawrence Lowlands, Québec. The horizontal well was successfully completed with 8 stage fracture stimulations. Clean up and flow back commenced January 29, 2010. Initial rates were over 12 MMcf/d. During the test, the well flowed natural gas at an average rate of over 6 MMcf/d. The well is still flowing on an extended production test. On February 23, 2010, the rate was approximately 5 MMcf/d at a flowing tubing pressure of 4412 kilopascals (640 pounds per square inch) with a choke size of 5/8 inch. During completion, microseismic data was gathered using the St. Edouard No. 1 vertical well as a monitoring well. Preliminary analysis indicates that the fracs were successful in stimulating sufficient rock volume in the entire Utica sequence.

On March 1, 2010, Questerre reported on its year-end reserves and updated resource assessment of the Utica shale gas discovery in Québec. Based on the independent assessment titled “Assessment of Unrisked Prospective Gas Resources to the Questerre Energy Corporation Interest in the Utica Shale for Certain Acreage Located in St. Lawrence Lowlands of Québec, Canada” completed by Netherland, Sewell & Associates, Inc. with an effective date of November 1, 2009, the best estimate of unrisked prospective recoverable natural gas resources on Questerre’s acreage is 17.99 Tcf (3 billion boe), with a high estimate of 56.93 Tcf (9.49 billion boe) and a low estimate of 5.50 Tcf (917 million boe). This equates to 4.36 Tcf (726 million boe) net to Questerre using a 10% recovery factor and does not include the benefit of its gross overriding royalty. The effective range of recovery factors in the report is from a low of 5% to a high of 23%. The 23% recovery factor resulted in an unrisked prospective recoverable resource assignment of 13.78 Tcf (2.30 billion boe) net to Questerre. The 5% recovery factor resulted in an unrisked prospective recoverable resource assignment of 1.33 Tcf (222 million boe) net to Questerre. Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially

recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. There is no certainty that any portion of the prospective resources in Québec will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. See “ Risk Factors ” for factors that may influence the development of the resources.

The Company also reported on the evaluation of its proven and probable reserves as at December 31, 2009. The report was prepared in accordance with the COGE Handbook by McDaniel & Associates Consultants Ltd. with an effective date of December 31, 2009. The report attributes proved and probable reserves of 1,982 mboe to the Company’s conventional assets with a net present value, using a 10% discount rate, of $53.1 million. Total proved reserves of 1,136 mboe were assigned with a NPV-10% of $30.7 million with oil and liquids accounting for 65% of the proved reserves and 87% of the net present value. Probable reserves assigned were 845 mboe with an NPV-10% of $22.3 million with oil and liquids representing 79% of the probable reserves and 92% of net present value. Summary tables are included below.

In accordance with the requirements of National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities of the Canadian Securities Administrators, the Corporation anticipates filing its Annual Information Form that includes more detailed disclosure and reports relating to petroleum and natural gas activities for the 2009 fiscal year at the end of March 2010. SUMMARY OF OIL AND GAS RESERVES as of December 31, 2009

FORECAST PRICES AND COSTS

RESERVES

OIL NATURAL GAS NATURAL GAS LIQUIDS RESERVES CATEGORY Gross (mbbl) Net (mbbl) Gross (MMcf) Net (MMcf) Gross (mstb) Net (mstb) Proved Developed Producing 542.0 495.4 2,369.4 1,779.7 13.8 7.5 Developed Non-Producing - - - - - - Undeveloped 183.0 171.3 15.4 12.0 0.1 0.1 Total Proved 725.0 666.7 2,384.8 1,791.7 13.9 7.6 Probable 658.2 610.5 1,087.3 823.3 5.7 3.4 Total Proved Plus Probable 1,383.2 1,277.2 3,472.1 2,615.0 19.6 11.0 SUMMARY NET PRESENT VALUES OF FUTURE NET REVENUE as of December 31, 2009 FORECAST PRICES AND COSTS BEFORE INCOME TAXES DISCOUNTED AT (%/YEAR) AFTER INCOME TAXES DISCOUNTED AT (%/YEAR) RESERVES CATEGORY 0 (M$) 5 (M$) 10 (M$) 15 (M$) 20 (M$) 0 (M$) 5 (M$) 10 (M$) 15 (M$) 20 (M$) Proved Developed Producing 36,789.8 31,146.8 27,020.8 23,905.9 21,487.8 36,789.8 31,146.8 27,020.8 23,905.9 21,487.8 Undeveloped 6,359.3 4,847.5 3,712.2 2,842.3 2,163.0 6,359.3 4,847.5 3,712.2 2,842.3 2,163.0 Total Proved 43,149.1 35,994.3 30,733.0 26,748.2 23,650.8 43,149.1 35,994.3 30,733.0 26,748.2 23,650.8 Probable 42,165.0 30,009.8 22,318.3 17,149.6 13,500.2 38,735.5 27,913.2 20,994.7 16,289.8 12,927.6 Total Proved Plus Probable 85,314.1 66,004.1 53,051.3 43,897.8 37,151.0 81,884.6 63,907.5 51,727.7 43,038.0 36,578.4	OIL NATURAL GAS NATURAL GAS LIQUIDS RESERVES CATEGORY Gross (mbbl) Net (mbbl) Gross (MMcf) Net (MMcf) Gross (mstb) Net (mstb) Proved Developed Producing 542.0 495.4 2,369.4 1,779.7 13.8 7.5 Developed Non-Producing - - - - - - Undeveloped 183.0 171.3 15.4 12.0 0.1 0.1 Total Proved 725.0 666.7 2,384.8 1,791.7 13.9 7.6 Probable 658.2 610.5 1,087.3 823.3 5.7 3.4 Total Proved Plus Probable 1,383.2 1,277.2 3,472.1 2,615.0 19.6 11.0 SUMMARY NET PRESENT VALUES OF FUTURE NET REVENUE as of December 31, 2009 FORECAST PRICES AND COSTS BEFORE INCOME TAXES DISCOUNTED AT (%/YEAR) AFTER INCOME TAXES DISCOUNTED AT (%/YEAR) RESERVES CATEGORY 0 (M$) 5 (M$) 10 (M$) 15 (M$) 20 (M$) 0 (M$) 5 (M$) 10 (M$) 15 (M$) 20 (M$) Proved Developed Producing 36,789.8 31,146.8 27,020.8 23,905.9 21,487.8 36,789.8 31,146.8 27,020.8 23,905.9 21,487.8 Undeveloped 6,359.3 4,847.5 3,712.2 2,842.3 2,163.0 6,359.3 4,847.5 3,712.2 2,842.3 2,163.0 Total Proved 43,149.1 35,994.3 30,733.0 26,748.2 23,650.8 43,149.1 35,994.3 30,733.0 26,748.2 23,650.8 Probable 42,165.0 30,009.8 22,318.3 17,149.6 13,500.2 38,735.5 27,913.2 20,994.7 16,289.8 12,927.6 Total Proved Plus Probable 85,314.1 66,004.1 53,051.3 43,897.8 37,151.0 81,884.6 63,907.5 51,727.7 43,038.0 36,578.4	OIL NATURAL GAS NATURAL GAS LIQUIDS RESERVES CATEGORY Gross (mbbl) Net (mbbl) Gross (MMcf) Net (MMcf) Gross (mstb) Net (mstb) Proved Developed Producing 542.0 495.4 2,369.4 1,779.7 13.8 7.5 Developed Non-Producing - - - - - - Undeveloped 183.0 171.3 15.4 12.0 0.1 0.1 Total Proved 725.0 666.7 2,384.8 1,791.7 13.9 7.6 Probable 658.2 610.5 1,087.3 823.3 5.7 3.4 Total Proved Plus Probable 1,383.2 1,277.2 3,472.1 2,615.0 19.6 11.0 SUMMARY NET PRESENT VALUES OF FUTURE NET REVENUE as of December 31, 2009 FORECAST PRICES AND COSTS BEFORE INCOME TAXES DISCOUNTED AT (%/YEAR) AFTER INCOME TAXES DISCOUNTED AT (%/YEAR) RESERVES CATEGORY 0 (M$) 5 (M$) 10 (M$) 15 (M$) 20 (M$) 0 (M$) 5 (M$) 10 (M$) 15 (M$) 20 (M$) Proved Developed Producing 36,789.8 31,146.8 27,020.8 23,905.9 21,487.8 36,789.8 31,146.8 27,020.8 23,905.9 21,487.8 Undeveloped 6,359.3 4,847.5 3,712.2 2,842.3 2,163.0 6,359.3 4,847.5 3,712.2 2,842.3 2,163.0 Total Proved 43,149.1 35,994.3 30,733.0 26,748.2 23,650.8 43,149.1 35,994.3 30,733.0 26,748.2 23,650.8 Probable 42,165.0 30,009.8 22,318.3 17,149.6 13,500.2 38,735.5 27,913.2 20,994.7 16,289.8 12,927.6 Total Proved Plus Probable 85,314.1 66,004.1 53,051.3 43,897.8 37,151.0 81,884.6 63,907.5 51,727.7 43,038.0 36,578.4	OIL NATURAL GAS NATURAL GAS LIQUIDS RESERVES CATEGORY Gross (mbbl) Net (mbbl) Gross (MMcf) Net (MMcf) Gross (mstb) Net (mstb) Proved Developed Producing 542.0 495.4 2,369.4 1,779.7 13.8 7.5 Developed Non-Producing - - - - - - Undeveloped 183.0 171.3 15.4 12.0 0.1 0.1 Total Proved 725.0 666.7 2,384.8 1,791.7 13.9 7.6 Probable 658.2 610.5 1,087.3 823.3 5.7 3.4 Total Proved Plus Probable 1,383.2 1,277.2 3,472.1 2,615.0 19.6 11.0 SUMMARY NET PRESENT VALUES OF FUTURE NET REVENUE as of December 31, 2009 FORECAST PRICES AND COSTS BEFORE INCOME TAXES DISCOUNTED AT (%/YEAR) AFTER INCOME TAXES DISCOUNTED AT (%/YEAR) RESERVES CATEGORY 0 (M$) 5 (M$) 10 (M$) 15 (M$) 20 (M$) 0 (M$) 5 (M$) 10 (M$) 15 (M$) 20 (M$) Proved Developed Producing 36,789.8 31,146.8 27,020.8 23,905.9 21,487.8 36,789.8 31,146.8 27,020.8 23,905.9 21,487.8 Undeveloped 6,359.3 4,847.5 3,712.2 2,842.3 2,163.0 6,359.3 4,847.5 3,712.2 2,842.3 2,163.0 Total Proved 43,149.1 35,994.3 30,733.0 26,748.2 23,650.8 43,149.1 35,994.3 30,733.0 26,748.2 23,650.8 Probable 42,165.0 30,009.8 22,318.3 17,149.6 13,500.2 38,735.5 27,913.2 20,994.7 16,289.8 12,927.6 Total Proved Plus Probable 85,314.1 66,004.1 53,051.3 43,897.8 37,151.0 81,884.6 63,907.5 51,727.7 43,038.0 36,578.4	OIL NATURAL GAS NATURAL GAS LIQUIDS RESERVES CATEGORY Gross (mbbl) Net (mbbl) Gross (MMcf) Net (MMcf) Gross (mstb) Net (mstb) Proved Developed Producing 542.0 495.4 2,369.4 1,779.7 13.8 7.5 Developed Non-Producing - - - - - - Undeveloped 183.0 171.3 15.4 12.0 0.1 0.1 Total Proved 725.0 666.7 2,384.8 1,791.7 13.9 7.6 Probable 658.2 610.5 1,087.3 823.3 5.7 3.4 Total Proved Plus Probable 1,383.2 1,277.2 3,472.1 2,615.0 19.6 11.0 SUMMARY NET PRESENT VALUES OF FUTURE NET REVENUE as of December 31, 2009 FORECAST PRICES AND COSTS BEFORE INCOME TAXES DISCOUNTED AT (%/YEAR) AFTER INCOME TAXES DISCOUNTED AT (%/YEAR) RESERVES CATEGORY 0 (M$) 5 (M$) 10 (M$) 15 (M$) 20 (M$) 0 (M$) 5 (M$) 10 (M$) 15 (M$) 20 (M$) Proved Developed Producing 36,789.8 31,146.8 27,020.8 23,905.9 21,487.8 36,789.8 31,146.8 27,020.8 23,905.9 21,487.8 Undeveloped 6,359.3 4,847.5 3,712.2 2,842.3 2,163.0 6,359.3 4,847.5 3,712.2 2,842.3 2,163.0 Total Proved 43,149.1 35,994.3 30,733.0 26,748.2 23,650.8 43,149.1 35,994.3 30,733.0 26,748.2 23,650.8 Probable 42,165.0 30,009.8 22,318.3 17,149.6 13,500.2 38,735.5 27,913.2 20,994.7 16,289.8 12,927.6 Total Proved Plus Probable 85,314.1 66,004.1 53,051.3 43,897.8 37,151.0 81,884.6 63,907.5 51,727.7 43,038.0 36,578.4
0 (M$) 36,789.8 6,359.3 43,149.1 38,735.5 81,884.6	5 (M$) 31,146.8 4,847.5 35,994.3 27,913.2 63,907.5	10 (M$) 27,020.8 3,712.2 30,733.0 20,994.7 51,727.7	15 (M$) 23,905.9 2,842.3 26,748.2 16,289.8 43,038.0	20 (M$)
				21,487.8 2,163.0
				23,650.8 12,927.6
				36,578.4

SUMMARY OF PRICE FORECASTS

Year		2010	2011	2012	2013	2014	2015	2016	2017	2018
AECO Spot	Price
(C$/MMBtu)		6.05	6.75	7.15	7.45	7.80	8.15	8.40	8.55	8.70
Edmonton	Light
Crude Oil (C$/bbl)		83.20	87.00	91.00	95.00	99.20	103.50	105.60	107.70	109.80

On March 9, 2010, Questerre completed an offering of 19,972,000 Common Shares to subscribers in Norway at a price of NOK 24.50 ($4.30) per Common Share (the “ Norwegian Offering ”).

CONSOLIDATED CAPITALIZATION OF THE CORPORATION

There has been no material changes in the share capitalization or the indebtedness of Questerre since December 31, 2009, other than the increase in share capitalization as a result of the completion of the Norwegian Offering. The following table sets forth the Corporation’s consolidated capitalization as at December 31, 2009, both before and after giving effect to the completion of the Offering.

Designation *Debt* Bank Debt(2) *Share Capital* Common Shares(3)(4)	Authorized $5 million Unlimited	As at December 31, 2009, before giving effect to the Offering (unaudited) $0 $183,706,643 (199,722,143 Common Shares)	As at December 31, 2009, after giving effect to the Offering and the Norwegian Offering(1) (unaudited)
			$0 $312,706,643 (229,722,143 Common Shares)

Notes:

(1) Before deducting the Agents’ commission of $2,156,020 and the expenses of the Offering.
(2) Questerre currently has a $5 million revolving term credit facility (the “ Term Credit Facility ”). The interest rate applicable to the Term Credit Facility is bank prime plus 1.5%. The Term Credit Facility revolves at the Corporation’s discretion and is secured by all of the property and assets of the Corporation.
(3) See “Description of Share Capital” .
(4) As at December 31, 2009, the Corporation also had options outstanding to purchase an aggregate of 18,618,753 Common Shares at a weighted average exercise price of $1.53 per share. As at the date hereof, 18,528,753 options are outstanding to purchase an equivalent number of Common Shares at a weighted average exercise price of $1.53 per share.

DESCRIPTION OF SHARE CAPITAL

The authorized capital of the Corporation consists of an unlimited number of Common Shares, an unlimited number of Class B common voting shares (“ Class B Shares ”) and an unlimited number of preferred shares, issuable in one or more series (“ Preferred Shares ”). As at the date hereof, 219,694,143 Common Shares, no Preferred Shares and no Class B Shares were issued and outstanding. The following is a description of the rights, privileges, restrictions and conditions attaching to the Common Shares, the Class B Shares and the Preferred shares.

Common Shares and Class B Shares

The holders of Common Shares and Class B Shares are entitled to receive notice of and to attend at and to vote one vote per Common Share or Class B Share, as the case may be, at meetings of shareholders of the Corporation, except meetings at which only holders of a specified class of shares are entitled to vote. In addition, the holders of Common Shares are entitled to receive dividends declared on the Common Shares, subject to the rights of the holders of shares ranking prior to the Common Shares, and the holders of Class B Shares are entitled to receive dividends declared on the Class B Shares, subject to the rights of the holders of shares ranking prior to the Class B Shares. Holders of Common Shares and Class B Shares are entitled to receive pro rata the remaining

property of the Corporation upon dissolution in equal rank with the holders of other Common Shares and Class B Shares.

Preferred Shares

The Preferred Shares may be issued from time to time in one or more series, each series consisting of a number of Preferred Shares as may be determined by the board of directors of the Corporation who may also fix the designations, rights, privileges, restrictions and conditions attaching to the shares of each series of Preferred Shares. Unless the directors otherwise specify in the articles of amendment designating a series of Preferred Shares, the holder of each series of Preferred Shares shall not, as such, be entitled to receive notice of or vote at any meeting of shareholders, except as otherwise specifically provided in the ABCA. The Preferred Shares of each series shall, with respect to payment of dividends and distributions of assets in the event of liquidation, dissolution or windingup of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding-up its affairs, be entitled to preference over the Common Shares and Class B Shares and over any other shares of the Corporation ranking by their terms junior to the Preferred Shares of that series.

PRIOR SALES

The following table summarizes the issuances by the Corporation of Common Shares or securities convertible into Common Shares in the 12-month period prior to the date of this short form prospectus.

Date May 21, 2009 May 21, 2009 June 17, 2009 June 17, 2009 June 17, 2009 June 17, 2009 June 17, 2009 June 30, 2009 July 28, 2009 July 28, 2009 August 21, 2009 September 18, 2009 September 18, 2009 September 18, 2009 September 18, 2009 September 18, 2009 September 18, 2009 September 22, 2009 September 22, 2009 September 22, 2009 September 22, 2009 November 14, 2009 December 11, 2009 December 21, 2009 December 21, 2009 December 21, 2009 December 21, 2009 December 21, 2009 March 9, 2010	Securities Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Stock Options Stock Options Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares(1) Common Shares	Price Per Security $ 0.40 0.45 0.45 0.82 0.65 0.79 0.45 0.30 0.10 0.30 1.34 0.25 0.30 0.79 0.54 0.51 1.34 0.40 0.72 0.79 0.45 2.47(2) 2.37(2) 0.40 0.82 0.65 1.34 0.45 4.30	Number of Securities
			50,001 39,166 50,000 75,000 50,000 25,000 25,000 5,000 4,167 8,334 20,833 25,000 785,000 150,000 100,000 125,000 100,000 47,500 62,500 37,500 100,000 2,205,000 250,000 100,000 100,000 50,000 37,500 250,000 19,972,000

Notes:

(1) Represents Common Shares issued pursuant to the exercise of previously granted stock options. (2) Represents the exercise price of stock options.

PRICE RANGE AND VOLUME OF TRADING OF COMMON SHARES

The Common Shares trade on the TSX and the OSE under the symbol “QEC”. The following table sets forth the reported high and low sales prices (which are not necessarily the closing prices) and the trading volumes for the Common Shares on the TSX as reported by the TSX for the periods indicated:

Date 2009 January February March April May June July August September October November December 2010 January February March 1 - 9	High $ 2.19 1.68 1.44 1.46 1.54 1.82 1.46 1.80 2.68 2.86 2.55 3.07 3.98 5.40 4.68	Low $ 1.49 0.85 0.78 1.10 1.20 1.30 1.15 1.45 1.79 2.12 2.23 2.27 3.03 2.96 4.32	Close $ 1.50 0.90 1.23 1.40 1.30 1.42 1.43 1.75 2.46 2.39 2.31 2.88 3.08 4.68 4.33	Trading Volume
				11,281,684 11,054,792 8,581,516 8,741,467 8,369,896 9,857,732 5,045,110 7,032,677 17,341,937 8,697,108 3,977,778 5,927,062 10,547,616 18,797,989 9,544,127

USE OF PROCEEDS

The net proceeds to the Corporation from the sale of the Offered Shares offered under this short form prospectus, assuming that the Offering is subscribed in full, are estimated to be $40,664,380 after deducting the Agents’ fee of $2,156,020 and the estimated expenses of the Offering of $300,000. See “Plan of Distribution”.

The net proceeds of the Offering combined with the net proceeds from the Norwegian Offering, estimated to be approximately $81,000,000, and existing working capital, which as at December 31, 2009, was $46,500,671, will be used: (i) to finance Questerre’s planned exploration and appraisal program in the St. Lawrence Lowlands, Québec; (ii) for acquisition opportunities; and (iii) for the development of Questerre’s other core areas, including Antler, Saskatchewan. It is anticipated that the majority of the net proceeds of the Offering will be utilized in 2011.

The Corporation’s capital program for 2010 is approximately $15 million - $45 million. It is anticipated that $10 million to $30 million will be incurred drilling and fracture stimulating wells to assess the Utica shale, construct pipelines and acquire 3-D seismic in the St. Lawrence Lowlands, Québec, with $5 million to $15 million to be incurred in Antler, Saskatchewan drilling and completing multiple horizontal oil wells.

Subject to the results from wells drilled with its partners in the St. Lawrence Lowlands in 2010, the Corporation’s focus in 2011 will remain the appraisal of the Utica shale. The Corporation is planning to incur approximately $50 million - $70 million in costs on drilling and fracture stimulating additional wells, acquisition of 3-D seismic and construction of pipelines and other production facilities in Québec. Between $5 million - $10 million will likely be spent in Antler, Saskatchewan drilling and completing multiple horizontal wells.

The use of the net proceeds of the Offering by the Corporation is consistent with Questerre’s stated business objectives, being the establishment of the commerciality of the Utica shale in the St. Lawrence Lowlands and the development of Questerre’s core areas, including Antler, Saskatchewan. In general, to mitigate the financial and operational risks associated with these projects, the Corporation seeks industry partners to jointly participate in their development and the Corporation further diversifies risk through the acquisition and development of lower risk projects. There is no particular significant event or milestone that must occur for Questerre’s business objectives to be accomplished. While Questerre believes that it has the skills and resources necessary to accomplish its stated

10 -

business objectives, participation in the exploration for and development of oil and natural gas has a number of inherent risks. See “ Risk Factors ”.

Although the Corporation intends to expend the net proceeds from the Offering as described above, the actual allocation of net proceeds may vary from that set out above, depending on future operations on the Corporation’s properties or unforeseen events.

PLAN OF DISTRIBUTION

Pursuant to an agency agreement (the “ Agency Agreement ”) dated effective February 28, 2010, among the Corporation and the Agents, the Corporation has appointed the Agents to arrange on a “reasonable commercial efforts” basis for purchasers of up to 10,028,000 Offered Shares at a price of $4.30 per Offered Share, payable in cash to the Corporation against delivery of certificates representing the Common Shares on March 17, 2010, or such other date as may be agreed by the Corporation and the Agents (subject to the termination rights described below), and subject to compliance with all necessary legal requirements and terms and conditions of the Agency Agreement. The Agency Agreement provides that the Corporation will pay the Agents a fee of $0.215 per Offered Share (5% of the gross proceeds of the Offering) for an aggregate fee payable by the Corporation of approximately $2,156,020 (assuming that the Offering is subscribed in full) in consideration for their services in connection with the Offering. The terms of the Offering, including the price of the Offered Shares, were determined by negotiation between the Corporation and Dundee, on its own behalf and on behalf of the other Agents.

The Agency Agreement provides that the obligations of the Agents under the Agency Agreement may be terminated at their discretion on the basis of their assessment of the state of the financial markets and may also be terminated on the occurrence of certain stated events. The Agency Agreement also provides that the Corporation will indemnify the Agents and their affiliates, directors, officers, partners, agents, shareholders and employees against certain liabilities and expenses.

It is expected that closing of the Offering will occur on or about March 17, 2010, or such other date as the Corporation and the Agents may agree, but in any event not later than April 30, 2010. It is expected that definitive certificates representing the Offered Shares will be available for delivery at closing.

The Corporation has been advised by the Agents that, in connection with the Offering, the Agents may effect transactions that stabilize or maintain the market price of the Common Shares at levels other than those that might prevail on the open market. Such transactions, if commenced, may be discontinued at any time.

Except for the Norwegian Offering, the Corporation has agreed with the Agents that, for the period commencing as of the date of the Agency Agreement and ending on the date that is 120 days following the date of closing of the Offering, it will not offer, or announce the offering of, or make or announce any agreement to issue, sell or exchange Common Shares or securities convertible or exchangeable into Common Shares, without the prior written consent of Dundee and Cormark Securities Inc., for and on behalf of the Agents, which consent shall not be unreasonably withheld or delayed, provided that, notwithstanding the foregoing, the Corporation may issue the Offered Shares and may issue Common Shares to the holders of stock options outstanding on the date of the Agency Agreement and the Corporation may also grant stock options and issue Common Shares pursuant to the exercise of options issued after the date of the Agency Agreement to officers, directors, employees and consultants of the Corporation, pursuant to board approved option incentive programs or to satisfy existing instruments and agreements already issued and executed as of the date of the Agency Agreement.

The TSX and OSE have conditionally approved the listing of the Offered Shares distributed under this short form prospectus on the TSX and OSE respectively. Listing is subject to the Corporation fulfilling all of the listing requirements of the TSX on or before May 31, 2010 and fulfilling all of the listing requirements of the OSE.

The Offered Shares offered under this short form prospectus have not been and will not be registered under the 1933 Act, or any state securities laws, and accordingly, may not be offered or sold within the United States except in transactions exempt from the registration requirements of the 1933 Act and applicable state securities laws. The Agency Agreement permits the Agents to offer and resell any Offered Shares that they purchase as principal from the Corporation hereunder to certain “qualified institutional buyers” (as such term is defined in Rule 144A under the 1933 Act) in the United States, provided that such offers and sales are made in accordance with Rule 144A

11 -

under the 1933 Act and similar exemptions under applicable state securities laws. The Agency Agreement also permits the Agents to offer the Offered Shares for sale directly by the Corporation to certain institutional “accredited investors” (within the meaning of Rule 501(a)(1), (2), (3) and (7) of Regulation D under the 1933 Act) in the United States, provided such offers and sales are made in accordance with Rule 506 of Regulation D under the 1933 Act, and similar exemptions under applicable state securities laws. Moreover, the Agency Agreement provides that the Agents will offer and sell the Offered Shares outside the United States only in accordance with Rule 903 of Regulation S of the 1933 Act. This short form prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the Offered Shares hereby in the United States.

In addition, until 40 days after the commencement of this Offering, an offer or sale of the Offered Shares within the United States by any dealer (whether or not participating in the Offering) may violate the registration requirements of the 1933 Act if such offer or sale is made otherwise than in accordance with an exemption from the registration requirements of the 1933 Act.

ELIGIBILITY FOR INVESTMENT

In the opinion of Borden Ladner Gervais LLP, counsel to the Corporation, and Burnet, Duckworth & Palmer LLP, counsel to the Agents, based on the provisions of the Income Tax Act (Canada) (the “ Tax Act ”) and the regulations thereunder in force as of the date hereof and the proposals to amend the Tax Act and the regulations thereunder publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof, the Offered Shares if issued on the date hereof, would be “qualified investments” under the Tax Act and the regulations thereunder for trusts governed by registered retirement savings plans, registered retirement income funds, registered disability savings plans, deferred profit sharing plans, registered education savings plans and tax free savings accounts (“ TFSA ”) (collectively, “ Plans ”), provided that the Common Shares are listed on a designated stock exchange (which currently includes the TSX) at such time. Notwithstanding that the Offered Shares may be a qualified investment for a trust governed by a TFSA, the holder of a TFSA will be subject to a penalty tax on the Offered Shares held in the TFSA if such Offered Shares are a “prohibited investment” for the purposes of section 207.01 of the Tax Act. The Offered Shares will generally be a “prohibited investment” if the holder of the TFSA does not deal at arm’s length with the Corporation for the purposes of the Tax Act or the holder of the TFSA has a significant interest (10% or more of the issued shares of any class owned directly or indirectly by the holder or persons not dealing at arm’s length with the holder) in the Corporation or a corporation, partnership or trust with which the Corporation does not deal at arm's length for the purposes of the Tax Act.

RISK FACTORS

An investment in the Offered Shares is subject to certain risks and should be considered speculative due to the nature of the Corporation’s involvement in the exploration for, and the acquisition, development and production of, oil and natural gas reserves. Investors should carefully consider the risks described under the heading “Risk Factors” in the AIF which is incorporated by reference in this short form prospectus as well as the risk factors set forth below and elsewhere in this short form prospectus prior to making an investment decision and consult their own experts where necessary.

Dividends are Discretionary

The Corporation is not obligated to pay dividends on the Common Shares. The payment of dividends is at the sole discretion of the Corporation’s board of directors and it may decide to eliminate or reduce any dividends paid on the Common Shares, or retain cash otherwise available for dividends for investment in our business. In addition, certain of its agreements may restrict its ability to pay dividends, and thus the Corporation’s ability to pay dividends on its Common Shares will depend on, among other things, the Corporation’s level of indebtedness at the time of the proposed dividend and whether it is in compliance with such agreements. Any reduction or elimination of dividends could cause the market price of the Common Shares to decline and could further cause the Common Shares to become less liquid, which may result in losses to shareholders.

Future Sales of Common Shares

The Corporation may issue additional Common Shares in the future, which may dilute a shareholder’s holdings in the Corporation. The Corporation’s articles permit the issuance of an unlimited number of Common

12 -

Shares, Class B Shares and Preferred Shares, and shareholders will have no pre-emptive rights in connection with such further issuances. The directors of the Corporation have the discretion to determine the provisions attaching to any series of Preferred Shares and the price and the terms of issue of further issuances of Common Shares or Class B Shares. Also, additional Common Shares may be issued by the Corporation on the exercise of stock options under the Corporation’s stock option plan.

Exploration, Development and Production Risks

Oil and natural gas exploration involves a high degree of risk and there is no assurance that expenditures made on exploration by the Corporation will result in new discoveries of oil or natural gas in commercial quantities. It is difficult to project the costs of implementing an exploratory drilling program due to the inherent uncertainties of drilling in unknown formations, the costs associated with encountering various drilling conditions such as over pressured zones and tools lost in the hole, and changes in drilling plans and locations as a result of prior exploratory wells or additional seismic data and interpretations thereof.

Future oil and gas exploration may involve unprofitable efforts, not only from dry wells, but from wells that are productive but do not produce sufficient net revenues to return a profit after drilling, operating and other costs. Completion of a well does not assure a profit on the investment or recovery of drilling, completion and operating costs. In addition, drilling hazards or environmental damage could greatly increase the cost of operations, and various field operating conditions may adversely affect the production from successful wells. These conditions include delays in obtaining governmental approvals or consents, shut-ins of connected wells resulting from extreme weather conditions, insufficient storage or transportation capacity or other geological and mechanical conditions. While close well supervision and effective maintenance operations can contribute to maximizing production rates over time, production delays and declines from normal field operating conditions cannot be eliminated and can be expected to adversely affect revenue and cash flow levels to varying degrees.

Reserve and Resource Estimates

There are numerous uncertainties inherent in estimating quantities of oil, natural gas and natural gas liquids resources, reserves and cash flows to be derived therefrom, including many factors beyond the Corporation’s control. In estimating reserves, the chance of commerciality is effectively 100%. For prospective resources, the chance of commerciality will be the product of the chance that a project will result in a discovery of petroleum or natural gas and the chance that an accumulation will be commercially developed. There is no certainty that any portion of the prospective resources in Québec will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

The reserve and associated cash flow information and estimates represent estimates only. In general, estimates of economically recoverable oil and natural gas reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserve recovery, timing and amount of capital expenditures, marketability of oil and gas, royalty rates, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary from actual results. All such estimates are to some degree speculative, and classifications of reserves are only attempts to define the degree of speculation involved. For those reasons, estimates of the economically recoverable oil and natural gas reserves attributable to any particular group of properties, classification of such reserves based on risk of recovery and estimates of future net revenues expected therefrom prepared by different engineers, or by the same engineers at different times, may vary. The Corporation’s actual production, revenues, taxes and development and operating expenditures with respect to its reserves will vary from estimates thereof and such variations could be material. Further, the evaluations are based in part on the assumed success of exploitation activities intended to be undertaken in future years. The reserves and estimated cash flows to be derived therefrom contained in such evaluations will be reduced to the extent that such exploitation activities do not achieve the level of success assumed in the evaluation.

Estimates of proved reserves that may be developed and produced in the future are often based upon volumetric calculations and upon analogy to similar types of reserves rather than actual production history. Estimates based on these methods are generally less reliable than those based on actual production history. Subsequent evaluation of the same reserves based upon production history and production practices will result in variations in the estimated reserves and such variations could be material.

13 -

Actual future net revenue from the Company’s assets will be affected by other factors such as actual production levels, supply and demand for oil and natural gas, curtailments or increases in consumption by oil and natural gas purchasers, changes in governmental regulation or taxation and the impact of inflation on costs. Actual production and revenues derived therefrom will vary from the estimates, and such variations could be material.

There are numerous uncertainties inherent in estimating quantities of resources, including many factors beyond the Corporation’s control, and no assurance can be given that the indicated level of resources will be realized. In general, estimates of recoverable resources are based upon a number of factors and assumptions made as of the date on which the resource estimates were determined, such as geological and engineering estimates which have inherent uncertainties, the assumed effects of regulation by governmental agencies and estimates of future commodity prices and operating costs, all of which may vary considerably from actual results. All such estimates are, to some degree, uncertain and classifications of resources are only attempts to define the degree of uncertainty involved. For these reasons, estimates of the economically recoverable natural gas and the classification of such resources based on risk of recovery prepared by different engineers or by the same engineers at different times may vary substantially.

No quantitative geological risk assessment was conducted for Questerre’s St. Lawrence Lowlands acreage. Geological risking of prospective resources addresses the probability of success for the discovery of petroleum; this risk analysis is conducted independently of probabilistic estimates of petroleum volumes and without regard to the chance of development. Principal risk elements of the petroleum system include: (i) trap and seal characteristics; (2) reservoir presence and quality; (iii) source rock capacity, quality and maturity; and (iv) timing, migration and preservation of petroleum in relation to trap and seal formation. Geological risk assessment is a highly subjective process dependent upon the experience and judgment of the evaluators.

Estimates with respect to resources that may be developed and produced in the future are often based upon volumetric calculations and upon analogy to similar types of resources, rather than upon actual production history. Estimates based on these methods are generally less reliable than those based on actual production history. Subsequent evaluation of the same resources based upon production history will result in variations, which may be material, in the estimated resources.

Questerre’s prospective resources described herein are those undiscovered, highly speculative resources estimated beyond reserves or contingent resources where geological and geophysical data suggest the potential for discovery of petroleum but where the level of proof is insufficient for classification as reserves or contingent resources.

Resources estimates may require revision based on actual production experience. Market price fluctuations of natural gas prices may render uneconomic the recovery of the resources.

Capital Markets

As a result of the weakened global economic situation, the Corporation may have restricted access to capital, bank debt and equity, and is likely to face increased borrowing costs. Although the Corporation’s business and asset base have not changed, the lending capacity of many financial institutions has diminished and risk premiums have increased. As future capital expenditures will be financed out of cash flow from operations, current cash balances, borrowings and possible future equity sales, the Corporation’s ability to do so is dependent on, among other factors, the overall state of capital markets and investor appetite for investments in the energy industry and the Corporation’s securities in particular.

To the extent that external sources of capital become limited or unavailable or available on onerous terms, the Corporation’s ability to make capital investments and maintain existing assets may be impaired, and its assets, liabilities, business, financial condition and results of operations may be materially and adversely affected as a result.

Based on current funds available and expected cash flow from operations, the Corporation believes it has sufficient funds available to fund its projected capital expenditures. However, if cash flow from operations are lower than expected or capital costs for these projects exceed current estimates, or if the Corporation incurs major

14 -

unanticipated expense related to development or maintenance of its existing properties, it may be required to seek additional capital to maintain its capital expenditures at planned levels. Failure to obtain any financing necessary for the Corporation’s capital expenditure plans may result in a delay in development or production on the Corporation’s properties. Any properties not proven before expiry will not be available for production leases.

Environmental Risks

All phases of the oil and natural gas business present environmental risks and hazards and are subject to environmental regulation pursuant to a variety of international conventions and federal, provincial and municipal laws and regulations. Environmental legislation provides for, among other things, restrictions and prohibitions on spills, releases or emissions of various substances produced in association with oil and gas operations. The legislation also requires that wells and facility sites be operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities. Compliance with such legislation can require significant expenditures and a breach may result in the imposition of fines and penalties, some of which may be material. Environmental legislation is evolving in a manner expected to result in stricter standards and enforcement, larger fines and liability and potentially increased capital expenditures and operating costs. The discharge of oil, natural gas or other pollutants into the air, soil or water may give rise to liabilities to governments and third parties and may require the Corporation to incur costs to remedy such discharge. No assurance can be given that the application of environmental laws to the business and operations of the Corporation will not result in a curtailment of production or a material increase in the costs of production, development or exploration activities or otherwise adversely affect the Corporation’s financial condition, results of operations or prospects.

Fiscal and Royalty Regime

In addition to federal regulation, each province has legislation and regulations which govern land tenure, drilling and construction permits, royalties, production rates, environmental protection and other matters. The royalty regime is a significant factor in the profitability of oil and natural gas production. Royalties payable on production from lands other than Crown lands are determined by negotiations between the mineral owner and the lessee. Crown royalties are determined by governmental regulation and are generally calculated as a percentage of the value of the gross production, and the rate of royalties payable generally depends in part on well productivity, geographical location, field discovery data and the type or quality of the petroleum product produced.

The Government of Québec has announced an intention to introduce a new Hydrocarbon Act. The Government has stated its intention is to make Québec’s regulatory system competitive with other jurisdictions in North America. There is no draft of this legislation available and there is no assurance that it will in fact be enacted in law or that it will in fact improve the existing system.

The royalty regime in Alberta and any other jurisdictions in which the Corporation’s oil and natural gas assets are located, including Québec, may be subject to further review and changes which could adversely impact the Corporation's financial condition and operations.

Project Risks

The Corporation will manage and participate in a variety of small and large projects in the conduct of its business. Project delays may delay expected revenues from operations. Québec is a new area for oil and gas and specialized support services are not locally available. Project cost estimates may not be accurate due to a lack of history of comparable projects. Furthermore, significant project cost over-runs could make a project uneconomic.

The Corporation’s ability to execute projects and market oil and natural gas will depend upon numerous factors beyond the Corporation’s control, including: the availability of processing capacity; the availability and proximity of pipeline capacity; the availability of storage capacity; the supply of and demand for oil and natural gas; the availability of alternative fuel sources; the effects of inclement weather; the availability of drilling and related equipment; unexpected cost increases; accidental events; currency fluctuations; changes in regulations; the availability and productivity of skilled labour; and the regulation of the oil and natural gas industry by various levels of government and governmental agencies.

15 -

Because of these factors, the Corporation could be unable to execute projects on time, on budget or at all, and may not be able to effectively market the oil and natural gas that it produces.

AUDITORS, TRANSFER AGENT AND REGISTRAR

The auditors of the Corporation are PricewaterhouseCoopers LLP, Chartered Accountants, (“ PWC ”) who have prepared an independent auditors’ report dated March 23, 2009, in respect of the Corporation’s financial statements as at December 31, 2008 and 2007 and for each of the years ended December 31, 2008 and 2007. PWC has advised that they are independent with respect to the Corporation within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of Alberta.

The transfer agent and registrar in Canada for the Common Shares is Computershare Trust Company of Canada.

INTERESTS OF EXPERTS

Certain legal matters in connection with the issuance of the Offered Shares offered under this short form prospectus will be passed upon on behalf of the Corporation by Borden Ladner Gervais LLP, Calgary, Alberta and on behalf of the Agents by Burnet, Duckworth & Palmer LLP, Calgary, Alberta. As of the date hereof, the partners and associates of Borden Ladner Gervais LLP, as a group, and the partners and associates of Burnet, Duckworth & Palmer LLP, as a group, beneficially own, directly and indirectly, less than 1% of the securities of the Corporation.

Reserves and resources data included and incorporated by reference into this short form prospectus has been prepared by McDaniel & Associates Consultants Ltd. (“ McDaniel ”) and Netherland, Sewell & Associates, Inc. (“ Netherland ”). As at the date hereof, neither McDaniel nor Netherland have any registered or beneficial interest, direct or indirect, in any securities or other property of the Corporation or any of the Corporation’s associates or affiliates. For the purposes of this paragraph, McDaniel and Netherland shall be interpreted to include each of its designated professionals.

EXEMPTIONS FROM NATIONAL INSTRUMENT 44-101

Pursuant to a decision of the Autorité des marchés financiers dated March 1, 2010, the Corporation was granted relief from the requirement to provide a French language version of the documents incorporated by reference in its preliminary short form prospectus, provided that such documents in their French language version are filed no later than the date of filing of this short form prospectus.

PURCHASERS’ STATUTORY RIGHTS

Securities legislation in certain of the provinces of Canada provides purchasers with the right to withdraw from an agreement to purchase securities. This right may be exercised within two business days after receipt or deemed receipt of a prospectus and any amendment. In several of the provinces, the securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revisions of the price or damages if the prospectus and any amendment contains a misrepresentation or is not delivered to the purchaser, provided that such remedies for rescission, revision of the price or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province for the particulars of these rights or consult with a legal adviser.

16 -

AUDITORS’ CONSENT

Consent of PricewaterhouseCoopers LLP

We have read the short form prospectus of Questerre Energy Corporation (the “ Corporation ”) dated March 10, 2010, qualifying the distribution of 10,028,000 Class “A” common voting shares in the capital of the Corporation. We have complied with Canadian generally accepted standards for an auditor’s involvement with offering documents.

We consent to the incorporation by reference in the above-mentioned short form prospectus of our report to the shareholders of the Corporation on the consolidated balance sheets of the Corporation as at December 31, 2008 and 2007 and the consolidated statements of operations, comprehensive loss and deficit and cash flows for the years then ended. Our report is dated March 23, 2009.

“ PricewaterhouseCoopers LLP ”

Chartered Accountants Calgary, Alberta March 10, 2010

17 -

CERTIFICATE OF QUESTERRE ENERGY CORPORATION

Dated: March 10, 2010

This short form prospectus, together with the documents incorporated by reference, constitutes full, true and plain disclosure of all material facts relating to the securities offered by this short form prospectus as required by the securities legislation of each of the provinces of Canada.

(signed) “Michael R. Binnion” (signed) “Jason D’Silva” President and Chief Executive Officer Chief Financial Officer

On Behalf of the Board of Directors

(signed) “Peder N. Paus” (signed) “Bjorn I. Tonnessen” Director Director

C-1

CERTIFICATE OF THE AGENTS

Dated: March 10, 2010

To the best of our knowledge, information and belief, this short form prospectus, together with the documents incorporated by reference, constitutes full, true and plain disclosure of all material facts relating to the securities offered by this short form prospectus as required by the securities legislation of each of the provinces of Canada.

DUNDEE SECURITIES CORPORATION

CORMARK SECURITIES INC.

By: (signed) “ Lindsay Weiss” Managing Director, Investment Banking

By: (signed) “ Dion Degrand” Director, Investment Banking

MACKIE RESEARCH CAPITAL CORPORATION

By: (signed) “Philip B. Hodge” Managing Director, Investment Banking

INDUSTRIAL ALLIANCE SECURITIES INC.

By: (signed) “Pierre Colas” Managing Director, Investment Banking

FRASER MACKENZIE LIMITED

By: (signed) “J.C. St-Amour” Director, Investment Banking

CLARUS SECURITIES INC.

NATIONAL BANK FINANCIAL INC.

By: (signed) “Danny C. Mah” Director, Investment Banking

By: (signed) “Tom MacInnis” Managing Director, Corporate & Investment Banking

MAISON PLACEMENTS CANADA INC.

By: (signed) “Paul D. Aitkens” Chief Financial Officer

C-2

O60116

AI assistant

Questerre Energy — Capital/Financing Update 2010

9913_rns_2010-03-17_19400bb2-9f86-4882-bc8b-bcf0d76625b4.pdf

SHORT FORM PROSPECTUS

QUESTERRE ENERGY CORPORATION

Up to $43,120,400

Up to 10,028,000 Common Shares

TABLE OF CONTENTS

ABBREVIATIONS

Oil and Natural Gas Liquids

Natural Gas

Other

PRESENTATION OF OIL AND GAS INFORMATION

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

CURRENCY AND EXCHANGE RATE INFORMATION

DOCUMENTS INCORPORATED BY REFERENCE

FOREIGN JURISDICTION

QUESTERRE ENERGY CORPORATION

Name, Address and Incorporation

Intercorporate Relationships

BUSINESS OF THE CORPORATION

RECENT DEVELOPMENTS

FORECAST PRICES AND COSTS

RESERVES

CONSOLIDATED CAPITALIZATION OF THE CORPORATION

Notes:

DESCRIPTION OF SHARE CAPITAL

Common Shares and Class B Shares

Preferred Shares

PRIOR SALES

Notes:

PRICE RANGE AND VOLUME OF TRADING OF COMMON SHARES

USE OF PROCEEDS

PLAN OF DISTRIBUTION

ELIGIBILITY FOR INVESTMENT

RISK FACTORS

Dividends are Discretionary

Future Sales of Common Shares

Exploration, Development and Production Risks

Reserve and Resource Estimates

Capital Markets

Environmental Risks

Fiscal and Royalty Regime

Project Risks

AUDITORS, TRANSFER AGENT AND REGISTRAR

INTERESTS OF EXPERTS

EXEMPTIONS FROM NATIONAL INSTRUMENT 44-101

PURCHASERS’ STATUTORY RIGHTS

AUDITORS’ CONSENT

Consent of PricewaterhouseCoopers LLP

CERTIFICATE OF QUESTERRE ENERGY CORPORATION

On Behalf of the Board of Directors

CERTIFICATE OF THE AGENTS

DUNDEE SECURITIES CORPORATION

CORMARK SECURITIES INC.

MACKIE RESEARCH CAPITAL CORPORATION

INDUSTRIAL ALLIANCE SECURITIES INC.

FRASER MACKENZIE LIMITED

CLARUS SECURITIES INC.

NATIONAL BANK FINANCIAL INC.

MAISON PLACEMENTS CANADA INC.

More from Questerre Energy

Questerre Energy Capital/Financing Update 2010