Questerre Energy Corp. (OTCPK:QTEYF) shares jumped again Friday morning rising almost 10% after the company announced that Talisman Inc. (NYSE:TLM) has elected to drill the remaining three option wells under the farm-in agreement with Questerre in the Utica shale in Quebec.
Drilling of the next three wells will start in the second half of 2008 and test multiple horizons including the Utica, Trenton-Black River and Lorraine shale.
"Talisman has shown the confidence to invest capital to validate the Utica shale play," said Fraser Mackenzie analysts Patty Shao and Vic Vallance.
They noted that under terms of the farm out agreement with Questerre, Talisman has the right to drill up to four test wells to earn approximately a 75% interest in the land with Questerre retain the remaining interest plus a 4 1/4% gross overriding royalty. Talisman drilled the first well, Gentilly #1, in 2006/2007.
The two analysts added that with Forest Oil Corp. (NYSE:FST) also drilling three horizontal wells in the area. enough data will soon be gathered and analyzed to provide a better assessment on the commercial prospects of the Utica shale play.
Ms. Shao and Mr. Vallance maintained their "buy" recommendation, and left their price target "under review" to reflect the early stage nature of the play.
Other junior explorers with a stake in the play were also soaring led by Petrolympic Ltd. up 25%, Gastem Inc. (OTC:GTMIF), up 12%, Junex Inc. (OTC:JNEXF), up 6% and Altai Resources Inc. (OTC:ARSEF) up 5%.