Questerre Energy Release Q1 2026 Report

President’s Message The turnaround at PX Energy is producing results.

In our first full quarter with management control, lifting costs in Brazil were reduced by $7.6 million or 30% to $17.5 million from $25.5 million last quarter. With stronger oil prices in March, this contributed to Questerre generating adjusted funds flow from operations of $20.8 million — including $6.7 million in revenue related to minimum sales contracts in Brazil — compared to $4.3 million in the fourth quarter of 2025. Further cost reductions are planned for the remainder of the year, and we believe the underlying operation has room to improve.

In Quebec, the economy and energy situation is evolving. The trade dispute with the United States, a structural electricity shortage, and rising concern about energy security have together rekindled consideration of energy options including local natural gas production. We have been making the case that our Quebec Utica discovery is part of the answer. On the emissions reduction front, we met with the Government on Bill 17, their framework for carbon storage, and on our pending carbon storage pilot application. These steps toward meeting Quebec's decarbonization commitments demonstrate our commitment to finding a business and political solution.

Our capital reorganization closed in January, transferring the value of our Quebec assets to preferred shareholders. We are actively evaluating paths to list those shares for trading.

Highlights • Average daily production of 6,180 boe per day • Additional 540 boe per day was invoiced as deferred revenue related to minimum sales contracts in Brazil • Adjusted funds flow from operations of $20.8 million including $6.7 million related to minimum sales contracts (net cash from operating activities of $3.1 million) • Cost cutting at PX Energy reduces lifting costs by $7.6 million to $17.5 million from $25.5 million in the fourth quarter of 2025 • Corporate reorganization conveys interest in Quebec assets to preferred shares • Questerre case approved by Quebec Superior Court to advance legal process

Oil Shale The first quarter results show we are on the right track with our cost cutting. The support from local management for the restructuring has been strong.

The cost reduction plan included cutting overhead, renegotiating supply contracts and refinancing government obligations. The target is to deliver $8 million in cost savings this year and reduce operating and overhead by 10% over last year. We plan to reduce them by a further $8 million in 2027. The goal is to reduce operating costs from US$59 per produced boe, the average cost in 2025 prior to our acquisition, to US$40 per produced boe by 2027.

One of our most significant cost items is internal fuel consumption. This accounts for nearly 25% of our operating costs in Brazil. This quarter it represented approximately 940 boe per day split equally between gas and fuel oil. We are investing capital to reduce these high-value fuel oil volumes.

In March, we commissioned a biomass boiler fueled by wood waste that cuts fuel oil consumption by nearly 50%. Other projects include switching our burners off fuel oil to materially lower costs. This summer, we also plan to test the Red Leaf HCCO technology— a trial that should increase heat mass efficiency, reduce fuel consumption further and validate a critical element of the technology at scale.

The Red Leaf HCCO is fundamentally different from conventional oil shale processing, including the process currently used at PX Energy. Conventional methods — almost universally — move large volumes of rock to a heat source. Red Leaf inverts that approach. The rock stays stationary inside vessels while a heat plug moves through in a batch process. This is engineered to materially lower costs, substantially reduce water usage, and improve thermal efficiency. The prize is converting billions of barrels of oil shale resource into reserves. We now have a clearer, faster, and cheaper path to proving the technology at scale than our original plan.

Quebec Quebec's electricity shortage is no longer a future problem — it is here. The provincial utility has stated plainly that surpluses are a thing of the past, and it is now rationing power for new industrial loads, prioritizing projects that support decarbonization(1). This February it proposed to the provincial energy regulator that new large data centers exceeding 5 MW should pay approximately double what current large-power customers pay(2). Earlier in the quarter it announced plans to utilize the TC Energy Bécancour power plant as a peaking facility to be supplied in part by renewable natural gas(3). We have been making the case directly that our gas is a cheaper alternative with lower environmental impact. Our tie-in point from drilled but as yet untested wells is less than ten kilometres from the Bécancour plant.

The political environment is also shifting. Despite the National Assembly's non-binding vote in March to reaffirm the shale gas ban, the current Premier — during her recent leadership campaign — expressed openness to local gas development as part of an energy sovereignty platform. She has acknowledged that local production would reduce dependence on United States imports and serve as a transition fuel(4). In April, the head of one of Quebec's largest financial institutions made a similar point publicly at a shareholder meeting, calling on the province to develop its own resources(5).

The judicial process to protect shareholder rights is advancing. During the first quarter the Quebec Superior Court approved Questerre as a ‘test case’ to move forward to expedite the process. The case protocol agreed in April sets out the schedule for remaining pre-trial steps, including a Government expert report. We expect a hearing date to be set for next year or early 2028.

Operating and Financial Production averaged 6,180 boe per day in the quarter. There was an additional 540 boe per day invoiced as deferred revenue related to minimum sales contracts. Volumes in Brazil were about 10% lower than last quarter as we reduced production to meet seasonally lower demand.

Our first quarter results reflected stronger commodity prices in March, which helped maintain revenue at $43 million, in line with the fourth quarter of 2025, despite lower production volumes. Revenue in the period does not include any amounts related to deferred revenue for the minimum sales contracts. We also made meaningful progress on cost cutting at PX Energy and, additionally, saw some unbudgeted savings in the period. This overall reduced operating costs to $17.5 million from $25.5 million in the fourth quarter of 2025. We reported a net loss for the quarter of $17.8 million, which includes several non-cash items such as depletion, deferred tax expense and most of our finance income and expense. For instance, our finance expense includes $10.1 million of non-cash expense related to the embedded derivative associated with the secured bonds.

Adjusting for these non-cash items, our cost cutting contributed to adjusted funds flow from operations of $20.8 million, including $6.7 million of revenue related to minimum sales contracts, compared to $4.3 million in the fourth quarter of 2025. Higher oil prices are creating some demand pressure in Brazil, with some customers lifting volumes below the minimums in their contracts. This makes it more challenging for them to meet their minimum sales volumes. Our customers and contracts are both essential to our business and managing this dynamic is an important priority for us.

Outlook We closed the disposition of our Kakwa Central assets in early May, further improving our working capital position. As a result, production is expected to be lower for the remainder of this year. A portion of our Canadian production is now hedged, though based on current strip prices, we expect the improvement in our working capital to continue.

The restructuring of PX Energy is well underway and the first quarter is an early proof point that we are on the right track. We have a defined path to prove the Red Leaf technology at scale — at lower cost and on a shorter timeline than originally planned. In Quebec, the political and economic environment is moving in our direction. The assets are unchanged. The opportunity, if anything, is larger.

Michael Binnion President and Chief Executive Officer

Forward Looking Advisory Please refer to the section Forward Looking Statements in the Management Discussion and Analysis regarding the forward-looking information provided in this President’s Message.

Footnotes: (1) https://www.hydroquebec.com/residential/energy-wise/are-we-running-out-electricity.html (2) https://news.hydroquebec.com/news/press-releases/all-quebec/hydro-quebec-proposing-regie-energie-new-rate-large-data-centres-adjustment-rate-cryptographic-use-applied-blockchains.html (3) https://news.hydroquebec.com/news/press-releases/all-quebec/quebec-energy-security-hydro-quebec-confirms-next-steps-use-power-plant-becancour-during-peak-periods.html (4) https://ici.radio-canada.ca/info/videos/1-10620098/christine-frechette-prete-a-rouvrir-dossier-gaz-schiste?liste=28-23005 (5) https://www.theglobeandmail.com/business/article-national-bank-quebec-energy-natural-resources-major-infrastructure/