Questar E&P - Operations

Questar E&P operates in two core areas – the Rocky Mountain region of Wyoming, Utah and Colorado and the Midcontinent region of Oklahoma, Texas and Louisiana. Division exploration offices are located in Denver, Colorado, Tulsa, Oklahoma and Oklahoma City, Oklahoma. The company has a large inventory of identified development-drilling locations primarily at properties near Pinedale, Wyoming, in the Uinta Basin of Utah, in northwestern Louisiana and in the Texas Panhandle. Most of the Company's current drilling activity is development or step-out in nature; however the Company does conduct exploratory drilling to determine commerciality of its inventory of undeveloped leaseholds in prospects located primarily in the Rocky Mountain region, including assessment of deeper reservoirs beneath currently producing horizons. The Company has operated continuously in many of its core Rockies areas since the 1920's. Pinedale Questar operates the northern third of the Pinedale Anticline in southwest Wyoming, one of the most significant gas development projects in North America and currently has over 330 producing wells in the field. In 2005, the Wyoming Oil and Gas Conservation Commission (WOGCC) approved 10-acre-density drilling for Lance Pool wells on about 12,700 acres of Market Resources 17,872-acre (gross) Pinedale leasehold. The area approved for increased density corresponds to the currently estimated productive limits of Market Resources core acreage in the field. In January 2008, the WOGCC approved five-acre-density drilling for Lance Pool wells on about 4,200 gross acres of Market Resources Pinedale leasehold. If five-acre-density development is appropriate for a majority of its leasehold, the Company currently estimates up to 1,500 additional wells will be required to fully develop the Lance Pool on its acreage. In September 2008, the BLM issued a Record of Decision (ROD) on the Final Supplemental Environmental Impact Statement (FSEIS) for long-term development of natural gas resources in the Pinedale Anticline Project Area (PAPA). Under the ROD, Questar E&P and Wexpro will be allowed to drill and complete wells year-round in one of five Development Areas defined in the PAPA. The ROD contains additional requirements and restrictions on development of the PAPA. Uinta Basin As of December 31, 2008, Questar E&P had an operating interest in 909 gross producing wells in the Uinta Basin of eastern Utah. The primary objectives of Questar E&P's drilling efforts in the Uinta Basin are a series of natural gas reservoirs (from the Wasatch formation to the Dakota formation) at depths of 5,000 feet to deeper than 18,000 feet and the oil bearing Green River formation. Questar E&P owns interests in over 252,000 gross leasehold acres in the Uinta Basin. Rockies Legacy The remainder of Questar E&P Rocky Mountain region leasehold interests, productive wells and proved reserves are distributed over a number of fields and properties managed as the company Rockies Legacy division. Most of the properties are located in the Greater Green River Basin of western Wyoming. In aggregate, exploration and development activity for 2008 included wells in the San Juan, Paradox, Powder River, Green River, Vermillion and Williston Basins. Questar E&P has over 78,000 net leasehold acres in the North Dakota Bakken play in the Williston Basin. Questar E&P completed its first operated horizontal Bakken well in January 2009. Midcontinent Questar E&P Midcontinent properties are distributed over a large area, including the Anadarko Basin of Oklahoma, the Texas Panhandle, the Arkoma Basin of Oklahoma and western Arkansas, and the Ark-La-Tex region of Arkansas, Louisiana, and Texas. Questar E&P is an active operator in the emerging Woodford Shale play in western Oklahoma and the Granite Wash Play in the Texas Panhandle. Questar E&P has approximately 31,000 net acres of Haynesville Shale lease rights in northwest Louisiana. The depth of the top of the Haynesville Shale ranges from approximately 10,500 feet to 12,500 feet across Questar E&P's leasehold and is below the Hosston and Cotton Valley formations that Questar E&P has been developing in northwest Louisiana for over a decade. Questar E&P intends to drill or participate in up to 35 horizontal Haynesville Shale wells in 2009. The company has a history of making successful acquisitions and continues to pursue acquisitions of producing properties (assets or corporate entities) to expand its presence in its core areas or create a new core area. At year-end 2008, Questar E&P had proved reserves of 2,218.1 Bcfe. Approximately 72% of Questar E&P's proved reserves, or 1,587.3 Bcfe, were located in the Rocky Mountain region of the United States, while the remaining 28%, or 630.8 Bcfe, were located in the Midcontinent region. Approximately 1,269.4 Bcfe of the proved reserves reported by Questar E&P at year-end 2008 were developed, while 948.7 Bcfe were proved undeveloped. The majority of the proved undeveloped reserves were associated with the Company's Pinedale Anticline leasehold. Natural gas comprised about 91% of Questar E&P's total proved reserves at year-end 2008. Questar E&P's net production totaled 171.4 Bcfe in 2008, an increase of 22% over 2007 production volumes. Refer to the most recent IR presentation available on this site's homepage for maps of Questar E&P's major operating areas.