On the listing and its other operations. The company is represented by President and CEO, Michael Binnion, and Chairman, Bjørn Inge Tønnessen . We will begin with a presentation from the management team, followed by a Q&A session. If you have any questions during the presentation, please submit them via the Q&A function, and we will address as many as possible afterwards. With that, I will hand over to you, Mike.
Thank you very much. I appreciate all of your help from SP1 to get us to where we are on this listing. Of course, this is now, I think, the second time that we're doing a live update for shareholders, and it's something that we plan to continue doing for our quarterlies and other special events. Bjørn Inge Tønnessen , our Chairman, has already been introduced as being part of the call, and also as participants in the call, we have Hans Jacob Holden, who is on the Board of Directors and the representative of Quebec preferred shareholders on our board. As well as Jason D'Silva is participating as our CFO as well. I will go through the presentation. I'm going to try not to go into the details.
Just try to stay at the high level, and then hopefully allow more time for questions, but we have the information, the details there for people that can go through during or after our presentation. Our lawyers tell us very important information, but I think it is important to understand that we have forward-looking statements that depend on a lot of risks and events that happen in the future that we don't control. The background is, just on the investment summary is, first of all, Questerre as a company. The common and preferred shares, the whole company. Business was started, founded initially to look for giant fields, large-scale resources, and then look to high-grade and commercialize them. That's been our business plan for many years now, and we currently have production over 5,000 bbl a day from our various assets.
Most of that's coming from Oil Shale in Brazil right now. The key thing for today to talk about is that we have made a 3.0 billion BOE, so it's a true giant field. Potentially 23 trillion cu ft, best effort, natural gas discovery in Quebec, Canada. The government of Quebec has moved to try to expropriate or nationalize this discovery. Of course, we've been protesting that as whether it's the constitutionality of that.
I think the key thing that's happening, and we've of course seen this in other countries, whether it's Spain or Germany or many other countries in the world. In fact, I was just in Brazil, and they're talking about exactly the same thing, the impact on the electricity grid of all of the wind and solar and how that's creating a potential shortage of energy in Brazil.
Which, of course, is the largest hydroelectricity country in the world. Yet they're now struggling with their grid because of the intermittent power. This is happening in Quebec as well. What our plan has been for some time now is to say, "Listen, we are first and foremost interested in a business and political solution with the government." We've no real desire to be in a conflict with the government of any place that we do business. We have to recognize that our shareholders put up all of the money that was invested into making this discovery. It's, we think, our fiduciary obligation to protect all of our shareholders' rights by legal means.
The key terms for the preferred shares, which we decided to separate off into its own share so that we could move forward other parts of our business without diluting our shareholders who, as I said, had invested and paid for the discovery, is one, is that we've created the separate shares, which is trading today and I understand potentially the winner today on the exchange. That's a good indication that we made the right decision to list it separately. I will tell you that, Bjørn can confirm in the board meetings, you sometimes, "Are we really doing the right thing? Have we really designed it well? We've got the best advice possible." The proof always is going to be on how it trades. Today's a good sign of that.
We did a consolidation, for every common share that someone held before the split in January, that person now owns for every 10 common shares, you now own one preferred share. It's a one for 10 consolidation. I think it's important that the main company will be Questerre is responsible to manage and fund the litigation and gets an administrative fee of 5% of any settlement proceeds for doing that. Alternatively, should the government, due to have a policy change around energy, electricity in Quebec and allow the project to move forward, we have got a pre-negotiated farm-in, basically 100 for 50. Questerre common shares would pay 100% of the initial development and receive 50% of the asset on a go-forward scenario. In terms of governance, I think there's a lot of time put into this.
Advice from investment bankers, advice from lawyers to make sure that we had proper governance to protect the preferred shareholders. There's an oversight committee that's elected by the preferred shareholders. We just had that election, and the current members are Hans Jacob Holden, who, as I mentioned, is on the call, myself, and Julian Hammond out of the U.K. Julian's followed this for a very long time. He has shares. He also has a small participation in a royalty on the Quebec asset, so has a definite interest in protecting the value. We also have one representative of the preferred shares on our main board. Any issues, for example, decisions about litigation to accept litigation settlements or anything like that, requires an approval of the Questerre board, but it must include the approval of the preferred director.
Hans Jacob Holden was elected to be our first preferred director. No settlement of litigation can happen without the oversight committee. So there's an ineffective veto right. We also have a technical committee to review the geological engineering and other issues that might affect those decisions. For those who saw how long the document was, you'll see that we put a lot of thought into it. We feel that the governance is very strong for the preferred shareholders within Questerre. There's still this, of course, to talk about why we did it, and in the end, what the market will give us the answers to whether we did that right, as I've already mentioned. It basically is to isolate the Quebec asset as a separate store of value.
We think the purpose of the listing is to allow some price discovery for what that asset could be worth and allow investors to both have liquidity but also have economic value in that asset. Rather than relying on some of the parts, what we have found for, I would say, many years when you look at Questerre as sum of a parts, we have a lot of investors say, "Look, I'm investing for this thing, Quebec," or, "I'm investing because of the Oil Shale" or, "I'm investing because of the cash flow." We think that the sum of the parts has not been a great way to get full value for the Questerre assets. It does allow us as well to consider equity issues relative to our other assets.
We had anticipation that we would be issuing some shares to the vendors on the transaction for PX Energy. At this point in time, we're currently doing an audit of the purchase price adjustment to see if any shares will actually be issued because we believe the working capital number wasn't what it was meant to be. Okay. Just a little bit of a refresher on the Quebec assets. There's been a lot of wells drilled here.
There's been 30 test wells. Questerre was a participant and paid for 16 of those wells. Several of those wells were horizontal wells. They were flared for 30 days. One well even has almost six months, a five-and-a-half-month test to give a very good estimate of the ultimate recoverable gas from that well. There's been a lot of money. Probably close to CAD 200 million were spent.
A lot of wells drilled. That was on the back of some pretty extensive geological information that Questerre had even before the first well was drilled. I think the other thing that for us is a bit of a frustration is the sense that blocking this discovery is being done for climate reasons. Quebec did make the decision to join the Beyond Oil and Gas Alliance of Denmark, Costa Rica, Netherlands, and then Quebec. First of all, I think it's just common sense clear that producing gas locally creates less emissions than importing it through transmission lines, which have emissions through the transmission. We've done full cycle environmental studies by Quebec-based universities that have calculated and shown that producing local gas actually decreases global emissions. By a material amount, at least a million tons a year.
There is an energy shortage that has developed in Quebec, which I talked about before. We believe that in terms of all of Quebec's energy options, from building new hydro dams to wind to solar to reopening nuclear, biofuels, all of the options that they look at, that ours is by far the one that comes to market first. We're genuinely, we'll talk later, a shovel-ready project. There is good support in Quebec. We've done polling many times over the last 10 years or so. Recently, with the Straits of Hormuz and the Trump factor, we now find that if Quebecers understand the question is, do you prefer local gas or do you prefer importing gas from U.S.?
We now find only 13% of Quebecers actually oppose it based on that choice. Then, of course, the litigation is ongoing, so we'll have a short update on that. As I said, our goal is that that's to protect our rights. It's not our preferred or primary solution. I had a time in Quebec one time where I went to somebody's brother-in-law's cottage, actually, on a weekend when I was down there. This was a few years ago. I was explaining to them, "Oh, yeah. Well, we have this gas discovery." He says, "You know, Michael, if you want to do something new in Quebec, you really have to start when you're young, because it's going to take a long time to do something new in Quebec." Just talking about just the culture of how Quebec politics work.
I said to him, "I don't think you understand. I did start when I was young." Our first well was drilled in 1989, I was actually there in our predecessor company in 1993. There's a lot of experience, data. Nobody has more data on the geology of Quebec, not even the government of Quebec, than Questerre. We have great knowledge there. In Norway, we typically talk about this discovery that we've made is about 50% or a little bit more than half of the Snøhvit field, which was the largest field found in Norway. In Quebec, Churchill Falls is the most famous hydro dam. It's the second-biggest in Canada, but it's, I think, the most famous in Quebec.
This discovery could produce the equivalent of maybe close to 100 years even of electricity, the equivalent energy of almost 100 years from Churchill Falls. I mentioned already that over 1 million tons per year of emissions reduction simply by producing locally versus imports, really important economic impacts to the province of Quebec at a time when Canada and Quebec, like many countries in the Western world, are suffering from an affordability problem for ordinary citizens.
This is a project that could supply 6,000 permanent jobs. Just to put that into context, an LNG plant, CAD 12 billion project, was anticipated to create 500 permanent jobs, whereas we think our project could create 6,000 permanent jobs. As well, of course, tax revenue and GDP and impacting the growth and affordability for people in Quebec. We all sometimes forget the curvature of the Earth.
When we're in Norway or Canada, we tend to forget that. Just because of that, Quebec, Canada is a lot closer to Germany than it looks on a map. It's half the distance, less than half the distance from Qatar, and quite a bit less than the distance from even Louisiana, where a lot of LNG is coming to Europe from right now. We have a clear competitive advantage for LNG. As to be able to export gas on the basis that the discovery is likely more than big enough to produce more than the internal needs of Quebec. There are opportunities to export it. I would say, as we learned when the Strait of Hormuz closed, gas doesn't just export as LNG, it also exports as fertilizer, as methanol, as other products.
There's other ways to export it. Our discovery in Quebec is, as you see from the map on the top left, is right on tidewater. There's a good size Panamax port in Baie-Comeau, and there is a super tanker port in Quebec City. This is a timeline. I won't go through all the details, but it starts in 2001. As I said, we actually drilled our first wells for a completely different prospect as early as 1993, shot seismic in the mid-'80s. This gives us the timeline under the relaunch of Questerre to go after this exploration in Quebec, which proved to be successful. We'll see that really we were able to do the farm out, the drilling, and the discovery by 2008, 2009.
Really since then, we've been through environmental studies, several environmental reviews. Ultimately, the government decided to join this Beyond Oil and Gas Alliance. We had a legal claim that was filed as a result of that. Our path on development is very energy rich, but due to policy, has now become a net importer of electricity in spite of it being, I think, the third or fourth biggest hydroelectricity producer in the world. It's becoming quite a political concern for potential increases in electricity for citizens. I would say front and center also is industry. We're seeing already the beginning of de-industrialization in Quebec, much like we've seen in Germany with the loss of close to 10% of its industrial output.
What we're seeing in Quebec right now is that new businesses that depend on long-term electricity contracts have either not been able to come because the government won't give it to them or who are reconsidering. The next step, of course, is for existing businesses, how competitive are they if the price of energy goes up? A lot of Quebec's economy is high energy intensity because for over two generations, they've had plentiful and cheap electricity, and it's attracted a lot of industry that depends on that. Energy security reemerging in Quebec like it is in many other places.
I think I've talked through most of this, but I would say that in a province that's now short of hydroelectricity, that something like 30 or 40 terawatts of energy could be freed up by switching from electricity to natural gas for heating. This is always a policy decision for people, but I would say that electricity is a refined product. It can do things like run the computers that we're on right now. It can run artificial intelligence, iPads.
Everything that's electronic in our life can be run by electricity. Why would we use something so valuable for something that a raw product, natural gas, does better and cheaper, and in the case of Quebec, would be less emissions if they produced it locally than importing it? You'll see there in the picture just how close our wells are to the port, and that picture is, I think, a realistic representation of that. Because of the concerns about climate and fossil fuels, to further improve the emissions profile, as I said, just by producing it locally and eliminating transmission reduces well over 1 million tons per year of emissions.
We've also spent close to five years now on the exploration study independent work to look at the carbon sequestration potential of the geology of Quebec. As I think we have more data than anyone, and I feel we've developed a very good pilot project. It's at late stages with the government, and we're hopeful that the government will ultimately approve that pilot design and allow us the opportunity to prove that carbon sequestration can work in Quebec and further reduce the environmental impacts of fossil fuels in Quebec. Just to go over the legal process, and I just want to emphasize for the third time, this was not our preferred way. We don't want to be in disputes with governments anywhere we are. In 2022, the bill to revoke permits was passed.
We have challenged that that's not constitutional, therefore it's ultra vires or not legal. It's a disguised expropriation, and that it should either be reversed as not being a constitutional law or, at a minimum, we should be given fair market value indemnity or compensation for the asset that's been indirectly expropriated by that bill. We have been selected. This will save a lot of time.
There's close to another 10 litigants, all with different capacity and different states of preparation for a hearing. We were successful in having Questerre to be selected as a lead case, which is referred to in Quebec as a test case. Which is to say that, based on our case, the other litigants can use that as a test for their case. The key thing for us is that we're the lead case. We go through first.
We're in the pretrial phase already. We have an important hearing before the end of this year, which we hope or anticipate will lead to the government having to put its expert witness report in no later than the first part of next year and hopefully have a hearing date set before the end of next year. As I said, our target is to either reinstate the revocation, allow us to go forward, or to be given fair compensation for the value of the discovery, which, from our point of view, is not damages. We're not seeking damages. We're just seeking the value of our discovery because we feel that the government of Quebec. The gas doesn't go away. It's still there. It's still valuable, even if it's for security purposes.
It would be unjust enrichment of the Quebec government if they were allowed to take the discovery after we've made it and take advantage of all of the money that our shareholders spent. We're, as I said, we're not looking for punitive damages or anything like that. We're just merely looking for the compensation for the fair value of what we worked hard for and discovered. This is our expert report. It was done and it shows the economic losses on different scenarios and different potential legal outcomes. One is in 2018. That's when regulations were first changed to the extent that that was, in fact, an attempt at expropriation rather than an attempt at regulation. That scenario was there for that reason. The other two are both dated based on the date of the law, which is around 2022.
The scenario three is the value on the basis that we were allowed to go ahead, and it's discounted, I think, at a rate of over 20%. A lot of the undiscovered resource is discounted 99%. Utica Resources is another litigant that's also been selected as a lead case. They have submitted that they think that their economic losses were CAD 18 billion. If we were to follow the same methodology as they did, which is to not do a big market discount, then our values would be between CAD 22 billion and CAD 40 billion. This damages report, CAD 4 billion, is a significant discount compared to unrisked NPV10. This damages report is at a significant discount. I think we've talked about the timelines.
As I said, I think our shareholders know how many years we put into this and how much money we put into it, and how successful and how valuable what we discovered is. To summarize, I think for the preferred shares, it's a binary asset on one asset, which we think is an incredible asset. I would tell you in all of North America, it is the only shale gas play that one company was able to discover it and capture most of what people call the sweet spot. It's an incredible accomplishment for our company. It's a giant discovery. We do think that it's extremely valuable to Quebec from an energy security point of view, from an environmental point of view, and from an economic point of view.
We'll certainly happy to get feedback from shareholders, but we do believe we put a lot of work into the governance to make sure that our preferred shareholders are protected, and that they will be able to realize on the value, however it ends up playing out in the end. I'm going to stop there and move to questions. My, Bjørn Inge Tønnessen , I have a new intern, but I'm instead using Bjørn Inge Tønnessen to help me with this.
That's very good. Thank you, Mike. I will just make one comment to you, and that was that you talked about being half of the Snøhvit field. For those who know Norwegian continental shelf, it's three times the Snøhvit field, but more important, nearly half of the Troll field, which is kind of supporting the natural gas for the whole of Europe these days. At least Northern Europe.
Local knowledge. Thank you very much, Bjørn Inge , for reminding. I mixed up those two fields.
You're welcome. I cannot see any questions being published on the Q&A session here. Please, if there are anyone that are eager to ask questions, please come along and put them forward. It doesn't seem like it, but I'll just add to what Mike says. The asset is, of course, enormous. Mike and company been onto it for decades. We hope that the politicians in Quebec will, of course, see the value of us progressing with this in the short term as well, so we can relieve the energy system of Quebec in a very short time. Okay. Now there come a couple of questions in here. Now I can hear it. I'll start with one. What kind of conversation dialogue do you have at the moment with the Quebec government to find or search for political and/or business solution?
I would say that our access to government in the year or so before Bill 21 was introduced, and I would say up until recently was quite limited. What changed was when we made the proposal to do a pilot program for carbon sequestration, and of course, we did that strategically. One is that under our permits, we also have the right to explore for storage reservoirs. We owned a right to storage, which we defended during recent legislation, so far successfully. We wanted to see if we could make some economic value for our shareholders out of the ownership of this right to look for storage space. Also to help to demonstrate more clearly, I think, a very common misperception that somehow producing natural gas is going to increase global emissions, when in fact, it dramatically reduces them.
We wanted to help to punctuate that by showing that our company was investing in climate tech and climate technology, like carbon sequestration and others. Of course, as you know, Bjørn Inge , we put some time into hydrogen pilots with a Norwegian company that you helped introduce us to. We put a lot of effort into that. It ultimately led to the application for this pilot.
I would say that the Government of Quebec has been very, I would say, very professional and very constructive. Not just the Government, but political people generally in Quebec have had a renewed interest. Since the current Premier said, "Hey, I'm not saying we should go forward with this. I'm just saying we should look at it." I think that's changed the conversation, and I don't think it's too much to say in a dramatic way, positively.
Another question. If Questerre were to receive the smallest damage report amount of CAD 700 million today, how would the interest be adjusted as to the amount related to 2018, compounded by 5%, 10% for eight years? Is that the answer?
What I understand is that under the rules of the Quebec rules in the court system that awards, and as I said, in this case for us, we think this is more an award for our economic loss, not really for damages. That it's normally compounded at 5% per year.
Then a question on the upcoming election, which is the 4th of October, I think, or 5th maybe. How does the upcoming election in Quebec impact the possibility for permission for gas production, and what party is in favor these days?
As I said, we don't want to be in a dispute with any government in any jurisdiction we're in, and the upcoming race in Québec, there's five competitive political parties. I would say only one of them is an unconditional no to very green. Québec Solidaire is very green socialist party. They're probably the one that is the one that was unconditionally no. We have one party, the Conservative Party of Québec, which is unconditionally yes. I wouldn't say unconditionally yes, because of course it would all depend on proper regulation, et cetera. Legislation in favor. We have three other parties that I think are wanting to look at the energy scenario of Québec before making a commitment. They're all different levels of support or opposition.
Another question following up on that. That survey suggests that there is a significant growing support for local gas in Québec, and the difference between the people and the political leaders and where the political leaders are slow to react.
That's an interesting question because it's a comment that we've made ourselves, that in some ways sometimes the population is ahead of the political leaders or the chattering classes, if you want. What I would say is that our polling has shown for quite a long time now that the average person would prefer to produce local gas than to import gas. If you were to ask a question, "Would you prefer to use some other energy completely?" I think the answer to that might be yes, but only if it doesn't cost too much more. Which, of course, we know it does. I think the people have been there for a long time on sort of a common sense basis of it doesn't make sense if we're using it, that we don't produce it ourselves.
I would say media leaders, we're seeing a difference in the Québec media, which is in French, so it's a bit of a media bubble in North America because it's in another language. That media has shifted. We're seeing more and more positive articles about looking at natural gas. I think the question absolutely identifies that the people are probably more ready for it than the politicians have been.
If I can add there, you see also in Europe that the importance of gas and acceptance of gas as a transition energy is growing, where the, if you can say, the green voices are not heard so loud anymore. I don't think Quebec is immune to that either.
I would say what people are seeing in countries in Europe is reasonably analogous to what's happening in Quebec, and for much the same reasons.
That was the questions I have received on this call. Any further question? We're happy to take one more if you are quick to write it down.
Okay. I wouldn't mind just finishing, Bjørn Inge, with what I say a lot of times in Quebec is I didn't learn French because we didn't want to have a positive solution in Quebec. We do want to have a very positive solution in Quebec. I think the one thing that I've really learned personally that I would apply anywhere I do business again is that stopping and listening to people on new projects is a faster way to get things done than to try to press them forward when people don't understand or are objecting. We absolutely have got an attitude as a company that this is a project that not only does it have to be good for Quebec, Quebecers have to believe it's good for Quebec.
We're absolutely committed and dedicated to working in a positive way with the province of Quebec to make a better solution, while of course, protecting our shareholders' interests.
There was one question coming in, which I think is an important one because it's looking for what kind of value and how did the value come to the preferred shareholders. The question is, "If Questerre is awarded a compensation by the court, assuming all avenues of appeal have been exhausted, what would the next step be? Would QGAS shareholders receive a payment in the form of a dividend proportional to their shareholding?
Yeah. What we have in Canada was for us to be able to distribute this preferred share as a non-taxable transaction. This was something that we felt was an extremely important aspect of the structure of our transaction because while we had valuations that suggested, given the litigation, given the government's Bill 21, that there could be a very low valuation. At the same time, we had indications that the economic losses, not necessarily the value, but that the losses could be much bigger. We wanted to make sure that we were able to do this on a tax-efficient basis. A requirement under the Canadian tax law, getting to answer the question, is that it has to be a convertible preferred share as opposed to an indirect cash distribution.
At the end of the answer, the preferred shareholders will be given a conversion rate at market for the entire settlement into Questerre common shares. That structure, as I said, was worked on very carefully to make sure that this was tax efficient for our shareholders, and that we didn't create a cash tax problem for our shareholders before there was a resolution.
Very good. I think with that, we will stop the Q&A session as no more questions have arrived. Mike, any final comments?
No, I made my final comment, we certainly appreciate the opportunity to talk to our shareholders. As I said, we're planning to make this a regular feature of our shareholder communications that we will do live updates at appropriate times.
Very good. With that, I think we can stop the presentation and Q&A, wish everybody a good evening or day in Canada for those listening in from Canada.
Yeah. Happy Canada Day.
It's happy Canada Day. Very good.