Questfire Energy Corp. (TSX VENTURE:Q.A) (TSX VENTURE:Q.B) announce that it has filed on SEDAR its unaudited financial statements and related management's discussion and analysis for the three month and six month periods ended June 30, 2012.

Second Quarter 2012 Corporate Highlights

• Averaged 69 boepd (93 percent natural gas) with low operating and transportation costs of $9.07/boe and an average royalty rate of 13%.

Added 6 sections (3,840 acres) of land bringing the Corporation's land base to 29 sections (18,535 acres) all at 100 percent working interest.

• Raised $1,510,000 in unsecured senior convertible debentures.

President's Message

The second quarter of 2012 continued to be a challenging time in a variety of ways for the oil and natural gas industry in Western Canada. Daily spot prices for Alberta natural gas sank to 15-year lows. World oil prices also declined by approximately 20 percent. Along with volatility in commodity prices, equity markets also remain volatile, with investors being averse to risk due in part to continuing economic uncertainty around the world. Consequently, the access to capital for junior oil and natural gas companies has become very limited.

In light of these factors, Questfire continued to be very cautious with respect to capital spending in the second quarter of 2012. The Corporation continued to prospect for light oil drilling opportunities and spent approximately $600,000 in the quarter, with the majority ($383,000) spent on acquiring 6.0 sections (3,840 acres) of Crown lands prospective for light oil drilling. This newly acquired land is held at 100 percent working interest and brings the Corporation's total land base to 29 sections (18,535 acres) all at 100 percent working interest. An additional $94,000 was spent preparing a drilling location at Thorsby for drilling in the third quarter of 2012. Subsequent to the quarter end the well was drilled but unfortunately proved to be unsuccessful and was abandoned.

With this conservative approach no new wells were drilled or production added in the second quarter. Although the Corporation achieved operating and transportation costs of $9.07/boe, which is low for a combined oil and natural gas producer with a small scale of operations, as well as low royalty rate of 13%, production for the quarter averaged a modest 69 boepd (93 percent natural gas). This resulted in modest cash flow from production (revenue less royalties, production and transportation expenses) and a net loss for the quarter.

Going forward, the third quarter should see higher average production and cash flow, with the planned tie-in of the Corporation's liquids-rich gas well drilled and completed in the Thorsby field in the first quarter of 2012. This tie-in is expected to occur in the second half of August with first production in early September. Based on flow test results the well is expected to produce at an initial rate of approximately 0.5 mmscfd with 15 to 20 bbls/d of natural gas liquids or approximately 100 boepd. The corporation will remain conservative in its capital spending while investigating all potential sources of additional capital and funding. The management team at Questfire continues to prospect for oil-drilling opportunities while evaluating producing oil and natural gas assets that are for sale.

We are currently seeing a slow resolution to the North American natural gas oversupply issues, via sharply reduced natural gas drilling, particularly of "dry" gas targets, and increased natural gas consumption for power generation. This is leading to a slow improvement in natural gas pricing, with signs of some stability and investor confidence returning to the equity markets.