424B3 1 qr-rule424b3_6710078v3.txt PROSPECTUS Filed pursuant to Rule 424(b)(3) Registration No. 333-130259 PROSPECTUS QUEST RESOURCE CORPORATION [GRAPHIC OMITTED] 15,658,144 Shares of Common Stock ------------------------- This prospectus relates to the offer and sale of shares of our common stock by the selling stockholders. The shares to be sold by the selling stockholders were obtained from us in a private placement of our common stock. The selling stockholders or their permitted transferees or other successors in interest may offer and sell these shares of common stock from time to time. The selling stockholders or their permitted transferees or other successors in interest may, but are not required to, sell their common stock in a number of different ways and at varying prices. See "Plan of Distribution" on page 26 for a further description of how the selling stockholders may dispose of the shares covered by this prospectus. We will not receive any of the proceeds from sales of common stock made by the selling stockholders pursuant to this prospectus. Our common stock trades in the over-the-counter market under the symbol "QRES." On January 31, 2006, the last reported sale price of our common stock in the over-the-counter market was $16.20 per share. Investing in our common stock involves risks. See "Risk Factors" on page 6. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is February 1, 2006. TABLE OF CONTENTS Page About This Prospectus........................................................1 Forward-Looking Statements...................................................1 About Quest Resource Corporation.............................................4 Risk Factors.................................................................6 Summary Of Financial, Reserve And Operating Data.............................7 Use Of Proceeds.............................................................11 Market For Common Stock.....................................................11 Security Ownership Of Certain Beneficial Owners And Management..............13 The Selling Stockholders....................................................16 Plan Of Distribution........................................................27 Future Transactions.........................................................30 Legal Matters...............................................................30 Experts.....................................................................30 How To Obtain More Information..............................................30 Incorporation Of Information Filed With The SEC.............................30 Glossary Of Natural Gas Terms...............................................32 i ABOUT THIS PROSPECTUS This prospectus is part of a resale registration statement. The selling stockholders may sell some or all of their shares in one or more transactions from time to time. We have provided definitions of some of the industry terms used in this prospectus in the "Glossary of Natural Gas Terms." This prospectus highlights selected information about us and our common stock but does not contain all information that you should consider before investing in the shares. You should read this entire prospectus and the documents incorporated by reference herein carefully, including the "Risk Factors" beginning on page 6. You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone else to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. You should assume that the information appearing in this prospectus, as well as the information we file with the Securities and Exchange Commission ("SEC") and incorporate by reference in this prospectus, is accurate only as of the date of the documents containing the information. In this prospectus, references to "Quest", "we", "our" and "us" refer to Quest Resource Corporation, its subsidiaries and predecessors. FORWARD-LOOKING STATEMENTS This prospectus, and the documents incorporated by reference in this prospectus, may include forward-looking statements within the meaning of Section 27A of Securities Act, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact may be deemed to be forward-looking statements. Examples of forward-looking statements include, but are not limited to: o projections and estimates concerning the timing and success of specific projects; o financial position; o business strategy; o budgets; o amount, nature and timing of capital expenditures; o drilling of wells; o acquisition and development of natural gas and oil properties; o timing and amount of future production of natural gas and oil; o operating costs and other expenses; o estimated future net revenues from natural gas and oil reserves and the present value thereof; o cash flow and anticipated liquidity; and o other plans and objectives for future operations. When we use the words "believe," "intend," "expect," "may," "will," "should," "anticipate," "could," "estimate," "plan," "predict," "project," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe strategy that involves risks or uncertainties, 1 we are making forward-looking statements. The forward-looking statements in this prospectus speak only as of the date of this prospectus. We caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: o our ability to implement our business strategy; o the extent of our success in discovering, developing and producing reserves, including the risks inherent in exploration and development drilling, well completion and other development activities; o fluctuations in the commodity prices for natural gas and crude oil; o engineering and mechanical or technological difficulties with operational equipment, in well completions and workovers, and in drilling new wells; o land issues; o the effects of government regulation and permitting and other legal requirements; o labor problems; o environmental related problems; o the uncertainty inherent in estimating future natural gas and oil production or reserves; o production variances from expectations; o the substantial capital expenditures required for construction of pipelines and the drilling of wells and the related need to fund such capital requirements through commercial banks and/or public securities markets; o disruptions, capacity constraints in or other limitations on our pipeline systems; o costs associated with perfecting title for natural gas rights in some of our properties; o the need to develop and replace reserves; o competition; o dependence upon key personnel; o the lack of liquidity of our equity securities; o operating hazards attendant to the natural gas and oil business; o down-hole drilling and completion risks that are generally not recoverable from third parties or insurance; o potential mechanical failure or under-performance of significant wells; 2 o climatic conditions; o natural disasters; o acts of terrorism; o availability and cost of material and equipment; o delays in anticipated start-up dates; o our ability to find and retain skilled personnel; o availability of capital; o the strength and financial resources of our competitors; and o general economic conditions. Except to fulfill our obligations under the United States securities laws, we do not undertake to update any forward-looking statement to reflect events or circumstances after the date on which it is made. Forward-looking statements are not guarantees of future performance or results, and are subject to known and unknown risks and uncertainties. Our actual results may vary materially and adversely from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described in "Risk Factors" under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2005. You may obtain a copy of this document as described under "How to Obtain More Information" and "Incorporation of Information Filed with the SEC." Other factors not identified could also have such an effect. We cannot give you any assurance that the forward-looking statements included or incorporated by reference in this prospectus will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included or incorporated by reference in this prospectus, you should not regard the inclusion of this information as a representation by us or any other person that the results or conditions described in those statements or our objectives and plans will be achieved. 3 ABOUT QUEST RESOURCE CORPORATION We are an independent energy company engaged in the exploration, development and production of natural gas. Our operations are currently focused on the development of coal bed methane, or CBM, in a ten county region in southeastern Kansas and northeastern Oklahoma that is part of the Cherokee Basin. As of July 1, 2005, we had 140.7 Bcfe of net proved reserves with a PV-10 value of $382.9 million. Our reserves are approximately 99% CBM and 53% proved developed. We believe we are the largest producer of natural gas in the Cherokee Basin with an average net daily production of approximately 26.0 mmcfe for the year ended December 31, 2005. Our reserves are long-lived with a reserve life index of 16.3 years. We own the development rights to 502,815 net CBM acres throughout the Cherokee Basin. To date we have developed 42% of our acreage. As of December 31, 2005, we were operating about 1,024 producing CBM wells. As of that date, our undeveloped acreage contained approximately 1,815 CBM drilling locations. Of the approximately 1,077 CBM wells that have been drilled on our acreage to date, over 98% have been successful. None of our acreage or producing wells is associated with coal mining operations. In addition to our CBM reserves and acreage, we own and operate a gas gathering pipeline network of approximately 1,120 miles that serves our acreage position. As of December 31, 2005, this system had a maximum daily throughput of 70 mmcf/d and was operating at about 54% capacity. We transport 100% of our production through our gas gathering pipeline network to interstate pipeline delivery points. Approximately 10% of the current volumes transported on our pipeline system are for third parties. As of December 31, 2005, we had an inventory of 234 PDNP CBM wells awaiting connection to our gas gathering system. It is our intention to focus on the development of CBM reserves that can be immediately served by our gathering system. In addition, we plan to continue to expand our gathering system to serve other areas of the Cherokee Basin where we intend to acquire additional CBM acreage for development. Summary of Cherokee Basin Properties All data is as of December 31, 2005, except for estimated net proved reserves and the cost to develop, which is as of July 1, 2005. Estimated Net Proved Reserves (Bcfe)........ 140.7 Percent Proved Developed(1)................. 53.3% Producing CBM Wells......................... 1,024 No. of Drill Sites Available................ 1,815 Net Developed Acres......................... 211,182 Net Undeveloped Acres....................... 291,633 ----------- Total Net Acres........................... 502,815 =========== ---------- (1) Based on our July 1, 2005 reserve report, the estimated cost to fully develop our proved undeveloped and proved developed non-producing reserves, excluding abandonment, was $70.8 million. Cherokee Basin CBM Production The Cherokee Basin is located in southeastern Kansas and northeastern Oklahoma. Geologically, it is situated between the Forest City Basin to the north, the Arkoma Basin to the south, the Ozark Dome to the east and the Nemaha Ridge to the west. Structurally, the Cherokee Basin is separated from the Forest City Basin by the Bourbon Arch. The Cherokee Basin is a mature producing area with respect to conventional reservoirs such as the Bartlesville sandstones and the Mississippian limestones which were developed beginning in the early 1900s. The Cherokee Basin is part of the Western Interior Coal Region of the central United States. The coal seams we target for development are Pennsylvanian (Desmoinesian-Cherokee Group) in age and are found at depths of 300 to 1,400 feet. The principal formations we target include the Mulky, Weir-Pittsburgh and the Riverton. These coal seams are blanket type deposits which extend across large areas of the basin. Each of these seams generally 4 range from two to five feet thick. Additional minor coal seams such as the Summit, Bevier, Fleming and Rowe are found at varying locations throughout the basin. These seams range in thickness from one to two feet. The coal seams found in the Cherokee Basin are primarily high-volatile A and B bituminous grade with excellent permeability and gas saturations ranging from 150 to 380 scf/ton. We develop our CBM reserves in the Cherokee Basin on 160 acre spacing. Our wells generally reach total depth in 1.5 days and cost approximately $85,000 to drill and complete. Additionally, infrastructure costs are currently estimated to be approximately $66,000 per well. These estimated production costs (including the $10,000 recompletion average cost below) are historical numbers. Recently, we have begun to experience increases in our material costs (especially for poly-pipe). As of the date of this prospectus, we do not have sufficient information to assess the magnitude of the increase and whether the increased costs will continue for an extended period. We perforate and frac the multiple coal seams present in each well. Our typical Cherokee Basin multi-seam CBM well has gross reserves of 160 mmcf. Our general production profile for a CBM well averages an initial 15-20 mcf/d (net), steadily rising for the first 8 months while water is pumped off and the formation pressure is lowered. A period of relatively flat production of 55-60 mcf/d (net) follows the initial de-watering period for a period of 8-10 months. After 16 to 18 months, production begins to decline at an annual rate of 12-14%. The standard economic life is about 14 years. Our completed wells rely on very basic industry technology and are mechanically unchallenging. Our development activities in the Cherokee Basin also include an active program to recomplete CBM wells that produce from a single coal seam to wells that produce from multiple coal seams. We began our well recompletions in November 2004. As of December 31, 2005, we have recompleted approximately 193 wellbores in Kansas and an additional 46 in Oklahoma. As of December 31, 2005, we had an additional 175 wells awaiting recompletion to multi-seam producers. The recompletion strategy is to add four to five additional pay zones to each wellbore, in a two stage process at an average cost of $10,000 per well. Recently, we have experienced an increase in material costs, and as of the date of this prospectus, we have insufficient information to assess the magnitude and duration of the increased costs. Adding new zones to a well has a brief negative effect on production by first taking the well offline to perform the work and then by introducing a second de-watering phase of the newly completed formations. However, in the long term, we believe the impact of the multi-seam recompletions will be positive as a result of an increase in the rate of production and the ultimate recoverable reserves available per well. Wells are equipped with small pumping units to facilitate the de-watering of the producing coal seams. Generally, upon initial production, a single coal seam will produce 50-60 bbls of water per day. A multi-seam completion produces about 150 bbls of water per day. Eventually, water production subsides to 30-50 bbls per day. Produced water is disposed through injection wells we drill into the underlying Arbuckle formation. One disposal well will generally handle the water produced from 25 producing wells. Recent Drilling and Completion Activity (net wells) and Pipeline Miles 12 Months 12 Months Ended Ended December 31, 2005 December 31, 2004 ----------------- ----------------- Wells Drilled................... 103 466 Wells Recompleted............... 206 18 Wells Connected................. 233 164 Pipeline Miles.................. 119 141 Well Completion %............... 98% 98% Total Capital Expenditures--(in thousands)...................... $26,428(1) $55,713 ---------- (1) Capital expenditures represent cash transactions for the nine months ended September 30, 2005. 5 RISK FACTORS Investing in shares of our common stock involves a risk of loss. Before investing in our common stock, you should carefully consider the risk factors described in "Risk Factors" under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, together with all of the other information included in this prospectus and any prospectus supplement and the other information that we have incorporated by reference. Any of these risks, as well as other risks and uncertainties, could harm our business and financial results and cause the value of our securities to decline, which in turn could cause you to lose all or a part of your investment. These risks are not the only ones facing our company. Additional risks not currently known to us or that we currently deem immaterial also may impair our business. 6 SUMMARY OF FINANCIAL, RESERVE AND OPERATING DATA The following table shows our historical financial, reserve and operating data for, and as of the end of, each of the periods indicated. Beginning January 1, 2005, we changed our fiscal year end from May 31 to December 31. Accordingly, historical financial information reported herein has been prepared for the seven month transition period ended December 31, 2004. Our historical results are not necessarily indicative of the results that may be expected for any future period. The following data should be read in conjunction with our consolidated financial statements and related notes and the accompanying "Management's Discussion and Analysis of Results of Operations and Financial Condition" in our Form 10-KSB/A (Amendment No. 2) for the seven month transition period ended December 31, 2004 and our Form 10-Q for the quarter ended September 30, 2005 incorporated by reference into this registration statement. The comparability of information from period to period has been significantly affected by the recent increase in the volatility of the prices at which we sell our natural gas and the corresponding effect of such price volatility on our obligations under our commodity hedge agreements. The statement of income data for the fiscal year ended May 31, 2001 has been restated to eliminate certain intercompany items of revenue and expense that had previously not been eliminated in preparing our consolidated financial statements. We have not amended our previously filed annual reports on Form 10-KSB or the quarterly reports on Form 10-QSB for any of the periods affected by the restatements. The information that has been previously filed or otherwise reported for the fiscal year ended May 31, 2001 is superseded by the information in this prospectus. As such, the consolidated financial statements and related financial information contained in such previously filed reports should no longer be relied upon.

Seven Month Transition Period Fiscal Year Ended Ended May 31, December 31, -------------------------------------------------- 2004 2004 2003(1) 2002(2) 2001 ---- ---- ------- ------- ---- (restated) (dollars in thousands, except operating data and per share data) Statement of income data Total revenues................... $ 26,156 $ 30,011 $ 8,098 $ 2,435 $ 2,392 Operating expenses............... 9,042 10,341 2,891 1,255 987 General and administrative Expenses....................... 2,681 2,555 977 370 250 Depreciation, depletion and Amortization................... 7,671 7,650 1,822 401 256 -------- ---------- -------- -------- -------- Operating income................. 6,762 9,465 2,408 409 899 Change in derivative fair value.. (1,487) (2,013) (4,867) -- -- Interest expense (net) and other............................ (10,138) (8,062) (730) (213) (152) Cumulative effect of accounting Change......................... -- (28) -- -- -- Deferred income tax benefit (expense)...................... -- 245 (374) (72) (318) -------- ---------- --------- -------- -------- Net income (loss).............. $ (4,863) $ (393) $ (3,563) $ 124 $ 429 ======== ========== ======== ======== ======== Net income (loss) per common share - basic.................. $ (0.86) $ (0.07) $ (0.87) $ 0.04 $ 0.18 ======== ========== ======== ======== ======== Balance sheet data (at period end) Working capital (deficiency)(3).. $ (9,525) $ 4,382 $ 2,449 $ (1,736) $ (104) Total assets..................... 237,962 190,375 36,533 9,671 7,212 Long-term debt................... 193,984 159,200 16,081 2,118 1,350 Long-term derivative liability... 12,964 9,701 1,032 -- -- Total long-term obligations ..... 207,819 170,256 18,528 2,507 1,350 Stockholders' equity (deficit)... (2,606) 2,235 11,142 4,612 4,296

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Seven Month Transition Period Fiscal Year Ended Ended May 31, December 31, ------------------------------------------------------------- 2004 2004 2003(1) 2002(2) 2001 ---- ---- ---- ---- ---- (restated) (dollars in thousands, except operating data and per share data) Cash flow statement data Net cash provided by operating Activities........................ $ 25,484 $ 12,197 $ 4,211 $ 1,306 $ 882 Net cash used in investing Activities........................ (48,814) (146,834) (8,804) (3,494) (1,567) Net cash (used in) provided by financing activities.............. 26,280 135,456 7,205 2,077 762 Other operating data Gas: Net sales volume (Bcf).............. 5.01 5.53 1.49 0.51 0.20 Average sales price excluding effects of hedging (per mcf)...... $ 5.74 $ 5.19 $ 5.66 $ 3.34 $ 2.64 Average sales price including effects of hedging (per mcf)...... $ 4.83 $ 5.04 $ 5.30 $ 3.63 $ 3.07 Expenses: (per mcf) Lifting........................... $ 0.72 $ 0.92 $ 0.97 $ 0.98 $ 1.54 (5) Transportation.................... $ 0.73 $ 0.63 $ 0.61 $ 1.30 $ 1.68 (5) Production and property tax....... $ 0.35 $ 0.33 $ 0.32 $ 0.10 $ 0.08 (5) General & administrative.......... $ 0.53 $ 0.46 $ 0.66 $ 0.73 $ 0.83 (5) Depreciation, depletion & amortization................... $ 1.53 $ 1.38 $ 1.22 $ 0.79 $ 0.85 (5) Total operating costs (per mcf)..... $ 3.86 $ 3.72 $ 3.78 $ 3.90 $ 4.98 (5) Net estimated proved reserves (Bcf)(4).......................... 149.8 133.6 28.3 14.9 5.6 Pretax PV-10 value (millions)....... $ 401.1 $ 318.4 $ 69.9 $ 17.4 $ 15.2 Price used for proved reserve PV-10 value (per mcf)................... $ 6.30 $ 5.95 $ 4.80 $ 2.78 $ 4.00 Other financial data Capital expenditures................ $ 48,814 $ 146,834 $ 8,804 $ 3,494 $ 1,567 EBIT(6)............................. $ 6,762 $ 9,465 $ 2,408 $ 409 $ 899 EBITDA(6)........................... $ 14,433 $ 17,115 $ 4,230 $ 810 $ 1,155

8 Nine Months Ended September 30, -------------------------- 2005 2004 ---- ---- (Unaudited) (dollars in thousands, except operating data and per share data) Statement of income data Total revenues.......................... $ 38,560 $ 34,407 Operating expenses...................... 15,444 11,243 General and administrative expenses..... 3,001 2,891 Depreciation, depletion and amortization 11,294 9,812 -------- --------- Operating income........................ 8,821 10,461 Change in derivative fair value......... 1,215 (4,188) Interest expense (net) and other........ (17,294) (11,427) Cumulative effect of accounting change.. -- -- Deferred income tax benefit (expense)... -- -- -------- --------- Net income (loss)..................... $ (7,258) $ (5,154) ======== ========= Net income (loss) per common share - basic................................ $ (1.16) $ (0.92) ======== ========= Balance sheet data (at period end) Working capital (deficiency)(3)......... $ (6,451) $ (4,615) Total assets............................ 246,800 210,765 Long-term debt.......................... 217,872 177,365 Long-term derivative liability.......... 31,289 15,243 Total long-term obligations............. 250,246 193,411 Stockholders' equity (deficit).......... (72,977) (9,467) Cash flow statement data Net cash provided by operating activities............................ $ 7,567 $ 21,771 Net cash used in investing activities... (26,428) (30,560) Net cash (used in) provided by financing activities.............................. 17,382 13,123 Other operating data Gas: Net sales volume (Bcf).................. 7.11 6.46 Average sales price excluding effects of hedging (per mcf)............................. $ 6.60 $ 5.52 Average sales price including effects of hedging (per mcf).......... $ 5.10 $ 5.05 Expenses: (per mcf) Lifting............................... $ 1.03 $ 0.79 Transportation........................ $ 0.83 $ 0.64 Production and property tax........... $ 0.32 $ 0.31 General & administrative.............. $ 0.42 $ 0.45 Depreciation, depletion & amortization $ 1.59 $ 1.52 Total operating costs (per mcf)......... $ 4.19 $ 3.71 Net estimated proved reserves (Bcf)(4).. n/a n/a Pretax PV-10 value (millions)........... n/a n/a Price used for proved reserve PV-10 value (per mcf).............................. n/a n/a Other financial data Capital expenditures.................... $ 26,428 $ 30,560 EBIT(6)................................. $ 8,821 $ 10,461 EBITDA(6)............................... $ 0,115 $ 20,273 ---------- (1) Includes results of operations since the dates of acquisition from the June 1, 2003 acquisition of natural gas producing properties, natural gas pipelines and a fleet of trucks and well service equipment, all of which are located in the southeastern Kansas portion of the geological region known as the Cherokee Basin, from Perkins and Willhite and the December 2003 acquisition of certain natural gas properties located in Kansas 9 and Oklahoma for a total consideration of $126 million, subject to certain purchase price adjustments, from Devon Energy Production Company, L.P. and Tall Grass Gas Services, L.L.C. (2) Includes results of operations from the November 2002 acquisition of STP Cherokee, Inc. since the date of acquisition. (3) Excludes derivatives associated with hedge contracts. (4) Represents proved developed and proved undeveloped gas reserves at period end. (5) Cost was calculated on a mcfe basis rather than a mcf basis because oil volumes were a significant percentage of overall volumes in this period. (6) EBIT is defined as earnings before deducting net interest expense (interest expense less interest income) income taxes, cumulative effect of accounting change, change in derivative fair value and gains on sale of assets, EBITDA is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization, cumulative effect of accounting change, change in derivative fair value and gains on sale of assets. Although EBIT and EBITDA are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating our company because they are used as measures to evaluate a company's operating performance before debt expense and cash flow. EBIT and EBITDA do not purport to represent cash generated by operating activities and should not be considered in isolation or as substitute for measures of performance in accordance with generally accepted accounting principles. In addition, because EBIT and EBITDA are not calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies. Management's discretionary use of funds depicted by EBIT and EBITDA may be limited by working capital, debt service and capital expenditure requirements, and by restrictions related to legal requirements, commitments and uncertainties. A reconciliation of EBIT and EBITDA to financial net income is as follows:

Seven Month Transition Period Fiscal Year Ended Ended May 31, December 31, ------------------------------------------------------ 2004 2004 2003 2002 2001 ---- ---- ---- ---- ---- (in thousands) (restated) Net income (loss)........................ $ (4,863) $ (393) $ (3,563) $ 124 $ 429 Add: Interest expense.................... 10,147 8,063 730 216 158 Less: Interest income.................... 9 1 -- 3 6 Less: Change in derivative fair value.... (1,487) (2,013) (4,867) -- -- Add: Income tax expense.................. -- (245) 374 72 318 Less: Cumulative effect of accounting change -- (28) -- -- -- --------- --------- ---------- ---------- --------- Earnings before interest and taxes (EBIT) 6,762 9,465 2,408 409 899 Add: Depreciation, depletion and amortization 7,671 7,650 1,822 401 256 --------- --------- --------- --------- --------- Earnings before interest, taxes and depreciation, depletion and amortization (EBITDA)............................... $ 14,433 $ 17,115 $ 4,230 $ 810 $ 1,155 ========= ========= ========= ========= =========

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Nine Months Ended September 30, ----------------- 2005 2004 ---- ---- (Unaudited) (in thousands) Net income (loss)............................................... $ (7,258) $ (5,154) Add: Interest expense........................................... 17,305 11,427 Less: Interest income........................................... 11 -- Less: Change in derivative fair value........................... 1,215 (4,188) Add: Income tax expense......................................... -- -- Less: Cumulative effect of accounting change.................... -- -- --------- --------- Earnings before interest and taxes (EBIT)....................... 8,821 10,461 Add: Depreciation, depletion and amortization................... 11,294 9,812 --------- --------- Earnings before interest, taxes and depreciation, depletion and amortization (EBITDA)........................... $ 20,115 $ 20,273 ========= =========

USE OF PROCEEDS We will receive no proceeds from the sale of the shares by the selling stockholders. We will pay certain expenses related to the registration of the shares of common stock. MARKET FOR COMMON STOCK Our common stock trades in the over-the-counter market under the symbol "QRES". From June 8, 1999 until February 23, 2004, our common stock traded on the OTC Bulletin Board. From February 23, 2004 until November 15, 2004, our common stock was traded in the "pink sheets". Since November 15, 2004, our common stock has traded on the OTC Bulletin Board. The table set forth below lists the range of high and low bids of our common stock for each of the periods set forth below, as adjusted to reflect the 2.5 to 1 reverse stock split on October 31, 2005. Beginning January 1, 2005, we changed our fiscal year end from May 31 to December 31. Accordingly, the quarterly periods set forth in the table below reflect the change in our fiscal year end. The prices in the table reflect inter-dealer prices, without retail markup, markdown or commission and may not represent actual transactions. Market Price ------------------------ High Low ----------- ----------- 2003 Quarters First $ 9.63 5.70 Second 10.00 7.00 Third 11.50 7.13 Fourth 11.38 8.63 2004 Quarters First $ 11.50 7.00 Second 11.25 8.00 Third 12.13 8.75 Fourth 18.13 11.75 2005 Quarters First $ 15.63 7.88 Second 10.63 5.28 Third 10.75 6.93 Fourth 13.75 9.58 The source for the information contained in the table above is Investools at www.investortoolbox.com. The closing price for our common stock on January 31, 2006 was $16.20. 11 As of January 17, 2006, there were approximately 835 holders of record of our common stock, excluding shares held in book-entry form through The Depository Trust Company. The payment of dividends on our common stock is within the discretion of our board of directors and will depend on our earnings, capital requirements, financial condition and other relevant factors. We have not declared any cash dividends on our common stock for the last two years and do not anticipate paying any dividends on our common stock in the foreseeable future. Under our existing credit facilities, we are generally prohibited from paying dividends on our common stock without the consent of our lenders. 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information as of January 13, 2006 concerning the shares of common stock beneficially owned by (a) each person known by us, solely by reason of our examination of Schedule 13D and 13G filings made with the SEC and by information voluntarily provided to us by certain selling stockholders, to be the beneficial owner of 5% or more of our outstanding common stock, (b) each of the directors and nominees for election as a director, (c) each of the executive officers named in the summary compensation table in our proxy statement filed with the SEC on May 3, 2005 (except for Mr. Lamb, who resigned as our president effective October 7, 2005) and (d) all current directors and executive officers as a group. If a person or entity listed in the following table is the beneficial owner of less than one percent of our common stock outstanding, this fact is indicated by an asterisk in the table. The percentages of ownership and the number of shares beneficially owned are disproportionate due to joint beneficial ownership making the notes following the table essential for a complete understanding of our ownership structure. Number of Shares of Common Stock Beneficially Percent Of Owned(1) Class Name and Address of Beneficial Owner ------------ ----- Wellington Management Company, LLP(2) 75 State Street Boston, MA 02109............................ 2,270,600 10.29% Third Point LLC(3) 390 Park Avenue, 18th Floor New York, NY 10022........................... 2,150,812 9.75% SAB Capital Advisors, L.L.C. (4) 712 Fifth Avenue, 42nd Floor New York, NY 10019........................... 1,923,076 8.7% First Pacific Advisors, Inc.(5) 11400 West Olympic Blvd., Suite 1200 New York, NY 10019........................... 1,540,000 7.0% Jerry D. Cash(6) 9520 North May Avenue, Suite 300 Oklahoma City, OK 73120...................... 1,269,238 5.8% James B. Kite, Jr.(7)(8) .................... 926,157 4.2% John C. Garrison(7) ......................... 76,053 * Kevin R. White(7) ........................... 10,000 * Jon H. Rateau(7) ............................ 10,000 * Ronnie K. Irani(7) .......................... 10,000 * Richard Marlin(9) ........................... 5,363 * Walter Yuras(10)............................. 207,698 * All Directors and Executive Officers as a Group (10 Persons)........................... 2,514,509 11.4% ---------- * Less than 1%. (1) The number of shares beneficially owned by the entities above is determined under rules promulgated by the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. 13 Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares that the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The inclusion herein of such shares, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner of such shares. Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares such power with his or her spouse) with respect to all shares of capital stock listed as owned by such person or entity. (2) Wellington Management Company, LLP ("Wellington") is the investment manager and adviser to clients that own a total of 2,270,600 shares of our common stock and is registered under the Investment Advisers Act of 1940, as amended. Wellington, in such capacity, is deemed to share beneficial ownership over the shares held by its client accounts. None of Wellington's individual clients owns more than 5% of our outstanding shares of common stock. (3) Third Point LLC ("Third Point") is the investment manager and adviser to hedge funds and other managed accounts that own a total of 2,150,812 shares of our common stock. Except for Third Point Offshore Fund, Ltd., which owns 1,386,312 shares of our common stock, none of the funds or accounts owns more than 5% of our outstanding shares of common stock. Daniel S. Loeb is the Chief Executive Officer of Third Point. Mr. Loeb and Third Point may each be deemed to beneficially own the shares of common stock owned by the hedge funds and managed accounts for which Third Point serves as the investment manager and adviser. On October 14, 2005, Third Point entered into a voting agreement with Mr. Cash in which it agreed to vote the shares it acquired from Mr. Cash on September 30, 2005 as directed in writing by Mr. Cash. In the absence of any such written direction by Mr. Cash, Third Point agreed to abstain from voting the shares purchased from Mr. Cash. The voting agreement expires March 31, 2006. (4) SAB Capital Advisors, L.L.C. is the general partner of SAB Capital Partners, L.P. and SAB Overseas Master Fund, L.P. Scott A. Bommer is the managing member of SAB Capital Advisors. SAB Capital Partners owns 944,814 shares of our common stock, and the SAB Overseas Master Fund owns 978,262 shares of our common stock. Mr. Bommer and SAB Capital Advisors, L.L.C. may each be deemed to beneficially own the shares of common stock owned by SAB Capital Partners and SAB Overseas Master Fund. (5) First Pacific Advisors, Inc. ("FPA") is the managing member of two funds that own a total of 1,540,000 shares of our common stock. FPA, in such capacity, has shared dispositive power and is deemed to share beneficial ownership over the shares held by the funds. Neither of the individual funds owns more than 5% of our outstanding shares of common stock. (6) Includes 200 shares owned by Mr. Cash's wife, Sherry J. Cash and 5,108 shares held in Mr. Cash's retirement account. Mr. Cash does not have voting rights with respect to the shares held in his profit sharing retirement account. Jerry D. Cash disclaims beneficial ownership of the shares owned by Sherry J. Cash. In addition to the shares listed in the table, on October 14, 2005, Mr. Cash has entered into a voting agreement with each of Third Point and Fondren Management LP ("Fondren") pursuant to which they agreed to vote the 227,736 shares of our common stock that they each acquired from Mr. Cash on September 30, 2005 as directed in writing by Mr. Cash. In the absence of any such written direction by Mr. Cash, each of Fondren and Third Point agreed to abstain from voting the shares purchased from Mr. Cash. Each voting agreement expires March 31, 2006. As a result of these voting agreements, Mr. Cash may be deemed to share voting beneficial ownership of these shares with Fondren and Third Point. Mr. Cash disclaims beneficial ownership of these shares. (7) Includes options to acquire 10,000 shares of our common stock that are immediately exercisable. (8) Includes 916,517 shares owned by McKown Point LP, a Texas Limited Partnership. Easterly Family Investments LLC is the sole general partner of McKown Point LP. Easterly Family Investments LLC is wholly owned by the Virginia V. Kite GST Exempt Trust for James B. Kite, Jr. Mr. Kite and Bank of 14 Texas, N.A. are the trustees of the Virginia V. Kite GST Exempt Trust for James B. Kite, Jr. Easterly Family Investments LLC, the Virginia V. Kite GST Exempt Trust for James B. Kite, Jr. and James B. Kite, Jr. may be deemed to have beneficial ownership of the shares owned by McKown Point LP. (9) Represents shares held in Mr. Marlin's retirement accounts. Mr. Marlin does not have voting rights with respect to these shares. (10) Represents shares owned of record by Southwind Resources, Inc. Mr. Yuras owns 100% of the outstanding capital stock of Southwind Resources and accordingly may be deemed to beneficially own the shares that are owned by Southwind Resources. 15 THE SELLING STOCKHOLDERS Pursuant to a registration rights agreement dated November 14, 2005, we agreed to file this registration statement with the SEC for the benefit of the selling stockholders. The shares are being registered to permit public trading of the shares (without any restriction as to holding period or volume of such sales). The selling stockholders, or their permitted transferees or other successors in interest, may offer the shares for resale from time to time. We did not have a material relationship with any of the selling security holders during the three years prior to their acquisition of our common stock, and have not had a material relationship with any of them since that date through the date of this prospectus. We agreed to file this registration statement with the SEC for the benefit of the selling security holders and to use our commercially reasonable efforts to file required amendments and supplements to keep it current and effective until the earlier of: o the sale, transfer or other disposition of all of the shares of common stock covered by this registration statement pursuant to this registration statement or pursuant to Rule 144 under the Securities Act; o such time as all of the shares of our common stock registered under this registration statements and not held by affiliates of us are, in the opinion of our counsel, eligible for sale pursuant to Rule 144(k) (or any successor or analogous rule) under the Securities Act; o the shares covered by this registration statement have been sold to us or any of our subsidiaries; or o the second anniversary of the initial effective date of this registration statement. The table below shows the number of shares owned by the selling stockholders based upon information they have provided to us as of January 13, 2006. We cannot estimate the number of shares the selling stockholders will hold after completion of this offering because they may sell all or a portion of the shares and there are currently no agreements, arrangements or understandings with respect to the number of shares to be sold by them. We have assumed for purposes of this table that none of the shares offered by this prospectus will be held by the selling stockholders after the completion of this offering. This information is based solely on information provided by or on behalf of the selling security holders set forth below, and we have not independently verified the information.

------------------------- ------------------- -------------------- ------------------- Number of Shares Number of Shares of of Common Stock Number of Shares of Common Stock Owned Prior to Common Stock Owned Upon Name of Selling this Offered Under this Completion of the Stockholder Offering Prospectus Offering ------------------------- ------------------- -------------------- ------------------- E. Peter Hoffman, Jr. 320,000 240,000 80,000 ------------------------- ------------------- -------------------- ------------------- Ty T. Hartwig 160,000 160,000 0 ------------------------- ------------------- -------------------- ------------------- Fondren Partners LP 361,432 125,308 236,124 ------------------------- ------------------- -------------------- ------------------- Fondren Partners 68,348 28,538 39,810 Offshore LTD ------------------------- ------------------- -------------------- ------------------- Drake Associates L.P. 30,000 30,000 0 ------------------------- ------------------- -------------------- ------------------- David R. Edelman 2,000 2,000 0 ------------------------- ------------------- -------------------- -------------------

16

------------------------- ------------------- -------------------- ------------------- Number of Shares Number of Shares of of Common Stock Number of Shares of Common Stock Owned Prior to Common Stock Owned Upon Name of Selling this Offered Under this Completion of the Stockholder Offering Prospectus Offering ------------------------- ------------------- -------------------- ------------------- Robert H. Smith 7,700 7,700 0 ------------------------- ------------------- -------------------- ------------------- Stratford Partners, L.P. 35,000 35,000 0 ------------------------- ------------------- -------------------- ------------------- Ronald L. Gallatin 40,000 40,000 0 ------------------------- ------------------- -------------------- ------------------- Edward J. Nusrala 10,000 10,000 0 ------------------------- ------------------- -------------------- ------------------- Surfgear and Co. 244,600 244,600 0 ------------------------- ------------------- -------------------- ------------------- Surfline and Co. 140,100 140,100 0 ------------------------- ------------------- -------------------- ------------------- JAM Investments, LLC 4,000 4,000 0 ------------------------- ------------------- -------------------- ------------------- HFR HE Systematic 66,480 66,480 0 Master Trust ------------------------- ------------------- -------------------- ------------------- Creve & Co. 15,000 15,000 0 ------------------------- ------------------- -------------------- ------------------- Kayne Anderson 50,000 50,000 0 Non-Traditional Investments LP ------------------------- ------------------- -------------------- ------------------- ARBCO Associates, LP 50,000 50,000 0 ------------------------- ------------------- -------------------- ------------------- Charles Amodei Post 1,700 1,700 0 ------------------------- ------------------- -------------------- ------------------- VentureSim, Inc. 7,700 7,700 0 ------------------------- ------------------- -------------------- ------------------- Martin Hirschhorn 10,000 10,000 0 ------------------------- ------------------- -------------------- ------------------- Richard Feinberg 17,500 17,500 0 ------------------------- ------------------- -------------------- ------------------- Howard C. Bluver IRA R/O 1,900 1,900 0 ------------------------- ------------------- -------------------- ------------------- Gary Kaplowitz 80,000 80,000 0 ------------------------- ------------------- -------------------- ------------------- Richard S. Bodman 7,700 7,700 0 Revocable Trust, dated 9/1/1998 ------------------------- ------------------- -------------------- ------------------- Hedge Capital Partners 99,000 99,000 0 LLC ------------------------- ------------------- -------------------- ------------------- Bennett Family LLC 5,700 5,700 0 ------------------------- ------------------- -------------------- -------------------

17

------------------------- ------------------- -------------------- ------------------- Number of Shares Number of Shares of of Common Stock Number of Shares of Common Stock Owned Prior to Common Stock Owned Upon Name of Selling this Offered Under this Completion of the Stockholder Offering Prospectus Offering ------------------------- ------------------- -------------------- ------------------- Johnson Revocable 10,000 10,000 0 Living Trust dtd 5/18/98, Richard & Clasina Johnson trustees ------------------------- ------------------- -------------------- ------------------- Dwayne Donald Barfell 3,800 3,800 0 and Margaret Lynn Harris ------------------------- ------------------- -------------------- ------------------- F. Ferguson Locke 7,600 7,600 0 ------------------------- ------------------- -------------------- ------------------- John M. & Patricia D. 11,500 11,500 0 Coleman ------------------------- ------------------- -------------------- ------------------- Daniel W. & Constance 3,800 3,800 0 R. Huthwaite ------------------------- ------------------- -------------------- ------------------- Steven R. Rothstein 30,000 30,000 0 ------------------------- ------------------- -------------------- ------------------- CastleRock Partners II, 15,320 15,320 0 L.P. ------------------------- ------------------- -------------------- ------------------- CastleRock Partners, 178,040 178,040 0 L.P. ------------------------- ------------------- -------------------- ------------------- CastleRock Fund, Ltd. 111,720 111,720 0 ------------------------- ------------------- -------------------- ------------------- L.H. Rich Companies 6,000 6,000 0 ------------------------- ------------------- -------------------- ------------------- Bermuda Partners LP 28,440 28,440 0 ------------------------- ------------------- -------------------- ------------------- Global Cap Ltd. Inc. 10,000 10,000 0 ------------------------- ------------------- -------------------- ------------------- Darryl W. Copeland Jr. 4,000 4,000 0 ------------------------- ------------------- -------------------- ------------------- HedgEnergy Master Fund, 125,000 125,000 0 L.P. ------------------------- ------------------- -------------------- ------------------- Robert C. Kettler 15,300 15,300 0 ------------------------- ------------------- -------------------- ------------------- Stuckey Timberland, Inc. 7,700 7,700 0 ------------------------- ------------------- -------------------- ------------------- Natelli Communities 7,700 7,700 0 Limited Partnership ------------------------- ------------------- -------------------- ------------------- Ironman Energy Capital, 30,000 30,000 0 L.P. ------------------------- ------------------- -------------------- ------------------- Vestal Venture Capital 22,000 22,000 0 ------------------------- ------------------- -------------------- -------------------

18

------------------------- ------------------- -------------------- ------------------- Number of Shares Number of Shares of of Common Stock Number of Shares of Common Stock Owned Prior to Common Stock Owned Upon Name of Selling this Offered Under this Completion of the Stockholder Offering Prospectus Offering ------------------------- ------------------- -------------------- ------------------- Flanagan Family Limited 7,700 7,700 0 Partnership ------------------------- ------------------- -------------------- ------------------- James Moeser IRA R/O 3,000 3,000 0 ------------------------- ------------------- -------------------- ------------------- Edward Fox IRA 7,700 7,700 0 ------------------------- ------------------- -------------------- ------------------- Falcon Fund QP, L.P. 465,900 250,000 215,900 ------------------------- ------------------- -------------------- ------------------- Robert Feinberg 10,000 10,000 0 ------------------------- ------------------- -------------------- ------------------- Bard Micro-Cap Value 2,000 2,000 0 Fund LP ------------------------- ------------------- -------------------- ------------------- Joseph H. Ballway 2,000 2,000 0 ------------------------- ------------------- -------------------- ------------------- William G. Escamilla 1,500 1,500 0 ------------------------- ------------------- -------------------- ------------------- Sidney N. Herman 2,000 2,000 0 ------------------------- ------------------- -------------------- ------------------- Robert S. Steinbaum 2,000 2,000 0 ------------------------- ------------------- -------------------- ------------------- Joanne G. Bloom IRA 2,000 2,000 0 ------------------------- ------------------- -------------------- ------------------- Susan W. McMillan IRA 3,000 3,000 0 ------------------------- ------------------- -------------------- ------------------- William K. Kellogg III 1,500 1,500 0 IRA ------------------------- ------------------- -------------------- ------------------- Pierrepont Trust, MSP-32 2,000 2,000 0 ------------------------- ------------------- -------------------- ------------------- Ralph A.L. Bogan Trust 2,500 2,500 0 ------------------------- ------------------- -------------------- ------------------- Katharine Bard Dickson 5,000 5,000 0 & Mark A. Dickson ------------------------- ------------------- -------------------- ------------------- Lorenz and Laura 1,500 1,500 0 Reibling Trust ------------------------- ------------------- -------------------- ------------------- Laurie M. Harmon Trust 2,000 2,000 0 ------------------------- ------------------- -------------------- ------------------- Suzanne R. Davis 1,500 1,500 0 ------------------------- ------------------- -------------------- ------------------- Third Point Partners LP 279,000 248,500 30,500 ------------------------- ------------------- -------------------- ------------------- Third Point Partners 131,500 118,000 13,500 Qualified L.P. ------------------------- ------------------- -------------------- -------------------

19

------------------------- ------------------- -------------------- ------------------- Number of Shares Number of Shares of of Common Stock Number of Shares of Common Stock Owned Prior to Common Stock Owned Upon Name of Selling this Offered Under this Completion of the Stockholder Offering Prospectus Offering ------------------------- ------------------- -------------------- ------------------- Third Point Resources LP 79,000 70,000 9,000 ------------------------- ------------------- -------------------- ------------------- Third Point Offshore 1,386,312 1,234,076 152,236 Fund Ltd ------------------------- ------------------- -------------------- ------------------- Third Point Ultra Ltd 143,500 136,000 7,500 ------------------------- ------------------- -------------------- ------------------- Third Point Resources 131,500 116,500 15,000 Ltd ------------------------- ------------------- -------------------- ------------------- Kenneth F. Rupp Roth 1,000 1,000 0 IRA, Bear Stearns Sec Corp custodian ------------------------- ------------------- -------------------- ------------------- Johanne S. Rupp IRA 3,000 3,000 0 R/O, Bear Stearns Sec Corp custodian ------------------------- ------------------- -------------------- ------------------- Leonard M. Herman Trust 5,000 5,000 0 ------------------------- ------------------- -------------------- ------------------- T. Michael & Patricia 1,500 1,500 0 Johnson ------------------------- ------------------- -------------------- ------------------- The WBJ Revocable Trust 1,500 1,500 0 ------------------------- ------------------- -------------------- ------------------- Carol Clark Coolidge 2,500 2,500 0 ------------------------- ------------------- -------------------- ------------------- Point Venture LLC 1,000 1,000 0 ------------------------- ------------------- -------------------- ------------------- DeFrees & Fiske 2,500 2,500 0 Retirement Trust ------------------------- ------------------- -------------------- ------------------- Henry Flynn 2,000 2,000 0 ------------------------- ------------------- -------------------- ------------------- Gordon K. Kapes 2,000 2,000 0 ------------------------- ------------------- -------------------- ------------------- Anne R. Brown 2,500 2,500 0 Irrevocable Trust ------------------------- ------------------- -------------------- ------------------- John Bard Manulis 2,000 2,000 0 ------------------------- ------------------- -------------------- ------------------- Bell Partnership 2,000 2,000 0 Retirement PL ------------------------- ------------------- -------------------- ------------------- M. Edward Sellers & 2,000 2,000 0 Suzan D. Boyd ------------------------- ------------------- -------------------- -------------------

20

------------------------- ------------------- -------------------- ------------------- Number of Shares Number of Shares of of Common Stock Number of Shares of Common Stock Owned Prior to Common Stock Owned Upon Name of Selling this Offered Under this Completion of the Stockholder Offering Prospectus Offering ------------------------- ------------------- -------------------- ------------------- Leland D. Boddy Roth IRA 2,000 2,000 0 ------------------------- ------------------- -------------------- ------------------- Anne H. Ross 2,000 2,000 0 ------------------------- ------------------- -------------------- ------------------- The Bourquin Family 2,000 2,000 0 Trust ------------------------- ------------------- -------------------- ------------------- Rosemary Steinbaum 1,500 1,500 0 ------------------------- ------------------- -------------------- ------------------- Balie M. Ross 1,500 1,500 0 ------------------------- ------------------- -------------------- ------------------- Gary R. Fairhead 2,500 2,500 0 ------------------------- ------------------- -------------------- ------------------- S. Donald Harlan, III 5,000 5,000 0 ------------------------- ------------------- -------------------- ------------------- Boston Partners Asset 712,685 600,000 112,685 Management, LLC ------------------------- ------------------- -------------------- ------------------- Mark Ristow Roth IRA 1,000 1,000 0 #75096206, Bear Stearns Sec Corp Custodian ------------------------- ------------------- -------------------- ------------------- Rebecca Ristow Roth IRA 1,000 1,000 0 #75096205, Bear Stearns Securities Corp. Custodian ------------------------- ------------------- -------------------- ------------------- The William K. Warren 30,000 30,000 0 Foundation ------------------------- ------------------- -------------------- ------------------- Le Roy Eakin III and 11,500 11,500 0 Lindsay Eakin JTWROS ------------------------- ------------------- -------------------- ------------------- Spring Street Partners, 15,000 15,000 0 L.P. ------------------------- ------------------- -------------------- ------------------- Thomas B. Parsons 1,000 1,000 0 ------------------------- ------------------- -------------------- ------------------- Thomas P. & Lucy G. 4,000 4,000 0 Gies JTWROS ------------------------- ------------------- -------------------- ------------------- Felix R. Harke 1,730 1,730 0 ------------------------- ------------------- -------------------- ------------------- Elizabeth Susan Sexworth 400 400 0 ------------------------- ------------------- -------------------- ------------------- Peter Westover Helms 667 667 0 ------------------------- ------------------- -------------------- -------------------

21

------------------------- ------------------- -------------------- ------------------- Number of Shares Number of Shares of of Common Stock Number of Shares of Common Stock Owned Prior to Common Stock Owned Upon Name of Selling this Offered Under this Completion of the Stockholder Offering Prospectus Offering ------------------------- ------------------- -------------------- ------------------- Bridgette Megan Helms 667 667 0 ------------------------- ------------------- -------------------- ------------------- Stephen Harrison 670 670 0 ------------------------- ------------------- -------------------- ------------------- Christine J. Harrison 670 670 0 ------------------------- ------------------- -------------------- ------------------- GAM Arbitrage 94,300 94,300 0 Investments Inc. ------------------------- ------------------- -------------------- ------------------- AG Super Fund 59,400 59,400 0 International Partners, L.P. ------------------------- ------------------- -------------------- ------------------- Nutmeg Partners, L.P. 33,700 33,700 0 ------------------------- ------------------- -------------------- ------------------- AG MM, L.P. 17,600 17,600 0 ------------------------- ------------------- -------------------- ------------------- AG Super Fund, L.P. 223,100 223,100 0 ------------------------- ------------------- -------------------- ------------------- AG Princess, L.P. 13,500 13,500 0 ------------------------- ------------------- -------------------- ------------------- AG CNG Fund, L.P. 25,700 25,700 0 ------------------------- ------------------- -------------------- ------------------- Commonfund Event-Driven 12,500 12,500 0 Company ------------------------- ------------------- -------------------- ------------------- PHS Patriot Fund, L.P. 6,700 6,700 0 ------------------------- ------------------- -------------------- ------------------- PHS Bay Colony Fund, 13,500 13,500 0 L.P. ------------------------- ------------------- -------------------- ------------------- United Capital 19,231 19,231 0 Management, Inc. ------------------------- ------------------- -------------------- ------------------- John Whalen & Linda D. 3,800 3,800 0 Rabbitt ------------------------- ------------------- -------------------- ------------------- Rider Fund, LP 25,000 25,000 0 ------------------------- ------------------- -------------------- ------------------- Bert Fingerhut Roth IRA 7,000 7,000 0 ------------------------- ------------------- -------------------- ------------------- Caroline Hicks Roth IRA 3,000 3,000 0 ------------------------- ------------------- -------------------- ------------------- Henry Ripp IRA 6,000 6,000 0 ------------------------- ------------------- -------------------- ------------------- Endeavor Asset 10,000 10,000 0 Management, L.P. ------------------------- ------------------- -------------------- -------------------

22

------------------------- ------------------- -------------------- ------------------- Number of Shares Number of Shares of of Common Stock Number of Shares of Common Stock Owned Prior to Common Stock Owned Upon Name of Selling this Offered Under this Completion of the Stockholder Offering Prospectus Offering ------------------------- ------------------- -------------------- ------------------- Magnetar Capital Master 825,908 692,308 133,600 Fund, Ltd ------------------------- ------------------- -------------------- ------------------- Daniel & Pauline 3,000 3,000 0 Paladino ------------------------- ------------------- -------------------- ------------------- Peter H. Huizenga 154,000 154,000 0 ------------------------- ------------------- -------------------- ------------------- HCM Energy Holdings, LLC 38,500 38,500 0 ------------------------- ------------------- -------------------- ------------------- Allied Funding, Inc. 11,538 11,538 0 ------------------------- ------------------- -------------------- ------------------- Steven Alonso 3,500 3,500 0 ------------------------- ------------------- -------------------- ------------------- Investors of America, 750,000 750,000 0 Limited Partnership ------------------------- ------------------- -------------------- ------------------- Brian Wilmovsky 1,730 1,730 0 ------------------------- ------------------- -------------------- ------------------- Bay Pond Investors 42,800 42,800 0 (Bermuda) L.P.* ------------------------- ------------------- -------------------- ------------------- Spindrift Investors 411,800 411,800 0 (Bermuda) L.P.* ------------------------- ------------------- -------------------- ------------------- British Columbia 36,200 35,300 900 Investment Management Corporation (nominee: Hare & Co.)* ------------------------- ------------------- -------------------- ------------------- Laborers' District 12,400 12,100 300 Council and Contractors' of Ohio Pension Fund (nominee: Tarp & Co.)* ------------------------- ------------------- -------------------- ------------------- Howard Hughes Medical 67,700 65,800 1,900 Institute (nominee: Mac & Co.)* ------------------------- ------------------- -------------------- ------------------- Oregon Investment 118,300 115,200 3,100 Council (nominee: Westcoast & Co.)* ------------------------- ------------------- -------------------- ------------------- New York Nurses 39,300 38,200 1,100 Association Pension Fund (nominee: Ell & Co.)* ------------------------- ------------------- -------------------- -------------------

23

------------------------- ------------------- -------------------- ------------------- Number of Shares Number of Shares of of Common Stock Number of Shares of Common Stock Owned Prior to Common Stock Owned Upon Name of Selling this Offered Under this Completion of the Stockholder Offering Prospectus Offering ------------------------- ------------------- -------------------- ------------------- The Retirement Program 51,100 49,600 1,500 Plan for Employees of Union Carbide Corporation (nominee: Kane & Co.)* ------------------------- ------------------- -------------------- ------------------- Global Natural 182,600 182,600 0 Resources III* ------------------------- ------------------- -------------------- ------------------- Placer Creek Partners, 71,100 71,100 0 L.P.* ------------------------- ------------------- -------------------- ------------------- Placer Creek Investors 60,100 60,100 0 (Bermuda) L.P.* ------------------------- ------------------- -------------------- ------------------- Radian Group Inc. 12,400 12,000 400 (nominee: Ell & Co.)* ------------------------- ------------------- -------------------- ------------------- Public Sector Pension 88,100 85,800 2,300 Investment Board (nominee: Mac & Co.)* ------------------------- ------------------- -------------------- ------------------- WTC-CIF Emerging 126,100 122,700 3,400 Companies Portfolio (nominee: Finwell & Co.)* ------------------------- ------------------- -------------------- ------------------- The Dow Chemical 67,300 65,400 1,900 Employees' Retirement Plan (nominee: Kane & Co.)* ------------------------- ------------------- -------------------- ------------------- WTC-CTF Emerging 117,900 114,800 3,100 Companies Portfolio (nominee: Landwatch & Co.)* ------------------------- ------------------- -------------------- ------------------- Bay Pond Partners, L.P.* 136,700 136,700 0 ------------------------- ------------------- -------------------- ------------------- The Robert Wood Johnson 78,200 75,900 2,300 Foundation (nominee: Benchworthy & Co.)* ------------------------- ------------------- -------------------- ------------------- Spindrift Partners, 346,900 346,900 0 L.P.* ------------------------- ------------------- -------------------- -------------------

24

------------------------- ------------------- -------------------- ------------------- Number of Shares Number of Shares of of Common Stock Number of Shares of Common Stock Owned Prior to Common Stock Owned Upon Name of Selling this Offered Under this Completion of the Stockholder Offering Prospectus Offering ------------------------- ------------------- -------------------- ------------------- Ohio Carpenters' 21,300 20,800 500 Pension Fund (nominee: Hammerhead & Co.)* ------------------------- ------------------- -------------------- ------------------- Gregory M. Luce 1,600 1,600 0 ------------------------- ------------------- -------------------- ------------------- Juliet Elizabeth Horn 2,300 2,300 0 ------------------------- ------------------- -------------------- ------------------- Michael Horn 2,300 2,300 0 ------------------------- ------------------- -------------------- ------------------- Nadine Grelsamer 5,000 5,000 0 ------------------------- ------------------- -------------------- ------------------- The Northwestern Mutual 960,000 960,000 0 Life Insurance Company ------------------------- ------------------- -------------------- ------------------- Daryll & Jennifer 1,922 1,922 0 Marshall-Inman ------------------------- ------------------- -------------------- ------------------- Andres Esteban Toro & 12,500 12,500 0 Cassie Toro ------------------------- ------------------- -------------------- ------------------- Rockbay Capital Fund, 9,606 9,606 0 LLC ------------------------- ------------------- -------------------- ------------------- Rockbay Capital 154,804 154,804 0 Institutional Fund, LLC ------------------------- ------------------- -------------------- ------------------- Rockbay Capital 412,513 412,513 0 Offshore Fund, Ltd. ------------------------- ------------------- -------------------- ------------------- SAB Capital Partners, 944,814 944,814 0 L.P. ------------------------- ------------------- -------------------- ------------------- SAB Overseas Master 978,262 978,262 0 Fund, L.P. ------------------------- ------------------- -------------------- ------------------- James & Susan Locke TBE 16,500 16,500 0 ------------------------- ------------------- -------------------- ------------------- Jerald & Francine Siegel 1,000 1,000 0 ------------------------- ------------------- -------------------- ------------------- Peter L. Kreeger 10,000 10,000 0 ------------------------- ------------------- -------------------- ------------------- Peterson Investment 38,000 38,000 0 Trust ------------------------- ------------------- -------------------- ------------------- FPA Hawkeye Fund** 718,600 693,000 25,600 ------------------------- ------------------- -------------------- -------------------

25

------------------------- ------------------- -------------------- ------------------- Number of Shares Number of Shares of of Common Stock Number of Shares of Common Stock Owned Prior to Common Stock Owned Upon Name of Selling this Offered Under this Completion of the Stockholder Offering Prospectus Offering ------------------------- ------------------- -------------------- ------------------- FPA Hawkeye - 7 Fund** 878,400 847,000 31,400 ------------------------- ------------------- -------------------- ------------------- Norman Rothstein 50,000 50,000 0 ------------------------- ------------------- -------------------- ------------------- Hale S. Irwin 2,000 2,000 0 ------------------------- ------------------- -------------------- ------------------- Alvin Jackson Mills Jr. 2,000 2,000 0 ------------------------- ------------------- -------------------- ------------------- J. Steven Emerson Roth 267,000 200,000 67,000 IRA ------------------------- ------------------- -------------------- ------------------- J. Steven Emerson R/O 266,100 200,000 66,100 IRA II ------------------------- ------------------- -------------------- ------------------- Cynthia Rothstein 30,000 30,000 0 ------------------------- ------------------- -------------------- ------------------- Moore Macro Fund, L.P. 384,615 384,615 0 ------------------------- ------------------- -------------------- ------------------- LM Moore Fund, L.P. 153,846 153,846 0 ------------------------- ------------------- -------------------- ------------------- Edward & Jill Im JTWROS 1,922 1,922 0 ------------------------- ------------------- -------------------- ------------------- James Anthony & Phyllis 5,000 5,000 0 K. Syme ------------------------- ------------------- -------------------- ------------------- A. Bartley & Maud S. 4,000 4,000 0 Bryt ------------------------- ------------------- -------------------- ------------------- Clark A. & Donna L. 10,000 10,000 0 Beebe ------------------------- ------------------- -------------------- ------------------- Neal Henschel 1,000 1,000 0 ------------------------- ------------------- -------------------- ------------------- EBS Microcap Partners - 21,000 21,000 0 Combined Portfolio ------------------------- ------------------- -------------------- ------------------- EBS Partners - Combined 93,000 93,000 0 Portfolio ------------------------- ------------------- -------------------- ------------------- R&D Investment 26,000 26,000 0 Partnership - Combined Portfolio ------------------------- ------------------- -------------------- ------------------- John O. McManus 10,000 10,000 0 ------------------------- ------------------- -------------------- -------------------

26

------------------------- ------------------- -------------------- ------------------- Number of Shares Number of Shares of of Common Stock Number of Shares of Common Stock Owned Prior to Common Stock Owned Upon Name of Selling this Offered Under this Completion of the Stockholder Offering Prospectus Offering ------------------------- ------------------- -------------------- ------------------- Terry P. Murphy Trust 1,538 1,538 0 ------------------------- ------------------- -------------------- ------------------- John E. Montgomery 769 769 0 ------------------------- ------------------- -------------------- ------------------- Margaret M. Thrower 7,000 7,000 0 ------------------------- ------------------- -------------------- ------------------- Thomas and Kristan First 4,000 4,000 0 ------------------------- ------------------- -------------------- ------------------- Jennifer Elizabeth 2,300 2,300 0 Cottingham ------------------------- ------------------- -------------------- ------------------- Georgetown Preparatory 7,700 7,700 0 School Inc. ------------------------- ------------------- -------------------- ------------------- Total: 16,916,799 15,658,144 1,258,655 ------------------------- ------------------- -------------------- -------------------

* Wellington Management Company, LLP ("Wellington") is an investment adviser registered under the Investment Advisers Act of 1940, as amended. Wellington, in such capacity, is deemed to share beneficial ownership over the shares held by its client accounts. ** First Pacific Advisors, Inc. ("FPA") has beneficial ownership with FPA Hawkeye Fund and FPA Hawkeye - 7 Fund, as FPA is the managing member of the two funds and has shared dispositive power over the funds. The selling security holders identified above may have sold, transferred or otherwise disposed of all or a portion of their common stock since the date on which the information in the table is presented. Information concerning the selling security holders may change from time to time and any such changed information will be set forth in prospectus supplements or, to the extent required, post-effective amendments to the registration statement. Each selling security holder who is an affiliate of a broker-dealer has informed us that such selling security holder purchased the securities in the ordinary course of business and, at the time of the purchase of the securities, did not have any agreements or understandings, directly or indirectly, with any person to distribute the securities. PLAN OF DISTRIBUTION The shares offered by this prospectus may be sold or distributed from time to time by the selling stockholders or their permitted transferees or other successors in interest, directly to one or more purchasers (including pledgees) or through brokers, dealers or underwriters who may act solely as agents or who may acquire shares as principals and will act independently of us in making decisions with respect to the timing, manner and size of each sale. The shares may be sold in one or more transactions at: o fixed prices; o prevailing market prices at the time of sale; o prices related to the prevailing market prices; 27 o varying prices determined at the time of sale; or o otherwise negotiated prices. The shares may be sold by one or more of, or a combination of, the following methods, in addition to any other method permitted under this prospectus, to the extent permitted by applicable law: o a block trade in which the broker-dealer so engaged will attempt to sell the offered securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; o purchases by a broker-dealer as principal and resale by the broker-dealer for its account pursuant to this prospectus; o on any national securities exchange or quotation service on which our common stock may be listed or quoted at the time of sale, including the Nasdaq National Market and the over-the-counter market; o ordinary brokerage transactions and transactions in which the broker solicits purchasers, o privately negotiated transactions; o by pledge to secure debts or other obligations; o put or call transactions; o to cover hedging transactions; or o underwritten offerings. If required, this prospectus may be amended or supplemented on a continual basis to describe a specific plan of distribution. In making sales, broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in the resales. In connection with the sale of shares, the selling stockholders may, subject to the terms of their agreement with us and applicable law, (i) enter into transactions with brokers, dealers or others, who in turn may engage in short sales of the shares in the course of hedging the positions they assume, (ii) sell short or deliver shares to close out positions or (iii) loan shares to brokers, dealers or others that may in turn sell such shares. The selling stockholders may enter into option or other transactions with broker-dealers or other financial institutions that require the delivery to the broker-dealer of the shares. The broker-dealer or other financial institution may then resell or transfer these shares through this prospectus. The selling stockholders may also loan or pledge their shares to a broker-dealer or other financial institution. The broker-dealer or other financial institution may sell the shares which are loaned or pursuant to a right to rehypothecate while pledged or, upon a default, the broker-dealer or other financial institution may sell the pledged shares by use of this prospectus. The broker, dealer or other financial institution may use shares pledged by the selling stockholders or borrowed from the selling stockholders or others to settle those sales or to close out any related open borrowing of shares, and may use securities received from the selling stockholders in settlement of those derivatives to close out any related open borrowing of shares. Some or all of the shares offered in this prospectus may also be sold to or through an underwriter or underwriters. Any shares sold in that manner will be acquired by the underwriters for their own accounts and may be resold at different times in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. These shares may be offered to the public through underwriting syndicates represented by one or more managing underwriters or may be offered to the public directly by one or more underwriters. Any public offering price and any discounts or concessions allowed or disallowed to be paid to dealers, in connection with any sales to or through an underwriter, may be changed at different times. To our knowledge, there are currently no plans, arrangements or understandings between any selling security holders and any underwriter, broker-dealer or agent regarding the sale of the shares of our common stock by the selling security holders. 28 The selling stockholders may pay usual and customary or specifically negotiated underwriting discounts and concessions or brokerage fees or commissions in connection with their sales. The selling stockholders have agreed not to use the registration statement of which this prospectus forms a part for purposes of an underwritten offering without our consent. The selling stockholders and any dealers or agents that participate in the distribution of the shares may be deemed to be "underwriters" within the meaning of the Securities Act, and any profit on the sale of shares by them and any commissions received by any such dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act. Because the selling stockholders may be deemed to be "underwriters" within the meaning of the Securities Act, the selling stockholders will be subject to the prospectus delivery requirements of the Securities Act. Neither the delivery of any prospectus, or any prospectus supplement, nor any other action taken by the selling stockholders or any purchaser relating to the purchase or sale of shares under this prospectus shall be treated as an admission that any of them is an underwriter within the meaning of the Securities Act, relating to the sale of any shares. We will make copies of this prospectus available to the selling stockholders and have informed them of the need for delivery of copies of this prospectus to purchasers at or prior to the time of any sale of the shares offered hereby. To the extent required by the Securities Act, a prospectus supplement or amendment will be filed and disclose the specific number of shares of common stock to be sold, the name of the selling stockholders, the purchase price, the public offering price, the names of any agent, dealer or underwriter, and any applicable commissions paid or discounts or concessions allowed with respect to a particular offering and other facts material to the transaction. We have agreed to bear certain expenses of registration of the common stock under federal and state securities laws and of any offering and sale hereunder but not certain other expenses, such as discounts and commissions of underwriters, brokers, dealers or agents attributable to the sale of the shares, and fees and disbursements of any counsel, advisors or experts retained by or on behalf of any selling stockholders. The aggregate proceeds to the selling stockholders from the sale of the shares will be the purchase price of the common stock sold, less the aggregate agents' commissions, if any, and other expenses of issuance and distribution not borne by us. We have agreed to indemnify the selling security holders against certain liabilities, including certain liabilities under the Securities Act, and to contribute to payments the selling security holders may be required to make in respect thereof. We may suspend the use of this prospectus and any supplements hereto upon any event or circumstance which necessitates the making of any changes in the registration statement or prospectus, or any document incorporated or deemed to be incorporated therein by reference, so that, in the case of the registration statement, it will not contain any untrue statement of a material fact or any omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the prospectus, it will not contain any untrue statement of a material fact or any omission to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The shares may be sold through registered or licensed brokers or dealers if required under applicable state securities laws. Any securities covered by this prospectus that qualify for sale pursuant to Rule 144 under the Securities Act, as amended, may be sold under that rule rather than pursuant to this prospectus. We cannot assure you that the selling stockholders will sell any or all of the common stock offered hereunder. 29 FUTURE TRANSACTIONS Pursuant to an engagement letter entered into between us and Friedman, Billings, Ramsey and Co., Inc. (FBR) in connection with the private placement that was completed in November 2005, we granted to FBR a right of first refusal to act in certain transactions we enter into or contemplate in which we retain an investment banker, underwriter or placement agent. The compensation to be received by FBR in connection with such transactions would be determined by agreement between us and FBR, subject to the terms of the engagement letter. LEGAL MATTERS The validity of the securities offered by this prospectus is being passed upon by Schreck Brignone, Las Vegas, Nevada. EXPERTS The financial statements as of May 31, 2004 and for each of the two fiscal years in the period ended May 31, 2004, and as of December 31, 2004 and for the seven month transition period ended December 31, 2004, incorporated by reference in this prospectus, have been audited by Murrell, Hall, McIntosh & Co., PLLP, an independent registered public account firm, as stated in their report in our Annual Report on Form 10-KSB/A (Amendment No.2) for the seven month transition period ended December 31, 2004. The statements of revenue and expenses for the two years ended May 31, 2003 for the oil and gas properties acquired from Devon Energy Production Company, L.P. and Tall Grass Gas Services, L.L.C. on December 23, 2003, incorporated by reference in this prospectus have been audited by Murrell, Hall, McIntosh & Co., PLLP, an independent registered public accounting firm, as stated in their report filed as Exhibit 99.1 to our Form 8-K/A filed September 21, 2004. The information included or incorporated by reference in this prospectus as of July 1, 2005, December 31, 2004, May 31, 2004 and May 31, 2003, relating to our total gas supply and our owned gas reserves is derived from reserve reports prepared or reviewed by Cawley, Gillespie & Associates, Inc., of Ft. Worth, Texas. This information is included or incorporated by reference in this prospectus in reliance upon these firms as experts in matters contained in the reports. HOW TO OBTAIN MORE INFORMATION We file annual, quarterly and interim reports, proxy and information statements and other information with the SEC. These filings contain important information which does not appear in this prospectus. You may read and copy any materials we file at the SEC's public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding us at http://www.sec.gov. We have filed with the SEC a registration statement on Form S-1 under the Securities Act, as amended, with respect to the common stock offered by this prospectus. This prospectus does not contain all of the information in the registration statement. We have omitted certain parts of the registration statement, as permitted by the rules and regulations of the SEC. You may inspect and copy the registration statement, including exhibits, at the SEC's public reference facilities or web site. INCORPORATION OF INFORMATION FILED WITH THE SEC The SEC allows us to "incorporate by reference" into this prospectus, which means that we may disclose important information to you by referring you to other documents that we have filed with the SEC. We are incorporating by reference into this prospectus the following documents filed with the SEC: 30 o Our Annual Report on Form 10-KSB/A (Amendment No. 2) for the transition period ended December 31, 2004; o Our Proxy Statement filed with the SEC on May 3, 2005; o Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005; o Our Current Reports on Form 8-K filed on September 21, 2004 (including Exhibit 99.1 thereto), February 17, 2005, February 23, 2005, April 19, 2005, July 26, 2005, July 29, 2005, August 12, 2005, October 7, 2005, October 18, 2005, November 8, 2005, November 14, 2005, November 18, 2005 and December 9, 2005; o The description of our common stock contained in our registration statement on Form 8-A12G/A (Amendment No. 2) filed with the SEC on December 7, 2005. Any statement incorporated or deemed to be incorporated herein shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus. The following information contained in documents described above is not incorporated herein by reference: (i) certifications accompanying or furnished in any such documents pursuant to Title 18, Section 1350 of the United States Code and (ii) any other information in such documents which is not deemed to be filed with the SEC under Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section (except the information in Part I of our Quarterly Reports on Form 10-Q). Documents incorporated by reference are available from us without charge, excluding any exhibit to those documents unless the exhibit is specifically incorporated by reference as an exhibit in this prospectus. You can obtain documents incorporated by reference in this prospectus by requesting them in writing or by telephone from us at the following address: Quest Resource Corporation 9520 N. May Avenue, Suite 300 Oklahoma City, Oklahoma 73120 (405) 488-1304 dgrose@qrcp.net You may also access these documents on our website at http://www.qrcp.net/secreports.html. 31 GLOSSARY OF NATURAL GAS TERMS The following is a description of the meanings of some of the oil and gas industry terms used in this offering memorandum. Bcf. Billion cubic feet of natural gas. Bcfe. Billion cubic feet equivalent, determined using the ratio of six mcf of natural gas to one bbl of crude oil, condensate or natural gas liquids. CBM. Coal bed methane. Completion. The installation of permanent equipment for the production of oil or natural gas, or in the case of a dry hole, the reporting of abandonment to the appropriate agency. Developed acreage. The number of acres that are allocated or assignable to productive wells or wells capable of production. Dry hole. A well found to be incapable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production exceed production expenses and taxes. Frac/Fracturing. The method used to increase the deliverability of a well by pumping a liquid or other substance into a well under pressure to crack and prop open the hydrocarbon formation. Gathering system. Pipelines and other equipment used to move natural gas from the wellhead to the trunk or the main transmission lines of a pipeline system. Gross acres or gross wells. The total acres or wells, as the case may be, in which a working interest is owned. mcf. Thousand cubic feet of natural gas. mcfe. Thousand cubic feet equivalent, determined using the ratio of six mcf of natural gas to one bbl of crude oil, condensate or natural gas liquids. mmcf. Million cubic feet of natural gas. mmcfe. Million cubic feet equivalent, determined using the ratio of six mcf of natural gas to one bbl of crude oil, condensate or natural gas liquids. Net acres or net wells. The sum of the fractional working interests owned in gross acres or well, as the case may be. Perforation. The making of holes in casing and cement (if present) to allow formation fluids to enter the well bore. Productive well. A well that is found to be capable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production exceed production expenses and taxes. Proved developed non-producing reserves. Proved developed reserves that are expected to be recovered from zones behind casings in existing wells. Proved developed reserves. Proved reserves that can be expected to be recovered from existing wells with existing equipment and operating methods. Proved reserves. The estimated quantities of crude oil, natural gas and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved undeveloped reserves or PUD. Proved reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion. PV-10 or present value of estimated future net revenues. An estimate of the present value of the estimated future net revenues from proved gas reserves at a date indicated after deducting estimated production and ad valorem taxes, future capital costs and operating expenses, but before deducting any estimates of federal income taxes. The estimated future net revenues are discounted at an annual rate of 10% in accordance with the SEC's 32 practice, to determine their "present value." The present value is shown to indicate the effect of time on the value of the revenue stream and should not be construed as being the fair market value of the properties. Estimates of future net revenues are made using oil and natural gas prices and operating costs at the date indicated and held constant for the life of the reserves. Reserve life index. This index is calculated by dividing total proved reserves by the production from the previous year to estimate the number of years of remaining production. Reservoir. A porous and permeable underground formation containing a natural accumulation of producible oil and/or gas that is confined by impermeable rock or water barriers and is individual and separate from other reservoirs. scf. Standard cubic feet of natural gas. Undeveloped acreage. Lease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil or gas regardless of whether or not such acreage contains proved reserves. Working interest. The operating interest that gives the owner the right to drill, produce and conduct operating activities on the property and receive a share of production. 33 ================================================================================ ----------------- 15,658,144 Shares Common Stock ----------------- QUEST RESOURCE CORPORATION [GRAPHIC OMITTED] PROSPECTUS ----------------- February 1, 2006 ================================================================================