Two Quests Hit By One Going Concern (QELP, QRCP)

Quest Energy Partners, L.P. (NASDAQ: QELP) got hit hard on fairly innocent trading volume today.  The partnership was formed by Quest Resource Corporation (NASDAQ: QRCP) to acquire, exploit and develop natural gas and oil properties and to acquire, own, and operate related assets.  The partnership was late in filing its annual report and that was finally turned in.  Unfortunately, there are de-listing possibilities by NASDAQ and the auditors gave it a dreaded “going concern” note.

The partnership announced the filing of its Annual Report for 2008 and that includes re-audited and restated financial statements as of December 31, 2007, and for the period from the Partnership’s inception on November 15, 2007 to December 31, 2007, and the Partnership’s Predecessor’s restated and re-audited carve out financial statements as of and for the years ended December 31, 2005 and 2006, and for the period from January 1, 2007 to November 14, 2007. QELP continues to work diligently to complete the preparation and filing of its 2008 Third Quarter Form 10-Q and 2009 First Quarter Form 10-Q. Management intends to host an investor update conference call after filing these Form 10-Qs along with amended Form 10-Qs for the first and second quarters of 2008.

UHY’s auditor report includes an explanatory paragraph regarding its ability to continue as a going concern, based primarily on a need to amend the terms of its credit facilities to address an expected borrowing base deficiency and to extend the maturity date of its second lien loan.

QELP also noted that it expects to receive a written decision from the NASDAQ Listing Panel by July 10, 2009, and the company will find out if its shares are given an exemption to remain listed. An adverse ruling could result in the suspension and de-listing of the partnership’s securities from The NASDAQ Stock Market.

Quest Energy Partners, L.P. owns more than 2,400 wells and is the largest producer of natural gas in the Cherokee Basin, which is located in southeast Kansas and northeast Oklahoma. The Partnership also owns natural gas and oil producing wells in the Appalachian Basin of the northeastern United States and in Seminole County, Oklahoma.

Quest Energy Partners, L.P. (NASDAQ: QELP) traded down by almost 14% to close at $1.55, and its 52-week range is $0.49 to $17.60.  Quest Resource Corporation (NASDAQ: QRCP) fell almost 7% to $0.428, and its 52-week trading range is $0.42 to $12.77.

JON C. OGG