CALGARY, ALBERTA–(Marketwire – Feb 25, 2013) – DeeThree Exploration Ltd. (“DeeThree” or the Company”) (DTX.TO) (DTHRF) announces its 2013 guidance and provides an operational update.
DeeThree 2013 Guidance Summary
Building on the operational and exploration success of 2012, DeeThree plans a 2013 capital program of approximately $150 million focused on increasing oil production from its Alberta Bakken property in the Lethbridge area of southern Alberta and its Belly River property in the Brazeau area of central Alberta.
DeeThree is forecasting its 2013 production to be within the range of 6,800 – 7,000 boe/d (76% crude oil and liquids, 24% natural gas) with a targeted exit of 8,500 – 9,000 boe/d (81% crude oil and liquids, 19% natural gas) as compared to the 2012 average production of approximately 4,230 boe/d (65% crude oil and liquids, 35% natural gas).
Key highlights and assumptions are:
- 20 Alberta Bakken wells and 11 Belly River wells are planned to be drilled in 2013. The Company is planning for 5 exploration wells and 26 development wells.
- Funds flow from operations for 2013 is forecast to be approximately $100 million, based on forecast pricing of US$95.00 per barrel WTI, Cdn$3.20 per mcf AECO gas and a US$/Cdn $0.99 exchange rate. The corporate oil price differential is forecast at 20 percent of WTI, which reflects the current market environment. The Company expects to improve on these differentials by increasing crude oil deliveries on rail.
- DeeThree”s balance sheet is forecast to remain strong, with projected year end net debt to fourth quarter annualized cash flow of approximately 0.8:1.0.
- The Company currently has 1,500 boe/d of crude oil hedged at an average floor of $90.00 US WTI.
In 2013 DeeThree plans to build on the success of its 2012 drilling program that resulted in the discovery of a significant oil pool on its Alberta Bakken property and the confirmation of the multi-zone potential of its Belly River light oil resource play. The Company plans to focus on achieving significant production gains while at the same time further establishing the resource potential of both of its Alberta Bakken and Belly River oil resource plays. The Company believes that its 2012 acquisitions of 51 sections (32,640 net acres) that offset its Alberta Bakken play and 34 sections (21,760 net acres) that offset its Belly River light oil play are highly prospective for further exploration and development.
Strategy and Operational Update
DeeThree is pleased to announce results following a significant light oil Belly River well completion in Brazeau. In the past weeks, DeeThree successfully drilled and completed a horizontal oil well at 5-27-47-14W5 into the previously undrilled “D sand” which is currently being tested at an approximate rate of 1,190 boe/day (45% crude oil and liquids) 44 hours after fracture stimulation. The well is currently flowing on a 3/4 inch choke at a wellhead pressure of 530 psi with the natural gas currently being recovered for sale through the Company”s extensive oil and gas sales system.
In 2012 the Company was successful in proving the multi-zone potential of the Belly River light oil resource play in Brazeau. This plan will continue in 2013 with the goal to have all six major intervals identified within the Belly River formation tested by the end of the first quarter. With the multi-zone potential having been identified the Company will now look to delineate the extents of each of these zones to ultimately prove the resource potential of each.
The lands subject to the Company”s recently announced farm-in are similar to the Company”s Belly River property and host all six of the major Belly River intervals that have shown production through legacy vertical wells. The Company believes that the farm-in lands are highly prospective for exploration and development. The Company plans to drill and complete the first two wells on the farm-in lands by the end of the first quarter of 2013.
The Company”s final Alberta Bakken well of 2012 was a two mile long horizontal extension to the east of its existing Ferguson Bakken oil field. The well encountered excellent pay and gas detection through to the end of the horizontal leg and significantly extended the known limits of the oil pool to a 40 square mile fairway. The well had an IP30 of 448 bopd further confirming the Company”s geological and seismic modeling. The Company relied on these results in its recent acquisition of an additional six sections of Crown land that offset the eastern portion of its Alberta Bakken land base. In early 2013, the Company will drill additional wells in this area to further delineate this trend over the 15 sections of its eastern lands.
The Company has yet to define the western edge of its Ferguson Alberta Bakken pool. Of the land acquired in 2012, the Company acquired 19 sections of highly prospective Crown land on trend to the west of its Alberta Bakken development oil wells. The Company is planning to drill one or two wells on this acquired acreage in 2013 with a view to extend the identified size of its Ferguson Alberta Bakken pool. Drilling success on these lands will be significant as this acreage had little or no oil in place associated to it in the mid-year resource study. The Company is currently in the process of licensing wells in the area.
The Company has completed an internal geological and geophysical study of its 50 section land base, including 17 recently acquired sections of Crown land, situated to the north of its existing core development area. After incorporating the 2012 drilling results and legacy vertical well control to the Company”s geological and geophysical mapping, the Company believes that it has potentially identified two separate and distinct oil prospects in the northern area of its Alberta Bakken play. Both prospects are 12-15 square miles in size and are located five to ten miles from DeeThree”s existing core development area. The Company plans to drill two to four wells testing these prospects in 2013. Drilling success would be significant as no oil resource potential has yet to be assigned to these lands.
The Company has invested in significant facility infrastructure on its Alberta Bakken property throughout the last quarter of 2012 and continuing into early 2013 in order to gather and process its increasing volumes of production in the area. The Company”s oil processing facilities are currently operating close to capacity however a second main battery will be commissioned in the second quarter of 2013 that will increase the Company”s total capacity in the area to 8,000 bbls/d.
Forward-Looking Statements. Certain statements contained in this press release may constitute forward-looking statements. These statements relate to future events or the DeeThree”s future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. DeeThree believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon by investors. These statements speak only as of the date of this press release and are expressly qualified, in their entirety, by this cautionary statement.
In particular, this press release contains forward-looking statements, pertaining to the following: DeeThree”s future projects, oil and natural gas production levels, financial results and capital expenditure programs.
With respect to forward-looking statements contained in this press release, DeeThree has made assumptions regarding, among other things: the legislative and regulatory environments of the jurisdictions where DeeThree carries on business or has operations, the price of oil and natural gas, the impact of increasing competition, and DeeThree”s ability to obtain additional financing on satisfactory terms.
DeeThree”s actual results could differ materially from those anticipated in these forward-looking statements as a result of risk factors that may include, but are not limited to: volatility in the market prices for oil and natural gas; uncertainties associated with estimating reserves; uncertainties associated with DeeThree”s ability to obtain additional financing on satisfactory terms; geological, technical, drilling and processing problems; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; incorrect assessments of the value of acquisitions; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could effect DeeThree”s operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).
This forward-looking information represents DeeThree”s views as of the date of this news lreease and such information should not be relied upon as representing its views as of any date subsequent to the date of this document. DeeThree has attempted to identify important factors that could cause actual results, performance or achievements to vary from those current expectations or estimates expressed or implied by the forward-looking information. However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differ materially from current expectations. There can be no assurance that forward-looking information will prove to be accurate, as results and future events could differ materially from those expected or estimated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. . Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements.
Test Rates. Test rates are not necessarily indicative of long-term performance or of ultimate recovery. Neither a pressure transient analysis nor a well-test interpretation has been carried out and the data should be considered to be preliminary until such analysis or interpretation has been done.
Non-IFRS Measurements. This news release contains the terms “funds from other operations” which should not be considered an alternative to or more meaningful than cash flow from operating activities as determined in accordance with IFRS or previous GAAP. This term does not have any standardized meaning as prescribed by IFRS or previous GAAP. DeeThree”s determination of funds from operations may not be comparable to that reported by other companies. Management uses funds from operations to analyze operating performance and leverage, and considers funds from operations to be a key measure as it demonstrates the Company”s ability to generate cash necessary to fund future capital investments and to repay debt. Funds from operations is calculated using cash flow from operating activities as presented in the statement of cash flows before changes in non-cash working capital and settlement of retirement costs.
BOE Presentation. References herein to “boe” mean barrels of oil equivalent derived by converting gas to oil in the ratio of six thousand cubic feet (Mcf) of gas to one barrel (bbl) of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
We seek Safe Harbor.
DeeThree Exploration Ltd.
President and Chief Executive Officer