CALGARY, ALBERTA–(Marketwired – May 23, 2013) –
THIS NEWS RELEASE IS NOT FOR DISSEMINATION OR DISTRIBUTION IN THE UNITED STATES OF AMERICA TO UNITED STATES NEWSWIRE SERVICES OR UNITED STATES PERSONS
Donnycreek Energy Inc. (“Donnycreek” or the “Company“) (TSX VENTURE:DCK) reports that it currently has 322 gross (226 net) sections of Montney lands in the greater Kakwa / Wapiti / Chicken area of Alberta and is producing approximately 640 boe/d (54% liquids) from two of its three Kakwa Montney gas wells. The third well will be brought on-stream as facility limitations are alleviated during the summer and further optimized with the completion of the 16-07-63-5 W6M centralized gas handling facility in Q4 2013. The facility will have capacity to handle 15 mmcf/d of gas and 3,000 bbls/d of condensate and will be capable of handling production volumes through 2014.
KAKWA MONTNEY 13-17-63-5 W6M
The first Donnycreek horizontal Kakwa Montney well at 13-17-63-5 W6M (the “13-17 Well“) has been on production since January 2013. Various facility bottlenecks associated with downstream processing has limited production. However, in the first 90 days of production the 13-17 Well had gross production at a restricted rate averaging approximately 2.4 mmcf/d of natural gas plus NGLs and 338 bbls/d wellhead condensate against 900 psi pipeline pressure. In the last 30 days of production, the well had gross production at a restricted rate averaging approximately 1.2 mmcf/d of natural gas plus NGLs and 161 bbls/d wellhead condensate with cumulative to date production of 268 mmcf and 37.2 mbbls. Donnycreek has a 25% working interest plus 10% GORR on 75% working interest before payout; 50% working interest after payout in the 13-17 Well.
KAKWA MONTNEY 14-30-63-5 W6M
Donnycreek’s second horizontal Kakwa Montney well at 14-30-63-5 W6M (the “14-30 Well“) has been on production since May 6, 2013 with the first ten days of restricted production averaging 2.5 mmcf/d of natural gas and 490 bbls/d of condensate with a condensate to gas ratio of 196 bbls/mmcf against 900 psi pipeline pressure. Donnycreek holds a 50% working interest in the 14-30 Well.
The production from the 13-17 Well and the 14-30 Well is constrained due to high pipeline pressures until Q4 2013 which will be alleviated when the centralized gas facility is on-stream.
KAKWA MONTNEY 3-19-63-5 W6M
Donnycreek’s third horizontal Kakwa Montney well at 3-19-63-5 W6M (the “3-19 Well“) was produced for three days but facility constraints has resulted in the well being shut in. The Corporation expects similar production results as its first and second Montney wells. Donnycreek holds a 50% working interest in the 3-19 Well.
KAKWA MONTNEY 14-02-63-6 W6M
The Company’s 14-02-63-6 W6M well (the “14-02 Well“) has reached total depth and is expected to be completed post break-up. Donnycreek is participating as to a 23.75% working interest (subject to a 5% GORR) and after drilling this new exploratory well, Donnycreek will earn a similar working interest in 2.25 sections of Montney rights, all contiguous with Donnycreek’s existing 50% Kakwa acreage.
2013 DRILLING ACTIVITY
Donnycreek expects to spud its 5th Montney well in June, its 6th Montney well in August and its 7thMontney well in October of this year.
About Donnycreek Energy Inc.
Donnycreek is a Calgary-based public oil and gas company which holds 326 gross (229 net) sections of petroleum and natural gas rights, with an average working interest of approximately 70%, prospective primarily for Montney liquid rich natural gas resource development in its 3 core areas: Kakwa, Wapiti and Chicken, all of which are located in the Deep Basin area of west central Alberta.
Further information relating to Donnycreek is also available on its website atwww.donnycreekenergy.com.
ON BEHALF OF THE BOARD OF DONNYCREEK ENERGY INC.
Malcolm F.W. Todd, Chief Executive Officer
ADVISORY ON FORWARD-LOOKING STATEMENTS: This news release contains certain forward-looking information and statements (“forward-looking statements“) within the meaning of applicable securities laws. The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “may”, “will”, “project”, “should”, “believe”, “plans”, “intends” and similar expressions are intended to identify forward-looking statements. In particular, but without limiting the foregoing, this press release contains statements concerning the timing of the 3-19 Well being brought on-stream, the completion of the centralized gas handling facility, facility capacity, production from the 3-19 Well, alleviation of production constraints, the completion of the 14-02 Well, the spudding of the Company’s 5th, 6th and 7th Montney wells and the primary prospective zone for development on the Company’s lands.
Forward-looking statements are based on a number of material factors, expectations or assumptions of Donnycreek which have been used to develop such statements and information but which may prove to be incorrect. Although Donnycreek believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because Donnycreek can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. In particular, in addition to other factors and assumptions which may be identified herein, no assurances can be given respecting: whether the Company’s exploration and development activities respecting its prospects, including the wells discussed herein, will be successful or that material volumes of petroleum and natural gas reserves will be encountered, or if encountered can be produced on a commercial basis; the ultimate size and scope of any hydrocarbon bearing formations on its lands; that drilling operations on its lands, including the wells discussed herein, will be successful such that further development activities in these areas are warranted; that Donnycreek’s efforts to raise additional capital will be successful; that Donnycreek will continue to conduct its operations in a manner consistent with past operations; results from drilling and development activities will be consistent with past operations; the accuracy of the estimates of Donnycreek’s reserve volumes; the general stability of the economic and political environment in which Donnycreek operates; drilling results; field production rates and decline rates; the general continuance of current industry conditions; the timing and cost of pipeline, storage and facility construction and expansion and the ability of Donnycreek to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Donnycreek operates; and the ability of Donnycreek to successfully market its oil and natural gas products.
Further, events or circumstances may cause actual results to differ materially from those predicted as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including, without limitation: changes in commodity prices; changes in the demand for or supply of the Company’s products; unanticipated operating results or production declines; changes in tax or environmental laws, royalty rates or other regulatory matters; changes in development plans of Donnycreek or by third party operators of Donnycreek’s properties, increased debt levels or debt service requirements; inaccurate estimation of Donnycreek’s oil and gas reserve and resource volumes; limited, unfavourable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; and certain other risks detailed from time-to-time in Donnycreek’s public disclosure documents. Additional information regarding some of these risk factors may be found under “Risk Factors” in the Company’s Revised Annual Information Form and Management’s Discussion and Analysis prepared for the year ended July 31, 2012. The reader is cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements contained in this news release are made as of the date hereof and Donnycreek undertakes no obligations to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
The Company advises that initial production results from the wells disclosed herein are not necessarily indicative of long-term performance or of ultimate recovery.
In this press release the calculation of barrels of oil equivalent (boe) is calculated at a conversion rate of six thousand cubic feet (6 mcf) of natural gas for one barrel (bbl) of oil based on an energy equivalency conversion method. Boes may be misleading particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable to the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value. References to oil in this discussion include crude oil and natural gas liquids (“NGLs“). NGLs include condensate, propane, butane and ethane.
President and Chief Executive Officer