CALGARY, ALBERTA–(Marketwired – July 2, 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 the results of its interim independent reserve evaluation of the Middle Montney reservoir on the Company’s Kakwa, Alberta property at March 31, 2013 conducted in accordance with the COGE Handbook by McDaniel and Associates Consultants Ltd. (“McDaniel”). The Company also provides an operational update on its Montney properties in the Alberta Deep Basin.
Interim Reserve Evaluation Update
The report outlines the volume of natural gas and natural gas liquids and the forecasted Net Present Value (NPV) of the non-conventional Middle Montney reservoir on 6 of its 19 prospective gross sections in the Kakwa block based on 3 gross (1.25 net) producing natural gas wells and using McDaniel’s April 1, 2013 forecast pricing and cost assumptions.
Company Reserve Evaluation Highlights:
| Total Proved plus Probable Reserves | ||
| Natural Gas: | 32.2 bcf | 5.37 mmboe |
| Natural Gas Liquids: | 5.08 mmbbls | |
| Total Proved plus Probable: | 10.45 mmboe | |
| Total Proved Reserves | ||
| Natural Gas: | 8.2 bcf | 1.37 mmboe |
| Natural Gas Liquids: | 1.32 mmbbls | |
| Total Proved: | 2.69 mmboe | |
| Net Present Value at 10% Discount ($,000) Before Tax | ||
| Total Proved plus Probable: | $126,380 | |
| Total Proved: | $36,256 | |
Operational Update
Kakwa, Alberta
The Company’s current net average daily production from the Kakwa area Montney natural gas wells is approximately 1.82 mmcf of natural gas and 315 bbls of natural gas liquids which is primarily condensate. Two of the three natural gas wells are on production while the third well is shut in until minor facility restrictions are resolved. The net shut in production is approximately 1.25 mmcf/d of natural gas and 220 bbls/d of natural gas liquids which is primarily condensate.
Production from the wells is still limited by high line pressure and by the ability to handle the large volumes of lease condensate during periods of wet weather limiting the accessibility of tank trucks to the sales terminal.
Completion operations are underway on the non-operated Upper Montney horizontal well at 14-02-63-6 W6M which was drilled in early 2013. Test results from this well (23.75% net working interest) are expected in August 2013.
Wellsite construction has begun for the drilling of a Montney stratigraphic vertical well at 12-24-63-6 W6M. This well is being drilled to assist in the evaluation of the remaining 13 sections of Montney rights on the Kakwa block. Following the drilling of the vertical well a horizontal well is programmed to be whipstocked from 12-24 to 5-23-63-6 W6M.
Two additional horizontal Kakwa Montney wells are planned to be drilled before calendar 2013 year end.
Construction of the Company’s Centralized Gas Gathering and Condensate Handling Facility has begun and is expected to be completed by October 31, 2013. The facility will help to provide for unrestricted production of up to 15 mmcf/d of natural gas and 3,000 bbls/d of condensate allowing for the gas wells to produce at their maximum potential.
Wapiti, Alberta
The Company has begun initial stages of evaluation on its Wapiti block which consists of approximately 256 gross (193 net) sections of Montney rights. Plans are underway to drill a stratigraphic Montney test well (with potential to drill horizontally) and also to re-enter a wellbore with bypassed Montney pay and test the reservoir potential before year end 2013.
Independent Undeveloped Deep Basin Land Evaluation
The Company engaged Seaton-Jordan & Associates Ltd. to complete an evaluation of Donnycreek’s undeveloped acreage at May 15, 2013, arriving at a value of approximately $62.86 million.
The above valuations exclude the Company’s holdings at Delia-Michichi valued at $1,012,000 (Proved plus Probable PVBT 10%) as evaluated by GLJ Petroleum Consultants Ltd. at July 31, 2012.
Working Capital
The Company currently has net working capital of approximately $13.5 million and no debt.
About Donnycreek Energy Inc.
Donnycreek is a Calgary based public oil and gas company which holds 339 gross (238 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 at www.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 reserves, the timing of test results from the non-operated Upper Montney horizontal well, drilling plans for future vertical and horizontal Montney wells, the completion of the Company’s Centralized Gas Gathering and Condensate Handling Facility, facility handling capacity and the primary prospective zone for development on the Company’s lands.
Statements relating to reserves are by their nature forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves can be profitably produced in the future. It should not be assumed that the estimated future net cash flow shown below is representative of the fair market value of the Company’s properties. There is no assurance that such price and natural gas liquids (“NGLs“) and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, NGLs and natural gas reserves may be greater than or less than the estimates provided herein.
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. 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 risks, expectations or assumptions and other factors may be found under 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.
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. Natural gas liquids include condensate, propane, butane and ethane.
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