CALGARY, ALBERTA–(Marketwired – Nov. 15, 2013) – Donnycreek Energy Inc. (“Donnycreek” or the “Company“) (TSX VENTURE:DCK) reports that it has filed on SEDAR its audited financial statements and related Management’s Discussion and Analysis (“MD&A”) for the year ended July 31, 2013 with 2012 comparatives. Selected financial and operational information is outlined below and should be read in conjunction with Donnycreek’s audited financial statements and related MD&A which are available for review at www.sedar.com and on our website at www.donnycreekenergy.com.
FINANCIAL AND OPERATING HIGHLIGHTS
| Financial | Three Months Ended July 31, |
Year Ended July 31, |
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| 2013 | 2012 | 2013 | 2012 | ||||||||||
| Petroleum and natural gas sales | $ | 2,899,982 | $ | 132,666 | $ | 4,751,899 | $ | 266,987 | |||||
| Funds flow from operations(1) | $ | 1,726,323 | $ | 21,511 | $ | 2,527,330 | $ | (49,014 | ) | ||||
| Basic ($/share) | $ | 0.04 | $ | 0.01 | $ | 0.07 | $ | (0.01 | ) | ||||
| Diluted ($/share) | $ | 0.04 | $ | 0.01 | $ | 0.07 | $ | (0.01 | ) | ||||
| Net income (loss) | $ | 551,137 | $ | 749,545 | $ | (1,308,614 | ) | $ | 164,985 | ||||
| Basic ($/share) | $ | 0.01 | $ | 0.05 | $ | (0.04 | ) | $ | 0.01 | ||||
| Diluted ($/share) | $ | 0.01 | $ | 0.05 | $ | (0.04 | ) | $ | 0.01 | ||||
| Capital expenditures | $ | 4,937,074 | $ | 1,092,441 | $ | 27,168,319 | $ | 8,004,276 | |||||
| Working capital | $ | – | $ | – | $ | 27,781,356 | $ | 7,840,474 | |||||
| Total assets | $ | – | $ | – | $ | 65,907,337 | $ | 16,153,024 | |||||
| Operating | |||||||||||||
| Average daily production | |||||||||||||
| Crude oil (bbls/d)(2) | 250.33 | 8.10 | 90.73 | 3.20 | |||||||||
| Natural gas (mcf/d) | 1,470.60 | 298.90 | 716.54 | 240.00 | |||||||||
| NGLs (bbls/d) | 2.27 | 2.50 | 2.11 | 2.30 | |||||||||
| Total (boe/d) | 497.71 | 60.40 | 212.25 | 45.50 | |||||||||
| Average realized price | |||||||||||||
| Crude oil ($/bbls)(2) | $ | 99.89 | $ | 81.65 | $ | 99.33 | $ | 87.26 | |||||
| Natural gas ($/mcf) | $ | 3.76 | $ | 2.07 | $ | 3.75 | $ | 2.13 | |||||
| NGLs ($/bbls) | $ | 76.22 | $ | 70.22 | $ | 89.28 | $ | 79.52 | |||||
| Netback ($/boe) | |||||||||||||
| Petroleum and natural gas sales | $ | 63.33 | $ | 23.87 | $ | 61.34 | $ | 21.39 | |||||
| Royalties | $ | (2.42 | ) | $ | 0.45 | $ | (2.63 | ) | $ | (2.63 | ) | ||
| Operating expenses (incl. transportation) | $ | (17.48 | ) | $ | (3.09 | ) | $ | (15.18 | ) | $ | (5.74 | ) | |
| Operating netbacks(3) | $ | 43.43 | $ | 21.23 | $ | 43.52 | $ | 13.02 | |||||
| Share Information | |||||||||||||
| Common shares outstanding | 51,310,530 | 20,603,587 | 51,310,530 | 20,603,587 | |||||||||
| Weighted average common shares outstanding | 42,961,889 | 14,670,365 | 37,154,660 | 13,607,399 | |||||||||
Note:
| (1) | Funds flow from operations are petroleum and natural gas revenue and interest income less producing and operating expenses, royalties, exploration and evaluation expenditures and general and administrative expenses. |
| (2) | References to crude oil include condensate. |
| (3) | Operating netbacks are determined by deducting royalties, production expenses and transportation and selling expenses from petroleum and natural gas revenue. |
FISCAL YEAR END RESERVES (as reported September 26, 2013)
| July 31, 2013 |
July 31, 2012 |
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| Proved plus probable (Gross) | 10,700 Mboe | 544 Mboe | ||
| Proved plus probable (PV10 before tax) M$ | $ | 133,513 | $ | 9,947 |
Fiscal 2014 Capital Budget
Donnycreek’s capital budget for fiscal 2014 allocates approximately $38.9 million to its Kakwa and Wapiti properties which are expected to be funded from cash on hand and funds flow from operations. In addition to the operations outlined below at Kakwa and Wapiti, the fiscal 2014 budget includes the drilling of 4 additional Montney wells at Kakwa to bring the total number of wells drilled to 11 gross (5 net) on our 19 gross (8.9 net) section Kakwa land block by July 31, 2014.
Operations Update – Kakwa
Donnycreek’s seventh horizontal Montney well spud on November 10, 2013 targeting the middle Montney formation from a surface location at 16-8-63-5 W6M with a bottom hole location at 16-17-63-5 W6M (the “16-17 Well”). The 16-17 Well (50% working interest) is being drilled from the same drilling pad as our discovery well 13-17-63-5 W6M.
Production casing has been run in Donnycreek’s sixth horizontal Montney well (50% working interest) at 16-25-63-6 W6M (the “16-25 Well”). Donnycreek expects completion and testing of the middle Montney in the 16-25 Well to occur over the next 3 weeks.
The recently completed and tested 5-23-63-6 W6M horizontal middle Montney well (the “5-23 Well”) (results reported – October 16, 2013) (50% working interest) is currently being tied-into existing Company owned infrastructure, including the 16-7-63-5 W6M compressor station and condensate stabilization facility (the “16-7 Facility”). The 16-17 Facility (50% working interest) is designed to handle 3,000 barrels per day of condensate and 15 mmcf per day of natural gas. Construction of the 16-7 Facility is underway and is on schedule for facility start-up in December 2013.
Operations Update – Wapiti
At Wapiti, final surface approval has been obtained to drill the Company’s 75% operated working interest stratigraphic Montney test well. The well will be drilled from a location at 13-26-64-8 W6M (the “13-26 Well”) and will log and evaluate the Montney formation and is programmed to allow for the well to be kicked off horizontally.
A drilling rig has been secured and the 13-26 Well is expected to spud in December 2013.
Donnycreek holds a 75% working interest in 328 gross (246 net) sections of Montney P&NG rights at Wapiti.
Litigation
In August 2013, a proposed class action lawsuit (“proposed lawsuit”) was filed in the Alberta Court of Queen’s Bench against Donnycreek, Donnybrook Energy Inc. (“Donnybrook”), and certain of their respective directors and officers. The action contains various claims relating to the plan of arrangement involving Donnycreek and Donnybrook completed in November 2011, the transfer of certain assets from Donnybrook to Donnycreek, a related private placement and other related transactions. The proposed lawsuit cannot proceed unless certified by the Court. The Company firmly believes that the allegations in the proposed class action are without merit and the Company will be vigorously defending the proposed lawsuit.
Donnycreek is a Calgary based public oil and gas company which holds approximately 438 gross (313 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 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, President and 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 news release contains statements concerning the capital budget for fiscal 2014 and the funding thereof, the fiscal 2014 drilling program, the timing of the completion and testing of the 16-25 Well, the 16-7 Facility start-up, the drilling of the 13-26 Well, the proposed lawsuit 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. 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: whether the Company’s exploration and development activities respecting its prospects 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 will be successful such that further development activities in these areas are warranted; 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 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; 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, 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 for the year ended July 31, 2012 and the Company’s Management’s Discussion and Analysis prepared for the year ended July 31, 2013. 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 news 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.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE.