CALGARY, ALBERTA–(Marketwired – Dec. 20, 2013) – Donnycreek Energy Inc. (“Donnycreek” or the “Company“) (TSX-V: DCK) reports that it has filed its condensed interim financial statements and related Management’s Discussion and Analysis (“MD&A”) for the three months ended October 31, 2013 with 2012 comparatives on SEDAR. Selected financial and operational information is outlined below and should be read in conjunction with Donnycreek’s condensed interim financial statements for the three months ended October 31, 2013 and its audited financial statements and related MD&A for the year ended July 31, 2013 which are available for review at www.sedar.com and on our website at www.donnycreekenergy.com.
FINANCIAL AND OPERATING HIGHLIGHTS
| Three Months Ended | ||||
| 31-Oct-13 | 31-Jul-13 | 31-Oct-12 | ||
| Petroleum and natural gas sales | $ 2,447,769 | $ 2,899,982 | $ 77,841 | |
| Funds flow from operations(1) | $ 1,545,501 | $ 1,726,323 | $ (48,969) | |
| Basic ($/share) | $ 0.03 | $ 0.04 | $ (0.01) | |
| Diluted ($/share) | $ 0.03 | $ 0.04 | $ (0.01) | |
| Net income (loss) | $ 396,224 | $ 551,137 | $ (1,920) | |
| Basic ($/share) | $ 0.01 | $ 0.01 | $ (0.01) | |
| Diluted ($/share) | $ 0.01 | $ 0.01 | $ (0.01) | |
| Capital expenditures | $ 7,290,529 | $ 4,937,074 | $ 13,156,289 | |
| Working capital | $ 23,606,388 | $ 27,781,356 | $ 24,522,259 | |
| Total assets | $ 67,176,274 | $ 65,907,337 | $ 46,559,397 | |
| Operating | ||||
| Average daily production (sales) | ||||
| Crude oil (bbls/d)(2) | 221 | 250 | 0.1 | |
| Natural gas (mcf/d) | 1,432 | 1,471 | 204 | |
| NGLs (bbls/d) | 12 | 2 | 2 | |
| Total (boe/d) | 472 | 498 | 36 | |
| Average realized price | ||||
| Crude oil ($/bbls)(2) | $ 95.67 | $ 99.89 | $ 81.55 | |
| Natural gas ($/mcf) | $ 2.90 | $ 3.76 | $ 2.41 | |
| NGLs ($/bbls) | $ 95.01 | $ 76.22 | $ 91.94 | |
| Netback ($/boe) | ||||
| Petroleum and natural gas sales | $ 56.37 | $ 63.33 | $ 23.50 | |
| Royalties | $ (2.98) | $ (2.42) | $ (3.11) | |
| Operating expenses (incl. transportation) | $ (12.59) | $ (17.48) | $ (8.57) | |
| Operating netbacks(3) | $ 40.80 | $ 43.43 | $ 11.81 | |
| Share Information | ||||
| Common shares outstanding | 51,310,350 | 51,310,530 | 40,785,037 | |
| Weighted average common shares outstanding | 51,310,350 | 42,961,889 | 24,167,780 | |
| Notes: | |
| (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 2014 Capital Budget
Donnycreek’s updated capital budget for fiscal 2014 allocates approximately $49.2 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 updated fiscal 2014 budget includes the drilling of 5 additional Montney wells at Kakwa to bring the total number of wells drilled to 12 gross (5.5 net) on our 18.75 gross (8.75 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) has been drilled to a total measured depth of 5,191 metres from the same drilling pad as our discovery well at 13-17-63-5 W6M and completion operations are expected to commence in January 2014.
Completion operationsare underway at Donnycreek’s sixth horizontal middle Montney well (50% working interest) at 16-25-63-6 W6M (the “16-25 Well”). The Company expects to flow the well back in the next two 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 tied-into existing Company owned infrastructure, including the 16-7-63-5 W6M compressor station and condensate stabilization facility (the “16-7 Facility”). The 16-7 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 complete and start up and commissioning of the facility is expected before the end of December 2013.
All three of these wells are expected to be on production by February 1, 2014 together with the three existing producing middle Montney Kakwa wells.
Operations Update – Wapiti
At Wapiti, the Company is in process of drilling a 75% operated working interest stratigraphic Montney test well. The well is being 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.
Donnycreek holds a 75% working interest in 328 gross (246 net) sections of Montney P&NG rights at Wapiti.
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 16-17 Well, the timing of the flow-back of the 16-25 Well, the 16-7 Facility start-up, the drilling of the 13-26 Well, the timing of production for the 16-17 Well, the 16-25 Well and the 5-23 Well 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 Annual Information Form for the year ended July 31, 2013 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.