CALGARY, ALBERTA–(Marketwired – May 5, 2014) – DEETHREE EXPLORATION LTD. (“DeeThree” or the “Company”) (TSX:DTX)(OTCQX:DTHRF) is pleased to announce that it has entered into an agreement, on a bought deal basis, with a syndicate of underwriters co-led by Cormark Securities Inc. and Macquarie Capital Markets Canada Ltd., including Raymond James Ltd., CIBC, Dundee Securities Ltd., TD Securities Inc., National Bank Financial Inc., and Desjardins Securities Inc., to purchase 5,410,000 common shares of the Company (the “Common Shares”) at a price of $11.10 per Common Share and 752,000 common shares issued on a flow-through basis (the “Flow-Through Common Shares”) at a price of $13.30 per Flow-Through Common Share for aggregate gross proceeds of approximately $70 million pursuant to a short form prospectus (the “Offering”).
The Company has also granted the underwriters an over-allotment option to increase the size of the Offering by purchasing from treasury up to an additional 450,000 Common Shares on the same terms, exercisable in whole or in part at any time prior to 30 days after the closing of the Offering. If the over-allotment option is exercised in full, the aggregate size of the Offering, would be approximately $75 million.
Proceeds of the offering will initially be used to reduce bank indebtedness thereby freeing up additional borrowing capacity to fund a portion of the Corporation’s ongoing capital expenditure program with the Flow-Through Common Share proceeds used to incur eligible Canadian exploration expenditures that will be renounced to subscribers effective on or before December 31, 2014.
Closing of the Offering is anticipated to occur on or about May 27, 2014 (the “Closing Date”) and is subject to the receipt of applicable regulatory approvals, including approval of the Toronto Stock Exchange.
The Common Shares and the Flow-Through Common Shares will be offered in each of the provinces of Canada other than Québec by way of a short form prospectus. The Common Shares will also be offered for sale in the United States on a private placement basis pursuant to exemptions from the registration requirements pursuant to Rule 144A and/or Regulation D of the United States Securities Act of 1933, as amended, in a manner that does not require the Common Shares to be registered in the United States and internationally, pursuant to applicable securities laws.
Brazeau Belly River
The Company has now received extended production data on the first round of down-spaced wells drilled on its Brazeau Belly River Property, each offsetting significant oil producing wells that were drilled in 2013. These new wells had an average IP30 rate of 818 barrels of oil per day (range of 535 to 1,102 bbl/day) and in combination with positive pressure data, continued to further prove the size and potential of the resource. With these new data points the Company is strongly encouraged of the development possibilities and subsequent risk profile of its development plan in all of the sands in the area on a go-forward basis.
With previous years drilling efforts in the region concentrated on proving up the multi-zone potential and areal extent of the reservoir, the Company will primarily focus on the development of its Brazeau Belly River property in 2014 with one rig drilling “C sand” development wells, one rig drilling “D sand” development wells and the third rig proving up future drilling opportunities.
Two wells drilled on the property earlier this quarter will be completed post break-up, providing new production additions as soon as weather permits. One of these wells is unique in that it is the first horizontal well to be drilled in the “BBR A sand”.
Lethbridge Alberta Bakken
The Company currently has two rigs drilling wells on its Lethbridge Alberta Bakken property with two wells drilled and completed this quarter and two additional wells in the latter stages of drilling the horizontal production legs. Operations on this property have not been delayed due to spring break up conditions in the area. The Company looks forward to updating progress from this development drilling in the future.
The Company has recently significantly expanded its land position in this core area by acquiring rights to more than 70 additional sections that are believed to include both lower risk development and exploration opportunities.
Acquisition highlights include an agreement with a senior producer pursuant to which DeeThree may earn a 100% working interest in up to 34.5 contiguous sections (22,080 acres) of land located directly on trend and between existing DeeThree production within its Lethbridge Alberta Bakken property. A map of these lands is attached to this news release and may also be viewed on DeeThree’s website at www.deethree.ca. In consideration, DeeThree has committed to drill one vertical well and one horizontal well by the third quarter of 2014. DeeThree has the right to acquire any lands which are not earned by the third quarter of 2014 in exchange for a cash payment and a further drilling commitment.
To view the lands acquired, visit this link:
DeeThree also announces it has entered into an amended and restated syndicated credit facility with a syndicate of five Canadian chartered banks, replacing the revolving operating demand loan credit facility previously in place. The new facility has a borrowing base of $235 million, consisting of a $215 million revolving line of credit and a $20 million operating line of credit.
First Quarter Reporting
The Company will report its results for the first quarter of 2014 and provide an operational update on May 15, 2014.
Forward-Looking Statements. Certain statements contained herein constitute forward-looking statements, including statements concerning the anticipated closing date of the Offering, the anticipated use of proceeds and 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 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 herein should not be unduly relied upon. Closing of the Offering could be delayed if DeeThree cannot obtain necessary regulatory approvals within anticipated timelines and will not be completed unless certain conditions customary for transactions of this kind are satisfied. The forward-looking statements included in this press release are made as of the date of this press release and DeeThree disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities legislation. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
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.
DeeThree Exploration Ltd.
President and Chief Executive Officer