CALGARY, ALBERTA–(Marketwired – Dec. 18, 2013) – DeeThree Exploration Ltd. (“DeeThree” or the Company”) (TSX:DTX) announces its 2014 guidance and provides an operational update in respect of a well recently completed on its Brazeau Belly River property.
2014 Guidance
The Company will undertake a $230 million capital expenditure program in 2014. This program is focused on the further exploration and development of the Company’s Alberta Bakken property in the Lethbridge area of Southern Alberta and its Belly River property in the Brazeau area of central Alberta by the drilling of approximately 46 gross wells. The 2014 capital program is anticipated to be fully funded through internally generated funds from operations and the Company’s existing credit facility.
The Company is forecasting its 2014 production to be within the range of 11,500 to 11,700 boe/d (81% crude oil and NGLs) with a targeted 2014 exit production rate of 13,000 – 13,500 boe/d (82% crude oil and NGLs).
Key highlights of the Company’s 2014 capital program and guidance are:
- Average production of 11,500 – 11,700 boe/d (81% crude oil and NGLs).
- Exit production target – 13,000 – 13,500 boe/d (82% crude oil and NGLs).
- Capital expenditures are budgeted at $230 million including the drilling of 46 gross wells on the Lethbridge and Brazeau properties.
- Funds from operations anticipated to be $170 million or $2.06 per basic share.
- Year end net debt to annualized fourth quarter funds from operations is expected to be less than one times, thereby maintaining a strong Balance Sheet.
- Operating netbacks are estimated to be $42.00 – $45.00/boe based on the following assumptions:
- WTI – 2014 US $95.00, Aeco $3.40 GJ
- Differential – WTI to Edmonton – 18% discount
- Exchange rate (US$/Cdn$) – 0.95
- Royalty rate – 22% – 23%
- Operating costs – $9.75/boe – $10.00/boe
- Transportation costs – $1.80 – $2.00
Risk Management
DeeThree presently has the following hedges in place for 2014.
Crude Oil
| Jan. 1/14 – Dec. 31/14 | Crude Oil | Collar | 1,000 bbls/d | WTI-NYMEX | US$85.00/bbl (floor) – | |||||
| US$97.00/bbl (cap) | ||||||||||
| Jan. 1/14 – Dec. 31/14 | Crude Oil | Collar | 500 bbls/d | WTI-NYMEX | CAD$92.50/bbl (floor) – | |||||
| CAD$102.01/bbl (cap) | ||||||||||
| Jan. 1/14 – Dec. 31/14 | Crude Oil | Collar | 500 bbls/d | WTI-NYMEX | CAD$90.00/bbl (floor) – | |||||
| CAD$101.25/bbl (cap) | ||||||||||
| Jan. 1/14 – Dec. 31/14 | Crude Oil | Collar | 1,000 bbls/d | WTI-NYMEX | CAD$90.00/bbl (floor) – | |||||
| CAD$107.85/bbl (cap) |
Foreign Currency
| Pricing Point | ||||||||
| Period | Currency | Type of Contract | Quantity | (Cdn$/US$) | ||||
| Jan. 1/14 – Dec. 31/14 | US$ | Average Rate Range | US$2,500,000 | Target – $1.0825 | ||||
| Bonus Accumulator | Cdn$/US$ + $1,500 | |||||||
| bonus/day (1) |
| (1) The Company can earn a bonus payout of up to $1,500 per day depending on the period in which the exchange rate remains in the applicable range of less than 1.0825. |
Brazeau Belly River Well Test Results
The Company is also pleased to announce the results of a four day production test of its most recent 100% working interest horizontal Belly River oil well drilled in the Brazeau area. After fracture stimulation, this well continued to flow for 4.5 days up the 4 1/2″frac string at an average