CALGARY, ALBERTA--(Marketwire - May 9, 2012) -
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
DeeThree Exploration Ltd. ("DeeThree" or the "Company") (TSX:DTX) (OTCQX:DTHRF) is pleased to announce an update on its 2012 Alberta Bakken and Brazeau Belly River drilling program and its financial and operational results for the three months ended March 31, 2012 as follows.
OPERATIONAL UPDATE
Alberta Bakken
Production test results and additional data from the first four Alberta Bakken wells (100% working interest) drilled by DeeThree in 2012 are provided in the following table. The production test results from the recently completed third and fourth wells exceeded expectations averaging 940 bbls/d and 960 bbls/d of oil after a 10 day and 5 day test respectively.
| Well Identification | Average Test Rate (bbl/d oil) (1 | ) | End of Test Rate
(bbl/d oil) (1 | ) | IP 30
(bbl/d oil | ) | IP 60
(bbl/d oil | ) | Current Rate
(bbl/d oil | ) | Oil Cumulative
(bbls | ) |
| Location #1 | 765 | | 550 | | 415 | | 370 | | 240 | | 25,000 | |
| | (4 day | ) | | | | | | | | | (70 days | ) |
| Location #2 | 957 | | 800 | | N/A | | N/A | | 385 | | 12,700 | |
| | (6 day | ) | | | | | | | | | (22 days | ) |
| Location #3 | 940 | | 620 | | N/A | | N/A | | N/A | | 9,800 | |
| | (10 day | ) | | | | | | | | | (10 days | ) |
| Location #4 | 960 | | 650 | | N/A | | N/A | | N/A | | 5,400 | |
| | (5 day | ) | | | | | | | | | (5 days | ) |
| | |
| (1) | Test rates are not necessarily indicative of long-term performance or of ultimate recovery. |
DeeThree continues to augment its Alberta Bakken program with modifications to the horizontal well lengths and fracing dynamics. Overall, the Company is very pleased with the continuity of the sand being targeted. Continuous improvement in the flow rates to date has resulted in IP30 and IP60 production results exceeding type curve expectations. The Company currently has two drilling rigs in the area with two additional Alberta Bakken wells anticipated to be completed and tested prior to the end of the second quarter.
The Company has continued to expand its 100% owned oil infrastructure to accommodate anticipated future production volumes. The oil battery has been expanded and pipeline infrastructure has also been constructed to the Company's recently drilled wells to accommodate year round production. DeeThree is in the process of procuring and installing CO2 removal facilities to process additional solution gas volumes which should be completed by the end of the third quarter.
Lethbridge Commitment Agreement
DeeThree is pleased to announce that it has extended the primary lease term on its Lethbridge property. The primary lease term has been extended for an additional two years to November 30, 2015. In exchange for the lease extension, the Company has surrendered approximately 50,000 acres while still retaining approximately 180,000 acres of what it feels is the most prospective acreage for Bakken reserves. Also as part of this extension, and in place of the twenty well commitment related to the April 13, 2010 agreement, the Company now has a commitment to drill 12 wells over the three-year period (five wells in each of 2012 and 2013 and two wells in 2014), with six of these commitment wells having been drilled to date.
Brazeau Belly River
In addition to the 3 (2.9 net) wells drilled in the first quarter of 2012, the Company has continued to drill through the second quarter on its Brazeau Belly River oil play. It is currently drilling the second well of the quarter with one additional well to be drilled prior to the end of June. All three of these wells will be completed as soon as weather permits.
Corporate Summary
The Company's production over the past two weeks has averaged 3,750 boe/d, not including flow rates from the two most recently completed Bakken wells described in the table above. The Company expects as many as 4.0 gross (4.0 net) additional Bakken wells and 3.0 gross (2.9 net) additional Belly River wells to be on production by the end of the second quarter.
2012 FIRST QUARTER FINANCIAL AND OPERATIONAL HIGHLIGHTS
DeeThree's first quarter of 2012 was significant with record average production of 3,042 boe/d being achieved as well as our busiest quarter operationally in Company history. Highlights for the period include the following:
- Achieved record production of 3,042 boe/d, resulting in a year over year increase of 327 percent and a 27 percent increase over the last quarter of 2011;
- Increased oil and NGL production by 43 percent over the previous quarter to 1,599 bbls/d compared to 1,118 bbls/d;
- Recorded $5.7 million in funds from operations, respectively a 40 percent and 789 percent increase over the fourth and first quarters of 2011;
- Funds from operations on a per share basis increased to
.09, up 50 and 550 percent respectively from the fourth and first quarters of 2011; - Invested $36.7 million in capital expenditures which included the drilling of 10 (9.1 net) wells;
- Closed a $16.0 million dollar (net of expenses) flow-through financing at a flow through share price of $4.50/share; and
- Completed the annual credit review in April 2012 which resulted in the Company's bankers increasing DeeThree's borrowing base to $60 million from $50 million.
| Financial and operational highlights for the quarter ended March 31, 2012 with comparative data for the same period of 2011 are as follows. |
| |
| Three Months Ended March 31, | 2012 | | 2011 | | Change | |
| (000s, except per share amounts) | ($ | ) | ($ | ) | (% | ) |
| Financial | | | | | | |
| Oil and natural gas revenues | 14,277 | | 1,969 | | 625 | |
| Funds from (used in) operations(1) | 5,741 | | (833 | ) | 789 | |
| | Per share - basic and diluted(1) | 0.09 | | (0.02 | ) | 550 | |
| Cash flow from (used in) operating activities | 4,064 | | (4,863 | ) | 184 | |
| Net loss | (3,199 | ) | (1,991 | ) | (61 | ) |
| | Per share - basic and diluted | (0.05 | ) | (0.05 | ) | -- | |
| Capital expenditures(2) | 36,715 | | 129,529 | | (72 | ) |
| Working capital(3) | (30,898 | ) | 20,659 | | (250 | ) |
| Shareholders' equity | 178,732 | | 175,423 | | 2 | |
| (000s) | (# | ) | (# | ) | (% | ) |
| Share Data | | | | | | |
| At period-end | 66,986 | | 62,752 | | 7 | |
| Weighted average - basic and diluted | 63,321 | | 36,294 | | 74 | |
| | | | | | (% | ) |
| Operating(4) | | | | | | |
| Production | | | | | | |
| | Natural gas (mcf/d) | 8,657 | | 3,744 | | 131 | |
| | Crude oil (bbls/d) | 1,316 | | 71 | | 1,754 | |
| | NGLs (bbls/d) | 283 | | 18 | | 1,472 | |
| | Total (boe/d) | 3,042 | | 713 | | 327 | |
| Average wellhead prices | | | | | | |
| | Natural gas ($/mcf) | 2.17 | | 3.77 | | (42 | ) |
| | Crude oil and NGLs ($/bbl) | 85.48 | | 86.98 | | (2 | ) |
| | Total ($/boe) | 51.58 | | 30.68 | | 68 | |
| Netbacks | | | | | | |
| | Operating netback ($/boe) | 24.59 | | 14.92 | | 65 | |
| | Funds flow netback ($/boe) | 20.64 | | (12.99 | ) | 259 | |
| Gross (net) wells drilled | | | | | | |
| | Gas (#) | -- (-- | ) | -- (-- | ) | -- | |
| | Oil (#) | 8 (7.1 | ) | 2 (2.0 | ) | 300 (255 | ) |
| | Standing (#) | 2 (2.0 | ) | -- (-- | ) | -- | |
| | Dry and abandoned (#) | -- (-- | ) | -- (-- | ) | -- | |
| | Total (#) | 10 (9.1 | ) | 2 (2.0 | ) | 400 (355 | ) |
| Average working interest (%) | 91 | | 100 | | (9 | ) |
| | |
| (1) | Funds from (used in) operations, funds from (used in) operations per share and funds flow netback are not recognized measures under International Financial Reporting Standards ("IFRS").Refer to the commentary under the heading "Non-IFRS Measurements" for further discussion. |
| (2) | Total capital expenditures, including acquisitions and excluding non-cash transactions.Refer to the commentary in the Corporation's Management's Discussion and Analysis for the interim period ended March 31, 2012 (the "MD&A") under the heading "Capital Expenditures and Acquisitions" for further information. |
| (3) | Current assets less current liabilities, excluding current derivative financial instruments. |
| (4) | For a description of the boe conversion ratio, refer to the commentary in the MD&A under the heading "Other Measurements". |
Reader Advisory
Forward-Looking Statements. Certain statements contained in this press release may constitute forward-looking statements. These statements relate to future events or the 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 that 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 in this press release should not be unduly relied upon by investors. These statements speak only as of the date of this press release and are expressly qualified, in their entirety, by this cautionary statement.
In particular, this press release contains forward-looking statements, pertaining to the following: projections of market prices and costs, supply and demand for oil and natural gas, the quantity of reserves, oil and natural gas production levels, capital expenditure programs, treatment under governmental regulatory and taxation regimes, expectations regarding DeeThree's ability to raise capital and to continually add to reserves through acquisitions and development, and projections of market prices and costs.
With respect to forward-looking statements contained in this press release, DeeThree has made assumptions regarding, among other things: the legislative and regulatory environments of the jurisdictions where DeeThree carries on business or has operations, the impact of increasing competition, and DeeThree's ability to obtain additional financing on satisfactory terms.
DeeThree's actual results could differ materially from those anticipated in these forward-looking statements as a result of risk factors that may include, but are not limited to: volatility in the market prices for oil and natural gas; uncertainties associated with estimating reserves; uncertainties associated with DeeThree's ability to obtain additional financing on satisfactory terms; geological, technical, drilling and processing problems; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; incorrect assessments of the value of acquisitions; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel.
This forward-looking information represents DeeThree's views as of the date of this document and such information should not be relied upon as representing its views as of any date subsequent to the date of this document. DeeThree has attempted to identify important factors that could cause actual results, performance or achievements to vary from those current expectations or estimates expressed or implied by the forward-looking information. However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differ materially from current expectations. There can be no assurance that forward-looking information will prove to be accurate, as results and future events could differ materially from those expected or estimated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. . Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements.
Non-IFRS Measurements. This news release contains the terms "funds from other operations" and "funds from operations per share", which should not be considered an alternative to or more meaningful than cash flow from operating activities as determined in accordance with IFRS or previous GAAP. These terms do not have any standardized meaning as prescribed by IFRS or previous GAAP. DeeThree's determination of funds from operations and funds from operations per share may not be comparable to that reported by other companies. Management uses funds from operations to analyze operating performance and leverage, and considers funds from operations to be a key measure as it demonstrates the Company's ability to generate cash necessary to fund future capital investments and to repay debt. Funds from operations is calculated using cash flow from operating activities as presented in the statement of cash flows before changes in non-cash working capital and settlement of retirement costs. DeeThree presents funds from operations per share whereby per share amounts are calculated using weighted average shares outstanding consistent with the calculation of earnings per share.
BOE Presentation. References herein to "boe" mean barrels of oil equivalent derived by converting gas to oil in the ratio of six thousand cubic feet (Mcf) of gas to one barrel (bbl) of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
This new release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.
We seek Safe Harbor.