Donnycreek Reports Interim Reserves at March 31, 2014
May 22 2014 - 8:30AM
Marketwired Canada
Donnycreek Energy Inc. ("Donnycreek" or the "Company") (TSX VENTURE:DCK) reports
the results of its March 31, 2014 Evaluation of Oil and Gas Reserves on its
Alberta oil and gas properties (the "McDaniel Report"), as evaluated by McDaniel
& Associates Consultants Ltd. ("McDaniel") in accordance with National
Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.
A summary of the Company's reserves volumes according to reserve category as at
March 31, 2014 is as provided in the following table. Unless otherwise stated,
the reserves information included in this release is stated on a "working
interest" basis, which represents Donnycreek's working interest (operated and
non-operated) share of remaining reserves before deduction of royalties or
including any royalty interests received. A summary of the Company's estimated
future net revenues associated with Donnycreek's reserves as at March 31, 2014
based on the McDaniel April 1, 2014 price forecast is provided in the following
table. It should not be assumed that the net present values estimated by
McDaniel represent the fair market value of the reserves. Numbers presented in
table may not add exactly due to rounding.
Company Reserve Evaluation Highlights:
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Total Proved plus Probable Reserves
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Natural Gas: 50.8 bcf 8.5 mmboe
Natural Gas Liquids: 7.9 mmbbls
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Total Proved plus Probable: 16.4 mmboe
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Total Proved Reserves
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Natural Gas: 33.6 bcf 5.6 mmboe
Natural Gas Liquids: 5.2 mmbbls
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Total Proved: 10.8 mmboe
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Net Present Value at 10% Discount ($,000) Before Tax
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Total Proved plus Probable: $249,242
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Total Proved: $162,326
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The McDaniel petroleum reserve evaluation of the Company's assets includes minor
properties at Delia and Michichi which has minor oil reserves assigned which are
included in the natural gas liquids category in the above table. Of the
Company's 20.75 section Kakwa land block where it holds an average 50% working
interest, petroleum reserves were assigned to approximately 10 sections in the
middle Montney and 2 sections of the 20.75 sections in the upper Montney.
Independent Undeveloped Land Evaluation
The Company engaged Seaton-Jordan & Associates Ltd. to complete an evaluation of
Donnycreek's undeveloped acreage at April 1, 2014, arriving at a value of
approximately $67.7 million.
Working Capital
The Company's working capital after allocating funds to the previously reported
operations on the Wapiti 01-26-64-8 W6M exploration well and the 102/14- 30
-63-5 W6M ("102/14-30") upper Montney well is estimated at $8 million. The
Company has a $15 million revolving loan facility which is currently undrawn.
Capital Structure
Donnycreek currently has 54,920,530 common shares issued and outstanding
(58,580,730 fully diluted).
Operations Update
Following the drilling of the upper Montney horizontal well at 102/14-30, the
contracted drilling rig moved to a surface lease at 07-19-63-5 W6M and has
drilled and cased its first of three extended length horizontal middle Montney
wells to a bottom hole location at 100/08-20-63-5 W6M encountering approximately
1,983 metres of Montney reservoir. The second well with a bottom hole location
of 102/02-18-63-5 W6M is drilling at 150 metres from its programed total depth
of 5,390 metres encountering approximately 2,000 metres of Montney reservoir.
The third well is expected to spud before the end of May 2014 with a bottom hole
location at 100/09-20-63-5 W6M. The first two of the three wells have been
drilled in fewer days than programed which will reflect in lower well costs and
improved well economics. Donnycreek has a 50% working interest in the three
wells.
In addition, Donnycreek is in the process of contracting a second rig that is
expected to be used to accelerate drilling at Kakwa.
Donnycreek is a Calgary based public oil and gas company which holds
approximately 439 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 exploration and 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.
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 reserves, the timing of the
spud of the third extended length horizontal middle Montney well, the
contracting of a second drilling rig expected to be used to accelerate drilling
at Kakwa and the primary prospective zone for development on the Company's
lands.
Statements relating to reserves are by their nature forward-looking statements,
as they involve the implied assessment, based on certain estimates and
assumptions, that the reserves can be profitably produced in the future. It
should not be assumed that the estimated future net cash flow shown below is
representative of the fair market value of the Company's properties. There is no
assurance that such price and natural gas liquids ("NGLs") and natural gas
reserves provided herein are estimates only and there is no guarantee that the
estimated reserves will be recovered. Actual crude oil, NGLs and natural gas
reserves may be greater than or less than the estimates provided herein.
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: 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, royalty rates or other regulatory matters;
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 and 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 press 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. Natural gas liquids include condensate,
propane, butane and ethane.
Certain information set out herein may be considered as "financial outlook"
within the meaning of applicable securities laws. The purpose of this financial
outlook is to provide readers with disclosure regarding Donnycreek's reasonable
expectations as to the anticipated results of its proposed business activities
for the periods indicated. Readers are cautioned that the financial outlook may
not be appropriate for other purposes.
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Jack Marsh
Chief Operating Officer
Telephone: 403-237-5700
403-255-2356 (Direct Line)
Fax: 403-265-3506
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