DeeThree Exploration Inc.
TSX VENTURE : DTX

DeeThree Exploration Inc.

November 30, 2009 09:43 ET

DeeThree Exploration Inc. Announces Its Third Quarter 2009 Results

CALGARY, ALBERTA--(Marketwire - Nov. 30, 2009) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

DEETHREE EXPLORATION INC. (DeeThree) (TSX VENTURE:DTX) is pleased to release its financial and operational results for the three and nine months ended September 30, 2009. DeeThree has filed its unaudited Consolidated Financial Statements for the period ended September 30, 2009, and related Management's Discussion and Analysis ("MD&A"), with Canadian securities regulatory authorities. DeeThree's materials may be viewed on www.sedar.com.

Operational Highlights

- Drilled and cased two wells (2.0 net) in the third quarter of 2009 with a 100% success rate

- Drilled seven wells (7.0 net) in the first 9 months of 2009 with an 86% success rate

- Increased tested behind pipe gas production capability to over 500 boe/d at the end of the third quarter

- Subsequent to quarter end, fulfilled all required drilling and seismic commitments for 2009

Certain selected financial and operational information for the three and nine months ended September 30, 2009 and the 2008 comparatives are set out below and should be read in conjunction with DeeThree's Consolidated Financial Statements and MD&A.



Financial and Operating Highlights
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Three Months Ended Nine Months Ended
Sept 30, Sept 30,
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2009 2008 2009 2008
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(000s, except per share amounts) ($) ($) ($) ($)
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Financial
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Oil and gas revenues 820 387 3,455 790
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Funds from operations (1) (18) 182 677 296
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Per share - basic and diluted -- 0.01 0.05 0.02
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Net income (loss) (830) 21 (2,399) 31
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Per share - basic and diluted (0.06) -- (0.18) --
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Capital expenditures 1,683 102 4,177 298
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Working capital (deficiency) (190) 1,871 (190) 1,871
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Shareholders' equity 20,106 3,013 20,106 3,013
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(000s) (#) (#) (#) (#)
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Share Data (2)
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At period-end 13,465 12,965 13,465 12,965
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Weighted average
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Basic 13,465 12,965 13,143 12,965
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Diluted 13,786 12,965 13,405 12,965
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Operating
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Production
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Natural gas (mcf/d) 2,900 322 3,130 258
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Crude oil & NGLs (bbls/d) 10 15 15 6
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Total (boe/d) 493 69 536 49
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Average wellhead prices
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Natural gas ($/mcf) 2.84 7.53 3.78 8.63
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Crude oil & NGLs($/bbl) 67.85 118.84 57.37 109.49
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Total ($/boe) 18.08 61.13 23.61 59.33
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Operating cost ($/boe) 8.84 17.85 8.57 19.08
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Operating netback ($/boe) 6.86 34.91 11.89 29.81
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Gross (net) wells drilled (#)
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Gas 2 (2.0) -- (--) 5 (5.0) -- (--)
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Oil -- (--) -- (--) -- (--) -- (--)
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Standing -- (--) -- (--) 2 (2.0) -- (--)
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Dry and abandoned -- (--) -- (--) -- (--) -- (--)
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Total 2 (2.0) -- (--) 7 (7.0) -- (--)
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Average working interest (%) 100 -- 100 --
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(1) Funds from operations and funds from operations per share are not
recognized measures under Canadian generally accepted accounting
principles. Refer to the Management's Discussion and Analysis for
further discussion.
(2) Shares outstanding have been adjusted to reflect the reverse takeover as
described in note 1 to the consolidated financial statements as if it
occurred at the beginning of the period.
(3) For a description of the boe conversion ratio, refer to the commentary
at the beginning of the Management's Discussion and Analysis.


DeeThree drilled and cased two wells (2.0 net) within its Lethbridge property in the third quarter of 2009. As announced on September 22, 2009 and October 9, 2009, both wells encountered gas that tested at relatively high rates.

The first well drilled in the third quarter of 2009 (100% working interest) successfully encountered its primary objective, which was an extension of a prolific natural gas pool that is currently owned 100% by DeeThree. Completion results indicate that reservoir pressure is higher than anticipated which, combined with the initial test rates of approximately 2,600 mcf/d over a 27 hour flow test, results in the potential for substantial reserves remaining. This zone was placed on production October 20, 2009 at initial restricted rates of approximately 800 mcf/d. In addition to the primary objective, a new uphole zone was discovered which drill stem tested at flow rates exceeding 650 mcf/d. The uphole zone remains behind pipe, and may be completed and placed on production in early 2010.

The second well drilled in the third quarter of 2009 (100% working interest) was an exploratory well targeting deeper horizons. As announced on October 9, 2009, the well tested at rates exceeding 1,000 mcf/d or a period of 24 hours during initial cleanup flow after fracture stimulation. A 72 hour production test was subsequently performed in November, and the well produced a total of over 6,000 mcf in that time (average rate of over 2,000 mcf/day) with a maximum bottom hole pressure drawdown of less than 30%. This well is currently suspended and awaiting pipeline construction.

Subsequent to the end of the third quarter, DeeThree drilled and cased an additional three (3.0 net) wells, bringing the yearly total of wells drilled to ten (10.0 net). The latest three wells are in varying stages of evaluation. The Company also completed shooting a 3D seismic program that exceeded 36 square miles in size. By drilling ten wells and acquiring over 36 square miles of seismic data, Deethree has fulfilled its development commitment for 2009.

Also subsequent to quarter end, DeeThree completed three pipeline tie-in projects (0.7 km, 5.5 km, and 1.5 km respectively), and placed the related wells on production. A third pipeline tie-in project (1.2 km) kicked off November 27 and is expected to be completed in early December. As announced previously, a pipeline extension that is approximately 18 km in length is required to tie-in two of DeeThree's discoveries. Construction of this pipeline project is expected to be complete early in the first quarter of 2010.

Current field-estimated corporate production rates exceed 650 boe/d. Additionally, DeeThree estimates that it has current tested behind pipe and restricted gas production capability of over 450 boe/d.

Martin Cheyne, DeeThree's President and Chief Executive Officer, commented, "The first year of our development program in Lethbridge has not only been successful from the perspective of production and reserves additions, but it has also provided us with valuable information and an even better understanding of the area. We are particularly excited about the forthcoming interpretation of our newly-shot township of 3D seismic data, and we look forward to continued drilling momentum in 2010."

This new release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.

Cautionary Note Regarding 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; 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.

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.

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 release.

Contact Information

  • DeeThree Exploration Inc.
    Martin Cheyne
    President and Chief Executive Officer
    (403) 263-9130