Daylight Energy Ltd.

Daylight Energy Ltd.

July 18, 2011 17:49 ET

Daylight Energy Provides Operational Update and Declares Q3 2011 Dividends -Liquids Rich Montney Results Exceed Expectations

CALGARY, ALBERTA--(Marketwire - July 18, 2011) - Daylight Energy Ltd. ("Daylight" or the "Corporation") (TSX:DAY) is pleased to provide an operational update and declare Q3 2011 dividends.


Daylight's Wapiti asset is located in a region of the Deep Basin that has recently attracted significant attention from industry. Driven by the consistently strong drilling results announced in the liquids rich Montney zone, industry players have aggressively bid for Montney rights at recent Crown land sales. Daylight's first Wapiti Montney well (0.5 net well) produced at a previously announced initial production rate of 7 million cubic feet ("MMcf") per day. Daylight's second well (0.5 net well) came on production in late May 2011 with a peak rate of over 10 MMcf per day. For the month of June this well attained an average production rate of 9.1 MMcf per day, which is the highest publicly reported Montney well production rate at Wapiti to date. This well exited June at a rate of over 8 MMcf per day. Natural Gas Liquids ("NGLs") yield has been consistent at approximately 50 Bbls per MMcf of natural gas, yielding initial liquids production rates of 350 to 450 Bbls per day from the above noted wells. On July 13, 2011, Daylight participated in the Alberta Crown land sale and acquired an additional 26 net sections (16,640 acres) of land on this trend, with Daylight now owning over 60 net sections of prospective Montney lands in the Wapiti area. With the opportunity to downspace this play to three wells per section, Daylight's unrisked drilling inventory in this play is 180 locations. Daylight's commitment to this exciting play continues with the Corporation planning an additional four wells during 2011. We have mobilized two drilling rigs to the Wapiti area to initiate this follow-up drilling program.

Daylight's Pembina Cardium program resumption was delayed due to adverse wet weather conditions following spring break-up. However, we are pleased to report that drilling and completion operations are proceeding as of mid-July, with two rigs currently drilling and an additional three rigs preparing to spud our next series of wells. The play continues to mature with Daylight and other industry participants optimizing drilling and completion operations. Daylight has now delineated our 100 net section land base and we are proceeding into downspacing operations, focusing on areas where we have had superior results. During early Q3 2011, Daylight completed our first Cardium oil well using water based frac fluids, reducing total well cost by approximately $0.5 million compared to similar wells utilizing oil based frac fluids. While we only have preliminary data at this point, completion operations on the well indicate that the well is flowing back load fluid at similar, if not superior, rates to comparable wells completed with oil based fluids. Daylight is also testing a new downhole packer system, with results that look promising in terms of optimizing frac effectiveness. The company intends to drill our first four well per pad configuration later in 2011 which we expect to provide additional per well cost savings and efficiencies.

For the remainder of Q3 2011, Daylight will be executing a focused and impactful program that, in addition to the above noted activity, will include results of our second horizontal Nikanassin well in Elmworth and our first horizontal Belly River oil well at Pembina.

Daylight is pleased to announce that our Q2 2011 production volumes were approximately 36,800 boe/d which is above the production guidance stated in our press release dated May 18, 2011.


Daylight maintains a Q3 2011 cash dividend to shareholders of Cdn$0.05 per share per month as follows:

Record Date Ex-Dividend Date Dividend Payment Date Dividend Per Share
July 29, 2011
August 31, 2011
September 30, 2011
July 27, 2011
August 29, 2011
September 28, 2011
August 15, 2011
September 15, 2011
October 17, 2011

* The dividend is considered an "eligible dividend" for tax purposes.

Daylight expects to pay a sustainable dividend on a monthly basis, provided however that any decision to pay dividends on the common shares will be made by the Board of Directors on the basis of Daylight's cash flow from operating activities, earnings, financial requirements, commodity price levels, legal requirements and other conditions existing at such future times. Daylight currently intends to designate all dividends to be "eligible dividends" for the purposes of the Income Tax Act (Canada) such that shareholders who are individuals will benefit from the enhanced gross-up and dividend tax credit mechanism under the Income Tax Act (Canada).

Daylight is a growing intermediate oil and natural gas producing company with a high quality suite of resource play assets in Western Canada. Our highly focused team utilizes our technical expertise in exploitation, development and acquisitions to create long-term value for our shareholders. Our team has developed a multi-year inventory of repeatable, low risk exploitation resource play projects with substantial potential reserve additions on assets we currently own and control in the premier Pembina Cardium light oil fairway and in the premier Deep Basin area of Alberta and British Columbia.

Daylight has approximately 213 million common shares outstanding which trade on the TSX under the symbol DAY. Daylight Series C and D convertible debentures trade on the TSX under the symbols DAY.DB.C and DAY.DB.D, respectively.

An updated corporate presentation is available on Daylight's website at


Forward-Looking Information and Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this press release contains forward-looking statements and information concerning: Daylight's 2011 capital program, including expectations regarding cost savings associated with pad drilling operations and utilizing water based frac technologies; anticipated timing of drilling, completion and tie-in of additional wells; estimated initial production rates; and estimated liquids volumes associated with Daylight's natural gas resource play drilling opportunities, and specifically the Corporation's Wapiti Montney wells; payment of Q3 2011 dividends and future dividends declared and payable on the common shares; the anticipated record date and payment date in respect of Q3 2011 dividends.

The forward-looking statements and information in this press release are based on certain key expectations and assumptions made by Daylight, including but not limited to expectations and assumptions concerning: prevailing and future commodity prices and exchange rates; applicable royalty rates and tax laws; future production rates; the performance of existing and future wells; application of existing technologies and future advancements in technology to Daylight's operations and drilling activities; the success obtained in drilling new wells; the inventory of new drilling locations; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labor and services, including but not limited to completion equipment and services; adequate weather and environmental conditions for drilling, completion and tie-in activities, including transportation of associated equipment; the receipt, in a timely manner, of regulatory and third party approvals.

Although Daylight believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Daylight can give no assurance that they will prove to be correct. There is no representation by Daylight that actual results achieved during the periods identified in this press release will be the same in whole or in part as those forecast.

Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risks associated with the oil and gas industry in general such as: operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource (including original oil in place) estimates; the uncertainty of estimates and projections relating to production, costs and expenses; health, safety and environmental risks; risks associated with weather and the impact on drilling and completion activities and the transportation of associated equipment; commodity price and exchange rate fluctuations; marketing and transportation of petroleum and natural gas and loss of markets; environmental risks; competition; risks associated with utilizing existing technologies and future technological advancements in Daylight's operations and drilling activities; failure to realize the anticipated benefits of acquisitions; risks regarding the integration of acquired entities and assets; incorrect assessment of the values of acquisitions; Daylight's ability to negotiate acceptable terms for disposition of non-core assets; Daylight's ability to obtain all third party and regulatory approvals necessary to dispose of non-core assets; ability to access sufficient capital from internal and external sources; failure to obtain required regulatory and other third party approvals; and changes in legislation, including but not limited to tax laws, royalty rates and environmental regulations. Readers are cautioned that the foregoing list of risk factors is not exhaustive. Additional information on the factors that could affect the business, operations or financial results of Daylight are included in reports on file with applicable securities regulatory authorities, including but not limited to Daylight's Annual Information Form for the year ended December 31, 2010 and Management's Discussion and Analysis for the year ended December 31, 2010, each of which may be accessed on Daylight's SEDAR profile at or on our website at

The forward-looking statements contained in this press release are made as of the date hereof and Daylight undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Barrels of Oil Equivalent

"Boe" or "barrel of oil equivalent" means barrel of oil equivalent on the basis of 1 boe to 6,000 cubic feet of natural gas. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 1 boe for 6,000 cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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