CALGARY, ALBERTA--(Marketwire - March 25, 2013) -
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 provide the following information on its reserves effective as at December 31, 2012, as evaluated by the Company's independent reserve engineering firm, Sproule Associates Limited ("Sproule"). The evaluation of DeeThree's petroleum and natural gas reserves was conducted pursuant to National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGEH") reserves definitions. Additional reserve information as required under NI 51-101 will be included in the Company's Annual Information Form which will be filed on SEDAR by March 28, 2013.
HIGHLIGHTS OF 2012 RESERVE REPORT
- Total proved reserves have increased from 7.4 million boe at December 31, 2011 to 14.4 million boe (78% oil and NGLs) as at December 31, 2012 representing a 95% increase; total proved plus probable reserves have increased from 9.7 million boe at December 31, 2011 to 20.2 million boe (78% oil and NGLs) as at December 31, 2012 representing an 108% increase.
- Increased proved plus probable crude oil reserves significantly to 14.8 million boe from 4.6 million boe at year end 2011.
- On a fully diluted per share basis, increased proved plus probable reserves by 83% and increased proved reserves by 71%.
- Reserve life index of approximately 10.4 years on a proved plus probable basis and 7.4 years on a proved basis (based on 2012 fourth quarter average production of approximately 5,300 boe/d)
- Proved plus probable reserve additions replaced 679% of 2012 production and proved reserve additions replaced 450% of 2012 production.
- Finding, development and net acquisition ("FD&A") costs of $21.51/boe on a proved plus probable reserve additions and $30.21 on total proved reserve additions. Excluding future development capital, FD&A costs were $12.02 on a proved plus probable basis and $17.02 on a total proved basis.
- 2012 FD&A costs include more than $15 million of expenditures in major facility and gathering infrastructure in the Ferguson area of southern Alberta to facilitate future development over the DeeThree's extensive Alberta Bakken oil pool.
Financial information presented above is based on management prepared financial statements for the year ended December 31, 2012 which are in the process of being audited by DeeThree's independent auditors and, accordingly, such financial information is subject to change based on the results of the audit. See "Reader Advisory - Unaudited Financial Information" below.
RESERVES INFORMATION
The Company's reserves are located in the Ferguson (southern Alberta) area, which features Bakken oil plus shallow natural gas and the Brazeau (west central Alberta) and Peace River Arch (northwestern Alberta) areas, which feature light crude oil, natural gas and natural gas liquids. In 2012, the Company drilled a total of 30 gross (28.8 net) wells with a 100 percent success rate, 21 wells in the Ferguson area, 8 wells in the Brazeau area, and 1 well in the Peace River Arch area.
The following table represents the Company's reserves effective as at December 31, 2012 as evaluated by Sproule. The evaluation of DeeThree's petroleum and natural gas reserves was conducted pursuant to NI 51-101 and COGEH reserves definitions.
| Natural Gas | Crude Oil | NGLs | BOE(4) | ||||||||||||||
| Gross(2)
(mmcf |
) | Net(3)
(mmcf |
) | Gross(2)
(mbbls |
) | Net(3)
(mbbls |
) | Gross(2)
(mbbls |
) | Net(3)
(mbbls |
) | Gross(2)
(mboe |
) | Net(3)
(mboe |
) | ||
| Proved | |||||||||||||||||
| Developed producing | 12,610 | 11,244 | 4,309 | 3,410 | 415 | 283 | 6,825 | 5,566 | |||||||||
| Developed non-producing | 1,185 | 945 | 141 | 97 | 4 | 2 | 342 | 257 | |||||||||
| Undeveloped | 5,490 | 4,866 | 6,020 | 4,494 | 255 | 188 | 7,190 | 5,492 | |||||||||
| Total Proved(1) | 19,285 | 17,056 | 10,470 | 8,000 | 674 | 472 | 14,358 | 11,315 | |||||||||
| Total Probable(1) | 7,777 | 6,829 | 4,294 | 3,096 | 240 | 157 | 5,830 | 4,391 | |||||||||
| Total Proved plus probable(1) | 27,062 | 23,885 | 14,764 | 11,096 | 913 | 630 | 20,188 | 15,706 | |||||||||
| Notes: | |
| (1) | Total values may not add due to rounding. |
| (2) | "Gross" Company reserves are the Company's total working interest share before the deduction of any royalties and without including any royalty interests of the Company. |
| (3) | "Net" reserves are the Company's working interest share after deduction of royalties but including royalty interests of the Company. |
| (4) | In the case of BOEs, using BOEs derived by converting gas to oil equivalent in the ratio of six thousand cubic feet of gas to one barrel of oil (6 MCF:1 bbl). See "Reader Advisory - BOE Presentation" and "Reader Advisory - Information Regarding Disclosure on Oil and Gas Reserves" below. |
| The following table summarizes the Net Present Value of the Company's share of oil and natural gas reserves effective as at December 31, 2012. |
| Before Income Taxes Discounted At | |||||||
| 0% | 10% | 15% | |||||
| ('000s) | ($ | ) | ($ | ) | ($ | ) | |
| Proved | |||||||
| Developed producing | 233,331 | 163,837 | 144,349 | ||||
| Developed non-producing | 7,567 | 4,984 | 4,216 | ||||
| Undeveloped | 175,150 | 94,144 | 69,823 | ||||
| Total Proved(1)(2)(3) | 416,048 | 262,965 | 218,387 | ||||
| Total Probable(1)(2)(3) | 235,031 | 110,044 | 84,745 | ||||
| Total Proved plus Probable(1)(2)(3) | 651,079 | 373,009 | 303,132 | ||||
| Notes: | |
| (1) | Total values may not add due to rounding. |
| (2) | Forecast pricing used is based on Sproule published price forecasts effective December 31, 2012. |
| (3) | It should not be assumed that the net present values of future net revenues estimated by Sproule represent fair market value of the reserves. There is no assurance that the forecast price and cost assumptions will be attained and variances could be material. See "Reader Advisory - Information Regarding Disclosure on Oil and Gas Reserves" below. |
| The following table provides a reconciliation of the Company's gross reserves based on forecast prices and costs. |
| RECONCILIATION OF COMPANY GROSS RESERVES BY PRINCIPLE PRODUCT TYPE | ||||||||||||||||||||||||
| Light and Medium Oil | Natural Gas (1) | Natural Gas Liquids | TOTAL | |||||||||||||||||||||
| Proved (MBbl | ) | Probable (MBbl | ) | Proved Plus Probable (MBbl | ) | Proved (MMcf | ) | Probable (MMcf | ) | Proved Plus Probable (MMcf | ) | Proved (MBbl | ) | Probable (MBbl | ) | Proved Plus Probable (MBbl | ) | Proved (MBOE | ) | Probable (MBOE | ) | Proved Plus Probable (MBOE | ) | |
| Balance at December 31, 2011 (1) | 3,520.5 | 1,088.4 | 4,608.9 | 20,153 | 6,447 | 26,600 | 518.1 | 133.3 | 651.4 | 7,397.4 | 2,296.2 | 9,693.6 | ||||||||||||
| Discoveries, Extensions and Improved Recovery | 2,194.9 | 726.4 | 2,921.3 | 879 | 224 | 1,103 | 9.4 | 1.4 | 10.8 | 2,350.8 | 765.3 | 3,116.0 | ||||||||||||
| Economic Factors | 5.6 | 1.9 | 7.5 | (757 | ) | (74 | ) | (831 | ) | (4.9 | ) | (2.4 | ) | (7.3 | ) | (125.5 | ) | (12.8 | ) | (138.2 | ) | |||
| Infills | 6,068.1 | 2,419.3 | 8,487.4 | 4,004 | 1,675 | 5,679 | 176.9 | 83.3 | 260.2 | 6,912.4 | 2,781.7 | 9,694.1 | ||||||||||||
| Technical Revisions | (414.5 |
) | 57.9 | (356.6 | ) | (1,735 | ) | (496 | ) | (2,231 | ) | 71.6 | 24.3 | 95.9 | (632.2 | ) | (0.4 | ) | (632.6 | ) | ||||
| Production | (904.8 | ) | - | (904.8 | ) | (3,258 | ) | - | (3,258 | ) | (97.6 | ) | - | (97.6 | ) | (1,545.4 | ) | - | (1,545.4 | ) | ||||
| Balance at December 31, 2012 | 10,469.8 | 4,293.9 | 14,763.7 | 19,285 | 7,777 | 27,062 | 673.5 | 239.9 | 913.4 | 14,357.5 | 5,830.0 | 20,187.4 | ||||||||||||
| Notes: | |
| (1) | Estimates of reserves of natural gas include associated and non-associated gas. |
| (2) | Figures may not add due to rounding. |
OPERATIONS UPDATE
The Company anticipates that its exit production for the first quarter of 2013 will be 6,800 boe per day. Three more wells are expected to be placed onto production by mid-April 2013.
The Company has drilled five Belly River horizontal wells in its Brazeau property year to date and is currently completing drilling operations on two (2.0 net) additional Belly River horizontal wells in its Brazeau property and one Bakken (1.0 net) horizontal well in its Ferguson property. An update regarding these wells and other activities will be provided in the coming weeks.
Two of the Belly River horizontal wells drilled and completed this year tested at significant rates. These wells targeted different intervals within the Belly River formation. Horizontal well 5-27-47-14W5 tested at a final stabilizing rate of approximately 3.5 mmscf/d of sales gas with 215 bbls/d of associated NGLs and 450 bbls/d of light oil at a flowing wellhead pressure of 420 psi after an 8 day test. Initial test results of this well were announced on February 25, 2013. Horizontal well 2-34-47-14W5 tested at a final stabilizing rate of approximately 1.2 mmscf/d of sales gas with 70 bbls/d of associated NGLs and 500 bbls/d of light oil at a flowing wellhead pressure of 30 psi after a 5 day test.
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. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could effect DeeThree's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).
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.
Test Rates. Test rates are not necessarily indicative of long-term performance or of ultimate recovery. Neither a pressure transient analysis nor a well-test interpretation has been carried out and the data should be considered to be preliminary until such analysis or interpretation has been done.
Unaudited Financial Information. Certain financial and operating information included in this press release are based on estimated unaudited financial results for the year ended December 31, 2012 and are subject to the same limitations as discussed under "Forward- Looking Statements" set out above. These estimated amounts may change upon the completion of audited financial statements for the year ended December 31, 2012 and changes could be material.
Information Regarding Disclosure on Oil and Gas Reserves. The reserves data set forth above is based upon an independent reserves assessment and evaluation prepared by Sproule with an effective date of December 31, 2012 (the "Sproule Report"). The presentation summarizes the Company's crude oil, natural gas liquids and natural gas reserves and the net present values before income tax of future net revenue for the Company's reserves using forecast prices and costs based on the Sproule Report. The Spoule Report has been prepared in accordance with the standards contained in the COGEH and the reserve definitions contained in NI 51-101. All evaluations and reviews of future net cash flows are stated prior to any provisions for interest costs or general and administrative costs and after the deduction of estimated future capital expenditures for wells to which reserves have been assigned. It should not be assumed that the estimates of future net revenues presented in the tables above represent the fair market value of the reserves. There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of our crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein. The reserve data provided in this release only represents a summary of the disclosure required under NI 51-101. Additional disclosure will be provided in the Company's Annual Information Form filed on www.sedar.com on or before March 28, 2013.
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.
We seek Safe Harbor.
Contact Information:
Martin Cheyne
President and Chief Executive Officer
(403) 263-9130