CALGARY, ALBERTA--(Marketwired - March 10, 2014) -
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 report its 2013 year end oil and gas reserves. At December 31, 2013 DeeThree has increased its proved plus probable reserves by 95% to 39.4 mmboe as compared to the prior year. DeeThree's reserve additions were predominately a result of the successful 2013 drilling program in the Company's two core properties being the Belly River property in the Brazeau area of west central Alberta and the Alberta Bakken property located in the Lethbridge area of southern Alberta. The reserve additions demonstrate the high quality of the Belly River and the Alberta Bakken properties and represent a successful return on the Company's rapid pace of development. In addition, DeeThree's estimated finding and development costs on proved reserves and proved plus probable reserves (including future development costs) were reduced in 2013 by 38% and 23% respectively to $19.14/boe for proved reserves and $17.08/boe for proved plus probable reserves.
DeeThree recorded impressive reserve gains in each of its core properties as a result of its 2013 delineation program. The proved plus probable reserves of the Belly River property increased 147% to 18.8 mmboe in 2013 from 7.6 mmboe in 2012. The Belly River reserves include 40 proved undeveloped locations ("PUDs") that have been assigned to the property at year end as compared to the 28 horizontal locations that DeeThree plans to drill in 2014 (1.4 times budget). Similarly, the proved plus probable reserves of the Alberta Bakken property increased 80% to 19.2 mmboe in 2013 from 10.7 mmboe in 2012. The Alberta Bakken reserves include 32 PUDs that have been assigned to the property at year end as compared to the 18 horizontal locations that DeeThree plans to drill in 2014 (1.8 times budget). Based on resource studies completed on the Belly River property (see August 14, 2013 news release) and the Alberta Bakken property (see August 21, 2012 news release) DeeThree expects this trend to continue into the future as the Company further drills and delineates its two core properties.
RESERVE HIGHLIGHTS
- Total proved plus probable reserves increased 95% to 39.4 million boe (77% oil and NGLs) as at December 31, 2013 from 20.2 million boe (78% oil and NGLs) as at December 31, 2012.
- Total proved reserves have increased 83% to 26.3 million boe (75% oil and NGLs) as at December 31, 2013 from 14.4 million boe (78% oil and NGLs) as at December 31, 2012.
- Predominately all 2013 reserve additions were added through the drill bit or as a result of technical revisions with only $12 million spent in 2013 on acquisitions comprised mainly of undeveloped land in the Company's core areas. The Company also spent approximately $10 million at crown land sales throughout 2013.
- Achieved finding and development costs ("F & D"), including the change in future development capital ("FDC"), of $17.08 per boe on proved plus probable reserves additions and $19.14 per boe on total proved reserves additions.
- Completed two significant "one-time" infrastructure projects totaling approximately $14 million to support future production growth including an 8,000 bbl/d battery on the Alberta Bakken property and a pipeline expansion in the western portion of the Belly River property.
- On a fully diluted per share basis, increased proved plus probable reserves by 67% and increased proved reserves by 57%.
- Proved plus probable reserve additions replaced 2013 production by 8.3 times.
- Proved plus probable future net capital of $328 million represents 1.4 times the Company's 2014 capital budget and includes only 72 horizontal wells, being less than 15% of the Company's current inventory of 500+ risked well locations.
- Proved plus probable recycle ratio of 2.4 based on estimated 2013 operating netback of $40.50/boe and 2.6 on forecasted 2014 operating netback of $45.00/boe.
The evaluation of DeeThree's petroleum and natural gas reserves as at December 31, 2013 was evaluated by the Company's independent reserve engineering firm, Sproule Associates Limited ("Sproule") and 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 31, 2014. Financial information presented above is based on management prepared financial statements for the year ended December 31, 2013 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 Lethbridge area of southern Alberta area, which features Bakken oil plus shallow natural gas, the Brazeau area of west central Alberta and Peace River Arch area of northwestern Alberta, which feature light crude oil, natural gas and natural gas liquids.
In 2013, the Company drilled a total of 35 gross (34.1 net) wells with a 86% percent success rate, 17 gross (17.0 net) wells on the Alberta Bakken property, 17 gross (16.9 net) wells on the Belly River property, and 1.0 gross (0.3 net) wells on the Peace River Arch property.
The following table represents the Company's reserves effective as at December 31, 2013 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(3) | ||||||
| Gross(2)
(mmcf) |
Gross(2)
(mbbls) |
Gross(2)
(mbbls) |
Gross(2)
(mboe) |
||||||
| Proved | |||||||||
| Developed producing | 24,740 | 8,828.3 | 1,073.8 | 14,025.4 | |||||
| Developed non-producing | 1,959 | 230.1 | 31.8 | 588.4 | |||||
| Undeveloped | 12,309 | 8,895.0 | 724.3 | 11,670.9 | |||||
| Total Proved(1) | 39,007 | 17,953.5 | 1,830.0 | 26,284.7 | |||||
| Total Probable(1) | 15,640 | 9,787.2 | 734.2 | 13,128.1 | |||||
| Total Proved plus probable(1) | 54,647 | 27,740.7 | 2,564.1 | 39,412.8 | |||||
| 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) | 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, 2013.
| Before Income Taxes Discounted At | ||||
| 0% | 10% | 15% | ||
| ('000s) | ($) | ($) | ($) | |
| Proved | ||||
| Developed producing | 484,776 | 315,061 | 272,533 | |
| Developed non-producing | 15,850 | 10,878 | 9,389 | |
| Undeveloped | 366,557 | 182,195 | 134,914 | |
| Total Proved(1)(2)(3) | 867,183 | 508,134 | 416,836 | |
| Total Probable(1)(2)(3) | 527,132 | 195,582 | 136,106 | |
| Total Proved plus Probable(1)(2)(3) | 1,394,315 | 703,716 | 552,942 | |
| Notes: | ||
| (1) | Total values may not add due to rounding. | |
| (2) | Forecast pricing used is based on Sproule published price forecasts effective December 31, 2013. | |
| (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, 2012 (1) | 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 | |||||||||||
| Discoveries, Extensions and Improved Recovery | 6,052.9 | 6,665.0 | 12,717.9 | 15,444 | 7,119 | 22,563 | 1,088.8 | 449.3 | 1,458.1 | 9,635.7 | 8,300.8 | 17,936.5 | |||||||||||
| Infill Drilling | 852.3 | 224.5 | 1,076.8 | 2,041 | 538 | 2,579 | 138.2 | 36.4 | 174.6 | 1,330.7 | 350.5 | 1,681.2 | |||||||||||
| Acquisitions | 133.3 | 18.9 | 152.2 | 841 | (795 | ) | 46 | 45.7 | 3.1 | 48.8 | 319.1 | (110.5 | ) | 208.6 | |||||||||
| Economic Factors | 40.4 | 21.4 | 61.8 | (48 | ) | 42 | (7 | ) | 3.3 | 0 | 3.3 | 35.7 | 28.3 | 64.0 | |||||||||
| Technical Revisions | 2,304.7 | (1,436.5 | ) | 868.2 | 5,051 | 960 | 6,011 | 81.6 | 5.4 | 87.0 | 3,228.1 | (1,271.1 | ) | 1,957.0 | |||||||||
| Production | (1,899.9 | ) | 0 | (1,899.9 | ) | (3,606 | ) | 0 | (3,606 | ) | (121.1 | ) | 0 | (121.1 | ) | (2,622.1 | ) | 0 | (2,622.1 | ) | |||
| Balance at December 31, 2013 | 17,953.5 | 9,787.2 | 27,740.7 | 39,007 | 15,640 | 54,647 | 1,830.0 | 734.2 | 2,564.1 | 26,284.7 | 13,128.1 | 39,412.8 |
|||||||||||
| Notes: | ||
| (1) | Estimates of reserves of natural gas include associated and non-associated gas. | |
| (2) | Figures may not add due to rounding. |
2014 GUIDANCE AND 2013 YEAR END REPORTING
DeeThree announces that it is on track to meet its forecasts for 2014. Please refer to the December 18, 2013 news release for details.
The Company will report its 2013 year end results and provide an operational update on March 24, 2014.
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 affect 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, 2013 and are subject to the same limitations as discussed under "Forward- Looking Statements" set out above. These estimated amounts are subject to change upon the completion of the audited financial statements for the year ended December 31, 2013 and changes could be material. DeeThree anticipates filings its audited financial statements and related management's discussion and analysis for the year ended December 31, 2013 on SEDAR on March 24, 2014.
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, 2013 (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 Sproule 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 31, 2014.
Non-IFRS Financial Measures. This press release includes references to financial measures commonly used in the oil and gas industry such as "funds from operations" and "recycle ratio", which do not have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS"). Management believes that in addition to net income and cash flow from operating activities, these non-IFRS financial measures are useful supplemental measures in assessing DeeThree's ability to generate the cash necessary to repay debt or fund future growth through capital investment. Readers are cautioned, however, that these measures should not be construed as an alternative to net income or cash flow from operating activities determined in accordance with IFRS as an indication of DeeThree's performance. DeeThree's method of calculating these measures may differ from other companies and accordingly, they may not be comparable to measures used by other companies. For these purposes, DeeThree defines funds from operations as cash provided by operations before changes in non-cash operating working capital.
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