DeeThree Exploration Ltd.

DeeThree Exploration Ltd.

March 25, 2011 18:17 ET

DeeThree Reports 2010 Financial Results and Announces Filing of its 2010 Year End Disclosure Documents

CALGARY, ALBERTA--(Marketwire - March 25, 2011) -


DeeThree Exploration Ltd. ("DeeThree" or the "Company") (TSX:DTX) is pleased to release its financial and operational results for the year ended December 31, 2010. DeeThree has filed its audited consolidated financial statements for the year ended December 31, 2010 and related Management Discussion and Analysis with Canadian securities regulatory authorities. In addition, DeeThree has filed its Annual Information Form which includes DeeThree's statement of reserves data and other oil and gas information for the year ended December 31, 2010 as mandated by National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities of the Canadian Securities Administrators. DeeThree's materials may be viewed in their entirety on


Years Ended December 31, 2010 2009 Change 2008
(000s, except per share
amounts) ($) ($) (%) ($)
Oil and gas revenues 7,073 5,018 41 1,649
Funds from operations (1) 1,607 1,112 45 367
Per share - basic and
diluted 0.07 0.08 (13) 0.03
Net loss 6,714 2,837 137 435
Per share - basic and
diluted 0.29 0.21 38 0.03
Capital expenditures 22,193 8,778 153 18,773
Working capital (deficiency) 28,505 375 7,501 (2,710)
Shareholders' equity 66,767 24,674 171 16,676
(000s) (#) (#) (%) (#)
Share Data (2)
At year-end 32,937 15,518 112 12,965
Weighted average
Basic and diluted 23,102 13,660 69 12,965
Natural gas (Mcf/d) 4,258 3,257 31 603
Crude oil and NGLs
(Bbls/d) 17 15 13 7
Total (BOE/d) 727 558 30 108
Average wellhead prices
Natural gas ($/Mcf) 4.26 3.94 8 6.38
Crude oil and NGLs ($/Bbl) 72.28 60.36 20 93.49
Total ($/BOE) 26.65 24.64 8 41.97
Operating cost ($/BOE) 8.72 8.61 1 15.65
Operating netback ($/BOE) 12.75 11.96 7 17.34
Years Ended December 31, 2010 2009 Change 2008
Proved (MBOE) 1,327 1,713 (23) 952
Proved plus probable (MBOE) 1,599 2,060 (22) 1,178
Total net present value -
proved plus probable (10%
discount, before tax) ($000s) 19,435 29,271 (34) 23,449

Gross (net) wells drilled
Gas (#) 5 (5.0) 8 (8.0) (38) (-38) -- (--)
Oil (#) 2 (2.0) -- (--) -- (--) -- (--)
Standing (#) 1 (1.0) -- (--) -- (--) -- (--)
Dry and abandoned (#) 8 (8.0) 2 (2.0) 300 (300) -- (--)
Total (#) 16 (16.0) 10 (10.0) 60 (60) -- (--)
Average working interest (%) 100 100 -- --


1. Funds from operations and funds from operations per share are not
recognized measures under Canadian generally accepted accounting
principles. Refer to the commentary in the Management's Discussion and
Analysis under the heading "Non-GAAP Terms" for further discussion.
2. Shares outstanding have been adjusted to reflect the reverse takeover as
described in note 1 to the financial statements as if it occurred at the
beginning of the year.
3. The aforementioned reserves information is based on an independent
engineering evaluation report prepared by Sproule Associates Limited
dated February 11, 2011 and effective December 31, 2010.


In December of 2010, DeeThree successfully drilled its first vertical stratigraphic well into the deeper Bakken zones, where the target section was cored and analyzed. The positive results led to the drilling of a successful horizontal leg. Subsequent to year end, a 15-stage frac assembly was installed and the well is currently awaiting fracture stimulation operations. The strong demand for services in the area and lease conditions has forced the completion into the second quarter of 2011. A second Bakken well was spud on February 20, 2011 and is currently drilling ahead in a horizontal leg with a planned total depth of 3,200 meters.

The Company's current drilling program is expected to be ongoing throughout the year, utilizing one rig in the Lethbridge area drilling in the Bakken locations and a second rig in the Brazeau and Peace River Arch areas of northern Alberta where six horizontal crude oil wells are planned to be drilled on the recently acquired lands. The Company has an enviable inventory of drilling locations, including the Bakken and shallow gas targets in the south and numerous locations on its newly acquired properties. The Company's expanded drilling inventory gives the Company the flexibility to redirect capital based on successes in a variety of targets and various areas.


Subsequent to year-end, DeeThree acquired approximately 1,830 BOE/d (2010 exit production) of primarily high working interest, operated oil, natural gas and natural gas liquids production and reserves principally situated in Brazeau, West Pembina and the Peace River Arch areas of northern Alberta. The Company's current production is approximately 2,250 BOE/d, consisting of 30% light oil and natural gas liquids and 70% natural gas. The Company also successfully closed a "bought deal" short form prospectus offering of 26,795,000 subscription receipts and 3,000,000 common shares issued on a "flow-through" basis under the Income Tax Act (Canada) for aggregate net proceeds of approximately $122.5 million. Concurrent with the completion of the asset acquisition, the 26,795,000 subscription receipts were converted into common shares.

Additionally, the Company's lender approved an increase to the Company's existing credit facility from $10 million to $40 million. The Company has elected to only increase the credit facility to $20 million in order to reduce standby fees associated with the unutilized balance.


For 2011, the Company had an approved capital budget of $32 million for operating activities in our core Lethbridge area. However, with the closing of our newly acquired properties, the Board of Directors of the Company approved an increase of approximately $10 million to include the drilling of an additional six horizontal wells in the Brazeau and Peace River Arch areas. We expect that this program will be funded through our current working capital, the increased credit facility and internally generated cash flow. With a shift in focus towards Bakken oil along with the light oil from our newly acquired properties, it is anticipated that DeeThree will be a more balanced resource company by the end of 2011 with approximately 60% of its production derived from light crude oil and natural gas liquids.

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

Reader Advisory

Certain statements contained in this press release may constitute forward-looking statements. These statements relate to future events or 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: its planned capital expenditure program, drilling locations, projections of product type by the end of the year, access to its credit facility, future production, operations, operating costs, market prices and costs, supply and demand for oil and natural gas, the quantity of reserves, oil and natural gas production levels, treatment under governmental regulatory and taxation regimes, expectations regarding DeeThree's ability to raise capital, generate cash flow and to continually add to reserves through acquisitions and development.

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 generate internal cash flow and 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 release and such information should not be relied upon as representing its views as of any date subsequent to the date of this release. 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.


"Probable Reserves" means those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated Proved plus Probable reserves.

"Proved Reserves" means those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated Proved Reserves.

Contact Information

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