Donnycreek Energy Inc.
TSX VENTURE : DCK

Donnycreek Energy Inc.

October 15, 2012 12:07 ET

Donnycreek Announces Closing of $29 Million Private Placement Equity Financing and Acquisition of 169.5 Gross (115.5 Net) Sections of Deep Basin Montney Assets

CALGARY, ALBERTA--(Marketwire - Oct. 15, 2012) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION OR DISTRIBUTION IN THE UNITED STATES OF AMERICA TO UNITED STATES NEWSWIRE SERVICES OR UNITED STATES PERSONS

Donnycreek Energy Inc. ("Donnycreek" or the "Company") (TSX VENTURE:DCK) reports that it has closed its previously announced brokered private placement (the "Offering") and land acquisition by completing the sale of $29,070,870 of common shares of the Company ("Common Shares") and the acquisition of approximately 169.5 gross (115.5 net) sections of undeveloped Montney lands in the Deep Basin area of West Central Alberta (the "Acquisition").

Private Placement

The Offering was made through a syndicate of agents (the "Agents") led by RBC Capital Markets and including Paradigm Capital Inc. and Cormark Securities Inc. Pursuant to the Offering, the Company issued 15,665,450 Common Shares at a price of $1.60 per Common Share for gross proceeds of $25,064,720 and 2,108,500 "flow-through" Common Shares within the meaning of the Income Tax Act (Canada) ("Flow-Through Shares") at a price of $1.90 per Flow-Through Share for gross proceeds of $4,006,150. The Agents were paid a fee equivalent to 6% of the gross proceeds of the Offering. The Common Shares issued pursuant to the Offering are subject to a four month hold period from the date of closing of the Offering.

The proceeds from the issuance of Flow-Through Shares will be used to incur eligible Canadian Exploration Expenses (as defined in the Income Tax Act (Canada)) prior to December 31, 2013 and which will be renounced to subscribers effective on or before December 31, 2012. Donnycreek will expend the proceeds from the Offering on drilling the Company's Kakwa block, advancing the Wapiti assets to be acquired in connection with the Acquisition towards commercial development and for general corporate purposes.

Acquisition of Assets

Pursuant to the Acquisition, Donnycreek acquired approximately 115.5 total net sections (73,968 net acres) of Montney lands from Deventa Land Corp. ("Deventa") comprised as follows:

  • a 75% working interest in 136.5 gross sections at Wapiti targeting the Montney with Donnycreek as operator; and
  • a 40% working interest in 33 gross sections at Chicken (south of Wapiti) targeting the Montney with Donnycreek as operator

The Company now holds interests in approximately 188.5 gross (127 net) sections (81,008 net acres) of Montney lands. In conjunction with the closing of the Acquisition, Donnycreek and Deventa have agreed to a joint operating agreement and areas of mutual of interest.

Donnycreek is a Calgary based oil and natural gas production company focused on horizontal, multi-stage frac development in the Deep Basin area of west central Alberta.

Further information relating to Donnycreek is also available on its website at www.donnycreekenergy.com.

ON BEHALF OF THE BOARD OF DONNYCREEK ENERGY INC.

Malcolm F.W. Todd, Chief Executive Officer

FORWARD-LOOKING STATEMENTS

Certain information set forth in this news release contains forward-looking statements or information ("forward-looking statements"), including statements concerning the uses of the net proceeds of the Offering.

The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Donnycreek, including with respect to the use of proceeds of the Offering as well as expectations and assumptions concerning the success of future drilling activities.

By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Donnycreek's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, operational risks in exploration and development, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and the ability to access sufficient capital from internal and external sources. Although Donnycreek believes that the expectations in our forward-looking statements are reasonable, our forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward looking information. As such, readers are cautioned not to place undue reliance on the forward looking information, as no assurance can be provided as to future results, levels of activity or achievements. The risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in our management's discussion and analysis and other documents available at www.sedar.com. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, Donnycreek does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

This news release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States or to or for the account or benefit of US persons (as such terms are defined in Regulation S under the United States Securities Act of 1933, as amended (the "U.S. Securities Act")), absent registration or an exemption from registration. The securities offered have not been and will not be registered under the U.S. Securities Act or any state securities laws and, therefore, may not be offered for sale in the United States, except in transactions exempt from registration under the U.S. Securities Act and applicable state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

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 NEWS RELEASE.

Contact Information

  • Donnycreek Energy Inc.
    Malcolm Todd
    President and Chief Executive Officer
    (604) 684-2356
    (604) 684-4265 (FAX)