Donnycreek Energy Inc.
TSX VENTURE : DCK

Donnycreek Energy Inc.

June 18, 2012 18:23 ET

Donnycreek Announces Increase in Size of Private Placement Equity and Debenture Financing to $5.13 Million

CALGARY, ALBERTA--(Marketwire - June 18, 2012) -

NOT FOR DISSEMINATION INTO THE UNITED STATES OF AMERICA OR DISTRIBUTION TO U.S. NEWSWIRE SERVICES

Donnycreek Energy Inc. ("Donnycreek" or the "Company") (TSX VENTURE:DCK) reports that due to the oversubscription of its previously announced private placement, the Company is increasing the size of its proposed private placement of a combination of: (i) "flow-through" common shares of the Company ("FT Shares") within the meaning of the Income Tax Act (Canada) at a price of $0.85 per FT Share; and (ii) ten percent (10%) redeemable, convertible, unsecured debentures of the Company ("Convertible Debentures") (collectively, the "Offering"). The Company will now issue up to $2,550,000 of FT Shares and up to $2,580,000 principal amount of Convertible Debentures for aggregate gross proceeds of up to $5,130,000, subject to regulatory approval.

The proceeds from the FT Shares will be used to incur eligible exploration and development expenses prior to December 31, 2013 and which will be renounced as Canadian Exploration Expenses for income tax purposes to subscribers effective on or before December 31, 2012, including a portion of the proceeds from the FT Shares will be deployed on Donnycreek's 16 gross section (4,140 ha/10,240 acres) land block located in the liquids-rich Kakwa Montney gas trend.

As previously announced, the Convertible Debentures shall bear interest at a rate of ten percent (10%) per annum, payable commencing July 31, 2012 and quarterly thereafter and will mature June 15, 2014 (the "Maturity Date"). The Convertible Debentures will be convertible into common shares of the Company ("Common Shares") at the holder's option at any time prior to the Maturity Date at a conversion price of $1.00 per Common Share. The Company will have the ability to redeem the Convertible Debentures in certain circumstances where an offer or business combination is made to acquire Common Shares or if the closing price or the volume weighted average price of the Common Shares exceeds $1.40 for 21 consecutive trading days. A portion of the proceeds from the Convertible Debentures will be used for the tie-in of the Corporation's first Montney horizontal well in Kakwa, Alberta and for working capital purposes.

The Company will pay finder's fees to eligible persons on a portion of the Offering consisting of: (i) a cash payment equal to 6% of the gross proceeds raised and finder's warrants ("Finder's Warrants") equal to 6% of the number of FT Shares issued from applicable subscriptions of FT Shares in the Offering; and (ii) a cash payment equal to 3% of the gross proceeds raised from applicable subscriptions for Convertible Debentures. Each Finder's Warrant will entitle the holder to acquire one additional common share in the Company at an exercise price of $0.85 for six months following the date of issuance.

The FT Shares and the Convertible Debentures issued pursuant to the Offering will be subject to a four month hold from the date of closing of the Offering. Completion of the first tranche of the Offering is expected to occur on or about June 20, 2012 and is subject to regulatory approvals, including the approval of the TSX Venture Exchange.

Donnycreek has approximately 19.9 million Common Shares issued and outstanding (22.0 million fully diluted).

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 expected timing of the closing of the second tranche of the Offering, and the prospective zones of liquid rich resource development on the Company's lands.

The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Donnycreek, including expectations and assumptions concerning timing of receipt of required regulatory approvals and third party consents and the satisfaction of other conditions to the completion 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.

Where amounts are expressed on a barrel of oil equivalent ("BOE") basis, natural gas volumes have been converted to oil equivalence at six thousand cubic feet per barrel. The term BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet per barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. References to oil in this discussion include crude oil and natural gas liquids ("NGLs"). NGLs include condensate, propane, butane and ethane. References to gas in this discussion include natural gas.

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)