Donnycreek Energy Inc.

Donnycreek Energy Inc.

January 23, 2012 20:31 ET

Donnycreek Completes $5.63 Million Private Placement

Kakwa Area Operations Update

CALGARY, ALBERTA--(Marketwire - Jan. 23, 2012) - Donnycreek Energy Inc. (TSX VENTURE:DCK) -


Donnycreek Energy Inc. ("Donnycreek" or the "Company") reports that it has completed the third tranche of its previously announced non-brokered private placement (the "Offering") for 259,933 common shares of the Corporation ("Common Shares") at a price of $0.75 per share. The aggregate gross proceeds pursuant to the third tranche of the Offering is $194,949.75 and the total aggregate gross proceeds to date pursuant to the Offering is approximately $5.63 million.

In connection with the third tranche of the Offering, the Company paid a finder's fee to eligible persons consisting of a cash payment in the aggregate amount of $3,447 and the issuance of an aggregate of 4,596 finder's warrants ("Finder's Warrants"). Each Finder's Warrant entitles the holder to acquire one Common Share at an exercise price of $0.85 for six months following the date of issuance.

The Common Shares and Finder's Warrants issued in connection with the third tranche of the Offering are subject to a hold period under applicable securities laws until May 24, 2012.

Kakwa Area, Alberta

A portion of the proceeds raised from the Offering will be deployed on Donnycreek's contiguous 16 section (8 net) land block located in the liquids-rich Kakwa Montney gas trend.

Donnycreek's joint venture partners in the 16 sections have committed to drilling a horizontal Montney well with Donnycreek paying 25% of the horizontal well costs (drill and complete) to hold a 25% working interest and 10% GORR on 75% before payout and 50% working interest after payout in the well. Donnycreek also holds a 50% working interest in the balance of the 16 section block.

The well licence has been issued and lease access and well site construction commenced earlier this month at the Kakwa Hz 13-17-63-5 W6M Montney location. Donnycreek and its joint venture partners plan to spud the Kakwa Hz 13-17 well in Q1, 2012 and drill horizontally through the Montney formation to a total measured depth of 5,150 metres subject to weather conditions and drilling rig availability.

The Kakwa acreage was acquired through Donnycreek's plan of arrangement with Donnybrook Energy Inc. and followed a detailed technical assessment of the region that included a petrophysical evaluation of pre-existing wells and the mapping of gas in place across what Donnycreek believes to be a localized area characterized by superior liquids-rich gas potential. The results from two Montney wells recently announced by competitors, both of which are located less than 14 kilometres (9 miles) from the Donnycreek lands, demonstrate exceptional deliverability from the Upper Montney, with reported rates of 4.7MMscf/d with 1,200bbl/d condensate and 15.8MMscf/d with 1,000bbls/d of condensate, respectively. Donnycreek considers the play to have been significantly de-risked through the operations of competitors active in the area and notes that these companies have continued to acquire petroleum and natural gas rights on lands surrounding Donnycreek's acreage.

Based on its petrophysical evaluation, mapping and technical review of producing wells in the area, Donnycreek has identified what it considers to be a thick hydrocarbon-charged zone throughout the 100m Upper Montney interval, which zone Donnycreek believes will be conducive for development using stacked horizontal wells. Donnycreek intends to target the lowermost portion of the Upper Montney with its first well. Based on current industry practices, development of the entire acreage could require up to 64 gross wells, with the possibility that additional laterals per well could be required to access the entire hydrocarbon-bearing section.

The Kakwa property is accessible for field operations year-round and is located within 6 kilometres (4 miles) of a major, midstream operated, natural gas and NGL processing facility.

The Company reports that in accordance with its previously approved stock option plan, the board of directors has today granted 682,200 incentive stock options ("Options") to purchase Common Shares to certain officers, directors, employees and consultants of the Company. The options each have an exercise price of $0.75 per share and are exercisable for a period of 3 years from the date of grant.

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. The Company holds working interests in 28 gross sections (7,250 ha/17,920 acres); 20 net sections (5,180 ha/12,800 acres) prospective for Montney, Bluesky, Wilrich and Falher liquid rich resource development providing a potential current drilling inventory of in excess of 80 gross locations.

Further information relating to the Company is also available on its website at


Malcolm Todd, President and Chief Executive Officer


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 private placement, the timing and drilling plans for the Kakwa Hz 13-17 well and the number of wells to develop Donnycreek's acreage.

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 private placement 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 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 press 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)