Donnycreek Energy Inc.
TSX VENTURE : DCK

Donnycreek Energy Inc.

February 01, 2012 20:56 ET

Donnycreek Energy to Spud First Horizontal Montney Well and Announces Conveyance of Assets at Kakwa

CALGARY, ALBERTA--(Marketwire - Feb. 1, 2012) - Donnycreek Energy Inc. (TSX VENTURE:DCK) ("Donnycreek") reports that its has exercised its option and concluded the purchase of certain petroleum and natural gas rights (the "Purchased Assets") from Donnybrook Energy Inc. ("Donnybrook") for a purchase price of approximately $2.3 million. The option was granted to Donnycreek pursuant to the arrangement agreement made as of October 3, 2011 and in connection with the previously concluded plan of arrangement (the "Arrangement") involving the companies which closed on November 4, 2011.

The Purchased Assets are comprised of 9 gross sections of lands prospective for Montney liquid rich resource development in the Kakwa area of Alberta acquired by Donnybrook from September 1, 2011 to November 4, 2011 which are within 8 kilometres (5 miles) of the assets conveyed to Donnycreek by Donnybrook on November 4, 2011 pursuant to the Arrangement.

Kakwa Area, Alberta

Donnycreek also reports that the first horizontal Montney location, Kakwa Hz 13-17-63-5 W6M, is expected to spud early next week with the objective of drilling horizontally through the Montney formation to a total measured depth of 5,150 metres.

Donnycreek's partners in the 16 sections have committed to drilling the Kakwa Hz 13-17 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 a 50% working interest after payout in the well. Donnycreek will also hold a 50% working interest in the balance of the 16 section block.

The Kakwa acreage was acquired following 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 4.7 MMscf/d with 1,200 bbl/d condensate and 15.8 MMscf/d with 1,000 bbls/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.

Donnycreek has also engaged Syndicated Capital Corp. ("SCC") of Vancouver, British Columbia, to provide investor relations services to Donnycreek. Mr. A. Salman Jamal of Vancouver, British Columbia is the principal of SCC. Donnycreek has granted 102,200 incentive stock options to SCC exercisable at a price of $0.75 per common share for a period of up to 3 years. The agreement is subject to the approval of the TSX Venture Exchange.

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 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 regarding the expected spud date of the Kakwa 13-17 well, development of the Upper Montney interval using stacked wells, the targeting of the lowermost portion of the Upper Montney with the first well, the number of potential gross wells, the possibility of additional lateral wells and potential drilling inventories. 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 the forward-looking statements are reasonable, the 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 Donnycreek's 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.

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)