Donnycreek Energy Inc.

TSX VENTURE : DCK


Donnycreek Energy Inc.

May 22, 2014 08:30 ET

Donnycreek Reports Interim Reserves at March 31, 2014

CALGARY, ALBERTA--(Marketwired - May 22, 2014) - Donnycreek Energy Inc. ("Donnycreek" or the "Company") (TSX VENTURE:DCK) reports the results of its March 31, 2014 Evaluation of Oil and Gas Reserves on its Alberta oil and gas properties (the "McDaniel Report"), as evaluated by McDaniel & Associates Consultants Ltd. ("McDaniel") in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.

A summary of the Company's reserves volumes according to reserve category as at March 31, 2014 is as provided in the following table. Unless otherwise stated, the reserves information included in this release is stated on a "working interest" basis, which represents Donnycreek's working interest (operated and non-operated) share of remaining reserves before deduction of royalties or including any royalty interests received. A summary of the Company's estimated future net revenues associated with Donnycreek's reserves as at March 31, 2014 based on the McDaniel April 1, 2014 price forecast is provided in the following table. It should not be assumed that the net present values estimated by McDaniel represent the fair market value of the reserves. Numbers presented in table may not add exactly due to rounding.

Company Reserve Evaluation Highlights:

Total Proved plus Probable Reserves
Natural Gas: 50.8 bcf 8.5 mmboe
Natural Gas Liquids: 7.9 mmbbls
Total Proved plus Probable: 16.4 mmboe
Total Proved Reserves
Natural Gas: 33.6 bcf 5.6 mmboe
Natural Gas Liquids: 5.2 mmbbls
Total Proved: 10.8 mmboe
Net Present Value at 10% Discount ($,000) Before Tax
Total Proved plus Probable: $249,242
Total Proved: $162,326

The McDaniel petroleum reserve evaluation of the Company's assets includes minor properties at Delia and Michichi which has minor oil reserves assigned which are included in the natural gas liquids category in the above table. Of the Company's 20.75 section Kakwa land block where it holds an average 50% working interest, petroleum reserves were assigned to approximately 10 sections in the middle Montney and 2 sections of the 20.75 sections in the upper Montney.

Independent Undeveloped Land Evaluation

The Company engaged Seaton-Jordan & Associates Ltd. to complete an evaluation of Donnycreek's undeveloped acreage at April 1, 2014, arriving at a value of approximately $67.7 million.

Working Capital

The Company's working capital after allocating funds to the previously reported operations on the Wapiti 01-26-64-8 W6M exploration well and the 102/14- 30 -63-5 W6M ("102/14-30") upper Montney well is estimated at $8 million. The Company has a $15 million revolving loan facility which is currently undrawn.

Capital Structure

Donnycreek currently has 54,920,530 common shares issued and outstanding (58,580,730 fully diluted).

Operations Update

Following the drilling of the upper Montney horizontal well at 102/14-30, the contracted drilling rig moved to a surface lease at 07-19-63-5 W6M and has drilled and cased its first of three extended length horizontal middle Montney wells to a bottom hole location at 100/08-20-63-5 W6M encountering approximately 1,983 metres of Montney reservoir. The second well with a bottom hole location of 102/02-18-63-5 W6M is drilling at 150 metres from its programed total depth of 5,390 metres encountering approximately 2,000 metres of Montney reservoir. The third well is expected to spud before the end of May 2014 with a bottom hole location at 100/09-20-63-5 W6M. The first two of the three wells have been drilled in fewer days than programed which will reflect in lower well costs and improved well economics. Donnycreek has a 50% working interest in the three wells.

In addition, Donnycreek is in the process of contracting a second rig that is expected to be used to accelerate drilling at Kakwa.

Donnycreek is a Calgary based public oil and gas company which holds approximately 439 gross (313 net) sections of petroleum and natural gas rights, with an average working interest of approximately 70%, prospective primarily for Montney liquid rich natural gas resource exploration and development all of which are located in the Deep Basin area of west-central Alberta.

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

ADVISORY ON FORWARD-LOOKING STATEMENTS: This news release contains certain forward-looking information and statements ("forward-looking statements") within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking statements. In particular, but without limiting the foregoing, this news release contains statements concerning reserves, the timing of the spud of the third extended length horizontal middle Montney well, the contracting of a second drilling rig expected to be used to accelerate drilling at Kakwa and the primary prospective zone for development on the Company's lands.

Statements relating to reserves are by their nature forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves can be profitably produced in the future. It should not be assumed that the estimated future net cash flow shown below is representative of the fair market value of the Company's properties. There is no assurance that such price and natural gas liquids ("NGLs") and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, NGLs and natural gas reserves may be greater than or less than the estimates provided herein.

Forward-looking statements are based on a number of material factors, expectations or assumptions of Donnycreek which have been used to develop such statements and information but which may prove to be incorrect. Although Donnycreek believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because Donnycreek can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Further, events or circumstances may cause actual results to differ materially from those predicted as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including, without limitation: changes in commodity prices; changes in the demand for or supply of the Company's products; unanticipated operating results or production declines; changes in tax or environmental laws, royalty rates or other regulatory matters; changes in development plans of Donnycreek or by third party operators of Donnycreek's properties, increased debt levels or debt service requirements; inaccurate estimation of Donnycreek's oil and gas reserve and resource volumes; limited, unfavourable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; and certain other risks detailed from time-to-time in Donnycreek's public disclosure documents. Additional information regarding some of these risks, expectations or assumptions and other factors may be found under in the Company's Annual Information Form and Management's Discussion and Analysis prepared for the year ended July 31, 2013. The reader is cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements contained in this news release are made as of the date hereof and Donnycreek undertakes no obligations to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

In this press release the calculation of barrels of oil equivalent (boe) is calculated at a conversion rate of six thousand cubic feet (6 mcf) of natural gas for one barrel (bbl) of oil based on an energy equivalency conversion method. Boes may be misleading particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable to the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value. Natural gas liquids include condensate, propane, butane and ethane.

Certain information set out herein may be considered as "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Donnycreek's reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.

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

  • Jack Marsh
    Chief Operating Officer
    Telephone: 403-237-5700
    403-255-2356 (Direct Line)
    Fax: 403-265-3506