Dundee Energy Limited

Dundee Energy Limited

January 04, 2013 08:35 ET

Dundee Energy Announces Approval of Spanish Ministerial Order Affecting Remuneration of Underground Gas Storage Projects

TORONTO, ONTARIO--(Marketwire - Jan. 4, 2013) - Dundee Energy Limited (TSX:DEN) ("Dundee Energy" or the "Corporation") announces that the Spanish authorities approved a Ministerial Order affecting the remuneration of underground natural gas storage projects. The key changes to the regulatory framework, as they apply to the Corporation's effective 24.6% interest in Escal UGS SL ("Escal"), the owner of the Castor Underground Gas Storage Project (the "Castor Project"), are outlined below.

  • The approval confirms a 20-year amortization period for the return of capital.

  • The amendments deem July 5, 2012, the date of receipt by Escal of the Provisional Commissioning Act, as the end date for capital investments, other than for cushion gas.

  • The amendments provide for an annual inflation adjustment of 2.5%.

  • Escal will receive a return on its capital investment at a rate of 8.76% per annum on any unpaid balances, being the average rate of Spanish 10-year bonds plus 3.5%, calculated based on the 24-month period ended immediately before July 5, 2012.

  • After the 20th amortization year, and throughout any remaining useful life of the Castor Project, Escal is entitled to receive a per annum amount equal to 50% of the payment received in the last amortization year.

  • The amendments provide that the purchase and injection of cushion gas may be segregated from the construction of the project, allowing for a third party purchase. If purchased by a third party, the third party will be entitled to a corresponding interest in the remuneration base of the Castor Project. Escal has already initiated discussions with a third party for the acquisition of the cushion gas.

  • The period during which Escal has the right to relinquish the Castor Project to the Spanish authorities for any unamortized value has been extended from five years to 25 years.

Final inclusion of the Castor Project into the Spanish gas system remains contingent on the injection of cushion gas, which is expected to be completed in the first half of 2013, the subsequent completion of the necessary performance and control testing, and the conclusion of the audit by the Spanish authorities of the expenditures forming the remuneration basis.


Dundee Energy Limited (formerly "Eurogas Corporation") is a Canadian-based oil and natural gas company with a mandate to create long-term value for its shareholders through the exploration, development, production and marketing of oil and natural gas, and through other high impact energy projects. Dundee Energy holds interests, both directly and indirectly, in the largest accumulation of producing oil and gas assets in Ontario, in the development of an offshore underground natural gas storage facility in Spain and, through a preferred share investment, in certain exploration and evaluation programs for oil and natural gas offshore Tunisia. The Corporation's common shares trade on the Toronto Stock Exchange under the symbol "DEN".


Certain information set forth in these documents, including management's assessment of each of the Corporation's future plans and operations, contains forward looking statements. Forward-looking statements are statements that are predictive in nature, depend upon or refer to future events or conditions or include words such as "expects", "anticipates", "intends", "plans", "believes", "estimates" or similar expressions. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Corporation's control, including: exploration, development and production risks; uncertainty of reserve estimates; reliance on operators, management and key personnel; cyclical nature of the business; economic dependence on a small number of customers; additional funding that may be required to execute on exploration and development work; the ability to obtain, sustain or renew licenses and permits; risks inherent to operating and investing in foreign countries; availability of drilling equipment and access; industry competition; environmental concerns; climate change regulations; volatility of commodity prices; hedging activities; potential defects in title to properties; potential conflicts of interest; changes in taxation legislation; insurance, health, safety and litigation risk; labour costs and labour relations; geo-political risks; risks relating to management of growth; aboriginal claims; volatility of the Corporation's share price; royalty rates and incentives; regulatory risks relating to oil and natural gas exploration; marketability and price of oil and natural gas; failure to realize anticipated benefits of acquisitions and dispositions; information system risk; and other risk factors discussed or referred to in the section entitled "Risk Factors" in the Corporation's Annual Information Form for the year ended December 31, 2011.

Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The Corporation's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Corporation will derive from them. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Contact Information

  • Dundee Energy Limited
    c/o Dundee Corporation
    21st Floor, Dundee Place
    1 Adelaide Street East
    Toronto, ON M5C 2V9

    Dundee Energy Limited
    Jaffar Khan
    President & CEO
    (403) 264-4985
    (403) 262-8299 (FAX)