Dundee Energy Limited
TSX : DEN

Dundee Energy Limited

October 30, 2014 18:15 ET

Dundee Energy Limited Announces Third Quarter 2014 Financial Results

TORONTO, ONTARIO--(Marketwired - Oct. 30, 2014) - Dundee Energy Limited (TSX:DEN) ("Dundee Energy" or the "Corporation") today announced its financial results for the three and nine months ended September 30, 2014. The Corporation's unaudited condensed interim consolidated financial statements, along with management's discussion and analysis have been filed on the System for Electronic Document Analysis and Retrieval ("SEDAR") and may be viewed under the Corporation's profile at www.sedar.com or the Corporation's website at www.dundee-energy.com.

  • Net loss attributable to owners of the parent during the three months ended September 30, 2014 was $0.3 million, compared with a net loss attributable to owners of the parent of $1.5 million incurred during the same period of the prior year.

  • Production volumes during the third quarter of 2014 averaged 11,746 Mcf/d of natural gas and 535 bbls/d of oil and liquids, compared with production volumes of 12,022 Mcf/d of natural gas and 608 bbls/d of oil and liquids during the third quarter of the prior year.

  • Revenues before royalty interests, earned from oil and natural gas sales during the third quarter of 2014 were $10.1 million, a decrease from the $11.0 million of revenues earned during the third quarter of the prior year. The decrease in revenues resulted primarily from reduced production volumes and lower prices for oil and liquids partially offset by improved natural gas prices.

  • Field netbacks during the third quarter of 2014, before realized amounts related to risk management contracts, were $1.53/Mcf (three months ended September 30, 2013 - $1.32/Mcf) from natural gas and $50.22/bbl (three months ended September 30, 2013 - $57.94/bbl) from oil and liquids.

  • Capital expenditures during the third quarter of 2014 were $2.5 million.

  • Cash and available credit under the Corporation's credit facilities totalled $6.7 million at September 30, 2014.

SOUTHERN ONTARIO ASSETS

During the third quarter of 2014, daily production volumes decreased to 2,493 boe/d, compared with an average of 2,612 boe/d in the same period of 2013.

Average daily volume during the three months ended September 30, 2014 2013
Natural gas (Mcf/d) 11,746 12,022
Oil (bbls/d) 527 596
Liquids (bbls/d) 8 12
Total (boe/d) 2,493 2,612

On a period-over-period basis, average daily natural gas production decreased by approximately 2%, while production of oil and liquids decreased by 12%, reflecting the natural decline rate in the Corporation's oil and natural gas properties. The reduction in production volumes was partially mitigated by the acquisition of the remaining 15% working interest in certain offshore gas properties in southern Ontario completed in August 2014.

Field Level Cash Flows and Field Netbacks
(in thousands)
For the three months ended September 30, 2014 2013
Natural Gas Oil and Liquids Total Natural Gas Oil and Liquids Total
Total sales $ 5,102 $ 5,012 $ 10,114 $ 4,875 $ 6,140 $ 11,015
Royalties (773 ) (767 ) (1,540 ) (736 ) (939 ) (1,675 )
Production expenditures (2,669 ) (1,774 ) (4,443 ) (2,672 ) (1,964 ) (4,636 )
1,660 2,471 4,131 1,467 3,237 4,704
Realized risk management (loss) gain - (126 ) (126 ) 196 (371 ) (175 )
Field level cash flows $ 1,660 $ 2,345 $ 4,005 $ 1,663 $ 2,866 $ 4,529
For the three months ended September 30, 2014 2013
Natural Gas Oil and Liquids Total Natural Gas Oil and Liquids Total
$ /Mcf $ /bbl $ /boe $ /Mcf $ /bbl $ /boe
Total sales $ 4.72 $ 101.83 $ 44.10 $ 4.41 $ 109.90 $ 45.86
Royalties (0.72 ) (15.58 ) (6.71 ) (0.67 ) (16.81 ) (6.97 )
Production expenditures (2.47 ) (36.03 ) (19.37 ) (2.42 ) (35.15 ) (19.30 )
1.53 50.22 18.02 1.32 57.94 19.59
Realized risk management (loss) gain - (2.56 ) (0.55 ) 0.18 (6.64 ) (0.73 )
Field netbacks $ 1.53 $ 47.66 $ 17.47 $ 1.50 $ 51.30 $ 18.86

Capital Expenditures and the 2014 Work Program

During the three months ended September 30, 2014, the Corporation expended $2.5 million on capital expenditures.

Approximately $0.8 million of capital expenditures were incurred offshore, including $0.7 million on four exploratory new horizon tests and $0.1 million in upgrading offshore facilities. Initial results from two of the four exploratory tests were positive and may lead to additional testing and a subsequent horizontal drilling program.

Capital expenditures on onshore properties were $0.7 million during the nine months ended September 30, 2014, including $0.5 million in drilling costs. During the three months ended September 30, 2014, the Corporation had drilled one vertical development well and one re-entry horizontal sidetrack well. While initial results are encouraging, the re-entry horizontal well came back into production late in the quarter at 42 bbl/d and has subsequently settled in at 18 bbl/d. The Corporation is still testing the vertical development well to evaluate its economic viability. In addition to these drilling activities, the Corporation expended $0.1 million in final costs associated with two workovers commenced in late 2013 and $0.1 million on efficiency and equipment upgrades to onshore facilities.

During the nine months ended September 30, 2014, the Corporation incurred costs of $1.0 million on two exploration wells on certain undeveloped land. The vertical exploration well requires further testing and analyses to determine flow rates and its economic viability. The second exploration well, in which the Corporation is a non-operating 50% working interest partner, has shown good test results to date. The Corporation and the operator of this well are currently working on a plan to tie-in this well, in order to bring it into production in the fourth quarter of 2014.

CASTOR UNDERGROUND GAS STORAGE PROJECT

During the third quarter, Escal UGS S.L. relinquished the exploitation concession associated with the Castor development project in Spain. The relinquishment was formally accepted by the Spanish authorities by royal decree-law on October 4, 2014.

NON-IFRS MEASURES

The Corporation believes that important measures of operating performance include certain measures that are not defined under International Financial Reporting Standards ("IFRS") and as such, may not be comparable to similar measures used by other companies. While these measures are non-IFRS, they are common benchmarks in the oil and natural gas industry, and are used by the Corporation in assessing its operating results, including net earnings and cash flows.

  • "Field Level Cash Flows" are calculated as revenues from oil and gas sales, less royalties and production expenditures, adjusted for realized gains or losses on risk management contracts.
  • "Field Netbacks" refer to field level cash flows expressed on a measurement unit or barrel of oil equivalent basis.

ABOUT THE CORPORATION

Dundee Energy Limited 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".

FORWARD-LOOKING STATEMENTS

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, 2013.

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.

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