Doxa Energy Ltd.
TSX VENTURE : DXA
FRANKFURT : 5D0
OTCQX : DXAEF

Doxa Energy Ltd.

January 12, 2011 09:02 ET

Shareholder Letter From President of Doxa

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 12, 2011) - Doxa Energy Ltd. (TSX VENTURE:DXA)(OTCQX:DXAEF)(FRANKFURT:5D0) -

Dear Valued Shareholders,

I am pleased to provide this first annual "Letter from the President" of Doxa Energy Ltd. and to share with you my excitement and positive outlook for the company as we move into 2011, our first full year of operation.

As you may know, on May 18, 2010 we closed our Qualifying Transaction and transitioned from a TSXV listed CPC (Capital Pool Company) to a publicly traded exploration company. During the seven months of operations since that time, we have been very successful in terms of making high quality initial investments and creating impressive shareholder value. In fact, despite the continuing global economic challenges, particularly relating to the energy sector, we have been able to transform our company into an oil and gas production and development company, having already initiated first production and cash flow. In addition, Doxa shares now trade in three jurisdictions on two continents (Canada, United States and Germany). More importantly, we have effectively demonstrated that many high quality investments are available to Doxa, and will continue to be available as we move into 2011.

I am happy to report that strong demand for our private placement in November, 2010 allowed us to exit the year with a strong balance sheet while maintaining the integrity of our share structure. Doxa is now in a position to continue to capitalize on exceptional investment opportunities and is positioned for long-term growth and expansion of our business.

All of Doxa's managers are fully committed to building a leading oil & gas company, one that will provide long term value creation for our shareholders by achieving superior financial and operating results. We intend to accomplish this by strictly adhering to our basic investment strategy of investing in a diverse portfolio of high quality investments, and acting quickly to secure our position in targeted investments. Representative of this commitment is that in August, 2010, Doxa's Chairman Arnold Armstrong and I created a combined personal loan facility for Doxa in the amount of $1.7 million in order to insure continuation of the valuable momentum established at inception. Additionally it's important to note that none of Doxa's Directors, including myself, have collected salaries or fees thus far; thereby enabling us to advance our operations more quickly. Collectively Doxa's Board of Directors own 36% of our company.

In the short term, we are focused on continuing to build the diverse investment portfolio described below and creating cash flow and profitability. Toward this end, we are constantly evaluating additional opportunities in the unconventional (including the Eagle Ford Shale) and conventional plays throughout south Texas and along the Gulf Coast. As we grow, I intend to direct the company into larger percentages of ownership in new projects, as available capital permits.

On the operational front, we expect our Eagle Ford Shale projects, including the Peeler Ranch (our Qualifying Transaction), Epley and others in the planning stage, to generate long term cash flow and significant development potential. For example, based on offset Operator development of the Peeler Ranch Project, I anticipate that 10-14 gross wells could ultimately be drilled on this project, under which our ownership is a 20% working interest and a 15% net revenue interest. Our initial well on this project, the Peeler Ranch No. 1H has been drilled and is scheduled for a multi-stage hydraulic frac in January, 2011. We also recently drilled and completed the initial well on the Epley Project, in which we own a 15% working interest and 11.25% net revenue interest. Subject to commercially viable results on this project I expect that up to 5 gross wells may eventually be drilled on this project. Doxa has acquired interests in several additional Eagle Ford Shale projects, some of which are slated for commencement of drilling in 2011.

We have also invested in a variety of conventional projects in South Texas and along the Gulf Coast, including a relatively small ownership position in the successful Koehn No. 1 well, being the initial well on the New Beilau Prospect in Colorado County, Texas. The Koehn No. 1 well was completed in the Wilcox formation, and placed on production November 23, 2010. The well initially tested at a high rate of 1,953 MCFD, 132 BOPD, and 0 BWPD on a 14/64" choke with 1,750 psi flowing tubing pressure. Another project of note is the Davis-McCrary Prospect, an Edwards test in Atascosa County, Texas where drilling operations were recently completed and based on favorable results from log and core analysis production casing was run and a completion attempt is currently underway.

Operationally we concluded 2010 with commencement of a 3D seismic acquisition program on Sarco Creek Project, encompassing 40 square miles (25600 acres) within the Goliad and Bee Counties, Texas. Our previous successes have allowed us to take a larger ownership (30%) in this exciting opportunity which is targeting the Miocene and Frio formations above 5,000'. The program calls for acquisition, processing and evaluation of new proprietary 3D seismic. We anticipate completion of preliminary seismic evaluation and commencement of drilling operations during 2nd quarter, 2011.

Currently, due to a surplus of natural gas and consequently lower product prices, we continue to focus primarily on oil and gas/condensate opportunities rather than dry gas projects. We are reviewing a number of exciting new oil and gas investment opportunities which are available to Doxa. Several of these opportunities are further described in our PowerPoint presentation available on our website (doxaenergy.com).

Capital expenditures for the seven months of operation in 2010 total approximately $6,000,000 (Cdn). As mentioned, our November, 2010 private placement, which was oversubscribed by institutions, private funds and private investors, raised a total of $3.8 million. After incorporating the effect of this private placement, Doxa has 28,115,856 common shares outstanding, and 39,918,867 shares outstanding on a fully diluted basis. The warrants associated with this recent share issuance are subject to a forced conversion clause which, if fully enacted, would provide an additional $4,072,821 (Cdn) in working capital to Doxa.

In closing, I would like to reiterate that Doxa is off to a great start, based on the several months of operations in 2010. Moving forward I anticipate increasing the company's participation in future projects to the extent fiscally prudent for our shareholders' security. I look forward to reporting on our progress throughout 2011. I would like to thank all of our valued shareholders for their ongoing support of Doxa.

All of us here at Doxa look forward to the exciting New Year ahead!

Sincerely,

John D. Harvison
President, Chief Executive Officer

Statements in this press release other than purely historical information, including statements relating to the Company's future plans, objectives or expected results, constitute forward-looking statements. Forward-looking statements are based on numerous assumptions and are subject to the risks and uncertainties inherent in the Company's business, including risks inherent in oil and gas exploration and development, and uncertainties in connection with anticipated commodity prices for oil and natural gas, growth of worldwide market demand, exploration capital requirements, potential drilling targets and gross wells, length of asset life and availability of qualified personnel, among others As a result, actual results may vary materially from those described in the forward-looking statements.

This new release does not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company in the United States. The securities of Doxa have not been registered under the U.S. Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States or to or for the account or benefit of a U.S. person unless so registered or pursuant to an available exemption from the registration requirements of such Act or laws.

Neither TSX Venture Exchange nor its Regulation Services providers (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Doxa Energy Ltd.
    Scott Parsons
    Director
    604.642.2625
    or
    Doxa Energy Ltd.
    Paul McKenzie
    Director
    604.642.2625
    604.642.2629 (FAX)
    www.doxaenergy.com