CALGARY, ALBERTA--(Marketwire - Sept. 20, 2012) - Sundance Energy Corporation (TSX VENTURE:SNY) (OTCQX:SNYXF)("Sundance" or the "Corporation") is a Calgary, Alberta, Canada based junior oil and gas exploration company. Sundance's primary focus is exploring for and developing light oil reserves on First Nation lands in Western Canada.
Sundance controls a strategic land position of approximately 100,000 gross and net acres of First Nations lands located in S.E. Saskatchewan and S.W. Saskatchewan and approximately 18,000 gross acres (9,000 net acres) located in Central Alberta. Extensive geological analysis and proprietary 2D and 3D seismic has been utilized to evaluate the Corporation's lands.
Sundance has established a "Competitive Advantage" over other industry competitors in dealing with Canada's First Nations and securing large land positions on First Nations lands in geological areas with proven oil and gas production by engaging in a "Chief to Chief" style of negotiations.
Since listing on the TSX Venture Exchange in April 2011, Sundance has spent approximately $2.3 million acquiring rights to its lands, has completed and interpreted approximately $3.7 million worth of proprietary 3D seismic on its lands and has spent approximately $4 million drilling 3 test wells, 1 well on each of its Muskowekwan, Ochapowace and Alexander First Nations Permits. Extensive geological testing and analysis has also been completed on each of Sundance's permits and has positioned the properties favorably for near term development by Sundance and/or an industry partner.
In addition, Sundance has secured a farm-in partner for its Lashburn Lease in S.W. Saskatchewan and has sold a non-core asset in Hoole, Alberta for net proceeds of approximately $1.46 million. These transactions were free of capital costs to Sundance and were non-dilutive.
IOGC Permit #OP-3300 - Alexander Area, Central Alberta
The 16-11-56-27W4 ("16-11") Test Well, which swab tested oil in both the Alexander and Detrital zones, was production tested commencing on July 3, 2012. After an initial test that produced water, the Alexander sand was isolated from the Ellersie and Detrital zones that had been perforated during completion, and was production tested over a 40 day period. The 16-11 Test Well was produced at a rate of approximately 16 m3 per day with oil cuts of up to 3%. The 16-11 Test Well is currently shut-in pending a review of additional potential in the wellbore.
Subsequent to drilling the 16-11 Test Well, the Corporation shot, processed and interpreted a nine square mile 3D seismic program and has recently obtained well information from the offsetting 9-12-56-27W4 ("9-12") well which is located approximately 1.5 km east of the 16-11 Test Well. The 9-12 well has steadily produced from the Detrital zone over the last year with an average 90-day initial production
("IP") rate of 117 barrels of oil equivalent per day ("boe/d") and an average 365-day IP rate of 98 boe/d. Utilizing the data from the 9-12 well in conjunction with the Corporation's newly obtained 3D seismic data, it was determined that the 16-11 Test Well was not drilled in the optimum location for oil production from either the Detrital and/or the Alexander formations. Consequently, new targets have been identified and Sundance is currently in the process of licensing three new drilling locations directly offsetting the 16-11 Test Well.
As a result of drilling the 16-11 Test Well, Sundance has earned 4 gross, and 2 net, sections of land on the Alexander Permit. Sundance owns a 50% interest in the Alexander Permit and is the Operator.
IOGC Permit #OP-3293 - Ochapowace Area, S.E. Saskatchewan
The 6-5-18-3W2 ("6-5") Test Well was drilled, cased and completed and is currently suspended. Independent log and core analysis has established that the 6-5 Test Well contains hydrocarbons in multiple formations that may be developable utilizing unconventional drilling and fracing techniques. 3D seismic has identified numerous multi-formation drilling locations on the Corporation's lands. Formations of particular interest are the Bakken, Torquay, Lodgepole and Birdbear. Subject to available funding, an additional test well is intended to be drilled on the Ochapowace Permit prior to the end of 2012 to further evaluate the light oil potential in the Bakken, Lodgepole, Torquay and Birdbear formations. Sundance intends to drill the 16-32-17-3 W2 ("16-32") Test Well with a partner who owns the potash rights below Sundance's target oil and gas formations. The 16-32 Test Well is currently in the process of being licensed. It is hoped that this additional test well will provide significant data to Sundance regarding its target formations on this permit and the potential for unconventional drilling development.
As a result of drilling the 6-5 Test Well, Sundance has earned 5 sections of land on the Ochapowace Permit. Sundance is in ongoing discussions with various parties regarding joint-venture and farm-in opportunities on the Ochapowace Permit. Sundance owns a 100% interest in the Ochapowace Permit and is the Operator.
IOGC Permit #OP-3292 - Muskowekwan Area, S.E. Saskatchewan
The 5-3-27-15W2 ("5-3") Test Well was drilled vertically, cased and completed and is currently suspended. Independent log and core analysis has established that the 5-3 Test Well contains hydrocarbons in multiple formations that may be developable utilizing unconventional drilling and fracing techniques. 3D seismic has identified numerous multi-formation drilling locations on the Corporation's lands. Formations of particular interest are the Lodgepole and Torquay. As a result of geological analysis completed following the drilling of the 5-3 Test Well, Sundance intends to re-enter the 5-3 Test Well to re-perforate the Lodgepole formation and test whether conventional economic hydrocarbon production can be established.
As a result of drilling the 5-3 Test Well, Sundance has earned 5 sections of land on the Muskowekwan Permit. Sundance is in ongoing discussions with various parties regarding joint-venture and farm-in opportunities on the Muskowekwan Permit. Sundance has a 100% interest in the Muskowekwan Permit and is the Operator.
IOGC Lease #OL-6388 - Lashburn Area
Sundance owns 100% interest in the half-section Lashburn Lease located in S.W. Saskatchewan. Sundance farmed out to a third party operator whereby the Operator must drill, complete and equip 4 wells on the Lease as a condition of earning a 60% interest in half of the Lease and a 50% interest in the other half of the Lease. The Operator recently acquired and interpreted 3D seismic on half of the Lease at no cost to Sundance. Each well to be drilled will cost the Operator approximately $500,000 and will be no cost to Sundance, yet Sundance will maintain a 40% interest in these wells. Prior to acquiring and interpreting the 3D seismic the Operator drilled 1 well on the Lease which was abandoned due to encountering a depleted oil pool. The Operator indicates that further drilling is expected to commence in October 2012 and drilling will target seismically identified locations that are more central on the Lease and not directly adjacent to producing wells on adjacent lands.
Sundance believes that it is in an enviable position of having operated and high working interests in large contiguous land/acreage positions and having numerous development and exploratory drilling locations defined by extensive geology, proprietary well information and proprietary 2D and 3D seismic. However, it also recognizes that it does not presently have the working capital needed to undertake its desired level of development of its assets.
Jeff Standen, Sundance's President & CEO comments, "Although we are disappointed with the market reaction to our operational activities to date, we are extremely excited about the lands that we have accumulated rights to and the delineation work that we have completed. We strongly believe that each of our Alexander, Ochapowace and Muskowekwan First Nations Permits have the potential to be significant oil and gas production projects. The challenge before us presently is balancing the continued analysis and development of our projects with prudently managing our capital structure. Although we would rather not give-up any of our project interests, carefully locating strategic partners that are well capitalized and that recognize the significant delineation work completed to date and the long-term potential in our projects is seemingly the path that will presently create the most value for our shareholders."
Given current market conditions, Sundance's Board of Directors believes that the best way to create and increase shareholder value is to establish strategic alliances with well capitalized industry operators to drill and develop its lands. Sundance has entered into a number of confidentiality agreements and discussions are ongoing with various industry operators regarding farm-in terms and conditions whereby such industry operators could equalize costs incurred to date by Sundance with cash payments and undertake drilling on Sundance's lands at no cost to Sundance in order to earn interests in Sundance's lands. Sundance's management is encouraged by the interest shown by the parties it is in discussions with and will promptly disclose the terms of any strategic alliances if final terms are agreed to.
The Corporation currently has sufficient working capital which will maintain operations for several months, however such capital will not provide the Corporation with the ability to undertake development of its properties. In addition, the Corporation has drilling commitments in the near term that may be difficult to meet given its current capital position, which includes drilling two wells on each of its Ochapowace and Muskowekwan Permits by December 31, 2012. Although the Corporation is hopeful that it will be able to obtain extensions to these drilling commitment dates, there is no guarantee that it will be able to do so. To date, the Corporation has incurred net losses and negative cash flow from operations and as a result the Corporation's ability to continue as a going concern is dependent upon management's ability to successfully develop and execute a business plan which includes raising adequate long-term financing for future growth, achieving profitable operations and generating positive cash flow. The Corporation will need to seek additional financing and/or secure joint ventures with industry partners to optimally develop its lands.
Sundance Energy Corporation is a junior publicly traded oil and gas company whose primary focus is exploring First Nation Lands in Western Canada. Sundance trades in Canada on the TSX Venture Exchange under the trading symbol "SNY" and on the OTCQX in the U.S.A. under the trading symbol "SNYXF".
Forward Looking Statements & Additional Cautionary Language
This news release contains forward-looking statements relating to the future operations of the Corporation and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "will", "may", "should", "anticipate", "expects" and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding future plans and objectives of the Corporation, are forward looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Corporation's expectations are exploration risks detailed from time to time in the filings made by the Corporation with securities regulations.
The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. 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 Sundance. As a result, we cannot guarantee that any forward-looking statement will materialize and the reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release, and Sundance does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by Canadian securities law.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. No stock exchange, securities commission or other regulatory authority has approved nor disapproved the information contained herein.