Donnycreek Announces Second Quarter Results & Provides Kakwa and Wapiti Field Operations Update
March 28 2014 - 8:21PM
Marketwired Canada
Donnycreek Energy Inc. ("Donnycreek" or the "Company") (TSX VENTURE:DCK) reports
that it has filed its condensed interim financial statements and related
Management's Discussion and Analysis ("MD&A") for the three and six months ended
January 31, 2014 with 2013 comparatives on SEDAR. Selected financial and
operational information is outlined below and should be read in conjunction with
Donnycreek's condensed interim financial statements for the three and six months
ended January 31, 2014 and its audited financial statements and related MD&A for
the year ended July 31, 2013 which are available for review at www.sedar.com and
on our website at www.donnycreekenergy.com.
FINANCIAL AND OPERATING HIGHLIGHTS
Three Months Ended Six Months Ended
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31-Jan-14 31-Jan-13 31-Jan-14 31-Jan-13
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Petroleum and
natural gas sales $ 1,547,336 $ 825,575 $ 3,995,105 $ 903,416
Funds flow from
operations(1) $ 445,762 $ 393,472 $ 1,991,263 $ 344,503
Basic ($/share) $ 0.01 $ 0.01 $ 0.04 $ 0.01
Diluted ($/share) $ 0.01 $ 0.01 $ 0.04 $ 0.01
Net income (loss) $ 451,141 $ (805,822) $ 847,365 $ (807,742)
Basic ($/share) $ 0.01 $ (0.02) $ 0.01 $ (0.02)
Diluted ($/share) $ 0.01 $ (0.02) $ 0.01 $ (0.02)
Capital expenditures $ 14,841,844 $ 3,615,259 $ 22,132,373 $ 16,771,548
Working capital $ 16,625,738 $ 19,061,674 $ 16,625,738 $ 19,061,674
Total assets $ 85,137,373 $ 47,160,122 $ 85,137,373 $ 47,160,122
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Operating
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Average daily
production (sales)
Crude oil (bbls/d) 0.6 0.1 5.4 0.8
Natural gas
(mcf/d) 931.1 500.3 1,181.4 352.1
NGLs (bbls/d)(2) 138.0 76.1 180.6 38.6
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Total (boe/d) 293.8 159.6 382.9 98.1
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Average realized
price
Crude oil ($/bbls) $ 79.50 $ 81.55 $ 89.35 $ 79.04
Natural gas
($/mcf) $ 4.49 $ 3.16 $ 3.53 $ 2.94
NGLs ($/bbls)(2) $ 90.37 $ 71.99 $ 93.78 $ 71.88
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Netback ($/boe)
Petroleum and
natural gas sales $ 57.25 $ 56.24 $ 56.71 $ 50.07
Royalties $ (2.98) $ (1.37) $ (2.98) $ (1.69)
Operating expenses
(incl.
transportation) $ (13.00) $ (8.49) $ (12.75) $ (8.49)
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Operating
netbacks(3) $ 41.27 $ 46.38 $ 40.98 $ 39.89
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Share Information
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Common shares
outstanding 54,660,530 41,360,530 54,660,530 41,360,530
Weighted average
common shares
outstanding 52,985,530 41,267,492 52,148,030 32,717,636
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Notes:
(1) Funds flow from operations are petroleum and natural gas revenue and
interest income less producing and operating expenses, royalties,
exploration and evaluation expenditures and general and administrative
expenses.
(2) References to NGLs include condensate.
(3) Operating netbacks are determined by deducting royalties, production
expenses and transportation and selling expenses from petroleum and
natural gas revenue.
Operations Update - Kakwa
Current production from five of the six middle Montney horizontal gas wells tied
into and producing through the Company's 16-07 Kakwa gas compression and
condensate handling facility is approximately 6.75 mmcf per day (net 3.2 mmcf
per day) and 1,106 bbls per day (net 530 bbls per day) of lease condensate;
1,063 boe per day net. The sixth well, Hz 14- 30-63-5 W6M Well (the "14-30
Well") is shut in (150 boe per day net) while completion operations are underway
on the Hz 102/14- 30-63-5 W6M (the "102/14-30 Well") upper Montney horizontal
well.
As previously reported, Donnycreek's 50% working interest middle Montney
horizontal gas well at Hz 16-17-63-5 W6M (the "16-17 Well") commenced production
in mid-February 2014. The 16-17 Well averaged approximately 2.6 mmcf per day
(gross) natural gas production during its first 30 days of production with an
average field condensate production estimate of 460 bbls per day (gross).
Subsequent to the end of the Q2 2014 reporting period, the Company has drilled
and cased a 50% working interest upper Montney horizontal well, the 102/14-30
Well, where completion operations are currently underway. Also following the end
of Q2 2014, a ninth Kakwa Montney horizontal well is drilling at 08-20-63-5 W6M
(the "08-20 Well"). The 08-20 Well is the first of three Montney horizontal
wells planned to be drilled consecutively from the same surface lease pad which
should result in an overall reduction in well costs.
On January 7, 2014, the Company's 50% working interest Kakwa gas compression and
condensate handling facility became operational. With a design capacity to
handle 15 mmcf per day of natural gas and 3,000 bbls per day of lease
condensate, the facility is currently handling approximately 8 mmcf per day of
natural gas including third party gas volumes.
Operations Update - Wapiti
Donnycreek received regulatory approval and the permit to flare the reservoir
natural gas at the Company's middle Montney horizontal well at Hz 1-26-64-8 W6M
(the "1-26 Well"). Testing operations have resumed following a 15 stage
hydraulic fracture stimulation of the well and load fluid flow back. Initial
flow results indicate the reservoir natural gas contains up to 10% hydrogen
sulfide (H2S). The natural gas flow rate after the first 48 hours of flow back
is approximately 1.7 mmcf per day against 1,600 kPa wellhead pressure. No lease
condensate has been recovered to date.
Donnycreek holds a 75% working interest in 328 gross (246 net) sections of
Montney P&NG rights at Wapiti.
Potential Transportation Disruptions
Donnycreek produces natural gas that is delivered to the Cutbank River receipt
point which the Company has been advised is expected to be affected by the
National Energy Board's order SG-N081-001-2014 issued on March 4, 2014 (the
"Order") to Nova Gas Transmission Ltd., a wholly owned subsidiary of TransCanada
PipeLines Limited.
At this time, Donnycreek is unaware of volumes or timing of any disruption to
its production. Future drilling and completion operations budgeted in fiscal
2014 are not anticipated to be affected as a result of the Order.
Donnycreek is a Calgary based public oil and gas company which holds
approximately 438 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 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.
ON BEHALF OF THE BOARD OF DONNYCREEK ENERGY INC.
Malcolm F.W. Todd, President and Chief Executive Officer
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 the drilling of the 08-20 Well
and subsequent Kakwa Montney horizontal wells and their impact on resulting well
costs and the impact of the Order on the Company's production and drilling and
completion operations budgeted in fiscal 2014.
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: whether the Company's exploration and
development activities respecting its prospects will be successful or that
material volumes of petroleum and natural gas reserves will be encountered, or
if encountered can be produced on a commercial basis; the ultimate size and
scope of any hydrocarbon bearing formations on its lands; that drilling
operations on its lands will be successful such that further development
activities in these areas are warranted; that Donnycreek will continue to
conduct its operations in a manner consistent with past operations; results from
drilling and development activities will be consistent with past operations; the
general stability of the economic and political environment in which Donnycreek
operates; drilling results; field production rates and decline rates; the
general continuance of current industry conditions; the timing and cost of
pipeline, storage and facility construction and expansion and the ability of
Donnycreek to secure adequate product transportation; future commodity prices;
currency, exchange and interest rates; regulatory framework regarding royalties,
taxes and environmental matters in the jurisdictions in which Donnycreek
operates; and the ability of Donnycreek to successfully market its oil and
natural gas products; 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, 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 for the year ended July
31, 2013 and the Company's 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 news 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.
NON-GAAP MEASURES
In this document "Funds flow from operations" and "Operating Netbacks",
collectively the "Non-GAAP measures", are used and do not have any standardized
meanings as prescribed by IFRS. They are used to assist management in measuring
the Company's ability to finance capital programs and meet financial
obligations. Funds flow from operations refers to cash flows from operating
activities before net changes in operating working capital.
Non-GAAP measures should not be considered in isolation or construed as
alternatives to their most directly comparable measure calculated in accordance
with IFRS, or other measures of financial performance calculated in accordance
with IFRS. The Non-GAAP measures are unlikely to be comparable to similar
measures presented by other issuers.
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Donnycreek Energy Inc.
Malcolm Todd
President and Chief Executive Officer
(604) 684-2356
(604) 684-4265 (FAX)
www.donnycreekenergy.com
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