Donnycreek Announces Second Quarter Results & Provides Kakwa
and Wapiti Field Operations Update
CALGARY, ALBERTA--(Marketwired - Mar 28, 2014) - 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 |
|
|
31-Jan-14 |
|
31-Jan-13 |
|
31-Jan-14 |
|
31-Jan-13 |
|
| 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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating |
|
|
|
|
|
|
|
|
|
|
|
|
| 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 |
|
|
Total (boe/d) |
|
293.8 |
|
|
159.6 |
|
|
382.9 |
|
|
98.1 |
|
| 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 |
|
| 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 |
) |
| Operating netbacks(3) |
$ |
41.27 |
|
$ |
46.38 |
|
$ |
40.98 |
|
$ |
39.89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share Information |
|
|
|
|
|
|
|
|
|
|
|
|
| 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 |
|
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.
Donnycreek Energy Inc.Malcolm ToddPresident and Chief Executive
Officer(604) 684-2356(604) 684-4265www.donnycreekenergy.com
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