DeeThree Announces Alberta Bakken Update and First Quarter Results Very Nice.
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DeeThree Exploration Ltd. ("DeeThree" or the "Company") (TSX:DTX) (OTCQX:DTHRF)
is pleased to announce an update on its 2012 Alberta Bakken and Brazeau Belly
River drilling program and its financial and operational results for the three
months ended March 31, 2012 as follows.
OPERATIONAL UPDATE
Alberta Bakken
Production test results and additional data from the first four Alberta Bakken
wells (100% working interest) drilled by DeeThree in 2012 are provided in the
following table. The production test results from the recently completed third
and fourth wells exceeded expectations averaging 940 bbls/d and 960 bbls/d of
oil after a 10 day and 5 day test respectively.
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Average End of Current
Test Rate Test Rate IP 30 IP 60 Rate Oil
Well (bbl/d (bbl/d (bbl/d (bbl/d (bbl/d Cumulative
Identification oil) (1) oil) (1) oil) oil) oil) (bbls)
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Location #1 765 550 415 370 240 25,000
(4 day) (70 days)
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Location #2 957 800 N/A N/A 385 12,700
(6 day) (22 days)
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Location #3 940 620 N/A N/A N/A 9,800
(10 day) (10 days)
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Location #4 960 650 N/A N/A N/A 5,400
(5 day) (5 days)
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(1) Test rates are not necessarily indicative of long-term performance or of
ultimate recovery.
DeeThree continues to augment its Alberta Bakken program with modifications to
the horizontal well lengths and fracing dynamics. Overall, the Company is very
pleased with the continuity of the sand being targeted. Continuous improvement
in the flow rates to date has resulted in IP30 and IP60 production results
exceeding type curve expectations. The Company currently has two drilling rigs
in the area with two additional Alberta Bakken wells anticipated to be completed
and tested prior to the end of the second quarter.
The Company has continued to expand its 100% owned oil infrastructure to
accommodate anticipated future production volumes. The oil battery has been
expanded and pipeline infrastructure has also been constructed to the Company's
recently drilled wells to accommodate year round production. DeeThree is in the
process of procuring and installing CO2 removal facilities to process additional
solution gas volumes which should be completed by the end of the third quarter.
Lethbridge Commitment Agreement
DeeThree is pleased to announce that it has extended the primary lease term on
its Lethbridge property. The primary lease term has been extended for an
additional two years to November 30, 2015. In exchange for the lease extension,
the Company has surrendered approximately 50,000 acres while still retaining
approximately 180,000 acres of what it feels is the most prospective acreage for
Bakken reserves. Also as part of this extension, and in place of the twenty well
commitment related to the April 13, 2010 agreement, the Company now has a
commitment to drill 12 wells over the three-year period (five wells in each of
2012 and 2013 and two wells in 2014), with six of these commitment wells having
been drilled to date.
Brazeau Belly River
In addition to the 3 (2.9 net) wells drilled in the first quarter of 2012, the
Company has continued to drill through the second quarter on its Brazeau Belly
River oil play. It is currently drilling the second well of the quarter with one
additional well to be drilled prior to the end of June. All three of these wells
will be completed as soon as weather permits.
Corporate Summary
The Company's production over the past two weeks has averaged 3,750 boe/d, not
including flow rates from the two most recently completed Bakken wells described
in the table above. The Company expects as many as 4.0 gross (4.0 net)
additional Bakken wells and 3.0 gross (2.9 net) additional Belly River wells to
be on production by the end of the second quarter.
2012 FIRST QUARTER FINANCIAL AND OPERATIONAL HIGHLIGHTS
DeeThree's first quarter of 2012 was significant with record average production
of 3,042 boe/d being achieved as well as our busiest quarter operationally in
Company history. Highlights for the period include the following:
-- Achieved record production of 3,042 boe/d, resulting in a year over year
increase of 327 percent and a 27 percent increase over the last quarter
of 2011;
-- Increased oil and NGL production by 43 percent over the previous quarter
to 1,599 bbls/d compared to 1,118 bbls/d;
-- Recorded $5.7 million in funds from operations, respectively a 40
percent and 789 percent increase over the fourth and first quarters of
2011;
-- Funds from operations on a per share basis increased to $0.09, up 50 and
550 percent respectively from the fourth and first quarters of 2011;
-- Invested $36.7 million in capital expenditures which included the
drilling of 10 (9.1 net) wells;
-- Closed a $16.0 million dollar (net of expenses) flow-through financing
at a flow through share price of $4.50/share; and
-- Completed the annual credit review in April 2012 which resulted in the
Company's bankers increasing DeeThree's borrowing base to $60 million
from $50 million.
Financial and operational highlights for the quarter ended March 31, 2012
with comparative data for the same period of 2011 are as follows.
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Three Months Ended March 31, 2012 2011 Change
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(000s, except per share
amounts) ($) ($) (%)
Financial
Oil and natural gas revenues 14,277 1,969 625
Funds from (used in)
operations(1) 5,741 (833) 789
Per share - basic and
diluted(1) 0.09 (0.02) 550
Cash flow from (used in)
operating activities 4,064 (4,863) 184
Net loss (3,199) (1,991) (61)
Per share - basic and diluted (0.05) (0.05) --
Capital expenditures(2) 36,715 129,529 (72)
Working capital(3) (30,898) 20,659 (250)
Shareholders' equity 178,732 175,423 2
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(000s) (#) (#) (%)
Share Data
At period-end 66,986 62,752 7
Weighted average - basic and
diluted 63,321 36,294 74
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(%)
Operating(4)
Production
Natural gas (mcf/d) 8,657 3,744 131
Crude oil (bbls/d) 1,316 71 1,754
NGLs (bbls/d) 283 18 1,472
Total (boe/d) 3,042 713 327
Average wellhead prices
Natural gas ($/mcf) 2.17 3.77 (42)
Crude oil and NGLs ($/bbl) 85.48 86.98 (2)
Total ($/boe) 51.58 30.68 68
Netbacks
Operating netback ($/boe) 24.59 14.92 65
Funds flow netback ($/boe) 20.64 (12.99) 259
Gross (net) wells drilled
Gas (#) -- (--) -- (--) --
Oil (#) 8 (7.1) 2 (2.0) 300 (255)
Standing (#) 2 (2.0) -- (--) --
Dry and abandoned (#) -- (--) -- (--) --
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Total (#) 10 (9.1) 2 (2.0) 400 (355)
Average working interest (%) 91 100 (9)
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(1) Funds from (used in) operations, funds from (used in) operations per
share and funds flow netback are not recognized measures under
International Financial Reporting Standards ("IFRS"). Refer to the
commentary under the heading "Non-IFRS Measurements" for further
discussion.
(2) Total capital expenditures, including acquisitions and excluding non-
cash transactions. Refer to the commentary in the Corporation's
Management's Discussion and Analysis for the interim period ended March
31, 2012 (the "MD&A") under the heading "Capital Expenditures and
Acquisitions" for further information.
(3) Current assets less current liabilities, excluding current derivative
financial instruments.
(4) For a description of the boe conversion ratio, refer to the commentary
in the MD&A under the heading "Other Measurements".
Reader Advisory
Forward-Looking Statements. Certain statements contained in this press release
may constitute forward-looking statements. These statements relate to future
events or the DeeThree's future performance. All statements other than
statements of historical fact may be forward-looking statements. Forward-looking
statements are often, but not always, identified by the use of words such as
"seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will",
"project", "predict", "potential", "targeting", "intend", "could", "might",
"should", "believe" and similar expressions. These statements involve known and
unknown risks, uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such forward-looking
statements. DeeThree believes that the expectations reflected in those
forward-looking statements are reasonable, but no assurance can be given that
these expectations will prove to be correct and such forward-looking statements
included in this press release should not be unduly relied upon by investors.
These statements speak only as of the date of this press release and are
expressly qualified, in their entirety, by this cautionary statement.
In particular, this press release contains forward-looking statements,
pertaining to the following: projections of market prices and costs, supply and
demand for oil and natural gas, the quantity of reserves, oil and natural gas
production levels, capital expenditure programs, treatment under governmental
regulatory and taxation regimes, expectations regarding DeeThree's ability to
raise capital and to continually add to reserves through acquisitions and
development, and projections of market prices and costs.
With respect to forward-looking statements contained in this press release,
DeeThree has made assumptions regarding, among other things: the legislative and
regulatory environments of the jurisdictions where DeeThree carries on business
or has operations, the impact of increasing competition, and DeeThree's ability
to obtain additional financing on satisfactory terms.
DeeThree's actual results could differ materially from those anticipated in
these forward-looking statements as a result of risk factors that may include,
but are not limited to: volatility in the market prices for oil and natural gas;
uncertainties associated with estimating reserves; uncertainties associated with
DeeThree's ability to obtain additional financing on satisfactory terms;
geological, technical, drilling and processing problems; liabilities and risks,
including environmental liabilities and risks, inherent in oil and natural gas
operations; incorrect assessments of the value of acquisitions; competition for,
among other things, capital, acquisitions of reserves, undeveloped lands and
skilled personnel.
This forward-looking information represents DeeThree's views as of the date of
this document and such information should not be relied upon as representing its
views as of any date subsequent to the date of this document. DeeThree has
attempted to identify important factors that could cause actual results,
performance or achievements to vary from those current expectations or estimates
expressed or implied by the forward-looking information. However, there may be
other factors that cause results, performance or achievements not to be as
expected or estimated and that could cause actual results, performance or
achievements to differ materially from current expectations. There can be no
assurance that forward-looking information will prove to be accurate, as results
and future events could differ materially from those expected or estimated in
such statements. Accordingly, readers should not place undue reliance on
forward-looking information. . Except as required by law, the Company undertakes
no obligation to publicly update or revise any forward-looking statements.
Non-IFRS Measurements. This news release contains the terms "funds from other
operations" and "funds from operations per share", which should not be
considered an alternative to or more meaningful than cash flow from operating
activities as determined in accordance with IFRS or previous GAAP. These terms
do not have any standardized meaning as prescribed by IFRS or previous GAAP.
DeeThree's determination of funds from operations and funds from operations per
share may not be comparable to that reported by other companies. Management uses
funds from operations to analyze operating performance and leverage, and
considers funds from operations to be a key measure as it demonstrates the
Company's ability to generate cash necessary to fund future capital investments
and to repay debt. Funds from operations is calculated using cash flow from
operating activities as presented in the statement of cash flows before changes
in non-cash working capital and settlement of retirement costs. DeeThree
presents funds from operations per share whereby per share amounts are
calculated using weighted average shares outstanding consistent with the
calculation of earnings per share.
BOE Presentation. References herein to "boe" mean barrels of oil equivalent
derived by converting gas to oil in the ratio of six thousand cubic feet (Mcf)
of gas to one barrel (bbl) of oil. Boe may be misleading, particularly if used
in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy
conversion method primarily applicable at the burner tip and does not represent
a value equivalency at the wellhead.
This new release shall not constitute an offer to sell or the solicitation of an
offer to buy any securities in any jurisdiction.
We seek Safe Harbor.
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