DeeThree Exploration Ltd. Announces 2011 Capital Budget and Provides Reserve and Bakken Operational Update

CALGARY, ALBERTA--(Marketwire - Feb. 11, 2011) -

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DEETHREE EXPLORATION LTD. ("DeeThree") ("Company") (TSX:DTX) announces its reserve update as of December 31, 2010 and details of its 2011 capital budget which is primarily directed towards increased activity in the Bakken fairway on its extensive land holdings in the Lethbridge area of southern Alberta.

LETHBRIDGE COMMITMENT

DeeThree's 2010 capital activities resulted in expenditures of approximately $22 million whereby DeeThree made great strides towards fulfilling its seismic and drilling commitment on its Lethbridge property. This commitment originally involved the drilling of 30 wells over a three-year period commencing November 14, 2008 and the shooting of four townships of seismic data over the same period. In April of 2010, the Company announced a two year extension on its land base through the drilling of an additional 20 wells with no additional seismic requirements. All commitment wells are required to be drilled to the Mississippian horizon at an approximate depth of 1,000 metres.

As at December 31, 2010 the Company had over 90% of the total seismic commitment complete, (seismic costs represented approximately 32% of 2010 capital expenditures) with an approximate 10 sections left to shoot in 2011. At December 31, 2010, DeeThree had drilled 26 of the original 30 commitment wells. As well, DeeThree invested significant capital in 2010 to expand its infrastructure with the addition of a gas plant to process liquids rich natural gas and an 18 km pipeline to access a key land block (collectively represented approximately 12% of 2010 capital expenditures). Due to a combination of depressed current and forecasted natural gas prices and reserve and production results from the shallow gas program that did not meet the Company's expectations, DeeThree shifted focus to the new and emerging Bakken play early in 2010.

RESERVES INFORMATION 

The Company's reserves as at December 31, 2010 have declined in comparison to its December 31, 2009 reserves estimate due to both a significant decline in current and future natural gas prices and also the Company's shallow gas drilling results throughout 2010.

The following table represents the Company's reserves as evaluated by DeeThree's independent reserve engineering firm, Sproule Associates Ltd. The evaluation of DeeThree's petroleum and natural gas reserves was conducted pursuant to National Instrument 51–101– Standards of Disclosure for Oil and Gas Activities and the Canadian Oil and Gas Evaluation Handbook (COGEH) reserves definitions.

The table below summarizes the changes in the company's share of oil and natural gas reserves (before royalties) from Dec. 31, 2009 to Dec. 31, 2010

		December 31, 2010								December 31, 2009
(columns may not add due to rounding)		Natural Gas (MMcf)		Oil & NGLs (Mbbls)		Total (Mboe)		% of P + P		Total (mboe)
Proved
Producing		6,470		19.8		1,098.1		69		1,332.8
Non-producing		1,011		29.5		198.0		12		--
Undeveloped		183		--		30.5		2		380.5
Total Proved		7,664		49.3		1,326.7		83		1,713.2
Probable		1,543		14.6		271.8		17		346.6
Total proved plus probable		9,207		63.9		1,598.5		100		2,059.9

The following table summarizes the Net Present Value of the Company's share of oil and natural gas reserves (before royalties) as at December 31, 2010.

SUMMARY OF NET PRESENT VALUES OF FUTURE NET REVENUE
As of December 31, 2010
		Before income taxes discounted at (% per year)
		0%		5%		10%
Reserve Category
Proved
Developed producing		20,281		15,486		12,533
Developed non-producing		5,463		4,434		3,705
Undeveloped		608		511		437
Total proved		26,352		20,432		16,675
Probable		6,509		3,997		2,760
Total proved plus probable		32,862		24,428		19,435

Summary of Price Forecasts and Inflation and Exchange Rates ($Cdn)
Effective December 31, 2010
Year		WTI Cushing 40-degree API (US$/bbl)		Edmonton par price – 40 degree API (CDN$/bbl)		Alberta AECO-C spot (CDN$/MMBTU)		Inflation rate (%/yr)		Exchange rate (US$/Cdn$)
2011		88.40		93.08		4.04		1.5		0.932
2012		89.14		93.85		4.66		1.5		0.932
2013		88.77		93.43		4.99		1.5		0.932
2014		88.88		93.54		6.58		1.5		0.932
2015		90.22		94.95		6.69		1.5		0.932
2016		91.57		96.38		6.80		1.5		0.932
2017		92.94		97.84		6.91		1.5		0.932
2018		94.34		99.32		7.02		1.5		0.932
2019		95.75		100.81		7.14		1.5		0.932
2020		97.19		102.34		7.26		1.5		0.932
Thereafter		Escalation rate 1.5%						.

Notes:

1. The pricing assumptions were provided by Sproule Associates Ltd.
2. None of the company's future production is subject to a fixed or contractually committed price.

2011 CAPITAL PROGRAM

DeeThree's Board of Directors has approved a 2011 capital budget of $32 million for exploration and development activities in its core area of Lethbridge, Alberta whereby in excess of 70% of the spending will be directed towards exploration and development of the emerging Alberta Bakken oil play. DeeThree expects that its capital budget will be funded through its current working capital of approximately $26 million and its undrawn credit facility of $10 million along with internally generated cash flow. With its shift in focus toward the Bakken oil play DeeThree expects that it will move from a currently heavily weighted natural gas producer to a more desirable balance of crude oil and liquids throughout the year.

BAKKEN OIL RESOURCE PLAY 

DeeThree is well positioned to capitalize on the emerging Alberta Bakken oil play with over 250 sections of lands in the Lethbridge area that the Company believes are prospective, coupled with ownership of extensive facilities and pipeline infrastructure over the area. 

In late 2010, the Company spud its first vertical Bakken stratigraphic test well on its Lethbridge property. The well was successfully drilled to the planned vertical depth with the target section cored and retrieved. After reviewing encouraging results from the core data, DeeThree proceeded with a horizontal leg. As of today's date, DeeThree has successfully drilled its planned horizontal leg and with continued positive results, installed a 15-stage frac assembly. The well is currently awaiting fracture stimulation operations. 

DeeThree is continuing exploration and development of the Alberta Bakken. The Company has two more licensed stratigraphic vertical wells that will be cored; testing additional land blocks and is currently in various stages of acquiring several multi-well pad sites. In total DeeThree plans to drill another seven Bakken locations on its Lethbridge property throughout 2011 with one rig being utilized consistently throughout the year with the possibility of engaging a second rig depending on results.

This new release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.

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.

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.

We seek Safe Harbor.