CALGARY, ALBERTA--(Marketwire - Jan. 19, 2012) -
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
DeeThree Exploration Ltd. ("DeeThree" or the Company") (TSX:DTX)(OTCQX:DTHRF) is providing an update on recent production levels and 2012 guidance.
Based on estimates provided by field reports, DeeThree has achieved record production of 3,500boe/d including the added production from its fourth Belly River well previously announced on January 10th, 2012. This represents a 64% increase from third-quarter 2011 average production volumes of 2,135 boe/d of which 36% was crude oil and NGLs. Current production consists of approximately 52% crude oil and liquids, a 135% volume increase from the third-quarter of 2011.
Operations Update
Brazeau - Belly River
The Company currently has two rigs operating in the area and expects to drill, complete and have on-stream a minimum of three gross (2.7 net) additional wells prior to spring break up. The Company has essentially doubled the production out of this area since purchasing it in March of 2011.
Lethbridge
The Company is currently drilling the horizontal leg of a Bakken test well in the area with a second rig to be operating by month end. Throughout the first quarter of 2012, the Company plans to drill as many as 6.0 gross (6.0 net) wells, weather permitting.
2012 Guidance
DeeThree's Board of Directors has approved a 2012 capital budget of approximately $57 million, focused entirely on the development and exploration of oil prospects. The capital will be directed primarily towards the Brazeau and Lethbridge areas, two of the Company's three core areas. The Company plans to direct 47% of the 2012 capital budget to the Brazeau area through the drilling of 8 gross (7.1 net) horizontal wells and 40% towards the Lethbridge area including the drilling of a minimum of 2 gross (2.0 net) horizontal Bakken locations and up to 11 gross (11.0 net) Sunburst horizontal locations. The remaining 13% of the budget will be allocated to additional strategic land purchases and other expenses.
Average 2012 production is expected to be in the range of 3,700 and 3,900 boe/d excluding approximately 200 boe/d of low netback natural gas that is currently shut-in and will remain shut-in indefinitely due to extreme depressed natural gas prices. The Company's 2012 exit rate is expected to be in the range of 4,300 boe/d. The Company is continually increasing its production weighting towards crude oil and NGLs with an estimated 55 - 58% corporate liquids weighting throughout 2012 generating an estimated 86% of DeeThree's revenues.
The Company's average commodity price assumptions for 2012 are US $90.00 per barrel for WTI oil, $2.70 per GJ for AECO natural gas and a US/Canadian dollar exchange rate of CAD$1.03. On this basis, the Company expects to generate $40 - $42 million of cash flow throughout 2012.
The Company intends to fund its capital program through internally generated cash flow and its current credit facility of $50 million. DeeThree expects to exit 2012 with a working capital deficit of approximately $35 million or approximately 0.8 times forecasted 2012 funds from operations.
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: DeeThree's future projects, oil and natural gas production levels, and capital expenditure programs.
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, future capital expenditure levels, future oil and natural gas prices, future oil and natural gas production levels, DeeThree's ability to obtain field equipment and services in a timely manner to carry out development and exploitations activities, the impact of increasing competition, the ability of DeeThree to add production and reserves through development and exploration activities
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.
Barrels of Oil Equivalent. Barrels of oil equivalent (boe) is calculated using the conversion factor of 6 mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1bbl (barrel) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Non-GAAP Measures. The term cash flow does not have any standardized meaning as prescribed by GAAP and, therefore, is considered non-GAAP measures. Cash flow is calculated based on cash flow from continuing operating activities before changes in non-cash working capital. Management believes that cash flow is a supplemental measure and utilizes it as a key measure to assess the ability of the Company to finance operating activities, capital expenditures and debt repayments. Cash flow as presented is not intended to represent cash flow from operating activities, net earnings or other measures of financial performance calculated in accordance with GAAP and should not be construed as an alternative to cash flow from operations.
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.
Contact Information:
Martin Cheyne
President and Chief Executive Officer
(403) 263-9130