Delphi Announces Funding Arrangement and Provides Operations Update

Delphi Energy Corp. (TSX:DEE) ("Delphi" or the "Company") is pleased to provide
the following corporate update. 


Funding

Delphi has entered into a Gross Overriding Royalty ("GOR") agreement to
partially fund the drilling of ten Montney wells in East Bigstone over the next
12 to 18 months. The parties purchasing the GOR ("Royalty Owners") will
contribute $25.0 million over this time frame towards seven wells scheduled to
be drilled in 2014 ($17.5 million) and have an option on the first three wells
of 2015. The Royalty Owners will be granted a GOR on the Company's working
interest revenue on the wells until an agreed upon rate of return is achieved,
at which time the GOR will be extinguished on all wells. 


In addition, Delphi's lenders (National Bank of Canada, Bank of Nova Scotia and
Alberta Treasury Branches) completed their semi-annual review of the Company's
credit facilities, renewing the existing $140.0 million revolving credit
facility. The facility is a 364 day committed facility available on a revolving
basis until May 26, 2014 at which time it may be extended at the lenders' option
upon completion of the annual review to determine the borrowing base. The annual
review will be based upon the Company's December 31, 2013 reserve report, the
results of the winter drilling program and the lenders' view of commodity
prices. 


The GOR funding, expected funds from operations for 2014 and reconfirmation of
the Company's credit facility provide the financial resources for the Company to
carry out its planned 2014 capital program. 


Operations 

Bigstone Montney Program 

Delphi has now successfully drilled, completed and brought on production eight
Montney horizontal wells at East Bigstone. The most recent five wells were
stimulated utilizing slickwater hybrid frac techniques rather than the smaller
conventional gelled oil frac designs used on the first three wells. The first
well completed with the new frac technique was drilled across one section and
stimulated with 20 stages with the subsequent four wells drilled with extended
reach laterals and completed using 30 stage slickwater hybrid fracture
stimulations. Production from the Montney is expected to average approximately
5,300 boe/d during the month of December, 2013, a 600 percent increase since
bringing on-stream the first well completed with the new completion technique in
March of 2013.


The ninth Montney well at 15-21-60-23W5M (surface location at 16-9-60-23W5M) has
been drilled to a total depth of 5,875 metres with a horizontal lateral length
of 2,886 metres. The 15-21 well (97.5 percent working interest) will be
completed with a 30 stage slickwater hybrid frac program in early January, 2014.
The drilling rig has commenced operations at the 13- 30 -60-22W5M (surface
location at 03-19-60-22W5M). This tenth well (100 percent Delphi) represents an
early start to the 2014 drilling program as spud to spud cycle times continue to
decrease. 


The most recent well (well number eight) to be stimulated with 30 stages using
the slickwater hybrid fracturing technique at 15- 30 -60-22W5M was brought on
production in early December through the Company's 100 percent owned Montney
7-11 compression and dehydration facility. Over the first 15 days of production,
the well averaged 8.6 mmcf/d raw natural gas (7.7 mmcf/d sales) and 713 bbls/d
of field condensate. Including estimated plant recovered NGL production of 36
bbls/mmcf sales, total sales production averaged 2,276 boe/d. Consistent with
Delphi's existing Montney production in Bigstone, the field condensate liquid
yields are expected to stabilize over the next three to four months. 


Given the exceptional well performance to date, Delphi plans to re-evaluate its
base type curve assumptions in the first quarter of 2014, with a larger data set
of more production history and additional wells on production. 


To handle the rapidly growing Montney production volumes, the Company has also
commenced construction to expand its 7-11 facility to handle 45 mmcf/d of raw
gas as well as increased produced field condensate volumes with the installation
of larger inlet separation and increased condensate storage tank capacity.


2014 Guidance

Production guidance for 2014 remains unchanged at this time but will be reviewed
in the first quarter of 2014 as additional results of the winter drilling
program are evaluated. Corporate production is forecast to grow 20 percent
compared to 2013, predominantly from a Montney focused capital program with its
superior netbacks, resulting in expected cash flow growth of 49 percent. Delphi
is estimating production to average 9,500 to 10,000 boe/d on a net capital
program of $67 to $72 million, drilling a total of seven Montney horizontal
wells at Bigstone. Total debt at year end 2014 is expected to be between $145.0
and $150.0 million. The total debt to funds flow ratio is forecast to drop to
2.2 times in the fourth quarter of 2014 and reach a targeted 1.5 times in 2015.
Delphi expects AECO natural gas prices to average approximately Cdn. $3.35 per
mcf and Edmonton light oil prices to average approximately Cdn. $93.50 per
barrel resulting in cash flow for 2014 of approximately $55.0 to $60.0 million.
Currently, the Company has approximately 50 percent of its natural gas
production hedged at an average price of $3.59 per mcf for 2014 and
approximately 27 percent of its crude oil and condensate production hedged at a
floor price of Cdn $96.03 per barrel for the first half of 2014. 


Delphi's business plan contemplates production growth to 20,000 boe/d by 2017,
with targeted annual production per share growth of 25 percent and annual cash
flow per share growth of 45 percent. Capital spending over the five years to
achieve that result under the plan is projected to be $560 million, funded 90
percent from cash flow to drill 50 Montney horizontal wells and fund the
expansion of Delphi's 100 percent owned facility. The contemplated 50 well
drilling program represents less than half of the current development drilling
inventory on approximately 50 percent of Delphi's current Montney undeveloped
land holdings. The Company now has a current project inventory that will provide
economic growth beyond a 10-year horizon. Over this time period, the Company's
balance sheet is forecast to continually strengthen, with internally generated
cash flow funding the majority of the capital expenditures on a go forward
basis. 


Delphi Energy is a Calgary-based company that explores, develops and produces
oil and natural gas in Western Canada. The Company is managed by a proven
technical team. Delphi trades on the Toronto Stock Exchange under the symbol
DEE.


Forward-Looking Statements. This management discussion and analysis contains
forward-looking statements and forward-looking information within the meaning of
applicable securities laws. The use of any of the words "expect", "anticipate",
"continue", "estimate", may", "will", "should", believe", "intends", "forecast",
"plans", "guidance" and similar expressions are intended to identify
forward-looking statements or information.


More particularly and without limitation, this management discussion and
analysis contains forward looking statements and information relating to the
Company's risk management program, petroleum and natural gas production, future
funds from operations, capital programs, commodity prices, costs and debt
levels. The forward-looking statements and information are based on certain key
expectations and assumptions made by Delphi, including expectations and
assumptions relating to prevailing commodity prices and exchange rates,
applicable royalty rates and tax laws, future well production rates, the
performance of existing wells, the success of drilling new wells, the capital
availability to undertake planned activities and the availability and cost of
labour and services.


Although the Company believes that the expectations reflected in such
forward-looking statements and information are reasonable, it can give no
assurance that such expectations will prove to be correct. Since forward-looking
statements and information address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual results may differ
materially from those currently anticipated due to a number of factors and
risks. These include, but are not limited to, the risks associated with the oil
and gas industry in general such as operational risks in development,
exploration and production, delays or changes in plans with respect to
exploration or development projects or capital expenditures, the uncertainty of
estimates and projections relating to production rates, costs and expenses,
commodity price and exchange rate fluctuations, marketing and transportation,
environmental risks, competition, the ability to access sufficient capital from
internal and external sources and changes in tax, royalty and environmental
legislation. Additional information on these and other factors that could affect
the Company's operations or financial results are included in reports on file
with the applicable securities regulatory authorities and may be accessed
through the SEDAR website (HUwww.sedar.com). The forward-looking statements and
information contained in this press release are made as of the date hereof for
the purpose of providing the readers with the Company's expectations for the
coming year. The forward-looking statements and information may not be
appropriate for other purposes. Delphi undertakes no obligation to update
publicly or revise any forward-looking statements or information, whether as a
result of new information, future events or otherwise, unless so required by
applicable securities laws.


Basis of Presentation.  For the purpose of reporting production information,
reserves and calculating unit prices and costs, natural gas volumes have been
converted to a barrel of oil equivalent (boe) using six thousand cubic feet
equal to one barrel. A boe conversion ratio of 6:1 is based upon an energy
equivalency conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. This conversion conforms with
the Canadian Securities Administrators' National Instrument 51-101 when boes are
disclosed. Boes may be misleading, particularly if used in isolation. 


As per CSA Staff Notice 51-327 initial production test results should be
considered preliminary data and such data is not necessarily indicative of
long-term performance or of ultimate recovery. 


Non-IFRS Measures. The release contains the terms "funds from operations",
"funds from operations per share", "net debt", "operating netbacks", "cash
netbacks" and "netbacks" which are not recognized measures under IFRS. The
Company uses these measures to help evaluate its performance. Management
considers netbacks an important measure as it demonstrates its profitability
relative to current commodity prices. Management uses funds from operations to
analyze performance and considers it a key measure as it demonstrates the
Company's ability to generate the cash necessary to fund future capital
investments and to repay debt. Funds from operations is a non-IFRS measure and
has been defined by the Company as cash flow from operating activities before
accretion on long-term debt, decommissioning expenditures and changes in
non-cash working capital. The Company also presents funds from operations per
share whereby amounts per share are calculated using weighted average shares
outstanding consistent with the calculation of earnings per share. Delphi's
determination of funds from operations may not be comparable to that reported by
other companies nor should it be viewed as an alternative to cash flow from
operating activities, net earnings or other measures of financial performance
calculated in accordance with IFRS. The Company has defined net debt as the sum
of long term debt plus/minus working capital excluding the current portion of
the fair value of financial instruments. Net debt is used by management to
monitor remaining availability under its credit facilities. Operating netbacks
have been defined as revenue less royalties, transportation and operating costs.
Cash netbacks have been defined as operating netbacks less interest and general
and administrative costs. Netbacks are generally discussed and presented on a
per boe basis.


FOR FURTHER INFORMATION PLEASE CONTACT: 
Delphi Energy Corp.
David J. Reid
President & CEO
(403) 265-6171
(403) 265-6207 (FAX)


Delphi Energy Corp.
Brian P. Kohlhammer
Senior VP Finance & CFO
(403) 265-6171
(403) 265-6207 (FAX)
info@delphienergy.ca
www.delphienergy.ca
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