DeeThree Exploration Ltd. ("DeeThree" or the Company") (TSX:DTX)
(OTCQX:DTHRF) announces its 2013 guidance and provides an
operational update.
DeeThree 2013 Guidance Summary
Building on the operational and exploration success of 2012,
DeeThree plans a 2013 capital program of approximately $150 million
focused on increasing oil production from its Alberta Bakken
property in the Lethbridge area of southern Alberta and its Belly
River property in the Brazeau area of central Alberta.
DeeThree is forecasting its 2013 production to be within the
range of 6,800 - 7,000 boe/d (76% crude oil and liquids, 24%
natural gas) with a targeted exit of 8,500 - 9,000 boe/d (81% crude
oil and liquids, 19% natural gas) as compared to the 2012 average
production of approximately 4,230 boe/d (65% crude oil and liquids,
35% natural gas).
Key highlights and assumptions are:
-- 20 Alberta Bakken wells and 11 Belly River wells are planned to be
drilled in 2013. The Company is planning for 5 exploration wells and 26
development wells.
-- Funds flow from operations for 2013 is forecast to be approximately $100
million, based on forecast pricing of US$95.00 per barrel WTI, Cdn$3.20
per mcf AECO gas and a US$/Cdn $0.99 exchange rate. The corporate oil
price differential is forecast at 20 percent of WTI, which reflects the
current market environment. The Company expects to improve on these
differentials by increasing crude oil deliveries on rail.
-- DeeThree's balance sheet is forecast to remain strong, with projected
year end net debt to fourth quarter annualized cash flow of
approximately 0.8:1.0.
-- The Company currently has 1,500 boe/d of crude oil hedged at an average
floor of $90.00 US WTI.
In 2013 DeeThree plans to build on the success of its 2012
drilling program that resulted in the discovery of a significant
oil pool on its Alberta Bakken property and the confirmation of the
multi-zone potential of its Belly River light oil resource play.
The Company plans to focus on achieving significant production
gains while at the same time further establishing the resource
potential of both of its Alberta Bakken and Belly River oil
resource plays. The Company believes that its 2012 acquisitions of
51 sections (32,640 net acres) that offset its Alberta Bakken play
and 34 sections (21,760 net acres) that offset its Belly River
light oil play are highly prospective for further exploration and
development.
Strategy and Operational Update
Belly River
DeeThree is pleased to announce results following a significant
light oil Belly River well completion in Brazeau. In the past
weeks, DeeThree successfully drilled and completed a horizontal oil
well at 5-27-47-14W5 into the previously undrilled "D sand" which
is currently being tested at an approximate rate of 1,190 boe/day
(45% crude oil and liquids) 44 hours after fracture stimulation.
The well is currently flowing on a 3/4 inch choke at a wellhead
pressure of 530 psi with the natural gas currently being recovered
for sale through the Company's extensive oil and gas sales
system.
In 2012 the Company was successful in proving the multi-zone
potential of the Belly River light oil resource play in Brazeau.
This plan will continue in 2013 with the goal to have all six major
intervals identified within the Belly River formation tested by the
end of the first quarter. With the multi-zone potential having been
identified the Company will now look to delineate the extents of
each of these zones to ultimately prove the resource potential of
each.
The lands subject to the Company's recently announced farm-in
are similar to the Company's Belly River property and host all six
of the major Belly River intervals that have shown production
through legacy vertical wells. The Company believes that the
farm-in lands are highly prospective for exploration and
development. The Company plans to drill and complete the first two
wells on the farm-in lands by the end of the first quarter of
2013.
Alberta Bakken
Eastern Lands
The Company's final Alberta Bakken well of 2012 was a two mile
long horizontal extension to the east of its existing Ferguson
Bakken oil field. The well encountered excellent pay and gas
detection through to the end of the horizontal leg and
significantly extended the known limits of the oil pool to a 40
square mile fairway. The well had an IP30 of 448 bopd further
confirming the Company's geological and seismic modeling. The
Company relied on these results in its recent acquisition of an
additional six sections of Crown land that offset the eastern
portion of its Alberta Bakken land base. In early 2013, the Company
will drill additional wells in this area to further delineate this
trend over the 15 sections of its eastern lands.
Western Lands
The Company has yet to define the western edge of its Ferguson
Alberta Bakken pool. Of the land acquired in 2012, the Company
acquired 19 sections of highly prospective Crown land on trend to
the west of its Alberta Bakken development oil wells. The Company
is planning to drill one or two wells on this acquired acreage in
2013 with a view to extend the identified size of its Ferguson
Alberta Bakken pool. Drilling success on these lands will be
significant as this acreage had little or no oil in place
associated to it in the mid-year resource study. The Company is
currently in the process of licensing wells in the area.
Northern Lands
The Company has completed an internal geological and geophysical
study of its 50 section land base, including 17 recently acquired
sections of Crown land, situated to the north of its existing core
development area. After incorporating the 2012 drilling results and
legacy vertical well control to the Company's geological and
geophysical mapping, the Company believes that it has potentially
identified two separate and distinct oil prospects in the northern
area of its Alberta Bakken play. Both prospects are 12-15 square
miles in size and are located five to ten miles from DeeThree's
existing core development area. The Company plans to drill two to
four wells testing these prospects in 2013. Drilling success would
be significant as no oil resource potential has yet to be assigned
to these lands.
The Company has invested in significant facility infrastructure
on its Alberta Bakken property throughout the last quarter of 2012
and continuing into early 2013 in order to gather and process its
increasing volumes of production in the area. The Company's oil
processing facilities are currently operating close to capacity
however a second main battery will be commissioned in the second
quarter of 2013 that will increase the Company's total capacity in
the area to 8,000 bbls/d.
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, financial results
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,
the price of oil and natural gas, 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. Readers are cautioned that the foregoing
list of factors is not exhaustive. Additional information on these
and other factors that could effect DeeThree's operations and
financial results are included in reports on file with Canadian
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com).
This forward-looking information represents DeeThree's views as
of the date of this news lreease 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.
Test Rates. Test rates are not necessarily indicative of
long-term performance or of ultimate recovery. Neither a pressure
transient analysis nor a well-test interpretation has been carried
out and the data should be considered to be preliminary until such
analysis or interpretation has been done.
Non-IFRS Measurements. This news release contains the terms
"funds from other operations" 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.
This term does not have any standardized meaning as prescribed by
IFRS or previous GAAP. DeeThree's determination of funds from
operations 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.
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.
Contacts: DeeThree Exploration Ltd. Martin Cheyne President and
Chief Executive Officer (403) 263-9130
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