Dundee Energy Limited Announces Third Quarter 2013 Financial Results

Dundee Energy Limited Announces Third Quarter 2013 Financial Results 
TORONTO, ONTARIO -- (Marketwired) -- 10/25/13 -- Dundee Energy
Limited ("Dundee Energy" or the "Corporation") (TSX:DEN) today
announced its financial results for the three and nine months ended
September 30, 2013. The Corporation's unaudited condensed interim
consolidated financial statements, along with management's discussion
and analysis, have been filed on the System for Electronic Document
Analysis and Retrieval ("SEDAR") and may be viewed under the
Corporation's profile at www.sedar.com or the Corporation's website
at www.dundee-energy.com. 

--  Net loss attributable to owners of the parent for the quarter ended
    September 30, 2013 was $1.5 million, compared with a net loss
    attributable to owners of the parent of $2.5 million incurred in the
    same period of the prior year. 
--  Production volumes during the third quarter of 2013 averaged 12,022
    Mcf/d of natural gas (third quarter of 2012 - 10,188 Mcf/d) and 608
    bbls/d of oil and liquids (third quarter of 2012 - 721 bbls/d). Natural
    gas production volumes increased during the period and reflect the
    acquisition of an additional 20% working interest in certain offshore
    gas properties in southern Ontario for $4.9 million completed in July
    2013. The decrease in oil production volumes results from the natural
    decline in the Corporation's assets. 
--  Revenues, before royalty interests, earned from oil and natural gas
    sales during the third quarter of 2013 were $11.0 million, compared with
    revenues of $8.7 million earned during the third quarter of 2012. The
    increase in revenues results primarily from improvements in commodity
    prices, partially offset by lower production volumes. 
--  Cash flow from operating activities, before changes in non-cash working
    capital items, decreased marginally to $2.0 million in the three months
    ended September 30, 2013, compared with $2.1 million in the same period
    of the prior year. 
--  Field netbacks in the third quarter of 2013, before realized amounts
    related to risk management contracts, were $1.32/Mcf (third quarter of
    2012 - $0.22/Mcf) from natural gas and $57.94/bbl (third quarter of 2012
    - $49.49/bbl) from oil and liquids. C
onsistent with increases in
    revenues, increases in field netbacks result primarily from improved
    commodity prices. 
--  Capital expenditures during the third quarter of 2013 were $3.4 million.
--  Cash and available credit under the Corporation's credit facilities
    totalled $3.8 million at September 30, 2013.

In the third quarter of 2013, production volumes increased to 2,612
boe/d compared with an average of 2,420 boe/d in the same period of
2012. The increase reflects production volumes from the Corporation's
acquisition of additional working interests in natural gas properties
completed in July 2013, offset by the natural decline in the
Corporation's assets. 

Average daily volume during the three months ended                          
 September 30,                                                 2013     2012
Natural gas (Mcf/d)                                          12,022   10,188
Oil (bbls/d)                                                    596      696
Liquids (bbls/d)                                                 12       25
Total (boe/d)                                                 2,612    2,420

The Corporation realized an average price on sales of natural gas of
$4.41/Mcf during the third quarter of 2013, a substantial improvement
over the average price of $3.09/Mcf realized in the same period of
the prior year. The realized sales price for crude oil during the
third quarter of 2013 averaged $111.32/bbl, a 26% increase from an
average sales price of $88.59/bbl realized in the third quarter of
the prior year. 
Field Level Cash Flows and Field Netbacks 
(in thousands) 

For the three months ended                                                  
September 30,                               2013                       2012 
                       Natural  Oil and           Natural  Oil and          
                           Gas  Liquids    Total      Gas  Liquids    Total 
Total sales            $ 4,875  $ 6,140  $11,015  $ 2,892  $ 5,794  $ 8,686 
Royalties                 (736)    (939)  (1,675)    (449)    (878)  (1,327)
 expenditures           (2,672)  (1,964)  (4,636)  (2,245)  (1,631)  (3,876)
                         1,467    3,237    4,704      198    3,285    3,483 
Realized risk                                                               
 management (loss)                                                          
 gain                      196     (371)    (175)     654      554    1,208 
Field level cash flows $ 1,663  $ 2,866  $ 4,529  $   852  $ 3,839  $ 4,691 
For the three months ended                                                  
September 30,                               2013                       2012 
                       Natural  Oil and           Natural  Oil and          
                           Gas  Liquids    Total      Gas  Liquids    Total 
                         $/Mcf    $/bbl    $/boe    $/Mcf    $/bbl    $/boe 
Total sales            $  4.41  $109.90  $ 45.86  $  3.09  $ 87.26  $ 39.02 
Royalties                (0.67)  (16.81)   (6.97)   (0.48)  (13.21)   (5.96)
 expenditures            (2.42)  (35.15)  (19.30)   (2.39)  (24.56)  (17.41)
                          1.32    57.94    19.59     0.22    49.49    15.65 
Realized risk                                                               
 management (loss)                                                          
 gain                     0.18    (6.64)   (0.73)    0.70     8.34     5.43 
Field netbacks         $  1.50  $ 51.30  $ 18.86  $  0.92  $ 57.83  $ 21.08 

The Corporation has entered into fixed price derivative contracts for
the purpose of protecting its oil and natural gas revenue from the
volatility of oil and natural gas prices and the volatility of
Canadian to US foreign exchange rates. At September 30, 2013, the
Corporation had entered into risk management contracts for
approximately 6,250 mbtu/d of natural gas at a fixed price of
$4.07/mbtu and for approximately 500 bbls/d of crude oil at a fixed
price of $98.22/bbl. 
Capital Expenditures 
During the third quarter, the Corporation incurred $3.4 million in
capital expenditures. The Corporation continued its 2013 revised
four-well drilling program during the third quarter, with the
drilling of a horizontal re-entry of a 2012 vertical exploration well
and the drilling of two exploration wells. The horizontal re-entry
produced natural gas from a new geological formation and further
drilling will be considered if gas production rates remain economic.
One of the exploration wells was shut in pending further evaluation
and the other was abandoned. Furthermore, the Corporation continued
the processing of 2-D and 3-D seismic data, which will be critical in
identifying future drill candidates. 
As part of its offshore program, the Corporation completed its
extensive pipeline replacement and relocation project. This project
included dredging of the Port Burwell harbour, which will improve
production efficiencies throughout Lake Erie. 
2013 Work Program 
The Corporation plans to expend a further $2.4 million in capital
expenditures during the fourth quarter of 2013. The capital
expenditure program includes the drilling of one exploration well at
an estimated cost of $1.1 million; $0.5 million on completion costs
on the exploration well previously shut in, and costs of $0.4 million
to complete the 2013 2-D seismic program undertaken in the second and
third quarters of the year. 
On July 26, 2013, Escal UGS S.L. ("Escal"), the owner of the Castor
Project, announced that it had arranged for the issuance of
euro-denominated senior secured bonds (the "Euro Bonds") totalling
EUR1.40 billion. The Euro Bonds are subject to an annual interest
rate of 5.756%, payable semi-annually, and are repayable in equal
semi-annual installments over a period of 21 and a half years, with
the last payment due in December 2034. The Euro Bonds are listed on
the Luxembourg stock exchange. 
The Euro Bonds were issued by a special purpose vehicle, Watercraft
Capital S.A. ("Watercraft"), a Luxembourg corporation. The proceeds
from the issuance were subsequently on-lent to Escal, pursuant to a
credit facility between Watercraft and Escal, and were used by Escal
to repay amounts owing pursuant to Escal's existing bank-funded
project financing arrangements. Escal provided a general security
interest against its assets for the benefit of Watercraft to secure
Escal's obligations under these arrangements, and the shareholders of
Escal have pledged their respective shares in Escal as part of the
overall security package. In addition, the European Investment Bank
has provided a EUR200 million standby letter of credit as a form of
subordinated credit enhancement instrument in support of the Euro
Cushion Gas 
In early 2013, Escal reached an agreement with Enagas S.A., the
leading gas transporter in Spain, to provide the 600 million cubic
metres of cushion gas required for completion of the Castor Project.
Enagas subsequently completed the acquisition of approximately 125
million cubic metres, and injection of the cushion gas into the
reservoir began in June 2013. Approximately 85% of the acquired
cushion gas was completed by September 16, 2013, with the remaining
15% scheduled for injection to the reservoir at the end of October
In mid September, seismic activity was detected in the area
surrounding the Castor Project. While the seismic activity did not
affect the integrity of the facility and the underground reservoir,
nor cause any damage, the Spanish authorities have implemented a
suspension to the injection of further volumes of cushion gas until
an independent assessment of the source of seismic activity is
completed. Assessments completed by Escal indicate that the
seismicity observed appears to be related to a secondary fault
present in the area. Importantly, gas to liquid levels in the
reservoir have remained stable, significantly reducing concerns over
the leakage of cushion gas. A complete report of Escal's assessment
of the seismic activity has been filed with the Spanish authorities
for their review and consideration. 
Following the reporting of the above events, on October 1, 2013,
Fitch Ratings Inc. placed the Euro Bonds, previously rated at
BBB+ on a "Rating Watch Negative". Standard & Poor's subsequently
reaffirmed its rating for the Euro Bonds issue at BBB. 
At September 30, 2013, the Corporation held 32.2 million Series A
Preference Shares of Eurogas International Inc. ("Eurogas
International"). The Corporation has concluded that there is
significant impairment in the par value of these shares and
accordingly, the Corporation has fully provided against the carrying
value of this asset, including any dividend amount receivable. 
In June 2013, Eurogas International announced that, together with its
joint venture partner, it had entered into a farmout agreement with
DNO Tunisia AS ("DNO") with respect to the Sfax Permit and the
associated Ras El Besh development concession (the "DNO Agreement").
The completion of the DNO Agreement is conditional on the approval by
the relevant Tunisian authorities of the terms of the DNO Agreement,
including the appointment of DNO as the operator, and is subject to
other normal conditions of closing, including the absence of a
material adverse change. In addition, and as a condition of the
completion of the DNO Agreement, the Joint Venture had committed to
complete the removal of an ocean-floor template previously assembled
as part of the Ras El Besh development concession within the Sfax
Permit. Work required to remove the template was completed in the
third quarter of 2013. The DNO Agreement provides DNO with an 87.5%
participating interest in the Sfax Permit in exchange for (i) a US$6
million cash payment to the joint venture, Eurogas International's
share of which approximates US$2.7 million; and (ii) the carrying of
100% of all future costs associated with the Sfax Permit, including
Eurogas International's commitment to the drilling of two exploration
wells as outlined above. 
The Corporation believes that important measures of operating
performance include certain measures that are not defined under
International Financial Reporting Standards ("IFRS") and as such, may
not be comparable to similar measures used by other companies. While
these measures are non-IFRS, they are common benchmarks in the oil
and natural gas industry, and are used by the Corporation in
assessing its operating results, including net earnings and cash

--  "Field Level Cash Flows" are calculated as revenues from oil and gas
    sales, less royalties and production expenditures, adjusted for realized
    gains or losses on risk management contracts. 
--  "Field Netbacks" refers to field level cash flows expressed on a
    measurement unit or barrel of oil equivalent basis.

Dundee Energy Limited is a Canadian-based oil and natural gas company
with a mandate to create long-term value for its shareholders through
the exploration, development, production and marketing of oil and
natural gas, and through other high impact energy projects. Dundee
Energy holds interests, both directly and indirectly, in the largest
accumulation of producing oil and gas assets in Ontario, in the
development of an offshore underground natural gas storage facility
in Spain and, through a preferred share investment, in certain
exploration and evaluation programs for oil and natural gas offshore
Tunisia. The Corporation's common shares trade on the Toronto Stock
Exchange under the symbol "DEN". 
Certain information set forth in these documents, including
management's assessment of each of the Corporation's future plans and
operations, contains forward-looking statements. Fo
statements are statements that are predictive in nature, depend upon
or refer to future events or conditions or include words such as
"expects", "anticipates", "intends", "plans", "believes", "estimates"
or similar expressions. By their nature, forward-looking statements
are subject to numerous risks and uncertainties, some of which are
beyond the Corporation's control, including: exploration, development
and production risks; uncertainty of reserve estimates; reliance on
operators, management and key personnel; cyclical nature of the
business; economic dependence on a small number of customers;
additional funding that may be required to execute on exploration and
development work; the ability to obtain, sustain or renew licenses
and permits; risks inherent to operating and investing in foreign
countries; availability of drilling equipment and access; industry
competition; environmental concerns; climate change regulations;
volatility of commodity prices; hedging activities; potential defects
in title to properties; potential conflicts of interest; changes in
taxation legislation; insurance, health, safety and litigation risk;
labour costs and labour relations; geo-political risks; risks
relating to management of growth; aboriginal claims; volatility of
the Corporation's share price; royalty rates and incentives;
regulatory risks relating to oil and natural gas exploration;
marketability and price of oil and natural gas; failure to realize
anticipated benefits of acquisitions and dispositions; information
system risk; and other risk factors discussed or referred to in the
section entitled "Risk Factors" in the Corporation's Annual
Information Form for the year ended December 31, 2012. 
Readers are cautioned that the assumptions used in the preparation of
such information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements. The Corporation's
actual results, performance or achievement could differ materially
from those expressed in, or implied by, these forward-looking
statements and, accordingly, no assurance can be given that any of
the events anticipated by the forward- looking statements will
transpire or occur, or if any of them do so, what benefits the
Corporation will derive from them. The Corporation disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise, except as required by law.
Dundee Energy Limited
Jaffar Khan
President & CEO
(403) 264-4985
(403) 262-8299 (FAX)
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