Dundee Energy Limited Announces 2013 Financial Results

FOR: Dundee Energy Limited 
MARCH 17, 2014 
Dundee Energy Limited Announces 2013 Financial Results 
TORONTO, ONTARIO--(Marketwired - March 17, 2014) - Dundee Energy Limited
(TSX:DEN) ("Dundee Energy" or the "Corporation") today
announced its financial results for the year ended December 31, 2013. The
Corporation's annual audited 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. 
--  Proved plus probable reserves increased to 19.4 MMboe at December 31, 
2013, an 18% increase from 16.4 MMboe at December 31, 2012. 
--  Net loss attributable to owners of the parent for the year ended 
December 31, 2013 was $6.2 million, compared with $16.6 million incurred 
in the prior year. Current year losses include an impairment of $3.5 
million against an oil-based property, reflecting a decrease in 
estimated reserves. In the prior year, the Corporation recognized an 
impairment provision of $15.5 million against certain natural gas 
properties, consistent with substantial decreases in forecasted natural 
gas prices. 
--  Production volumes during the year ended December 31, 2013 averaged 
10,196 Mcf/d (2012 - 10,081 Mcf/d) of natural gas and 634 bbls/d (2012 - 
748 bbls/d) of oil and liquids. 
--  Revenues, before royalty interests, earned from oil and gas sales during 
the year ended December 31, 2013 were $39.2 million, compared with 
revenues of $35.9 million earned in 2012. The increase in revenues 
resulted primarily from improvements in commodity prices, partially 
offset by lower production volumes. 
--  Field netbacks for the year ended December 31, 2013, before realized 
amounts related to risk management contracts, were $1.67/Mcf (2012 - 
$0.80/Mcf) from natural gas and $51.90/bbl (2012 - $51.30/bbl) from oil 
and liquids. 
--  Capital expenditures during the year ended December 31, 2013 were $12.1 
--  Cash and available credit under the Corporation's credit facilities 
totalled $3.9 million at December 31, 2013. 
During 2013, production volumes were 2,333 boe/d, compared with an average of
2,428 boe/d in 2012. The Corporation's acquisition of additional working
interests in natural gas properties completed in July 2013 improved production
volumes, however, this was offset by the natural decline in the
Corporation's oil and natural gas assets. The Corporation's drilling
program throughout 2013 did not adequately replace the natural decline rate in
the Corporation's oil reserves. 
Average daily volume during the years ended December 31,       2013     2012
Natural gas (Mcf/d)                                          10,196   10,081
Oil (bbls/d)                                                    615      721
Liquids (bbls/d)                                                 19       27
Total (boe/d)                                                 2,333    2,428
Field Level Cash Flows and Field Netbacks                                   
(in thousands)                                                               
For the years ended                                                         
 December 31,                              2013                        2012 
Natural  Oil and            Natural  Oil and            
Gas  Liquids     Total      Gas  Liquids     Total 
Total sales          $16,711  $22,463  $ 39,174  $11,746  $24,128  $ 35,874 
Royalties             (2,508)  (3,458)   (5,966)  (1,741)  (3,650)   (5,391)
 expenditures         (8,007)  (6,983)  (14,990)  (7,041)  (6,442)  (13,483)
6,196   12,022    18,218    2,964   14,036    17,000 
Realized risk                                                               
 management (loss)                                                          
 gain                    (12)    (262)     (274)   2,963      965     3,928 
Field level cash                                                            
 flows               $ 6,184  $11,760  $ 17,944  $ 5,927  $15,001  $ 20,928 
For the years ended                                                         
December 31,                               2013                        2012 
Natural  Oil and            Natural  Oil and            
Gas  Liquids     Total      Gas  Liquids     Total  
$/Mcf    $/bbl     $/boe    $/Mcf    $/bbl     $/boe 
Total sales          $  4.49  $ 97.00  $  45.99  $  3.18  $ 88.19  $  40.37 
Royalties              (0.67)  (14.94)    (7.00)   (0.47)  (13.34)    (6.07)
 expenditures          (2.15)  (30.16)   (17.60)   (1.91)  (23.55)   (15.18)
1.67    51.90     21.39     0.80    51.30     19.12 
Realized risk                                                               
 management (loss)                                                          
 gain                      -    (1.13)    (0.32)    0.80     3.53      4.42 
Field netbacks       $  1.67  $ 50.77  $  21.07  $  1.60  $ 54.83  $  23.54 
Capital Expenditures 
During 2013, the Corporation expended $12.1 million on capital expenditures,
net of $1.4 million received on the disposition of certain property, plant and
equipment. This compares with capital expenditures of $12.8 million incurred
during 2012. 
Onshore, the Corporation incurred capital expenditures of $5.0 million,
including $4.1 million incurred on drilling and completion costs on four wells,
which included a horizontal re-entry of a well initially drilled in 2012. After
acid stimulation, the well came on production at 10 bbl/d in December 2013. The
Corporation has determined that the other three wells drilled were uneconomic.
The Corporation also expended $0.9 million in late 2013 to stimulate a further
six wells, increasing production by approximately 20 bbl/d. 
Exploration and evaluation expenditures were $7.4 million in 2013, including
$4.7 million incurred on the acquisition and processing of 2-D and 3-D seismic
data, which will be used to identify future drill locations. Another $2.7
million of costs were incurred on undeveloped properties, including $1.6
million of costs incurred on a horizontal natural gas well from a new
geological formation. Further work on this exploration well will be considered
if gas production rates remain economic. The remaining $0.9 million of
exploration and evaluation costs were incurred on maintenance costs associated
with undeveloped land, including leasing costs. 
In addition, as part of its offshore capital program, the Corporation incurred
costs of $1.0 million to complete an extensive pipeline replacement and
rerouting project. 
2014 Work Program 
The Corporation anticipates spending $7.3 million on its 2014 work program of
which $4.8 million will be directed towards development of its oil fields in
southern Ontario; a further $1.4 million will be directed towards the
Corporation's offshore natural gas assets; and, approximately $1.1 million
will be incurred to acquire or maintain mineral rights for both producing and
undeveloped properties. 
The 2014 onshore capital work program includes a three-well drilling and
completion program estimated to cost $2.5 million. In addition, the Corporation
intends to spend $1.5 million on three workovers and it has budgeted
approximately $0.8 million for the shooting and processing of both 2-D and 3-D
seismic, covering 50 to 60 kilometres. 
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. 
Cushion Gas 
In early 2013, Escal reached an agreement with Enagas, S.A.
("Enagas") to provide the 600 million cubic metres of cushion gas
required for 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 injected by September 16, 2013. 
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. Independent assessments were subsequently undertaken and
are currently under review and consideration by the Spanish authorities. The
assessments put forward that the seismicity observed appears to be related to a
secondary fault present in the area. Importantly, gas to liquid levels in the
reservoir remained stable throughout, significantly reducing concerns over the
leakage of cushion gas. 
The technical and economic audits that are required for inclusion of the Castor
Project to the Spanish gas system commenced in July 2013, were completed in
late December 2013 and were delivered to the Spanish authorities in January
2014. On a preliminary basis, these audits have concluded that the Castor
Project is technically fit to store and deliver gas; it has an appropriate
process design and configuration and it has sufficient safety engineering for
operation. The audits have also concluded that the capital cost employed for
the construction of the Castor Project are reasonable. These findings are now
subject to the review and concurrence by the Spanish authorities. 
At December 31, 2013, the Corporation held 32.2 million Series A Preference
Shares of Eurogas International Inc. ("Eurogas International").
Eurogas International held a 45% working interest, and is the non-operating
partner in the Sfax Permit, encompassing approximately 800,000 acres located
within a prolific hydrocarbon fairway extending from offshore Libya, through
the Gulf of Gabes, to onshore Tunisia, southeast of the city of Sfax. 
In June 2013, Eurogas International, along with its partner (the "Original
Contractors") entered into negotiations to complete a farmout agreement
with a third party with respect to the Sfax Permit and the associated Ras El
Besh development concession. The agreement provides that the third party will
acquire an 87.5% working interest in the Sfax Permit in exchange for a US$6
million cash payment to the Original Contractors, and the carrying of 100% of
all future costs associated with the Sfax Permit, including the Original
Contractors' drilling commitments pursuant to the Sfax Permit. The
agreement was completed in January 2014. 
The Corporation believes that important measures of its 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 flows. 
--  "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" refer 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.
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. Forward-looking 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,
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
c/o Dundee Corporation
1 Adelaide Street East, 21st Floor
Toronto, ON M5C 2V9
Dundee Energy Limited
Jaffar Khan
President & CEO
(403) 264-4985
(403) 262-8299 
INDUSTRY:  Energy and Utilities - Oil and Gas  
-0- Mar/17/2014 22:53 GMT
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