TORONTO, ONTARIO — (Marketwire) — 07/21/11 — Dundee Energy Limited (TSX: DEN)(formerly “Eurogas Corporation”) (“Dundee Energy” or the “Corporation”) today announced its financial results for the three and six months ended June 30, 2011. The Corporation–s unaudited 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 Company–s profile at or the Corporation–s website at .
SOUTHERN ONTARIO ASSETS
Revenues from Oil and Gas Sales
During the second quarter of 2011, the Corporation realized an average price of $4.71/Mcf, before adjustments resulting from risk management contracts, on sales of natural gas. This represents a positive basis differential from the average NYMEX price of US$4.28/Mcf due in part, to the Corporation–s proximity to the Dawn hub, which is located in southwestern Ontario and which is a leading provider of natural gas supply to the greater Toronto market area. Despite the positive basis differential, revenues from natural gas sales in the first half of 2011 continue to be affected by a low North American natural gas price, which reflects excess supply of this commodity.
The Corporation realized an average price of $105.63/bbl on sales of oil during the second quarter of 2011, before adjustments resulting from risk management contracts. While world oil consumption continues to grow, significant uncertainties in world markets have caused substantial volatility in the price of oil.
Production
Due to severe weather conditions in the late winter and early spring, the Corporation was required to make unanticipated repairs to an offshore gas pipeline, resulting in an average production loss of approximately 8.8 Mcf/d throughout the first half of 2011. Since completing the repairs in the early spring, and with the extensive workover program undertaken by the Corporation during the second quarter of 2011, the Corporation has arrested the production decline and increased natural gas production.
Field Level Cash Flows
Capital Expenditures
During the three months ended June 30, 2011, the Corporation incurred capital expenditures on the southern Ontario assets of $1.3 million. Planned capital expenditures during the remainder of 2011 are estimated at $7.0 million towards upgrading productivity, which includes approximately $5.0 million for onshore projects and a further $2.0 million for offshore projects.
Price Risk Management
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 in Canadian to US foreign exchange rates. At June 30, 2011, the Corporation had locked in pricing for 550 bbls/d of oil production at a weighted average rate of Cdn$93.79/bbl through to December 2011 and 6.5 million btu/day of natural gas from July 1, 2011 to February 28, 2012 at a fixed price of Cdn$4.66/MMbtu. With these risk management contracts, the Corporation has hedged approximately 80% of its oil production and 60% of its natural gas production during the periods covered by the hedges.
CASTOR UNDERGROUND GAS STORAGE PROJECT
The construction and development of the Castor Project, including the well drilling program, continued to advance throughout the second quarter of 2011 and is now over 70% complete. The routing of the subsea pipeline between the platform and the onshore facilities continues to advance, with manufacturing of the offshore pipeline having commenced in late 2010, and the onshore pipeline in 2011. Laying of the pipeline is expected to begin during the second half of 2011.
NON-IFRS MEASURES
The Corporation believes that important measures of operating performance include certain measures that are not defined under 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 as supplementary measures to net earnings and assist management in the estimation of future cash flow.
ABOUT THE CORPORATION
Dundee Energy Limited (formerly “Eurogas Corporation”) is a Canadian-based company whose common shares currently trade on the Toronto Stock Exchange under the symbol “DEN” (formerly “EUG”). The Corporation is focused on creating long-term value for its shareholders through the development and acquisition of 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 of Tunisia. Prior to February 4, 2011, the Corporation–s common shares were trading on the TSX Venture Exchange.
FORWARD LOOKING STATEMENTS
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; no history of earnings; 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 “Business Risks” in the Corporation–s Management–s Discussion and Analysis as at and for the year ended December 31, 2010. 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.
Contacts:
Dundee Energy Limited
c/o Dundee Corporation
28th Floor, Dundee Place
1 Adelaide Street East
Toronto, ON M5C 2V9
Dundee Energy Limited
Jaffar Khan
President & CEO
(403) 264-4985
(403) 262-8299 (FAX)