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Dundee Energy Limited Announces First Quarter 2014 Financial Results

TORONTO, ONTARIO -- (Marketwired) -- 04/30/14 -- Dundee Energy Limited ("Dundee Energy" or the "Corporation") (TSX: DEN) today announced its financial results for the three months ended March 31, 2014. 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 earnings attributable to owners of the parent during the three
    months ended March 31, 2014 were $3.2 million, compared with a net loss
    attributable to owners of the parent of $1.1 million incurred during the
    same period of the prior year.

--  Production volumes during the three months ended March 31, 2014 averaged
    8,485 Mcf/d of natural gas and 562 bbls/d of oil and liquids, a decrease
    from 9,093 Mcf/d of natural gas and 640 bbls/d of oil and liquids during
    the first quarter of the prior year.

--  Revenues, before royalty interests, earned from oil and natural gas
    sales during the three months ended March 31, 2014 were $15.0 million, a
    significant increase over the $8.7 million of revenues earned during the
    first quarter of the prior year. The increase in revenues resulted
    primarily from substantial improvements in commodity prices, offset
    marginally by lower production volumes.

--  Field netbacks during the three months ended March 31, 2014, before
    realized amounts related to risk management contracts, were $8.89/Mcf
    (three months ended March 31, 2013 - $1.85/Mcf) from natural gas and
    $60.70/bbl (three months ended March 31, 2013 - $52.10/bbl) from oil and
    liquids.

--  Capital expenditures during the three months ended March 31, 2014 were
    $1.5 million.

--  Cash and available credit under the Corporation's credit facilities
    totalled $10.0 million at March 31, 2014.

SOUTHERN ONTARIO ASSETS

During the first quarter of 2014, daily production volumes decreased to 1,976 boe/d, compared with an average of 2,156 boe/d in the same period of 2013.

----------------------------------------------------------------------------
Average daily volume during the three months ended
 March 31,                                                  2014        2013
----------------------------------------------------------------------------
Natural gas (Mcf/d)                                        8,485       9,093
Oil (bbls/d)                                                 549         619
Liquids (bbls/d)                                              13          21
Total (boe/d)                                              1,976       2,156
----------------------------------------------------------------------------

Average daily natural gas production dropped by approximately 7% on a period-over-period basis. The decrease is partially a result of the natural decline rate of the Corporation's assets. However, natural gas production was also adversely affected by the severing of an offshore gas pipeline following ice scouring on Lake Erie during the month of February. Production declines in natural gas were partially offset by increased volumes from the acquisition of an additional 20% working interest in the southern Ontario assets, which the Corporation completed during the second half of the prior year. Oil and liquids daily production declined by 12% during the first quarter of 2014, compared with the same period of the prior year. The decrease reflects natural declines in the underlying assets.

Field Level Cash Flows and Field Netbacks
(in thousands)

----------------------------------------------------------------------------
For the three months ended March 31,       2014                         2013
----------------------------------------------------------------------------
                     Natural   Oil and            Natural   Oil and
                         Gas   Liquids    Total       Gas   Liquids    Total
----------------------------------------------------------------------------
Total sales      $     9,694 $   5,283 $ 14,977 $   3,431 $   5,241 $  8,672
Royalties            (1,425)     (808)  (2,233)     (509)     (804)  (1,313)
Production
 expenditures        (1,474)   (1,406)  (2,880)   (1,412)   (1,436)  (2,848)
----------------------------------------------------------------------------
                       6,795     3,069    9,864     1,510     3,001    4,511
Realized risk
 management
 (loss) gain               -      (92)     (92)         -       243      243
----------------------------------------------------------------------------
Field level cash
 flows           $     6,795 $   2,977 $  9,772 $   1,510 $   3,244 $  4,754
----------------------------------------------------------------------------


----------------------------------------------------------------------------
For the three months ended March 31,       2014                         2013
----------------------------------------------------------------------------
                     Natural   Oil and            Natural   Oil and
                         Gas   Liquids    Total       Gas   Liquids    Total
                       $/Mcf     $/bbl    $/boe     $/Mcf     $/bbl    $/boe
----------------------------------------------------------------------------
Total sales      $     12.69 $  104.48 $  84.22 $    4.19 $   90.98 $  44.70
Royalties             (1.87)   (15.98)  (12.55)    (0.62)   (13.95)   (6.77)
Production
 expenditures         (1.93)   (27.80)  (16.19)    (1.72)   (24.93)  (14.68)
----------------------------------------------------------------------------
                        8.89     60.70    55.48      1.85     52.10    23.25
Realized risk
 management
 (loss) gain               -    (1.82)   (0.52)         -      4.22     1.25
----------------------------------------------------------------------------
Field netbacks   $      8.89 $   58.88 $  54.96 $    1.85 $   56.32 $  24.50
----------------------------------------------------------------------------

Capital Expenditures and the 2014 Work Program

Due to severe winter weather experienced across southern Ontario, the Corporation was limited in completing scheduled capital projects and accordingly, during the three months ended March 31, 2014, the Corporation incurred $1.5 million of capital expenditures on its oil and gas properties, compared with $1.9 million of capital expenditures incurred during the first quarter of 2013.

The Corporation anticipates spending $6.6 million on the remainder of its 2014 work program. Approximately $4.9 million will be directed towards exploration and optimization of its oil fields in southern Ontario; a further $0.5 million will be directed towards the Corporation's offshore natural gas assets; and, approximately $1.2 million will be incurred to acquire or maintain mineral rights for both producing and undeveloped properties.

The 2014 onshore capital work program includes a drilling and completion program of two new vertical wells and three existing horizontal well re-entries estimated to cost $3.8 million. Based on reprocessing of previously obtained seismic information, the Corporation has identified ten possible re-entry and vertical drill locations and it is currently assessing each location in order to determine the appropriate drilling selection. In addition, the Corporation has budgeted approximately $1.1 million for the acquisition and processing of both 2-D and 3-D seismic as well as other activities to work up additional locations.

The Corporation has limited its 2014 offshore capital work program to approximately $0.5 million needed to complete four workovers in a shallow gas horizon to partially offset some of the natural decline of the Corporation's natural gas assets. With continued higher natural gas prices and if the four workovers are successful, these completions could lead to a horizontal well drilling program in the future.

CASTOR UNDERGROUND GAS STORAGE PROJECT

In September 2013, 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, the Spanish authorities have implemented a suspension to the injection of cushion gas until they have completed a review of independent assessments of the source of seismic activity. In the interim, Escal UGS S.L., the owner of the Castor Project, has completed the technical and economic audits required for the inclusion of the Castor Project to the Spanish gas system. 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 costs employed for the construction of the Castor Project are reasonable. These audit findings are now subject to review and concurrence by the Spanish authorities.

INVESTMENT IN EUROGAS INTERNATIONAL INC.

At March 31, 2014, the Corporation held 32.2 million Series A Preference Shares of Eurogas International Inc. ("Eurogas International"), at a nominal value. During the first quarter of 2014, Eurogas International, together with its joint venture partner, entered into a farmout arrangement with DNO Tunisia AS ("DNO") in respect of the Sfax Permit. The arrangement provides DNO with an 87.5% interest in the Sfax Permit in exchange for a cash payment of US$6 million and the assumption of all future costs and obligations related to the Sfax Permit. During the three months ended March 31, 2014, Eurogas International received cash of US$2.7 million in respect of the transaction, representing its share of the total cash proceeds, and it retains a 5.625% interest in the Sfax Permit, subject to certain thresholds.

NON-IFRS MEASURES

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 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" refers to field level cash flows expressed on a
    measurement unit or barrel of oil equivalent basis.

ABOUT THE CORPORATION

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".

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; 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, 2013.

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
21st Floor,
1 Adelaide Street East
Toronto, ON M5C 2V9

Dundee Energy Limited
Jaffar Khan
President & CEO
(403) 264-4985
(403) 262-8299 (FAX)
www.dundee-energy.com

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