Hedging | Capital Markets | Capital Expenditure | Drilling Program

Delphi Drilling 8 Montney Wells Through Q4 2016

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Delphi Energy Corp has released a corporate update.

• As previously released, Delphi continues to improve its Montney well results while significantly reducing its well costs. With the drilling and completion costs of a Montney well down almost 30 percent from 2014, capital efficiencies have improved to approximately $6,000 per flowing boe (IP180 basis).
• The Company has commenced drilling operations of its fifth well of 2015 with plans now to drill the sixth well prior to year-end.
• 2015 field capital expenditures are expected to remain within the planned $40 to $42 million.
• Both wells will be completed in the first quarter of 2016, in back-to-back operations, to further optimize costs and take advantage of the Company's 100 percent owned water disposal facility that is expected to be commissioned in the fourth quarter.
• Given the lower costs, Delphi is projecting it can drill and place on production up to eight Montney wells between now and the end of 2016. This is almost twice the Company's 2015 level of field activity.

Delphi remains focused on its large-scale Montney project at Bigstone. The Hythe asset disposition and previously announced sale of its Wapiti assets in July 2015 for combined gross proceeds of approximately $62 million strategically positions the Company to focus exclusively on its Bigstone core assets where the Company holds 138.5 gross sections of Montney rights and 89 sections of Cretaceous rights. In addition, the Company owns and operates a network of gas gathering pipelines, field compression and gas processing facilities.

The two dispositions, representing approximately 2,300 boe/d or 22 percent of the Company's production and seven percent of the field operating income, reduces the Company's well count by 57 percent.

The Company has also monetized certain natural gas and crude oil hedges as a result of the sale of the Hythe and Wapiti producing assets for total proceeds of approximately $4.9 million. The Company remains well hedged though 2016 and into 2017 with most of its natural gas hedge position focused on the Chicago based market rather than AECO market. On December 1, 2015, the Company commences transporting most of its gas under its Alliance firm service agreement, eliminating exposure to ongoing TCPL curtailments and resulting Alberta based natural price weakness. The Company has experienced and expects continued exposure to TCPL related production curtailments and resulting price weakness through to the end of November.

Total property and hedge contract proceeds of approximately $67 million provides Delphi with increased financial flexibility, reducing bank debt by approximately 35 percent from first quarter of 2015.