Denison Energy Inc. Updates Fourth Quarter Activities
www.stockhouse.ca 1/21/03 TORONTO, ONTARIO, Jan 21, 2003 (CCNMatthews via COMTEX) --
Denison Energy Inc. today issued an update on its operation and exploration activities during the fourth quarter of 2002.
The McClean uranium production facility was shut down on December 10, 2002 for vacations and routine annual maintenance after producing 6.1 million pounds of U3O8 in 2002, slightly over the budgeted production of 6.0 million pounds. Substantially all of the Company's share of production was sold under existing long-term contracts during the year. Sales this year are expected to be about 5% less than in 2002.
The McClean mill was restarted on schedule on January 6, 2003, with this year's U3O8 production budgeted at 6.0 million pounds from processing the ore in stockpiles from the previously mined-out Sue C and JEB pits.
No date has been set as yet for the hearing of the appeal filed by the CNSC and Cogema against the decision of the Trial Division of the Federal Court of Canada quashing the 1999 McClean operating license. The Federal Court of Appeal granted a stay of that decision in November and the McClean facility continues to operate normally under the four-year operating license issued in August 2001. Efforts to eliminate the uncertainty concerning the validity of the McClean operating license are continuing.
An 11,000 meter diamond drill program, involving in excess of 60 holes, is underway as part of the delineation of the Caribou Lake uranium discovery announced last winter. The program is designed to test for extensions of known mineralization and evaluate other nearby targets in this area, which is within 3 kilometers of the mined out Sue C pit. This year's exploration program is expected to be complete by the end of April.
The spot price for U3O8 climbed to US $10.20 in early January. We expect upward pressure through most of the year, but with significantly more volatility than last year, including periods of market weakness. While Denison does not sell on the spot market, the spot price affects the prices at which new long-term contracts can be obtained and reflects the tightening uranium supply where natural production has for several years totaled only between 50% and 60% of annual consumption.
The Company drilled or participated in the drilling of nine gross (7.14 net) oil and gas wells during the quarter of which four have been completed as gas wells and one as an oil producer. One gas well is still being evaluated.
Insufficient pipeline capacity in the area has so far prevented the three new Knappen gas wells from being put into production. However, some of the new gas will be on stream in early February. Efforts are continuing to obtain additional pipeline capacity to permit all of our gas wells to be operated at optimum rates in accordance with good oil and gas practice.
A fourth gas well, in which the Company has a 100% interest, is located in the Bow Island area in southeastern Alberta, and is expected to be put on production when pipeline capacity becomes available.
Our Lubicon well, located northwest of Edmonton, was completed as an oil producer in early December and has been producing at an initial rate of over 100 boepd. Additional offset drilling in this field is being assessed.
Our recent Skiff acquisition of 12.5% to 100% working interests in an oil property in the Conrad area in southeastern Alberta has been successfully incorporated into Denison's production operations. Production is increasing and plans are well underway to reinitiate pressure maintenance and thereby more effectively exploit this field.
Our Countess field remains our principal producer with current production of approximately 400 boepd.
Denison's year-end exit production rate was approximately 650 boepd (about 80% oil) with an additional 350 boepd of gas production shut- in awaiting pipeline capacity. The Company plans on drilling several additional exploration wells during the current quarter utilizing the $2.5 million remaining from the $5 million flow-through share issue that closed in the third quarter of 2002.
As a result of increasing oil and gas production combined with an active exploration program, Denison has made a number of key additions to our staff in Calgary. This month, Leif Snethun joined Denison as Manager, Exploration and Joe Stepaniuk as Manager, Oil and Gas Production and Facilities. They are both valuable additions to the team of Tony Boogmans, Terry O'Connor and Kevin Ryczak. Steve Ewaskiw, our Vice President, Oil and Gas Operations, resigned at the end of 2002 for personal reasons but continues to make his services available to the Company on a consulting basis.
Oil and gas prices have increased substantially in the later part of the year as a result of war fears in Iraq, labour and production problems in Venezuela, the recent cold weather throughout North America and falling inventories.
The news release contains forward-looking information with respect to Denison's operations and future financial results. Actual results may differ from expected results for a variety of reasons including factors discussed in the Company's Management Discussion and Analysis section of its 2001 Annual Report.
Denison Energy Inc. E. Peter Farmer President and Chief Executive Officer (416) 979-1991 Extension 231 Website: www.denisonenergy.com
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