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Dundee Energy Limited Announces First Quarter 2013 Financial Results

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TORONTO, ONTARIO -- (Marketwired) -- 04/30/13 -- Dundee Energy Limited ("Dundee Energy" or the "Corporation") (TSX: DEN) today announced its financial results for the three months ended March 31, 2013. 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 loss attributable to owners of the parent for the three months ended March 31, 2013 was $1.1 million, compared with a net loss attributable to owners of the parent of $0.4 million incurred in the same period of the prior year.-- Production volumes for the three months ended March 31, 2013 averaged 9,093 Mcf/d of natural gas and 640 bbls/d of oil and liquids, a decrease from 10,123 Mcf/d of natural gas and 763 bbls/d of oil and liquids in 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, 2013 decreased correspondingly to $8.7 million, compared with $9.4 million in the first quarter of 2012.-- Cash flow from operating activities, before changes in non-cash working capital items, decreased to $2.3 million in the three months ended March 31, 2013 compared with $3.2 million in the same period of the prior year.-- Field netbacks for the three months ended March 31, 2013 were $1.85/Mcf from sales of natural gas and $56.32/bbl from sales of oil and liquids, compared with $2.14/Mcf from sales of natural gas and $56.07/bbl from sales of oil and liquids in the first quarter of 2012.-- Capital expenditures during the three months ended March 31, 2013 were $1.9 million.-- Cash and available credit under the Corporation's credit facilities totalled $3.4 million at March 31, 2013.-- Rights Offering - Subsequent to March 31, 2013, the Corporation raised gross proceeds of $8.9 million from a rights offering to shareholders, pursuant to which it issued 23.5 million common shares.



SOUTHERN ONTARIO ASSETS

In the first quarter of 2013, production volumes decreased to 2,156 boe/d compared with an average of 2,450 boe/d in the same period of 2012, consistent with the natural decline rate and seasonal decline.

--------------------------------------------------------------------------------------------------------------------------------------------------------Average daily volume during the three months ended March 31, 2013 2012----------------------------------------------------------------------------Natural gas (Mcf/d) 9,093 10,123Oil (bbls/d) 619 733Liquids (bbls/d) 21 30Total (boe/d) 2,156 2,450--------------------------------------------------------------------------------------------------------------------------------------------------------



Reflecting reduced production levels, oil and gas sales, net of associated royalties, were $7.4 million during the first quarter of 2013, compared with revenues of $8.1 million earned in the same period of the prior year. Natural gas sales represented 70% of total production volume on a boe basis, and 40% of total revenues, with sales of crude oil representing the balance.

Reflecting market-related conditions, the Corporation realized an average price on sales of natural gas of $4.19/Mcf during the first quarter of 2013, an increase of 34% from the average price of $3.12/Mcf realized in the same period of the prior year. The realized sales price for crude oil during the first quarter of 2013 averaged $92.26/bbl, a 4% decrease from an average sales price of $95.89/bbl realized in the first quarter of the prior year. The average sales price for crude oil realized by the Corporation is currently correlated to the Edmonton Par, although the Corporation is exploring alternative marketing options to realign the price received for its Ontario oil production to the WTI benchmark.

Field Level Cash Flows and Field Netbacks

(in thousands)--------------------------------------------------------------------------------------------------------------------------------------------------------For the three months ended March 31, 2013 2012---------------------------------------------------------------------------- Natural Oil and Natural Oil and Gas Liquids Total Gas Liquids Total----------------------------------------------------------------------------Total sales $ 3,431 $ 5,241 $ 8,672 $ 2,875 $ 6,571 $ 9,446Realized risk management gain (loss) - 243 243 979 (137) 842Royalties (509) (804) (1,313) (433) (939) (1,372)Production expenditures (1,412) (1,436) (2,848) (1,444) (1,601) (3,045)----------------------------------------------------------------------------Field level cash flows $ 1,510 $ 3,244 $ 4,754 $ 1,977 $ 3,894 $ 5,871----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------For the three months ended March 31, 2013 2012---------------------------------------------------------------------------- Natural Oil and Natural Oil and Gas Liquids Total Gas Liquids Total $/Mcf $/bbl $/boe $/Mcf $/bbl $/boe----------------------------------------------------------------------------Total sales $ 4.19 $ 90.98 $ 44.70 $ 3.12 $ 94.61 $ 42.36Realized risk management gain (loss) - 4.22 1.25 1.06 (1.97) 3.78Royalties (0.62) (13.95) (6.77) (0.47) (13.52) (6.15)Production expenditures (1.72) (24.93) (14.68) (1.57) (23.05) (13.65)----------------------------------------------------------------------------Field netbacks $ 1.85 $ 56.32 $ 24.50 $ 2.14 $ 56.07 $ 26.34--------------------------------------------------------------------------------------------------------------------------------------------------------



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 of Canadian to US foreign exchange rates. At March 31, 2013, the Corporation had entered into risk management contracts for approximately 10,000 mbtu/day of natural gas at a fixed price of $4.07/mbtu and for approximately 500 bbls/d of crude oil at a fixed price of $98.22/bbl. Subsequent to the quarter end, and in anticipation of an upswing in natural gas prices, the Corporation cancelled a portion of these natural gas fixed priced contracts, representing 3,750 mbtu/d, at a cost of $0.3 million.

Capital Expenditures

During the three months ended March 31, 2013, the Corporation incurred $1.9 million of capital expenditures on its oil and gas properties in southern Ontario. Included in this amount is $1.1 million expended on onshore drilling and completion activities relating to wells commenced in the fourth quarter of 2012. The Corporation's drill targets in late 2012 were in anticipation of extending the producing area of a select oilfield. Each of the vertical wells encountered dolomitic pay, but the reservoir rock was tight and therefore uneconomic. The Corporation plans to re-enter the second well and deviate the wellbore to a more prospective part of the reservoir.

The Corporation also expended $0.5 million on the acquisition and processing of 2-D and 3-D seismic data, which will be critical in identifying future drill candidates.

2013 Work Program

With the successful completion of the rights offering, the Corporation has updated its 2013 work program to $13.2 million. Subject to market-driven changes to natural gas prices, the Corporation's current intent is to focus its efforts on increasing oil production. Consequently, approximately $11.0 million of the 2013 Work Program will be directed to onshore oil projects, while offshore gas projects are forecasted at approximately $0.8 million. The remaining $1.4 million of the 2013 work program will be incurred on mineral rights required to maintain producing properties, as well as to acquire land for new onshore drilling and seismic programs.

Onshore, the Corporation anticipates drilling and completing eight wells at a cost of approximately $6.7 million. The Corporation will also continue to conduct seismic work, and plans to spend approximately $3.3 million on these activities in an effort to bolster the existing database of seismic information in support of planned future drilling programs. A further $1.0 million will be spent on facility enhancements.

With continued depressed natural gas prices, the 2013 offshore work program is focused on projects that will yield the greatest returns in the short term. The Corporation will be reactivating the company-owned dock located in Port Burwell in conjunction with the planned strategy to abandon a dock and a gas plant located at Port Stanley. This comprehensive project includes dredging of the Port Burwell harbour, and a pipeline exchange to larger diameter pipe, all of which will provide improved access to the central Lake Erie field, and improved production efficiencies throughout Lake Erie operations. Capital costs relating to this project are approximately $0.4 million. A further $0.4 million of the 2013 offshore work program will be incurred for non-discretionary dry dock inspection costs for two vessels.

CASTOR UNDERGROUND GAS STORAGE PROJECT

During the first quarter of 2013, Escal UGS S.L. ("Escal"), the Corporation's indirect 25%-owned investment and owner of the Castor Project, reached agreement with Enagas S.A., the leading gas transporter in Spain, to provide the 600 million cubic metres of cushion gas required for completion of the Castor Project. Injection is expected to commence in early June 2013 and will take approximately four months to complete. Following completion of the injection process, the Castor Project will be required to undergo a 48-hour performance test before becoming operational and eligible for inclusion into the Spanish gas system.

INVESTMENT IN EUROGAS INTERNATIONAL INC.

At March 31, 2013, the Corporation held 32.2 million Series A Preference Shares of Eurogas International Inc. ("Eurogas International"), at a nominal value. Eurogas International, together with its joint venture partner, is actively exploring alternatives to raise the necessary funding for the drilling of two exploration wells, which it committed to as part of the Tunisian authorities' approval of a renewal of the Sfax Permit to December 8, 2015. The actual cost of drilling these wells will depend on the selection of the prospect and location within the Sfax Permit.

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, 2012.

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, Dundee Place
1 Adelaide Street East
Toronto, ON M5C 2V9

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



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