GOR Goldrea Resources Corp

Delphi Energy Corp. (TSX:DEE) ("Delphi" or the "Company") provides the following
operations update on its Montney capital program. 


South Bigstone

Delphi is pleased to announce completion and clean-up test results on its
initial exploration well at 11-17-59-22 W5M ("11-17") on the South Bigstone
Montney farm-in lands, part of the Company's contiguous 122 section land
position in the Bigstone area. The 11-17 Montney horizontal well is located
approximately 13 kilometres south of the Company's ongoing drilling activity at
East Bigstone. The well was drilled as a whipstock operation from the Duvernay
stratigraphic drill with a horizontal lateral length in the Montney of 1,848
metres (most similar to the initial East Bigstone slickwater evaluation well at
15-10-60-23 W5M ("15-10") with a horizontal lateral length of 1,424 metres). 


After successfully placing all 26 stages of the fracture stimulation, the well
flowed on clean-up over an eight day period, recovering approximately 34 percent
of the initial frac load water. During the last 24 hours of clean-up flow, the
well averaged 4.4 million cubic feet per day ("mmcf/d") of raw natural gas and
165 barrels per day ("bbls/d") of field condensate (42 bbls/mmcf of sales gas).
With estimated natural gas liquids ("NGL") plant recoveries of 35 bbls/mmcf of
sales gas, total production over this time period was 962 barrels of oil
equivalent per day ("boe/d"). For comparison purposes, Delphi's 15-10 well
produced at an average rate of 957 boe/d, consisting of 4.6 mmcf/d of raw
natural gas, approximately 118 bbls/d of wellhead condensate (47 bbls/mmcf of
sales gas) and an estimated 151 bbls/d of gas plant recovered NGLs over the
final 24 continuous hours of its seven day clean-up test. Total production at
15-10 over the first 30 days was approximately 991 boe/d. 


The 11-17 well is expected to be pipeline connected and on production in the
third quarter of 2014 and consistent with the Company's other slickwater
fracture stimulated wells, will continue to recover load water over the next
several months of production. The test results at 11-17 validate the reservoir
rock quality and liquids-rich nature of the production mix as being consistent
with East Bigstone, 13 kilometres to the north. Based on this test result,
Delphi expects to begin development of the Montney play in South Bigstone in the
latter part of 2014, employing the same 2,500 to 3,000 metre horizontal well
lengths and 30 stage fracs as employed in the ongoing Montney development
program at East Bigstone.


East Bigstone

At East Bigstone, Delphi has now drilled a total of ten horizontal Montney wells
of which nine are extended-reach horizontal laterals with lengths up to 3,000
metres. Since changing completion techniques from conventional oil fracs on the
first three wells to a slickwater hybrid fracturing technique, the Montney wells
at East Bigstone have exceeded the Company's expectations.


The previously announced 15- 30-60-22 W5M ("15-30") well, the most recent to be
placed on production, with a horizontal length of 3,014 metres, has produced at
a Company record high rate of 2,076 boe/d over the first 30 days of production.
During this initial 30 day period, the 15-30 well produced at an average rate of
8.3 mmcf/d of raw gas, 566 bbls/d of wellhead condensate (76 bbls/mmcf of sales
gas) and an estimated 272 bbls/d of shallow cut plant NGL production. For
comparison purposes, Delphi's Montney producer at 10-27-60-23 W5M ("10-27")
located five kilometres to the west of 15-30, produced at an average rate of
1,815 boe/d over the first 30 days of production, consisting of 6.8 mmcf/d of
raw gas, 582 bbls/d of wellhead condensate and shallow cut plant NGL production
of 222 bbls/d. The 10-27 well has produced 319,000 boe (120,000 barrels of total
NGL, 65 percent of which is field condensate) since coming on production in
March 2013.


The table below illustrates the significant impact the slickwater hybrid
fracturing technique has had on well performance at Bigstone in comparison to
smaller conventional frac methods. Well performance during the initial 30 days
of production has almost doubled, as observed in the 15-30 and 16-30 production
performance where the two wells are approximately 400 metres (one spacing unit)
apart. Longer term production performance has tripled when observing production
rates after 180 days. Wellhead condensate production and yields have also
improved by two to three times. 


To view the table associated with this release, click the following link:
http://media3.marketwire.com/docs/del_table1.jpg


The Company continues optimizing capital efficiencies through its extended-reach
drilling plan targeting horizontal lateral lengths between 2,500 and 3,000
metres. In the table above, the East Bigstone wells are sorted on horizontal
lateral lengths illustrating that lateral length is an important driver in
enhancing well production performance. 


The adjacent cumulative production plot illustrates the step change in well
performance experienced with extended-reach horizontal lateral sections
stimulated with the slickwater hybrid fracturing technique as compared to
conventional gelled oil fracs. The wells continue to exceed the Company's
initial type curve expectations (illustrated by the blue dashed line).  Given
the exceptional well performance to date, Delphi plans to re-evaluate its base
type curve assumptions after the winter drilling program.   


To view the graph associated with this release, click the following link:
http://media3.marketwire.com/docs/del_graph1.jpg


Drilling operations continue in East Bigstone with two additional wells now
drilled and one to two more wells planned prior to break-up in 2014. The
15-21-60-23 W5M ("15-21") Montney well has been drilled to a total depth of
5,875 metres with a horizontal lateral length of 2,886 metres and is in the
process of being stimulated with a 30 stage slickwater hybrid completion. The
13- 30-60-22 W5M ("13-30") Montney well has recently reached its planned total
depth of 5,419 metres in a Company record 27 days, with a horizontal lateral
length of 2,593 metres. The 13-30 well is scheduled to be completed in the first
two weeks of February. 


To handle the rapidly growing Montney production volumes, the Company is
continuing with construction to expand its 7-11 facility to handle 45 mmcf/d of
raw gas as well as increased field condensate volumes with the installation of
larger inlet separation and increased condensate storage tank capacity.


Funding

As previously announced late in 2013, Delphi has entered into a Gross Overriding
Royalty ("GOR") agreement to partially fund the drilling of ten Montney wells in
East Bigstone over the next 12 to 18 months. The parties purchasing the GOR
("Royalty Owners") will contribute $25.0 million over this time frame towards
seven wells scheduled to be drilled in 2014 ($17.5 million) and have an option
on the first three wells of 2015. The Royalty Owners will be granted a GOR on
the Company's working interest revenue on the wells until an agreed upon rate of
return is achieved, at which time the GOR will be extinguished on all wells.


Also as previously announced, Delphi's lenders (National Bank of Canada, Bank of
Nova Scotia and Alberta Treasury Branches) completed their semi-annual review of
the Company's credit facilities, renewing the existing $140.0 million revolving
credit facility. The facility is a 364 day committed facility available on a
revolving basis until May 26, 2014 at which time it may be extended at the
lenders' option upon completion of the annual review to determine the borrowing
base. The annual review will be based upon the Company's December 31, 2013
reserve report, the results of the winter drilling program and the lenders' view
of commodity prices. 


The GOR funding, expected funds from operations for 2014 and reconfirmation of
the Company's credit facility provide the financial resources for the Company to
carry out its planned 2014 capital program. 


2014 Guidance

Delphi reiterates its market guidance for 2014 but expects to review it as
additional results of the winter drilling program are evaluated. Corporate
production is forecast to grow 20 percent compared to 2013, predominantly from a
Montney focused capital program with its superior netbacks, resulting in
expected cash flow growth of 49 percent. Delphi is estimating production to
average 9,500 to 10,000 boe/d on a net capital program of $67 to $72 million,
drilling a total of seven Montney horizontal wells at Bigstone. Total debt at
year end 2014 is expected to be between $145.0 and $150.0 million versus between
$135.0 and $140.0 million at the end of 2013. The total debt to funds flow ratio
is forecast to drop to 2.2 times in the fourth quarter of 2014 and reach a
targeted 1.5 times in 2015. Delphi expects AECO natural gas prices to average
approximately Cdn. $3.35 per mcf and Edmonton light oil prices to average
approximately Cdn. $93.50 per barrel resulting in cash flow for 2014 of
approximately $55.0 to $60.0 million. Currently, the Company has approximately
60 percent of its natural gas production hedged at an average price of $3.63 per
mcf for 2014 and approximately 27 percent of its crude oil and condensate
production hedged at a floor price of Cdn $96.03 per barrel for the first half
of 2014. 


Delphi's business plan contemplates production growth to 20,000 boe/d by 2017,
with targeted annual production per share growth of 25 percent and annual cash
flow per share growth of 45 percent. Capital spending over the five years to
achieve that result under the plan is projected to be $560 million, funded 90
percent from cash flow to drill 50 Montney horizontal wells and fund the
expansion of Delphi's 100 percent owned facility. The contemplated 50 well
drilling program represents less than half of the current development drilling
inventory on approximately 50 percent of Delphi's current Montney undeveloped
land holdings. The Company now has a current project inventory that will provide
economic growth beyond a 10-year horizon. Over this time period, the Company's
balance sheet is forecast to continually strengthen, with internally generated
cash flow funding the majority of the capital expenditures on a go forward
basis. 


Delphi Energy is a Calgary-based company that explores, develops and produces
oil and natural gas in Western Canada. The Company is managed by a proven
technical team. Delphi trades on the Toronto Stock Exchange under the symbol
DEE.


Forward-Looking Statements. This release contains forward-looking statements and
forward-looking information within the meaning of applicable securities laws.
The use of any of the words "expect", "anticipate", "continue", "estimate",
may", "will", "should", believe", "intends", "forecast", "plans", "guidance" and
similar expressions are intended to identify forward-looking statements or
information.


More particularly and without limitation, this management discussion and
analysis contains forward looking statements and information relating to the
Company's risk management program, petroleum and natural gas production, future
funds from operations, capital programs, commodity prices, costs and debt
levels. The forward-looking statements and information are based on certain key
expectations and assumptions made by Delphi, including expectations and
assumptions relating to prevailing commodity prices and exchange rates,
applicable royalty rates and tax laws, future well production rates, the
performance of existing wells, the success of drilling new wells, the capital
availability to undertake planned activities and the availability and cost of
labour and services.


Although the Company believes that the expectations reflected in such
forward-looking statements and information are reasonable, it can give no
assurance that such expectations will prove to be correct. Since forward-looking
statements and information address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual results may differ
materially from those currently anticipated due to a number of factors and
risks. These include, but are not limited to, the risks associated with the oil
and gas industry in general such as operational risks in development,
exploration and production, delays or changes in plans with respect to
exploration or development projects or capital expenditures, the uncertainty of
estimates and projections relating to production rates, costs and expenses,
commodity price and exchange rate fluctuations, marketing and transportation,
environmental risks, competition, the ability to access sufficient capital from
internal and external sources and changes in tax, royalty and environmental
legislation. Additional information on these and other factors that could affect
the Company's operations or financial results are included in reports on file
with the applicable securities regulatory authorities and may be accessed
through the SEDAR website (www.sedar.com). The forward-looking statements and
information contained in this press release are made as of the date hereof for
the purpose of providing the readers with the Company's expectations for the
coming year. The forward-looking statements and information may not be
appropriate for other purposes. Delphi undertakes no obligation to update
publicly or revise any forward-looking statements or information, whether as a
result of new information, future events or otherwise, unless so required by
applicable securities laws.


Basis of Presentation.  For the purpose of reporting production information,
reserves and calculating unit prices and costs, natural gas volumes have been
converted to a barrel of oil equivalent (boe) using six thousand cubic feet
equal to one barrel. A boe conversion ratio of 6:1 is based upon an energy
equivalency conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. This conversion conforms with
the Canadian Securities Administrators' National Instrument 51-101 when boes are
disclosed. Boes may be misleading, particularly if used in isolation.


As per CSA Staff Notice 51-327 initial test results and initial production
performance should be considered preliminary data and such data is not
necessarily indicative of long-term performance or of ultimate recovery. 


Non-IFRS Measures. The release contains the terms "funds from operations",
"funds from operations per share", "net debt", "operating netbacks" "cash
netbacks" and "netbacks" which are not recognized measures under IFRS. The
Company uses these measures to help evaluate its performance. Management
considers netbacks an important measure as it demonstrates its profitability
relative to current commodity prices. Management uses funds from operations to
analyze performance and considers it a key measure as it demonstrates the
Company's ability to generate the cash necessary to fund future capital
investments and to repay debt. Funds from operations is a non-IFRS measure and
has been defined by the Company as cash flow from operating activities before
accretion on long-term debt, decommissioning expenditures and changes in
non-cash working capital. The Company also presents funds from operations per
share whereby amounts per share are calculated using weighted average shares
outstanding consistent with the calculation of earnings per share. Delphi's
determination of funds from operations may not be comparable to that reported by
other companies nor should it be viewed as an alternative to cash flow from
operating activities, net earnings or other measures of financial performance
calculated in accordance with IFRS. The Company has defined net debt as the sum
of long term debt plus/minus working capital excluding the current portion of
the fair value of financial instruments plus the long term portion of the
restricted share units ("RSU"). Net debt is used by management to monitor
remaining availability under its credit facilities. Operating netbacks have been
defined as revenue less royalties, transportation and operating costs. Cash
netbacks have been defined as operating netbacks less interest and general and
administrative costs. Netbacks are generally discussed and presented on a per
boe basis.


FOR FURTHER INFORMATION PLEASE CONTACT: 
Delphi Energy Corp.
David J. Reid
President & CEO
(403) 265-6171
(403) 265-6207 (FAX)


Delphi Energy Corp.
Brian P. Kohlhammer
Senior VP Finance & CFO
(403) 265-6171
(403) 265-6207 (FAX)
info@delphienergy.ca
www.delphienergy.ca


Delphi Energy Corp.
300, 500 - 4 Avenue S.W.
Calgary, Alberta T2P 2V6

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