CALGARY, Nov. 9, 2016 /CNW/ – Painted Pony Petroleum Ltd. (“Painted Pony” or the “Corporation“) (TSX: PPY) is pleased to announce average daily production over the past week of approximately 240 MMcfe/d (40,000 boe/d), based on field estimates. The Corporation’s production increase represents production growth (both absolute and per share) of approximately 76% over third quarter 2016 average daily production volumes of 136.4 MMcfe/d (22,741 boe/d).
In response to reaching this goal, Pat Ward, President and CEO of Painted Pony remarked, “Achieving this production milestone marks the most significant event in the history of Painted Pony and is something of which we are very proud. As pleased as we are of this accomplishment today, we remain focused on the future and executing on Painted Pony’s long-term growth strategy.”
HIGHLIGHTS:
- Achieved current production of approximately 240 MMcfe/d (40,000 boe/d) during the first week in November 2016;
- Began commercial operations at the Townsend Facility, a 198 MMcf/d natural gas processing facility built and operated by AltaGas, on July 7, 2016 which was more than 30 days ahead of schedule;
- Increased market diversification by selling 45 MMcf/d, effective October 1, 2016, directly into the AECO hub market and 18 MMcf/d, effective November 1, 2016, at the Huntingdon / Sumas hub;
- Increased average daily production volumes to 136.4 MMcfe/d (22,741 boe/d) during the third quarter of 2016, an increase of 46% compared to the third quarter of 2015 and a 37% increase compared to the second quarter of 2016;
- Generated funds flow from operations of $12.6 million ($0.13/share) during the third quarter of 2016, an increase of 100% compared to $6.3 million ($0.06 per share) in the third quarter of 2015;
- Recorded net income of $11.6 million ($0.12/share) during the third quarter of 2016, compared to a net loss of $0.4 million ($0.00/share) in the third quarter of 2015; and
- Reduced field cash costs by $0.47/Mcfe or 34% to $0.90/Mcfe during the third quarter of 2016 from $1.37/Mcfe in the third quarter of 2015;
THIRD QUARTER 2016 FINANCIAL & OPERATING RESULTS
Production
Painted Pony’s production volumes averaged over 240 MMcfe/d (40,000 boe/d) during the first week of November, 2016. This represents a 76% increase over average daily production volumes during the third quarter of 2016 of 136.4 MMcfe/d (22,741 boe/d). Third quarter 2016 average daily production volumes represent a 46% increase over third quarter 2015 production volumes of 93.1 MMcfe/d (15,523 boe/d) and an increase of 37% over second quarter 2016 average daily production volumes of 99.8 MMcfe/d (16,634 boe/d).
Painted Pony anticipates annual average production volumes for 2016 of 138 MMcfe/d (23,000 boe/d) with 2016 exit production volumes of approximately 240 MMcfe/d (40,000 boe/d), setting an exit production record for the Corporation and marking a significant milestone in the execution of Painted Pony’s 5-year plan.
AltaGas Townsend Facility
The Townsend Facility represents a major step change for Painted Pony and began flowing natural gas volumes on July 7, 2016, more than 30 days ahead of Painted Pony’s schedule. The early commissioning of the Townsend Facility has provided Painted Pony the opportunity to accelerate production volume growth for the remainder of 2016. Painted Pony is currently utilizing 150 MMcf/d through the Townsend Facility’s 198 MMcf/d capacity with the remaining 48 MMcf/d expected to begin flowing during the second half of 2017.
Funds Flow from Operations
Painted Pony generated funds flow from operations of $12.6 million or $0.13 per share during the third quarter of 2016, doubling the $6.3 million or $0.06 per share recorded during the third quarter of 2015. Despite a $0.13/Mcfe or 6% drop in average realized commodity prices, Painted Pony’s third quarter 2016 operating netback of $1.74/Mcfe increased by 60% compared to an operating netback in the third quarter of 2015 of $1.09/Mcfe. A combination of realized commodity hedging gains, production volume growth, as well as lower general and administrative, transportation, and operating costs, contributed to this increase in funds flow from operations.
Royalties, Operating and Transportation Costs
Field cash costs of $0.90/Mcfe (royalties of $0.05/Mcfe, operating expenses of $0.63/Mcfe, and transportation of $0.22/Mcfe) were reduced by $0.47/Mcfe or 34% in the third quarter of 2016 compared to $1.37/Mcfe in the third quarter of 2015. This cost improvement was due to increased production volumes that positively impacted fixed field expenses as well as ongoing efficiency improvements by field personnel.
Capital Expenditures and Operations
Painted Pony’s capital expenditures for the third quarter totaled $50.5 million and included 10 (10.0 net) Montney natural gas wells drilled and 11.0 (11.0 net) Montney natural gas wells completed.
Painted Pony’s current inventory of wells, drilled and not yet completed, stands at 8.0 wells. In addition, 2.0 wells are currently not producing and awaiting reactivation.
New wells for the AltaGas Townsend Facility are exhibiting performance at or slightly above budgeted type curves. Average 90-day initial rates and cumulative production volumes for 19 new wells throughout Blair and Townsend which have at least 90 days of cumulative production history, in aggregate, match or exceed the Corporation’s internal estimates.
Painted Pony anticipates releasing details of the 2017 capital budget within the next two weeks.
Market Diversification
As part of Painted Pony’s market diversification strategy, 45 MMcf/d of natural gas volumes began flowing to the AECO hub as of October 1, 2016. On November 1, 2016 the Corporation also began selling 18 MMcf/d at the Sumas / Huntingdon hub.
Credit Facilities Confirmed
Painted Pony’s syndicated credit facilities of $325 million were confirmed following a regularly scheduled, semi-annual review conducted in October 2016. As at September 30, 2016 Painted Pony had bank debt and a working capital deficiency of $208.7 million, leaving the Corporation well positioned to execute its planned capital programs.
Conference Participation
Painted Pony is pleased to announce that it will be participating in the GMP FirstEnergy Energy Growth Conference taking place on November 15 and 16, 2016 at The Ritz-Carlton Hotel located at 181 Wellington Street West, Toronto, Ontario. Mr. Pat Ward, President and CEO, will be presenting on Tuesday, November 15, 2016 at 9.40 am (ET) in Presentation Room A, Salon III.
Painted Pony will be undertaking a series of presentations to institutional investors while at this conference in addition to meetings with investors in the US prior to conference attendance. Interested parties are invited to view the current Painted Pony investor presentation at:
http://paintedpony.ca/investors/dashboard/default.aspx
FINANCIAL AND OPERATING HIGHLIGHTS
Three months ended September 30, |
Nine months ended September 30, |
|||||||
2016 |
2015 |
Change |
2016 |
2015 |
Change |
|||
Financial ($ millions, except per share and shares outstanding) |
||||||||
Petroleum and natural gas revenue(1) |
28.0 |
20.2 |
39% |
56.4 |
66.5 |
(15%) |
||
Funds flow from operations(2) |
12.6 |
6.3 |
100% |
29.1 |
25.9 |
12% |
||
Per share – basic(3) |
0.13 |
0.06 |
117% |
0.29 |
0.26 |
12% |
||
Per share – diluted(4) |
0.12 |
0.06 |
100% |
0.29 |
0.26 |
12% |
||
Net income (loss) |
11.6 |
(0.4) |
N/A |
(24.1) |
(7.8) |
209% |
||
Per share – basic(3) |
0.12 |
(0.00) |
N/A |
(0.24) |
(0.08) |
200% |
||
Per share – diluted(4) |
0.11 |
(0.00) |
N/A |
(0.24) |
(0.08) |
200% |
||
Capital expenditures |
50.5 |
21.8 |
132% |
152.9 |
92.1 |
66% |
||
Working capital deficiency (5) |
36.6 |
16.9 |
117% |
36.6 |
16.9 |
117% |
||
Bank debt |
172.1 |
45.9 |
275% |
172.1 |
45.9 |
275% |
||
Total assets |
1,290.2 |
760.0 |
70% |
1,290.2 |
760.0 |
70% |
||
Shares outstanding (millions) |
100.1 |
100.0 |
– |
100.1 |
100.0 |
– |
||
Basic weighted-average shares (millions) |
100.1 |
99.9 |
– |
100.1 |
99.7 |
– |
||
Fully diluted weighted-average shares (millions) |
101.1 |
99.9 |
– |
100.1 |
99.7 |
– |
||
Operational |
||||||||
Daily production volumes |
||||||||
Natural gas (MMcf/d) |
129.3 |
88.6 |
46% |
106.0 |
89.4 |
19% |
||
Natural gas liquids (bbls/d) |
1,189 |
760 |
56% |
1,013 |
896 |
13% |
||
Total (MMcfe/d) |
136.4 |
93.1 |
46% |
112.0 |
94.8 |
18% |
||
Total (boe/d) |
22,741 |
15,523 |
46% |
18,674 |
15,794 |
18% |
||
Realized commodity prices |
||||||||
Natural gas ($/Mcf) |
1.97 |
2.07 |
(5%) |
1.56 |
2.27 |
(31%) |
||
Natural gas liquids ($/bbl) |
41.67 |
46.68 |
(11%) |
40.18 |
45.18 |
(11%) |
||
Total ($/Mcfe) |
2.23 |
2.36 |
(6%) |
1.84 |
2.57 |
(28%) |
||
Operating netbacks ($/Mcfe) (6) |
1.74 |
1.09 |
60% |
1.50 |
1.33 |
13% |
1. |
Before royalties. |
2. |
Funds flow from operations and funds flow from operations per share (basic and diluted) are non-GAAP measures used to |
3. |
Basic per share information is calculated on the basis of the weighted average number of shares outstanding in the period. |
4. |
Diluted per share information reflects the potential dilutive effect of stock options. |
5. |
Working capital (deficiency) is a non-GAAP measure calculated as current assets less current liabilities. See “Non-GAAP |
6. |
Operating netbacks is a non-GAAP measure calculated on a per unit basis as natural gas, crude oil and natural gas liquids |