CALGARY, March 6, 2017 /CNW/ – Painted Pony Petroleum Ltd. (“Painted Pony” or the “Corporation“) (TSX: PPY) is pleased to announce updated 2017 capital budget and 2018 development plan details. Consistent with Painted Pony’s strategy of capital discipline and due to the recent decline in forward strip natural gas prices, the Corporation has decided to reduce the level of capital spending during 2017 and 2018 to ensure the Corporation maintains its current financial flexibility.
2017 Capital Budget
- Reduced 2017 capital spending to $288 million from previously announced capital budget of $319 million;
- Expect 2017 annual average daily production of approximately 260 MMcfe/d (43,000 boe/d), an 85% production per share increase over 2016 annual average daily production of 139.2 Mcfe/d (23,204 boe/d);
- Anticipate drilling 58 net wells and completing 51 net wells as part of the 2017 capital program.
2018 Development Plans
- Expect capital spending in 2018 of $216 million, down from previous 2018 capital spending indications of $385 million per Painted Pony’s previous 5-year plan;
- Anticipate annual average daily production in 2018 of 360 MMcfe/d (60,000 boe/d), a 40% production per share increase over expected 2017 annual average daily production of 260 MMcfe/d (43,000 boe/d), and;
- Expect to drill 37 net wells and complete 42 net wells in 2018.
Painted Pony believes that a reduction in the 2017 capital budget and a deeper reduction to the 2018 development plan is financially prudent based on the current commodity strip price outlook. Steps taken in prior periods to financially hedge approximately 75% of 2017 natural gas production volumes, combined with indexed physical contracts, affords Painted Pony the ability to withstand lower natural gas prices and still proceed with a reduced but strong organic growth capital program. The Corporation believes these program changes will result in Painted Pony delivering a cash flow capital program at February 1, 2017 strip pricing. Painted Pony believes these steps will help retain financial flexibility for the Corporation while delivering attractive production and cash flow per share growth.
During 2016, Painted Pony executed a capital program that produced organic year-over-year average daily production per share growth of 49%. The Corporation grew average annual daily production to 139.2 Mcfe/d (23,204 boe/d) in 2016 from 93.6 Mcfe/d (15,604 boe/d) in 2015. Painted Pony accomplished this while achieving a top-decile 2016 Proved Developed Producing recycle ratio of 2.0 times.
The 2017 revised capital budget of $288 million is approximately 10% or $31 million lower than the $319 million capital budget disclosed by Painted Pony in November 2016. The reduced capital budget is expected to deliver annual average daily production in 2017 of 260 MMcfe/d (43,000 boe/d) which is approximately 10% less than the 2017 annual average daily production of 288 MMcfe/d (48,000 boe/d) previously disclosed in November 2016. The 2018 revised capital plan of $216 million is 44% or $169 million less than the $385 million capital program originally contemplated by Painted Pony’s 5-year plan. The 2018 capital plan is expected to deliver annual average daily production of 360 MMcfe/d (60,000 boe/d), 40% higher than expected 2017 annual average daily production of 260 MMcfe/d (43,000 boe/d).
During 2016, through a combination of fixed price indexed contracts and market diversification, Painted Pony realized natural gas prices, before realized hedging gains, that represented a premium of 19% over the Station 2 average daily spot price and a discount of 6% to the AECO daily spot price. Painted Pony will continue to mitigate pricing risk by using market strategies to boost the Corporation’s average realized natural gas price.
Production levels from the reduced 2017 capital budget and 2018 development plan are expected to fulfill all of Painted Pony’s take-or-pay processing commitments.
Painted Pony is well-positioned to deliver another year of significant growth from the Corporation’s Montney assets and, similar to past years, expects to execute a 2017 capital program focused on capital efficiency and cost discipline.
Painted Pony is pleased to announce that it will be attending the GMP FirstEnergy East Coast Energy Symposium taking place March 9 and 10, 2017 at The Lotte New York Palace, located at 455 Madison Avenue in New York, NY.
The Corporation will be undertaking a series of meetings with institutional investors while at this conference as well as in additional cities during the week of March 6 – 10, 2017. Interested parties are invited to view the Corporation’s updated investor presentation on Painted Pony’s website, www.paintedpony.ca.