CALGARY, ALBERTA–(Marketwired – April 9, 2014) – Painted Pony Petroleum Ltd. (“Painted Pony” or the “Company”) (TSX:PPY) is pleased to provide the following production and operations update. Highlights include:
- exceeded 15,000 barrels of oil equivalent per day (“boe/d”), weighted 86% towards natural gas, in the first week of April 2014, based on field estimates that included 79 million cubic feet per day (“MMcf/d”) of raw natural gas production and 2,050 barrels (“bbls”) per day (“bbls/d”) of crude oil and natural gas liquids (“NGLs”) production;
- increased second quarter 2014 production estimate by 17% to 13,500 boe/d (86% natural gas) from previous estimates of 11,500 boe/d, as a result of better than anticipated well results at Blair and Townsend. This represents increases of approximately 38% over first quarter of 2014 estimated production of 9,750 boe/d and 70% over second quarter 2013 production of 7,928 boe/d;
- increased average annual production estimates for 2014 to 13,000 boe/d, a 50% increase over average production in 2013 of 8,693 boe/d;
- completed start-up of the new 100% working interest 25 MMcf/d natural gas processing facility at Townsend, British Columbia on time and on budget, which is expected to reach full capacity by the end of April 2014. This facility currently has an associated recoverable wellhead condensate yield in excess of 40 bbls/MMcf;
- drilled 5 (5.0 net) Montney wells to date as part of an 18 (17.0 net) well 2014 Montney drilling program; and
- completed 4 (4.0 net) Montney wells to date in 2014 including 2 (2.0 net) Montney wells at Townsend and 2 (2.0 net) Montney wells at Blair.
INCREASED PRODUCTION EXCEEDING EXPECTATIONS
Painted Pony continues to achieve significant increases in its production base that have exceeded the Company’s expectations. The recent production test results at Blair and Townsend, in conjunction with the commissioning of the new natural gas processing facility, have prompted the Company to increase its second quarter 2014 average production estimate. The Q2 production estimate has been increased to 13,500 boe/d from the previous estimate of 11,500 boe/d. Field production estimates during the first week of April 2014 exceeded 15,000 boe/d, including 79 MMcf/d of raw natural gas production, 1,050 bbls/d of natural gas liquids production and 1,000 bbls/d of crude oil production.
Annual average production estimates have also been increased to 13,000 boe/d (86% natural gas) from a previous estimate of 11,500 boe/d (85% natural gas). Field estimated production for the first quarter of 2014 was approximately 9,750 boe/d (87% natural gas) including 1,500 bbls/d of oil and natural gas liquids.
The Company has recently completed the commissioning of its 100% owned and operated natural gas processing facility at the 33-J pad with a design capacity of 25 MMcf/d. Field estimated condensate yields at this facility since April 1, 2014 have been 40 bbls/MMcf, and receive a price that approximates the Edmonton Par reference price for light oil. Painted Pony anticipates reaching full capacity at this facility by the end of April 2014. The Townsend property is the site of the Company’s highest liquids yield production within its British Columbia Montney assets.
In addition, Painted Pony recently completed two 100% working interest Montney wells at Townsend. A Lower Montney well and an Upper Montney well have been flow-testing in-line through the Company’s new 100% owned natural gas processing facility since April 1, 2014. These wells have flowed at a combined average raw wellhead rate of 12.0 MMcf/d plus associated condensate of 40 bbls/MMcf (480 bbls/d) over the last three days.
The Company has undertaken a pre-engineering study with a third party midstream company to build a refrigeration and natural gas plant facility with an expected capacity of approximately 190 MMcf/d. Final approval of the study is anticipated by the end of the second quarter of 2014. The plant is expected to be operational during the second half of 2015, and is expected to reduce transportation, processing, and operating costs, and increase liquids yields.
At Blair, Painted Pony drilled 5 (5.0 net) Montney wells to date in 2014. The Company completed two of the 100% working interest Montney wells on the 41-F pad drilled to date, and anticipates completing the remaining three 100% working interest Montney wells during the second quarter of 2014. Both of the completed wells are Upper Montney producers that have been testing in-line since late March 2014. In the first week of April, these wells have flowed at a combined average raw wellhead rate of 20.8 MMcf/d with an estimated associated 15 bbls/MMcf of natural gas liquids (312 bbls/d), which includes condensate, propane, and butane.
The production results of the Montney wells have exceeded the Company’s expectations in the Blair area and confirm the continued success of the open-hole ball-drop completion technology utilized by Painted Pony. These early indications from well performance have confirmed the step-change in terms of both production volumes and reduced costs. Painted Pony is currently producing natural gas from the Blair property through a third party midstream facility and is evaluating options for increasing processing capacity at this plant.
LIGHT CRUDE OIL OPERATIONS
In Saskatchewan, Painted Pony has increased its current light, sweet oil production base to approximately 1,000 bbls/d with the successful Midale discovery at Ralph, and a recently completed 2 mile Bakken horizontal well at Flat Lake. Additionally, the Company anticipates restoring approximately 130 boe/d of natural gas and NGLs from the Huntoon area that was previously shut-in due to third party processing issues. Painted Pony continues to maintain an inventory of low-risk light crude oil development opportunities in Saskatchewan.
Painted Pony is a Canadian oil and gas exploration company that trades on the Toronto Stock Exchange under the symbol “PPY”.
For more information please visit www.paintedpony.ca.
Special Note Regarding Forward-Looking Information
This news release contains certain forward-looking statements, which are based on numerous assumptions including but not limited to (i) drilling success; (ii) production; (iii) future capital expenditures; (iv) continued production at current rates; (v) the Townsend processing facility reaching full capacity; (vi) the receipt of a positive pre-engineering study in respect of the proposed refrigeration and natural gas plant; ; and (vii) cash flows from operating activities. In addition, and without limiting the generality of the foregoing, the key assumptions underlying the forward-looking statements contained herein include the following: (i) commodity prices will be volatile, and natural gas prices will remain low, throughout 2014; (ii) capital, undeveloped lands and skilled personnel will continue to be available at the level Painted Pony has enjoyed to date; (iii) the effect of hedges on risk management programs; (iv) Painted Pony will be able to obtain equipment in a timely manner to carry out exploration, development and exploitation activities; (v) production rates in 2014 are expected to show growth from the fourth quarter of 2013; (vi) Painted Pony will have sufficient financial resources with which to conduct the capital program; and (vii) the current tax and regulatory regime will remain substantially unchanged The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect.
This news release contains information, including in respect of Painted Pony’s capital program, which may constitute future oriented financial information or a financial outlook. Such information was approved by management of Painted Pony on March 4, 2014, and such information is included herein to provide readers with an understanding of the Company’s anticipated capital expenditures. Readers are cautioned that the information may not be appropriate for other purposes.
Certain information regarding Painted Pony set forth in this document, including estimates of the Company’s production, the timing of proposed capital projects and receipt of a positive pre-feasibility study for the proposed refrigeration and natural gas plant may constitute forward-looking statements under applicable securities laws and necessarily involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Painted Pony’s control, including without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, environmental risks, inability to obtain drilling rigs or other services, capital expenditure costs, including drilling, completion and facility costs, unexpected decline rates in wells, wells not performing as expected, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, and stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof. Readers are cautioned that the foregoing list of factors is not exhaustive. Painted Pony’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, including the amount of proceeds, that the Company will derive therefrom. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.
Estimates of production for individual wells may not reflect the same confidence or production levels as estimates of production for all wells on specific properties due to the effects of aggregation.
The well test results and short term production disclosed in this news release represent short-term results, which may not necessarily be indicative of long-term well performance or ultimate hydrocarbon recovery therefrom.
Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mcf: 1 bbl, utilizing a conversion ratio at 6 Mcf: 1 bbl may be misleading as an indication of value.
Additional information on these and other factors that could affect Painted Pony’s operations and financial results are included in the Company’s Management’s Discussion and Analysis for the year ended December 31, 2013, and the Company’s Annual Information Form for the year ended December 31, 2013 and in reports which are on file with the Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) or Painted Pony’s website (www.paintedpony.ca).
The forward-looking statements contained in this document are made as at the date of this news release and Painted Pony does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
Painted Pony Petroleum Ltd.
Patrick R. Ward
President & CEO
(403) 238-1487 (FAX)
Painted Pony Petroleum Ltd.
John H. Van de Pol
Vice President, Finance & CFO
(403) 238-1487 (FAX)