CALGARY, ALBERTA–(Marketwired – June 29, 2015) – Painted Pony Petroleum Ltd. (“Painted Pony” or the “Corporation“) (TSX:PPY) is pleased to announce that it has signed a definitive agreement to provide the Corporation with long-term natural gas transportation to serve its growing British Columbia production base. This contract represents a critical step in Painted Pony’s plan to develop and deliver 240 million cubic feet equivalent per day (“MMcfe/d“) of natural gas and gas liquids volumes by the end of 2016.
Highlights of the new transportation agreement include:
- A contract with Spectra Energy Transmission for 220 MMcf/d of firm capacity on the T-North pipeline, expected to commence on November 1, 2016. The contract carries a term of 25 years on 200 MMcf/d and a term of 18 years, 8 months on 20 MMcf/d.
- The expected commencement of the Spectra Energy contracted service has been timed to coincide with the start-up of the planned AltaGas Townsend area gas processing plant (the “AltaGas Townsend Facility“), which is scheduled to be operational by mid-year 2016. Following commissioning and start-up of this new facility, Painted Pony’s sales volumes are forecast to reach a total of 240 MMcfe/d by the end of 2016, which includes a minimum 150 MMcf/d of incremental volumes from the AltaGas Townsend Facility.
- The Spectra Energy contract provides Painted Pony with the option to deliver up to 220 MMcf/d to one of two receipt points – either Station ‘2’ or Sunset Creek. Deliveries at Station ‘2’ provide the ability to supply proposed LNG export facilities and traditional Pacific northwest markets in Canada and the United States. Deliveries at Sunset Creek provide a potential future connection into the Alberta natural gas pipeline network, servicing the AECO hub and eastern markets.
The execution of this firm transportation agreement provides Painted Pony with certainty around pipeline egress for growing production in addition to strengthening the Corporation’s marketing position and underpinning the opportunity to pursue a wide range of gas sales opportunities with customers at multiple sales points. The Corporation remains confident that a strong demand for Liquefied Natural Gas (LNG) exports will develop for British Columbia gas producers and this contract provides a mechanism for transportation into LNG export schemes, including the proposed AltaGas-Idemitsu Douglas Channel project at Kitimat, expected to come on-stream in 2018. In commenting on the strategic significance, Mr. Patrick Ward, President and CEO said, “This contract guarantees transportation take-away capacity for the Corporation’s planned volume growth, while providing necessary marketing flexibility and the opportunity to maximize value.”
Painted Pony recently completed two (2.0 net) horizontal lower Montney wells, representing the first application of the Corporation’s parallel-pair completion technology in the Townsend area. On initial clean-up and flow-back these wells tested at an average combined rate of 8.3 MMcf/d of raw gas plus liquids and 1,914 psi average flowing casing pressure over approximately 3.4 days (83 hours). Both wells were continuing to clean up at the end of the flow test period; during the last six hours of testing the combined average flow rate was 18.4 MMcf/d of raw gas plus liquids at an average flowing casing pressure of 2,083 psi. The associated liquids production rates for these wells, once processed at the planned AltaGas Townsend Facility, are anticipated to be in line with prior Townsend area liquids production rates, averaging approximately 60 bbls/MMcf of propane, butane and condensate (C3+). Painted Pony is very pleased with these preliminary flowback rates, as they appear to validate the application of the parallel-pair technology at Townsend. The wells have subsequently been shut-in as they reached the end of the flare volume permit. The wells will resume flow testing in-line during the third quarter of 2015, following the installation of wellhead equipment.
Painted Pony has commenced its pre-drill program for the new AltaGas Townsend gas processing facility. To date, four (4.0 net) wells have completed drilling operations. Over the next 14 months, the Corporation expects to drill and complete an additional 18 (18.0 net) wells under its Townsend pre-drill program.
Well Test Results: Test rates are not necessary indicative of long-term performance or of ultimate recovery.
Forward-Looking Information: This press release contains certain forward-looking information within the meaning of Canadian securities laws. Forward-looking information relates to future events or future performance and is based upon the Corporation’s current internal expectations, estimates, projections, assumptions and beliefs. All information other than historical fact is forward-looking information. Words such as “plan“, “expect“, “intend“, “believe“, “anticipate“, “estimate“, “may“, “will“, “potential“, “proposed“ and other similar words that indicate events or conditions may occur are intended to identify forward-looking information. In particular, this press release contains forward looking information relating to: future natural gas transportation capacity; the AltaGas Townsend Facility construction completion timeframe; the anticipated production to be processed through the AltaGas Townsend Facility; future LNG export schemes including the proposed AltaGas-Idemitsu Douglas Channel project; and the anticipated liquids yields from the Townsend area wells.
Forward-looking information is based on assumptions including but not limited to future commodity prices, currency exchange rates, drilling success, production rates, future capital expenditures and the availability of labor and services. Undue reliance should not be placed on forward-looking information, as there can be no assurance that the plans, intentions or expectations on which they are based will occur. Although the Corporation’s management believes that the expectations in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.
Forward-looking information necessarily involves both known and unknown risks associated with oil and gas exploration, production, transportation and marketing. There are risks associated with the uncertainty of geological and technical data, imprecision of reserve estimates, operational risks, risks associated with drilling and completions, the risk that anticipated project timelines change, environmental risks, risks of the change in government regulation of the oil and gas industry, risks associated with competition from others for scarce resources and risks associated with general economic conditions affecting the Corporation’s ability to access sufficient capital. Additional information on these and other risk factors that could affect operational or financial results are included in the Corporation’s most recent Annual Information Form and in other reports filed with Canadian securities regulatory authorities.
Forward-looking information is based on estimates and opinions of management at the time the information is presented. The Corporation is not under any duty to update the forward-looking information after the date of this press release to revise such information to actual results or to changes in the Corporation’s plans or expectations, except as required by applicable securities laws.
ABOUT PAINTED PONY
Painted Pony is a publicly-traded natural gas corporation based in Western Canada. The Corporation is primarily focused on the development of natural gas and natural gas liquids from the Montney formation in northeast British Columbia. Painted Pony’s common shares trade on the Toronto Stock Exchange under the symbol “PPY”.
For more information please visit www.paintedpony.ca.
PainPainted Pony Petroleum Ltd.
Patrick R. Ward
President & CEO
Painted Pony Petroleum Ltd.
John H. Van de Pol
Senior Vice President & CFO