CALGARY, Jan. 13, 2016 /CNW/ – Painted Pony Petroleum Ltd. (“Painted Pony” or the “Corporation“) (TSX: PPY) is pleased to announce a strong operational start to 2016, ongoing success in obtaining firm transportation service, and an update on construction of the new gas processing facility in the Townsend area by AltaGas Ltd. (“AltaGas“) (“AltaGas Townsend Facility” or the “Facility“).
AltaGas Townsend Facility Ahead of Schedule
Construction of the Facility is progressing well ahead of schedule and is now approximately 70 percent complete. As a result, AltaGas and Painted Pony expect to commission the Facility earlier than initially scheduled. Recent photos and aerial videos of the construction site illustrating the ongoing progress can be viewed on the Painted Pony website at http://paintedpony.ca/investors/Media-Gallery/
Painted Pony has signed an agreement with TransCanada Corporation (“TransCanada“) to participate in the Towerbirch Expansion Project that will provide the Corporation with 130 MMcf/d of firm transportation service. When combined with Painted Pony’s firm transportation service to Sunset Creek, this expansion will provide direct physical access into the AECO system. This will greatly diversify Painted Pony’s sales point options. The Towerbirch Expansion Project could be completed as early as November 2017. The 130 MMcf/d of firm transportation service will represent approximately 45 percent of Painted Pony’s estimated natural gas sales volume at that time.
Painted Pony is actively drilling three wells and plans to drill a total of 29 (net) wells in 2016 driving daily production volumes to over 240 Mmcfe/d (40,000 boe/d) by year end. While Painted Pony had planned for a September 1, 2016 Facility commissioning, the Corporation is confident that the current drilling and completions schedule provides sufficient flexibility to meet an earlier start date.
Painted Pony currently delivers the majority of its natural gas production to Spectra’s Station 2 receipt point in British Columbia (“Station 2“). Recent easing of third-party pipeline maintenance restrictions has narrowed the pricing differential between Station 2 and AECO. Station 2 to AECO spot pricing differential, which averaged $0.89/Mcf in 2015, has averaged approximately $0.55/Mcf year-to-date in 2016 and continues to narrow. During the fourth quarter of 2015, the Station 2 spot price averaged approximately $1.13/Mcf while Painted Pony averaged a realized price of approximately $2.01/Mcfe. Spot pricing at Station 2 on January 13, 2016 was $2.42/Mcf, just $0.01/Mcf below spot pricing offered at AECO of $2.43/Mcf. Painted Pony has hedged 75 percent of current production at an average AECO price of $3.03/Mcf through 2016 and to the end of the first quarter of 2017.
Painted Pony production averaged approximately 105 Mmcfe/d (17,500 boe/d) during the first ten days of January 2016, based on field estimates. Production during the first quarter of 2016 is forecast to average approximately 16,500 boe/d. Production was curtailed in the fourth quarter of 2015 to average approximately 90 MMcf/d (15,000 boe/d) as a result of weak Station 2 pricing.