CALGARY, Jan. 25, 2016 /CNW/ – Painted Pony Petroleum Ltd. (“Painted Pony” or the “Corporation“) (TSX: PPY) is pleased to announce that due to further realized capital efficiencies, the 2016 capital spending program has been reduced by 8% to $197 million from a previous estimate of $215 million. Forecast 2016 production volumes remain unchanged and are expected to average approximately 138 MMcfe/d (23,000 boe/d) with daily production volumes expected to exceed 240 MMcfe/d (40,000 boe/d) by year end 2016. Painted Pony also anticipates a reduction in estimated 2017 capital spending of 15% or $52 million to $298 million from a previous estimate of $350 million. Painted Pony maintains previously forecast 2017 average daily production volumes of approximately 288 MMcfe/d (48,000 boe/d).
Further Improved Capital Efficiencies
The efficiencies achieved over the six most recent completions have contributed to a reduction in drilling, completion and equipping costs per well to $5.4 million from previous budget estimates of $5.9 million per well. This reduction is the result of a significant increase in the number of frac stages completed per operational day, reduced water usage, and other efficiencies. Painted Pony has been able to complete the most recent four net wells in three days per well versus the previously estimated four days per well resulting in significant cost savings. The benefits of this operational effectiveness is expected to continue to provide cost reductions going forward.
As a result of these efficiencies, the Corporation has been able to further reduce its 2016 capital spending forecast to $197 million, which represents a reduction of 31% from the original five-year plan capital spending estimate in early 2015 of $287 million and a reduction of 8% from the 2016 capital budget of $215 million announced in November 2015. Similarly, the lower drilling, completion and equipping costs have positively impacted the Corporation’s 2017 capital spending forecast. When combined with reduced infrastructure costs, the revised forecast of $298 million represents a reduction of 31% from the original five-year plan capital spending estimate in early 2015 of $435 million and a reduction of 15% from the 2017 capital spending estimate in November 2015 of $350 million.
AltaGas Propane Export Facility
AltaGas Ltd. (“AltaGas“) recently announced plans to build a propane export terminal in the Prince Rupert area at Ridley Island, British Columbia. (Please see AltaGas press release dated January 20, 2016.) As part of Painted Pony’s strategic alliance with AltaGas, Painted Pony has the right to be a supplier for a portion of the Ridley Island Propane Export Terminal’s capacity. This will allow Painted Pony’s propane to access world prices. AltaGas indicated it is working towards reaching a final investment decision in 2016.
As previously announced, Painted Pony has three rigs drilling in the Blair and Townsend areas which is part of a planned 29 net well drilling program for 2016. Drilling and completions operations necessary for the start-up of the AltaGas Townsend Facility are on-schedule. The AltaGas Townsend Facility is approximately 70 % complete and is expected to begin commissioning operations in mid-2016.
Painted Pony’s current production year-to-date is approximately 105 MMcfe/d (17,500 boe/d) based on field estimates. Production during the first quarter of 2016 is forecast to average approximately 99 MMcfe/d (16,500 boe/d).
Painted Pony currently delivers the majority of its natural gas production to Spectra’s Station 2 receipt point in British Columbia (“Station 2“). The Station 2 to AECO spot pricing differential which averaged $1.23/Mcf during the second half of 2015, has averaged approximately $0.52/Mcf year-to-date in 2016.
On March 2, 2016 Painted Pony expects to release fourth quarter and year-end 2015 financial and operating results as well as updated reserves as at December 31, 2015.