CALGARY, ALBERTA–(Marketwired – July 12, 2016) – BlackPearl Resources Inc. (“BlackPearl” or the “Company”) (TSX:PXX)(OMX:PXXS) announced today the completion of the semi-annual review of its credit facilities with its syndicated group of lenders. As a result of this review the maximum borrowing amount has been reduced from $150 million to $117.5 million.
The lenders have agreed to extend the revolving period to May 27, 2017, which may be extended in the future at the discretion of the lenders. If the revolving period is not extended any balance owing on the facilities would be required to be repaid by May 26, 2018. The pricing grid used to calculate the interest rates charged on the loans and stand-by fees remain unchanged. The next borrowing base review is scheduled to occur by November 30, 2016.
The Company currently has $80 million drawn on its credit facilities, $8 million lower than at year-end 2015. Based on the Company’s current capital spending plans for the remainder of the year and the Company’s budgeted production levels and commodity prices, our anticipated cash flow will likely exceed capital spending, which should enable the Company to continue to reduce its debt levels during the remainder of 2016.
During the second quarter BlackPearl expanded its on-going risk management program by initiating oil price hedges for 2017. During the quarter, the Company entered into hedges for 2,000 bbl/d for 2017 at an average Western Canadian Select price (WCS) of C$49.75/bbl. We expect to add to our 2017 oil hedging program as attractive opportunities come available.
BlackPearl is pleased to announce that the Onion Lake thermal project has reached its productive design capacity in June and production is continuing to ramp-up. Oil production during the month of June averaged just over 6,000 bbls/d, with a steam oil ratio of 2.7. Current production from the project is approximately 6,300 bbls/d. Thermal projects in Saskatchewan, such as our Onion Lake project, provide some of the most attractive economics in industry in terms of capital efficiency and low operating costs. The first phase of our Onion Lake thermal project was built for under $35,000 per flowing barrel and operating costs are currently under $10/bbl.
John Festival, President and CEO of BlackPearl, commenting on current operations indicated “that reaching nameplate capacity at Onion Lake is a significant achievement for the company. Transitioning the company to a lower cost, long-life, low decline resource company has been part of our business strategy for a number of years and the successful construction and start-up of the first phase of the thermal project at Onion Lake is a big step in implementing that strategy. We have begun technical planning for the second 6,000 bbl/d phase of the project and would expect to sanction the project as the financial environment continues to improve.”