CALGARY, Jan. 5, 2017 /CNW/ – Painted Pony Petroleum Ltd. (“Painted Pony” or the “Corporation“) (TSX: PPY) is pleased to announce that production volumes, based on field estimates, averaged over 240 MMcfe/d (40,000 boe/d) during the month of December 2016 with liquids making up approximately 9% of total production volumes or more than 3,600 bbls/d. Exiting 2016 with production volumes at these levels was a significant goal for Painted Pony and one which, in conjunction with the commissioning of the AltaGas Townsend Facility (the “Townsend Facility“), marked a significant milestone for the Corporation.
Mr. Pat Ward, President and CEO of Painted Pony said, “The production growth we achieved during 2015 and 2016 was generated solely through drilling on our industry-leading Montney property. Between the fourth quarter of 2013 with production of 9,312 boe/d and our fourth quarter exit production volumes in 2016 of more than 40,000 boe/d, we have organically grown our production by 330%.” Mr. Ward continued by saying, “When Painted Pony first introduced the concept of growing to 240 MMcfe/d or 40,000 boe/d in the third year of our initial five-year plan, we believed it to be a very ambitious but achievable goal. However, when you carefully plan the development of a world class asset, and have a great group of dedicated people, you can accomplish exceptional things.”
PRODUCTION
2016 Production Volumes
Based on field estimates, December 2016 daily production volumes averaged over 240 MMcfe/d (40,000 boe/d) while fourth quarter 2016 daily production volumes averaged approximately 218.7 MMcfe/d (36,455 boe/d). Liquids production during the fourth quarter of 2016 averaged approximately 8% (2,990 bbls/d) of production volumes, based on field estimates. Condensate comprised approximately 50% of liquids volumes with butane making up approximately 30% and propane making up the balance at approximately 20%, all based on field estimates. Based on fourth quarter field estimates and previously reported quarterly production volumes, Painted Pony’s 2016 daily production volumes averaged approximately 138.9 MMcfe/d (23,144 boe/d) consistent with annual production guidance of 138 MMcfe/d (23,000 boe/d).
2017 Forecast Production Volume Growth
Daily production volumes for 2017 are expected to average approximately 288 MMcfe/d (48,000 boe/d), an increase of approximately 110% over 2016 average daily production volumes of approximately 138 MMcfe/d (23,000 boe/d). Liquids production volumes in 2017 are expected to be more than 9% of total production volumes or approximately 4,400 bbls/d.
The 198 MMcf/d capacity Townsend Facility which was commissioned in July 2016, currently processes approximately 150 MMcf/d of Painted Pony’s natural gas. Painted Pony anticipates ramping production volumes to fill the remaining 48 MMcf/d of capacity in August 2017 bringing Painted Pony’s total processed volumes at the Townsend Facility to 198 MMcf/d.
The planned Phase Two 100 MMcf/d expansion to the Townsend Facility is expected to be completed and on-stream in October 2017. Painted Pony anticipates 2017 forecasted exit production volumes to be approximately 408 MMcfe/d (68,000 boe/d), representing exit production growth of 70% when compared to 2016 exit production volumes of over 240 MMcfe/d (40,000 boe/d).
OPERATIONAL UPDATE
Field Activity
During 2016, Painted Pony drilled a total of 36 net wells including 9 net wells in the fourth quarter of 2016. One additional well began drilling in later December and is expected to rig-release in mid-January. Completions during 2016 totaled 38 net wells with 8 net wells completed in the fourth quarter.
Painted Pony currently has three drilling rigs actively drilling with a fourth drilling rig expected to begin drilling by mid-January. The Corporation anticipates drilling 22 net wells and completing 12 net wells with estimated capital spending of $87 million during the first quarter of 2017.
Hedging Update
In recent months, the Corporation has added additional financial hedges to provide further protection from commodity price volatility. Since November 2016, Painted Pony has hedged an additional 56.5 MMcf/d on contracts for 2017 and 2018. The Corporation has hedged a total of 65% of natural gas production during 2017 at an average price of $3.30/Mcf on AECO swaps (51% of hedged volumes) and an average of $2.24/Mcf on Station 2 swaps (49% of hedged volumes).
Additional details about Painted Pony’s financial hedging can be found in the current Investor Presentation located at: http://paintedpony.ca/investors/presentations/default.aspx
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CONFERENCE PARTICIPATION
Painted Pony is pleased to announce that it will be participating in the TD Securities London Energy Conference taking place on January 9 and 10, 2017 at the Grosvenor House Hotel located at 86-90 Park Ln, Mayfair, London W1K 7TN, UK. Mr. Pat Ward, President and CEO, will be presenting on Tuesday, January 10, 2017 at 11:05 am (GMT) in the Audley Room of the Grosvenor House Hotel.
Painted Pony will be undertaking a series of presentations to institutional investors while at this conference in addition to meetings with investors in London prior to conference attendance.
Interested parties are invited to view the current Painted Pony investor presentation at:
http://paintedpony.ca/investors/presentations/default.aspx
ADVISORIES
Boe Conversions: Barrel of oil equivalent (“boe“) amounts have been calculated by using the conversion ratio of six thousand cubic feet (6 Mcf) of natural gas to one barrel of oil (1 bbl). Boe amounts may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf to 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 that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalent of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Mcfe Conversions: Thousands of cubic feet of gas equivalent (“Mcfe“) amounts have been calculated by using the conversion ratio of one barrel of oil (1 bbl) to six thousand cubic feet (6 Mcf) of natural gas. Mcfe amounts may be misleading, particularly if used in isolation. A conversion ratio of 1 bbl to 6 Mcf 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 that the value ratio based on the current price of natural gas as compared to oil is significantly different from the energy equivalent of 1:6, utilizing a conversion on a 1:6 basis may be misleading as an indication of value.
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: average daily production volumes in 2017; average daily liquids production volumes in 2017; utilization of all remaining processing capacity in the AltaGas Townsend Facility; total processed production volumes at the AltaGas Townsend Facility; the construction completion and on-stream date of a Phase Two expansion to the AltaGas Townsend Facility; average daily exit production volumes in 2017; rig-release timing for a well which began drilling in December 2016; the number of drilling rigs actively drilling wells for the Corporation by mid-January 2017; the total number of wells anticipated to be drilled and completed, and the associated cost of such drilling and completions in the first quarter of 2017.
Forward-looking information is based on certain expectations and assumptions including but not limited to future commodity prices, currency exchange rates interest rates, royalty rates and tax rates; the state of the economy and the exploration and production business; the economic and political environment in which the Corporation operates; the regulatory framework; anticipate timing and results of capital expenditures; the sufficiency of budgeted capital expenditures to carryout planned operations; operating, transportation, marketing and general and administrative costs; drilling success, production rates, future capital expenditures and the availability of labor and services. With respect to future wells, a key assumption is the validity of geological and technical interpretations performed by the Corporation’s technical staff, which indicate that commercially economic volumes can be recovered from the Corporation’s lands. Estimates as to production rates assume that no material unexpected outages occur in the infrastructure the Corporation relies upon to produce its wells, that existing wells continue to meet production expectations and that future wells scheduled to come on production meet timing and production rate expectations.
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. As a consequence, actual results may differ materially from those anticipated.
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, risk of 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. Any “financial outlook” contained in this press release, as such term is defined by applicable securities laws, is provided for the purpose of providing information about management’s current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes.
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”.
SOURCE Painted Pony Petroleum Ltd.
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