CALGARY, ALBERTA–(Marketwired – Feb. 13, 2017) – Pine Cliff Energy Ltd. (“Pine Cliff”) (TSX:PNE) is pleased to announce 2017 guidance, 2016 bank debt reduction and its 2016 year-end reserves.
Pine Cliff’s Board of Directors has approved a capital budget of $18.5 million for 2017. Pine Cliff anticipates directing $13.5 million of the capital budget to drilling in the Edson and Viking areas of Alberta and conducting recompletions in various areas. Additionally, Pine Cliff anticipates spending approximately $3.3 million on major maintenance capital and $1.7 million on facility and other capital. Pine Cliff will monitor its capital spending throughout the year and it may be modified depending on commodity prices, drilling results and non-operated drilling activity.
Based on the $13.5 million drilling and recompletion capital budget, Pine Cliff is budgeting 2017 annual production volumes to range from 21,250 – 21,750 BOE per day, weighted 94% to natural gas. Pine Cliff’s fourth quarter 2016 production was 21,525 BOE per day, weighted 93% to natural gas. Pine Cliff exited the year with production of approximately 22,000 BOE per day, weighted 94% to natural gas.
Pine Cliff will continue to focus on additional opportunities to enhance our shareholders’ long term value which could include further asset acquisitions.
2016 Bank Debt Reduction
Pine Cliff’s primary focus in 2016 was strengthening its balance sheet and the Company successfully reduced its bank debt by $125 million from $155.9 million at December 31, 2015 to $30.9 million at December 31, 2016. This was accomplished through the disposition of royalty assets for net proceeds of $24.7 million, the disposition of non-core oil assets for net proceeds of $37.0 million ($32.0 million in cash), $41.0 million of term debt financing, the sale of public security investments and excess funds from operations (cash flow from operations, including changes in non-cash working capital, less capital expenditures).
Reserve Report Highlights
Pine Cliff’s independent reserve report was prepared by McDaniel & Associates Limited (“McDaniel“) in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101“) with the effective date of December 31, 2016.
In response to depressed natural gas prices experienced for the majority of 2016, Pine Cliff conducted a limited capital program, spending $9.6 million (excluding acquisitions and dispositions but including $2.8 million of major maintenance and other capital expenses). Improved well performance and decreases in the Pine Cliff production cost structure increased proved and proved plus probable reserves, however, as a result of dispositions, the conservative capital program, limited acquisitions and 2016 production, Pine Cliff’s remaining reserves decreased. Highlights of the McDaniel reserve report include:
- Net present value for proved plus probable reserves of $346.9 million, discounted at 10%, an increase of $6.9 million, or 2%, from December 31, 2015, despite dispositions in 2016;
- Prior to adjusting for 2016 production, total positive net changes to proved reserves were 2.6 MMBOE (4%), including 1.9 MMBOE of dispositions, from December 31, 2015, which was largely as a result of improved well performance and lower production costs;
- Remaining proved reserves of 53.8 MMBOE (94% natural gas) at December 31, 2016 decreased by 5.7 MMBOE (10%) from 59.5 MMBOE (91% natural gas) at December 31, 2015;
- Prior to adjusting for 2016 production, total positive net changes to proved plus probable reserves were 0.5 MMBOE (1%), including 2.4 MMBOE of dispositions from December 31, 2015, which was largely as a result of improved well performance and lower production costs;
- Remaining proved plus probable reserves of 70.9 MMBOE (94% natural gas) at December 31, 2016 decreased by 7.8 MMBOE from 78.7 MMBOE (91% natural gas) at December 31, 2015;
- Approximately 76% of total reserves are classified as proved reserves and 24% are classified as probable reserves;
- Approximately 98% of proved reserves are classified as proved developed producing; and
- As Pine Cliff has historically focused on acquiring new assets rather than drilling existing reserves, the McDaniel reserve report reflects a conservative future development capital program of $57.8 million over the next five years.
Pine Cliff’s Reserves
McDaniel is using a price forecast of $3.40 and $3.15 per Mcf for AECO natural gas in 2017 and 2018, respectively, and US$55.00 and US$57.80 per bbl for WTI oil in 2017 and 2018, respectively.
Summary of Remaining Working Interest Reserves, as of December 31, 2016
|Light, Medium and Heavy Oil||Natural Gas and CBM||Natural Gas
|Total Proved plus Probable||770.0||398,635.5||3,726.2||70,935.4|
Summary of Net Present Values of Future Net Revenue, Before Income Taxes, as of December 31, 2016
|Discounted at (% per Year)|
|Total Proved plus Probable||517.8||421.2||346.9||292.5|
Reconciliation of Gross Reserves by Principal Product Type, as of December 31, 2016
|Light, Medium and Heavy Oil and Natural Gas Liquids||Natural Gas and CBM||BOE|
|Proved (Mbbl)||Proved plus Probable (Mbbl)||Proved (Mmcf)||Proved plus Probable (Mmcf)||Proved (MBOE)||Proved Plus Probable (MBOE)|
|December 31, 2015||5,576.6||7,234.1||323,254.6||428,803.0||59,452.3||78,701.3|
|December 31, 2016||3,377.6||4,496.3||302,540.7||398,635.4||53,801.1||70,935.4|
1 The production shown in the above reconciliation includes production from the acquisitions as of the closing dates and excludes production from dispositions after the closing dates.
About Pine Cliff
Pine Cliff is a natural gas company with a long-term view of creating shareholder value. Pine Cliff’s current focus is on acquiring, developing and operating long life assets that are cash flow positive in a low commodity price environment. Further information relating to Pine Cliff may be found on www.sedar.com as well as on Pine Cliff’s website at www.pinecliffenergy.com.