CALGARY, Jan. 31, 2018 /CNW/ – Painted Pony Energy Ltd. (“Painted Pony” or the “Corporation“) (TSX: PONY) is pleased to announce preliminary 2017 fourth quarter average daily production volumes, an update on first quarter 2018 field operations as well as changes to the executive team.
Daily production volumes for the fourth quarter of 2017 averaged approximately 315 MMcfe/d (52,500 boe/d), based on preliminary results, and included approximately 9% liquids or approximately 4,500 Bbls/d. These production volumes are consistent with previous guidance range of 306 MMcfe/d (51,000 boe/d) to 318 MMcfe/d (53,000 boe/d) provided in the December 14, 2017 press release. Production volumes during the fourth quarter of 2017 were impacted by approximately 48 MMcfe/d (8,000 boe/d) of voluntary pricing-related production shut-ins.
Daily production volumes to-date during January 2018 averaged more than 360 MMcfe/d (60,000 boe/d), based on field estimates and included approximately 5,200 Bbls/d of liquids or approximately 9% of production volumes.
First quarter 2018 daily production volumes are expected to average between 360 MMcfe/d (60,000 boe/d) and 370 MMcfe/d (62,000 boe/d). Full-year 2018 annual average daily production guidance remains unchanged with volumes expected to average between 366 MMcfe/d (61,000 boe/d) and 378 MMcfe/d (63,000 boe/d). Liquids volumes for 2018 are expected to average approximately 9% and deliver between 5,200 Bbls/d and 5,500 Bbls/d, with approximately half of those expected liquids volumes to be high-netback condensate.
Commodity Risk Management
Painted Pony is well-positioned to mitigate much of the near-term commodity price weakness in western Canadian natural gas pricing through a combination of fixed-price physical delivery agreements, basis contracts, and financial hedging. Approximately 52% of expected 2018 production volumes are protected at a volume-weighted average price of $3.47/Mcfe. This includes 54% of projected 2018 natural gas production at a volume-weighted average fixed price of $2.97/Mcf and 62% of projected 2018 liquids production at a volume-weighted average fixed price of $64.16/Bbl. Painted Pony will continue to watch the forward commodity price curve and opportunistically hedge future production volumes to further mitigate commodity price volatility.
Patrick Ward, Painted Pony’s President and CEO, remarked “We continue to manage our business in a financially prudent manner during a time of volatile natural gas pricing. While the current natural gas price outlook calls for caution, Painted Pony’s sales points are well-diversified which should, when combined with our fixed prices contracts, provide significant pricing protection. We remain committed to ensuring the 2018 capital program is executed with precision and cost-discipline.”
First quarter 2018 activity is expected to result in a total of 14 wells drilled. Four wells are expected in the liquids-rich area of Townsend of which one has been rig released. Nine wells are expected in the Blair area of which two have been rig released. One well was planned in the liquids-rich area of Beg and it has already been rig released.
Completions during the first quarter of 2018 are anticipated to total 13. In the Blair area, seven completions are expected with three already finished to-date. A total of six completions at Townsend are expected during the first quarter with four already finished to-date.
Capital costs during the first quarter of 2018 remain consistent with 2017 historical averages, with drill costs averaging approximately $1.9 million per well and completions costs averaging approximately $2.1 million per well.
Mr. Bruce Hall, Vice President, Land will retire effective February 28, 2018. Mr. Hall joined Painted Pony in May 2008 and was appointed Vice President, Land in September 2012. His contributions have been a significant part of the Corporation’s success during the past 10 years. The Corporation and the Board of Directors thank him for his contributions and wish him all the best in his retirement.
Mr. Derek Aylesworth, Senior Vice President and Chief Financial Officer has advised the Corporation that he will resign, effective March 7, 2018, to pursue other business opportunities. Mr. Aylesworth will assist the Corporation in completing its year-end financial statement filing obligations prior to his departure. The Corporation and the Board of Directors thank Mr. Aylesworth for his contributions to Painted Pony and wish him well in his future endeavors. Painted Pony has commenced a search for Mr. Aylesworth’s replacement and will be considering both internal and external candidates.
Effective March 7, 2018, Mr. Stuart Jaggard, Vice President, Finance, will be appointed Interim CFO of the Corporation until a successor to Mr. Aylesworth is determined.