Painted Pony Petroleum Ltd.

Painted Pony Petroleum Ltd.

November 28, 2007 09:12 ET

Painted Pony Announces Proposed 40 Well Bakken Drilling Budget And Q3, 2007 Financial Results

CALGARY, ALBERTA--(Marketwire - Nov. 28, 2007) - Painted Pony Petroleum Ltd. (TSX VENTURE:PPY.A)(TSX VENTURE:PPY.B) ("Painted Pony" or the "Company") is pleased to announce an operational update and its financial results for the period ending September 30, 2007. Painted Pony was formed in May 2007 through an initial public offering into a private company, followed by the conversion of all outstanding debt to shares and a private placement. The Company's Class A and Class B shares commenced trading on the TSX Venture Exchange on May 23, 2007 under the symbols PPY.A and PPY.B respectively.

The Company is focused on building a reserve base in S.E. Saskatchewan. Its technical staff is pursuing exploration and development programs prospective for light, sweet oil in the Bakken formation. In addition it is developing prospects in N.E. BC prospective for high-impact natural gas.

The proceeds of the initial public offering and private placement amounted to $13.5 million, before costs. This capital, being largely "flow through" ($12.0 million), enabled the Company to commence its exploration program. The Company drilled four new Bakken oil discoveries in S.E. Saskatchewan. To enable it to develop these discoveries, participate in land sales and to fund equipping and facility costs, it was decided to raise additional capital. On November 14, 2007, Painted Pony entered into an agreement whereby it has agreed to issue 4,166,700 Class A common shares at an issue price of $2.40 per share on a bought-deal private placement basis for gross proceeds of $10,000,080. The issuance is subject to certain regulatory approvals, and is anticipated to close on or about December 6, 2007.

The three months ended September 30, 2007 marks the first full quarter for Painted Pony operating as an oil and gas entity. Operational results reflect the initial production of new discoveries brought on-stream late in the quarter.

Highlights of the accomplishments since the commencement of operations and for the three months ended September 30, 2007 include:

- Drilling 3 (1.2 net revenue interest) light oil operated wells in Saskatchewan at a 100% success rate during the third quarter of 2007. To date, Painted Pony has drilled a total of 5 (2.2 net revenue interest) oil wells,

- Satisfying all initial drilling commitments on the two farm-in agreements in S.E. Saskatchewan by the end of October 2007,

- Commencing production of light sweet oil in the third quarter, that enjoyed field netbacks over $55 per bbl,

- Identifying over 100 drilling locations on the Company's existing lands prospective for Bakken oil, and

- Identifying several high impact gas prospects on the Company's large seismic database in N.E. British Columbia.

Operations Overview

For the first three weeks of November, production to Painted Pony from three horizontal Bakken and one vertical Midale well averaged 120 bbls/d net to Painted Pony. Current production is estimated at 150 bbls/d net, with one Bakken horizontal well scheduled to be fraced before year end.

In the Kisbey area, Painted Pony drilled two (0.7 net revenue interest) horizontal wells during the third quarter of 2007, targeting light sweet oil. Both wells have been fracture stimulated to date. For the first three weeks of November, the wells produced at an average rate of 192 bbls/d gross (63 bbls/d net to Painted Pony) of light sweet (44 API) oil, based on field estimates.

In the Midale area, the Company completed the drilling of 2 (1.0 net revenue interest) horizontal wells targeting the Bakken formation subsequent to the end of the third quarter. One well has been fracture stimulated. For the first three weeks of November, the well produced light sweet oil at an average rate of 104 gross bbls/d (52 bbls/d net to Painted Pony), based on field estimates. For the third week of November, production rates increased to average 164 bbls/d gross (82 bbls/d net to Painted Pony). These are preliminary field estimated rates and may increase or decrease over the near term and will decline over the long term. The second Midale area well is planned to be fraced before year end. Both wells qualify for the Saskatchewan royalty and Freehold mineral tax incentive for deep, horizontal wells for the first 106,000 bbls per well of production.

In the Alameda area, Painted Pony participated in drilling 1 (0.5 net revenue interest) vertical Midale formation well during the third quarter of 2007. For the first three weeks of November, this well has been producing at an average rate of 10 bbls/d (5 bbls/d net to Painted Pony) of light sweet oil, based on field estimates.


The Board of Directors of Painted Pony has approved a budget for 2008 which anticipates the drilling of over 40 horizontal wells targeting the Bakken formation. Painted Pony currently anticipates drilling up to 10 (3.8 net revenue interest) horizontal wells in locations in Saskatchewan targeting the Bakken formation, prior to the end of March 2008. With access to over 63,100 gross acres with multi-zone light oil potential through a combination of farm-in agreements, Crown land sales and through drilling operations, Painted Pony's technical team have identified approximately 100 horizontal drilling locations targeting the Bakken formation.


The Company is pleased to announce the appointment of Bruce Mezei as Vice President, Geology. Mr. Mezei graduated in 1987 with a B. Sc. in Geology from the University of Alberta and brought approximately twenty-one years of industry experience to Painted Pony when he joined as Manager, Geology in May 2007.

Selected Financial Highlights
Three months ended Nine months ended
September 30, 2007 September 30, 2007
Petroleum sales (before
transportation) $ 38,751 $ 38,751
Cash flow from operations:(1) $ 79,885 $ 27,092
Per share - basic & diluted $ 0.00 $ 0.00
Net earnings (loss): $ 46,254 $ ( 7,407)
Per share - basic & diluted $ 0.00 $ 0.00
Capital expenditures, net $ 3,027,516 $ 3,525,131
Net working capital position $ 8,930,416 $ 8,930,416
Total assets $ 17,054,020 $ 17,054,020
Shareholders' equity $ 12,421,048 $ 12,421,048

(1) This table contains the term cash flow from operations, which should
not be considered an alternative to, or more meaningful than cash flow from
operating activities as determined in accordance with Canadian generally
accepted accounting principles ("GAAP") as an indicator of the Company's
performance. Therefore reference to cash flow from operations or cash flow
from operations per share (basic and diluted) may not be comparable with
the calculation of similar measures for other entities. Management uses
cash flow from operations to analyze operating performance and leverage
and considers cash flow from operations to be a key measure as it
demonstrates the Company's ability to generate the cash necessary to fund
future capital investment. The reconciliation between cash flow from
operations and cash flow from operating activities can be found in the
statement of cash flows in the unaudited interim financial statements. Cash
flow from operations per share is calculated using the basic and diluted
weighted average number of shares for the period.


This news release contains certain forward-looking statements, which include assumptions with respect to (i) funds to be raised in a private placement;(ii) production; (iii) future capital expenditures; and (iv) cash flow. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect.

Certain information regarding Painted Pony set forth in this document, including management's assessment of Painted Pony's future plans and operations, number, type and timing of wells to be drilled, the plan and development of certain prospects, production estimates, and expected production growth may constitute forward-looking statements under applicable securities laws and necessarily involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Painted Pony's control, including without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, environmental risks, competition, the lack of availability of qualified personnel or management, inability to obtain drilling rigs or other services, capital expenditure costs, including drilling, completion and facility costs, unexpected decline rates in wells, wells not performing as expected, stock market volatility, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. Readers are cautioned that the foregoing list of factors is not exhaustive. Painted Pony's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Corporation will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to the Corporation or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.

Additional information on these and other factors that could affect Painted Pony's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website ( or Painted Pony's website (

The forward-looking statements contained in this document are made as at the date of this news release and Painted Pony does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Painted Pony Petroleum Ltd.
    Patrick R. Ward
    President & CEO
    (403) 475-0440
    (403) 238-1487 (FAX)
    Painted Pony Petroleum Ltd.
    Joan E. Dunne
    Vice President, Finance & CFO
    (403) 475-0440
    (403) 238-1487 (FAX)
    Painted Pony Petroleum Ltd.
    402, 620 - 12 Ave SW
    Calgary, Ab T2R 0H5