Painted Pony Petroleum Ltd.

Painted Pony Petroleum Ltd.

February 12, 2013 08:30 ET

Painted Pony Petroleum Provides Operations Update on Montney Gas and Light Oil Projects

CALGARY, ALBERTA--(Marketwire - Feb. 12, 2013) - Painted Pony Petroleum Ltd. ("Painted Pony" or the "Company") (TSX VENTURE:PPY) is pleased to provide the following operations update and drilling activity forecast for 2013.


  • fourth quarter 2012 field-estimated sales averaged 7,290 boe/d (76% weighted to gas); a 40% increase over fourth quarter 2011;
  • field-estimated sales for January 2013 averaged 8,100 boe/d (77% weighted to gas); a 27% increase over January 2012;
  • successful testing of 2.0 net Montney wells on the 62-F pad at peak 24 hour rates of 7.1 MMcf/d and 4.5 MMcf/d;
  • currently drilling the first well on the recently-acquired Townsend (Kobes) lands in the upper Montney;
  • 2013 capital plans include drilling 22 (17.8 net) wells, with 12 (9.4 net) Montney-directed; and
  • exited 2012 with no debt and an undrawn demand credit facility of $100 million.


During the fourth quarter of 2012, Painted Pony's field-estimated sales averaged 7,290 boe/d, (weighted 76% gas), an increase of 15% from average third quarter 2012 volumes of 6,327 boe/d (77% gas weighted) and 40% above fourth quarter 2011. Painted Pony's field-estimated production for January 2013 averaged 8,100 boe/d (77% weighted to gas). This production estimate is up 11% over fourth quarter 2012 average and 27% over January 2012.


Painted Pony continues to pursue the development and expansion of its Montney gas assets in northeastern British Columbia. In the fourth quarter of 2012, the Company drilled or participated in drilling 4 (3.2 net) horizontal wells. To-date in 2013, the Company has participated in drilling 1 (0.2 net) well and a 100% well is currently being drilled. The Company has also completed two 100% wells in the Blair area of the Montney.

At Blair, British Columbia, Painted Pony has recently commenced production testing on 2 (2.0 net) Montney wells on the c-62-F/94-B-16 pad, in-line to a third party gas processing facility. Over the past ten days, the upper Montney well has flowed at an average wellhead rate of 5.8 MMcf/d at a flowing casing pressure of 604 psi, and a peak 24 hour rate of 7.1 MMcf/d at an average flowing casing pressure of 900 psi. The most recent 24 hour rate was 5.4 MMcf/d at an average flowing casing pressure of 458 psi. The lower Montney well at 62-F has flowed on cleanup and initial production test for the past five days. During this period, the wellhead flow rate has averaged 3.8 MMcf/d at an average flowing casing pressure of 405 psi. The peak 24-hour rate was 4.5 MMcf/d at a flowing casing pressure of 500 psi.

At Gundy (Cameron), Painted Pony has recently participated in the drilling of 2 (0.4 net) non-operated Montney wells on the c-68-J/94-B-09 pad. These two wells are expected to be completed and production tested prior to the end of the first quarter. A further 2 (0.4 net) Montney wells are expected to be drilled on the nearby c-75-J pad, also before the end of the first quarter.

At Townsend (Kobes), Painted Pony completed the acquisition of certain mineral interests in late December 2012 (please refer to press releases dated December 4, 2012 and December 21, 2012). Subsequent to closing this acquisition, the Company has commenced drilling its first Montney well on these lands at a-B11-J/94-B-09. This 100% working interest well is targeting liquids-rich gas from an upper Montney interval. The B11-J well, plus an adjacent cased lower Montney well on the same pad, are expected to be completed and production tested prior to the end of the first quarter.

Painted Pony's Montney exploration well at West Blair (Daiber) a-80-E/94-B-16 has completed initial production testing of potential gas pay in the upper, middle and lower Montney zones. This well was fracture stimulated across 11 stages, including single stages in the upper and middle Montney zones, plus nine stages in the lower Montney horizontal section. The well flowed intermittently over a month for a total of approximately ten flowing days. The last 36 hour test of all three zones had a peak 24 hour wellhead rate of 5.5 MMcf/d at an average flowing casing pressure of 911 psi. The combined average wellhead flow rate for the total 36 hour test was 4.7 MMcf/d at an average flowing casing pressure of 758 psi. A subsequent spinner survey indicated that the upper Montney interval was contributing 47% of the combined wellhead flow. Painted Pony believes that the upper Montney zone represents the preferred target horizon in this area. A further 2 (2.0 net) upper Montney horizontal wells are planned to be drilled on the 80-E pad in 2013, and placed on production early in 2014.


Painted Pony continues to maintain its inventory of light oil opportunities, focusing on projects in Saskatchewan and Alberta. In the fourth quarter of 2012, the Company drilled 6 (5.2 net) wells targeting light oil. In its southeast Saskatchewan core area, the Company continues to explore for and develop various assets targeting the Bakken light oil resource play. In the fourth quarter of 2012, 4 (3.2 net) wells were drilled in Saskatchewan and have all been placed on production. In the first quarter of 2013, Painted Pony expects to participate in the drilling of 3 (1.4 net) wells in Saskatchewan, including 2 (0.6 net) wells on the Flat Lake Bakken project.


Painted Pony currently has no net debt and has an undrawn $100 million demand revolving credit facility with a Canadian chartered bank, which is subject to a review by the lender on or before June 1, 2013.


The Company continues to pursue the development and expansion of its Montney gas assets in northeastern British Columbia. In 2013, the Company expects to complete drilling operations on a total of 12 (9.4 net) Montney wells. This proposed program is expected to include activity on the Company's Blair, West Blair, Cameron, and Cypress projects, including at least 3 (2.8 net) wells on the recently acquired Townsend (Kobes) project. A completion is also planned to test the Buckinghorse formation in the greater Blair area.

Painted Pony was not selected as the supplier of natural gas to the Douglas Channel BC LNG initial project; however, as a founding member of the co-operative, Painted Pony is entitled to bid for supply on any future expansion. In general, the prospects for construction of LNG (Liquefied Natural Gas) facilities on Canada's west coast continue to gain momentum. Painted Pony's Montney gas project is well-positioned to become an important supplier to these export terminals.

An updated presentation incorporating the Company's latest activity plans for 2013 will be available on the Company's website in the next day.

For more information please visit


This news release contains certain forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "believe", "plan", "potential", "intend", "objective", "continuous", "ongoing", "encouraging", "estimate", "expect", "may", "will", "project", "should", or similar words suggesting future outcomes.

These forward-looking statements are based on numerous assumptions including but not limited to (i) drilling success; (ii) production; (iii) future capital expenditures; and (iv) cash flow from operating activities. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect.

Forward-looking statements are based upon the opinions and expectations of management of the Company as at the effective date of such statements and, in some cases, information supplied by third parties. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions and that information received from third parties is reliable, it can give no assurance that those expectations will prove to have been correct. Forward-looking statements are subject to certain risks and uncertainties that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements.

With respect to forward-looking statements contained in this document, Painted Pony has made a number of assumptions. The key assumptions underlying the aforementioned forward-looking statements include assumptions that: (i) commodity prices will be volatile throughout 2013; (ii) capital, undeveloped lands and skilled personnel will continue to be available at the level Painted Pony has enjoyed to date; (iii) Painted Pony will be able to obtain equipment in a timely manner to carry out exploration, development and exploitation activities; (iv) Painted Pony will have sufficient financial resources with which to conduct the proposed capital program; (v) the accuracy of geological and geophysical data and Painted Pony's interpretation of that data; (vi) production rates in 2013 are expected to show growth from 2012; (vii) that production from new wells will be substantially similar to production rates associated with existing wells in the vicinity of the Company's properties; (viii) the continued ability of the Company to generate internal cash flow and the availability of capital on acceptable terms; and (ix) the current tax and regulatory regime will remain substantially unchanged. Certain or all of the forgoing assumptions may prove to be untrue.

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 and the planning and development of certain prospects, 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, volatility of commodity prices, environmental risks, 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, 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 globally, 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, and stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof. 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 the Company will derive therefrom. All subsequent and forgoing forward-looking statements, whether written or oral, attributable to the Company 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.

Certain natural gas volumes have been converted to barrels of oil equivalent (BOE) on the basis of six thousand cubic feet (Mcf) to one barrel (bbl). BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 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 the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mcf:1bbl, utilizing a conversion ratio at 6 Mcf:1bbl may be misleading as an indication of value.

The well test results disclosed in this news release represent short-term results, which may not necessarily be indicative of long-term well performance or ultimate hydrocarbon recovery therefrom.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts 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.
    300, 602 - 12 Ave SW
    Calgary, AB T2R 1J3
    (403) 475-0440
    (403) 475-0440 (FAX)