Painted Pony Petroleum Ltd.
TSX VENTURE : PPY

Painted Pony Petroleum Ltd.

November 04, 2013 08:30 ET

Painted Pony Petroleum Provides Production and Montney Operations Update

CALGARY, ALBERTA--(Marketwired - Nov. 4, 2013) - Painted Pony Petroleum Ltd. ("Painted Pony" or the "Company") (TSX:PPY) is pleased to provide an operations and activity update.

HIGHLIGHTS

  • A 41% production growth in the third quarter of 2013 over the same period in 2012.

  • The Company had strong peak and final test rates of over 10 million cubic feet per day ("MMcf/d") of natural gas on two (1.0 net) 50% working interest Montney wells at Daiber.

  • Experienced reduced capital costs and significant production gains from the use of ball-drop completion technology on new Montney horizontal wells.

PRODUCTION AND MONTNEY OPERATIONS HIGHLIGHTS

  • Painted Pony's average third quarter 2013 field-estimated sales volumes were approximately 8,900 barrels of oil equivalent per day ("boed"), weighted approximately 83% toward natural gas. This estimate represents an increase of 41% over average volumes in the third quarter of 2012 and an increase of 12% from average second quarter 2013 volumes.

  • The Company has finished drilling and completion operations on two (1.0 net) 50% working interest Montney wells on the Daiber 44-C/94-B-16 pad, which are currently undergoing production testing. The d-C44-C upper Montney well flowed for 129 hours. During this period, the peak and final 1-hour rate was 10.8 MMcf/d at an average flowing casing pressure of 2,540 pounds per square inch ("psi"). The average rate was 3.2 MMcf/d at an average flowing casing pressure of 2,210 psi. The d-D44-C lower Montney well flowed for 61 hours. During this period, the peak and final 1-hour rate was 10.8 MMcf/d at an average flowing casing pressure of 3,220 psi. The average rate was 3.1 MMcf/d at an average flowing casing pressure of 1,880 psi. Both wells continue to clean up.

  • Painted Pony is encouraged by the results of ball-drop completion technology. To date, the Company has used the ball-drop system on 6 (5.0 net) of its recently drilled Montney wells, including two (2.0 net) wells on the Townsend 11-J/94-B-09 pad, two wells on the Daiber 44-C/94-B-16 pad and single wells on each of the Blair 91-F/94-B-16 and 14-F/94-B-16 pads. The ball-drop system was employed as an alternative to the conventional perf-and-plug system at the Blair 91-F/94-B-16 pad. The ball-drop well at a-A91-F/94-B-16 produced approximately 575 million cubic feet ("MMcf") of natural gas over its initial 3 month period, whereas the perf-and-plug well at a-91-F/94-B-16 produced approximately 416 MMcf of natural gas over the same time frame. Both 91-F/94-B-16 wells are Upper Montney horizontal wells. These results represent a 38% increase in production volumes attributable to the ball-drop system. In addition, the Company has realized cost savings using the ball-drop system of approximately $0.7 million per well.

  • The 100% working interest lower Montney well at Townsend a-A11-J/94-B-09, which produced intermittently during the third quarter, has resumed production following infrastructure modifications. This liquids-rich well has now been on-stream since October 30, 2013 and, over the latest 24-hour period, produced at a field-estimated rate of 1,830 boed, including 9.9 MMcf/d of natural gas plus 180 barrels ("bbls") per day of condensate and gas liquids.

  • The 100% working interest upper Montney well at Townsend a-B11-J/94-B-09 previously produced an average of 2,230 boed including an estimated 75 bbls/MMcf of natural gas liquids and condensate over a period of 5.2 days. Current production infrastructure is not capable of handling the high liquids volumes associated with this well and consequently the well remains shut-in. The well is currently expected to be placed on production during the first quarter of 2014 following the construction of required infrastructure.

  • The Company remains pleased with successful drilling results at Townsend and, on November 3, 2013, the Company spudded the first of three 100% working interest wells at Townsend on the 56-H/94-B-09 pad as part of its fourth quarter 2013 drilling program. These wells will target the upper, middle and lower Montney zones and are expected to be completed and tied-in to production facilities in the first quarter of 2014.

  • The Company estimates current shut-in volumes in excess of 2,500 boed which is expected to come on production in the fourth quarter of 2013 and the first quarter of 2014.

  • Two previously drilled 100% working interest Montney wells at the Blair 14-F/94-B-16 pad are expected to be tied-in and commence production on November 4, 2013.

  • Realized estimated wellhead natural gas prices during the third quarter of 2013 of approximately $2.95 per thousand cubic feet ("Mcf") of natural gas, which represents a premium of more than 20% to the AECO reference price of $2.44 per Mcf of natural gas.

  • The Company continues to focus on low-risk Montney drilling opportunities across its extensive land base. To date in 2013, the Company has participated in drilling 11 (7.6 net) Montney natural gas wells and is expecting to spud up to 3 (3.0 net) Montney natural gas wells in the fourth quarter of 2013.

CAPITAL PROGRAM FOR 2014

Painted Pony is currently reviewing its planned capital program for 2014. The Company expects to release its detailed operating and financial plan for 2014 by early December 2013.

As of the date hereof, the Corporation has an undrawn credit facility in the amount of $125 million and it is not considering issuing equity at this time.

For more information please visit www.paintedpony.ca.

Advisory

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 and 2014; (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 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 (www.sedar.com) or Painted Pony's website (www.paintedpony.ca).

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.

Special Note Regarding Oil and Gas Disclosure

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 that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalents of 6:1, utilizing a conversion ratio of 6:1 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.

Contact Information

  • Painted Pony Petroleum Ltd.
    Patrick R. Ward
    President & CEO
    (403) 475-0440
    (403) 238-1487 (FAX)

    Painted Pony Petroleum Ltd.
    John H. Van de Pol
    Vice President, Finance & CFO
    (403) 475-0440
    (403) 238-1487 (FAX)

    Painted Pony Petroleum Ltd.
    1800, 736 - 6th Avenue SW
    Calgary, AB T2P 3T7
    (403) 475-0440
    (403) 238-1487 (FAX)
    www.paintedpony.ca