Painted Pony Petroleum Ltd.

Painted Pony Petroleum Ltd.

July 30, 2012 08:30 ET

Painted Pony Provides Montney and Bakken Operational Update and Expected Activity for the Balance of 2012

CALGARY, ALBERTA--(Marketwire - July 30, 2012) -


Painted Pony Petroleum Ltd. ("Painted Pony" or the "Company") (TSX VENTURE:PPY) is pleased to provide the following operations update and activity forecast.


Painted Pony continues to develop its natural gas asset in the Montney formation of northeastern British Columbia. Montney project highlights for 2012 include:

  • During the first half of 2012, Painted Pony completed drilling operations on 4 (2.2 net) new Montney wells. During the third quarter, the Company plans to conduct completion and testing operations on 5 (2.4 net) Montney wells. In the balance of this year, the Company expects to drill up to 3 (2.2 net) additional Montney wells, of which 2 (2.0 net) wells are expected to be completed and tested in the fourth quarter, subject to drilling results and equipment availability.

  • Painted Pony's field-estimated production in July 2012 from the Company's Montney project area is approximately 4,500 boe/d (26.5 mmcf/d). Over the past several months, the Company has experienced several planned and unplanned production curtailments on its B.C. gas properties. These curtailments are estimated to average approximately 1,400 boe/d (8.4 mmcf/d). Accordingly, current field-estimated, unrestricted productive capability on the Company's Montney project is approximately 5,900 boe/d (35.4 mmcf/d).

  • Painted Pony has been advised that the third party gas plant expansion at Blair (previously announced in the Company's December 21, 2011 press release) is expected to become fully operational in mid-August. At that time, the Company's allocated firm processing capacity will increase to 32 mmcf/d, with additional processing available on an interruptible basis. Total plant capability is expected to increase to a range of 65 mmcf/d to 80 mmcf/d.

  • Also, as part of this expansion, the forecast gas liquids recovery at the new portion of the Blair facility is expected to increase to approximately 15 to 20 bbls/mmcf. Accordingly, Painted Pony expects to realize an average liquids recovery of double its current rate at Blair once this expansion is operational.

  • Earlier this year, the Company completed the acquisition of certain working interests in the Cypress area Montney gas trend. As a result of this transaction, coupled with additional mineral rights obtained at recent Crown land sales, Painted Pony currently has 101,267 net acres of Montney rights, or approximately 160 net sections.

Painted Pony previously announced that it is a founding member of the BC LNG Export Cooperative group (please refer to the Company's press release dated February 15, 2012). The Company continues to pursue a strong interest in this project and anticipates that additional details will become available during the second half of 2012. The BC LNG export facility is expected to become operational in 2014.

Painted Pony believes that its Montney gas assets in northeastern British Columbia are ideally situated to deliver physical gas supply to west coast LNG projects. The strategic nature of such assets was recently highlighted when a multinational Asian company announced an all-cash takeover bid for one of the key producers on the Montney gas trend. In commenting on this proposed transaction, Mr. Patrick Ward, President & CEO of Painted Pony, said "We are encouraged by the keen interest shown by major offshore players in Canada's natural gas resources, particularly well-positioned assets like those of Painted Pony."


In Saskatchewan, Painted Pony continues to enjoy success on its Bakken and Mississippian light oil projects. To date in 2012, the Company has brought on-stream 5 (4.7 net) new light oil wells. The Company is currently completing and tying-in an additional 7 (5.3 net) wells, all of which are expected to come on-stream in the next 30 days. For the balance of 2012, Painted Pony expects to participate in the drilling of at least 7 (3.3 net) wells. In addition, the Company expects to commence water injection on its planned Bakken pressure maintenance scheme at Midale late in the third quarter. The Company currently has two operated drilling rigs active in Saskatchewan.

Painted Pony has also recently completed drilling operations on a deep exploratory test at Flat Lake, which is targeting multiple prospective zones in the Mississippian, Devonian and Ordovician formations. This well has been cased to total depth and completion operations are expected to commence within the next several weeks.


During the first half of 2012, the Company expanded its exploration program in western Canada to include several new light oil projects in Alberta. Painted Pony recently finished completion and testing operations on its first exploratory well targeting Viking light oil in the Wimborne district. This well failed to produce commercial volumes of oil and instead flowed natural gas at modest rates. At the present time, the Company has no plans to tie this well into production facilities. Painted Pony continues to evaluate other Viking opportunities throughout central Alberta, including possible additional locations at greater Wimborne. The Company's current budget contemplates the drilling of up to 2 (2.0 net) additional Viking test wells in the last half of 2012.


Painted Pony's current field-estimated total production is approximately 5,900 boe/d, weighted 77% to gas. Second quarter 2012 field-estimated production averaged approximately 5,700 boe/d, 75% gas-weighted.

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Painted Pony Petroleum Ltd. was recognized as a TSX Venture 50® Company in 2012. TSX Venture 50 is a trade-mark of TSX Inc. and is used under license.


Special Note Regarding Forward-Looking Information

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

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, and natural gas prices will remain low, throughout 2012; (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) production rates in 2012 are expected to show growth from 2011; (v) Painted Pony will have sufficient financial resources with which to conduct the capital program; and (vi) 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 its future plans and operations, the planning and development of certain prospects, production estimates and liquid recovery estimates, 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 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, 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, including the amount of proceeds, that the Company will derive therefrom. All subsequent 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.

Special Note Regarding Disclosure of Crude Oil and Natural Gas Volumes

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: 1 bbl, utilizing a conversion ratio at 6 Mcf: 1 bbl may be misleading as an indication of value.

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) 238-1487 (FAX)