From the Wires
Painted Pony Reports Third Quarter 2012 Financial Results and Recent Montney Well Results
By: Marketwired .
Nov. 21, 2012 08:31 PM
CALGARY, ALBERTA -- (Marketwire) -- 11/22/12 -- Painted Pony Petroleum Ltd. ("Painted Pony" or the "Company") (TSX VENTURE:PPY) is pleased to report its financial and operating results for the nine and three month periods ending September 30, 2012. Highlights for the third quarter of 2012 include:
-- production averaged 6,327 boe per day, an increase of 56% over the same period in 2011; -- funds flow from operations totaled $8.5 million ($0.12 per basic and diluted share); -- drilled 12 (8.2 net) wells, including 2 (1.2 net) wells on its Montney gas project in northeastern British Columbia and 10 (7.0 net) wells on the Company's light oil projects in southeastern Saskatchewan; and -- exited the quarter with no debt, a positive working capital position of $20.3 million and an undrawn demand credit facility of $100 million.
MONTNEY GAS OPERATIONS
Painted Pony has recently commenced completion and production testing operations on three 100% working interest horizontal Montney wells in the greater Blair area. An upper Montney well at c-B11-F/94-B-16 is currently flowing in-line to the non-operated third party Blair gas processing facility. Over the past seven days, this well has flowed at an average wellhead rate of 10.4 MMcf/d and at an average flowing casing pressure of 1,857 psi. The most recent 24-hour rate averaged 12.2 MMcf/d at an average flowing casing pressure of 1,520 psi. Painted Pony is encouraged by the early results from this well, as they are comparable to the initial rates reported from the Blair 41-F upper Montney well located approximately 2.7 kilometers north of c-B11-F and the Blair 8-F upper Montney well situated 4.5 kilometers west (please refer to press releases dated November 24, 2011 and January 9, 2012). Together, the Company believes these three wells delineate a region of high gas deliverability from the upper Montney zone along the southeastern portion of its Blair block.
Elsewhere at Blair, the c-C11-F/94-B-16 lower Montney well is currently flowing back on initial cleanup. In addition, the west Blair a-80-E/94-B-16 well is presently being completed in the upper, middle and lower Montney zones. Test results from these two wells are expected to be available prior to year-end.
LIGHT OIL OPERATIONS
Painted Pony continues to develop its light oil assets in southeastern Saskatchewan. During the first three quarters of 2012, the Company participated in the drilling of 17 (13.5 net) wells. Of these, 7 (5.3 net) wells were drilled and subsequently completed on the Bakken project in the Flat Lake area. During the fourth quarter of 2012, the Company expects to drill and complete an additional 3 (2.3 net) wells at Flat Lake.
In Alberta, Painted Pony is currently conducting testing operations on its second 100% working interest Viking exploratory well in the Wimborne area. Results are expected by year-end 2012. Elsewhere in Alberta, drilling operations have commenced on a third Viking exploratory well (100% working interest), which is testing a new play in the Corbett area.
During the third quarter, Painted Pony's production grew to average 6,327 boe/d (weighted 77% gas), an increase of 10% from average second quarter 2012 volumes of 5,745 boe/d (75% gas weighted). During the month of October 2012, the Company's field-estimated production averaged approximately 7,000 boe/d, weighted 75% to gas. The Company expects its British Columbia sales gas volumes to remain essentially flat for the last two months of 2012 due to current operational constraints at the Blair gas facility. Furthermore, certain existing Blair production has been temporarily restricted to permit in-line testing of the new 11-F pad wells.
In the third quarter, Painted Pony generated funds flow from operations of $8.5 million equating to $0.12 per basic and diluted share. The Company remains strong financially, exiting the third quarter of 2012 with no debt, a positive working capital position of $20.3 million and an undrawn demand credit facility of $100 million.
The Company continues to pursue the development and expansion of its Montney gas assets in northeastern British Columbia. In 2012, the Company expects to complete drilling operations on a total of 11 (6.8 net) Montney wells. For 2013, the Company has approved a capital budget of approximately $120 million, expected to be funded from cash flow and the existing credit facility. Approximately 80% of the budget has been allocated to Montney gas. During 2013, the Company expects to participate in 11 (9.4 net) Montney wells. This proposed Montney program will include step-out drilling in the Company's Cypress, northwest Blair and central Cameron blocks.
An updated presentation incorporating the Company's third quarter 2012 financial results will be available on the Company's website. Painted Pony's Common Shares trade on the TSX Venture Exchange under the symbol "PPY".
Financial and Operational Highlights
---------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, 2012 2011 2012 2011 ---------------------------------------------------------------------------- Financial (000s, except per share) Petroleum and natural gas revenue $ 16,913 $ 16,647 $ 51,538 $ 53,408 Funds flow from operations(1) $ 8,492 $ 9,159 $ 26,978 $ 31,633 Per share - basic(2) $ 0.12 $ 0.15 $ 0.38 $ 0.55 Per share - diluted(3) $ 0.12 $ 0.15 $ 0.38 $ 0.53 Cash flows from operating activities $ 7,581 $ 8,586 $ 27,414 $ 31,995 Net income (loss) and comprehensive income (loss) $ (2,594) $ 4,765 $ (7,442) $ 5,085 Per share - basic and diluted(2)(3) $ (0.04) $ 0.08 $ (0.11) $ 0.09 Capital expenditures(4) $ 33,533 $ 45,924 $ 84,482 $ 108,416 Working capital $ 20,309 $ 6,709 $ 20,309 $ 6,709 Total assets $ 476,260 $ 360,227 $ 476,260 $ 360,227 Shares outstanding Class A/ Common 70,648,127 59,633,673 70,648,127 59,633,673 Class B - 1,173,600 - 1,173,600 Basic weighted-average shares 70,460,984 59,592,021 70,080,812 58,027,694 Diluted weighted-average shares 70,460,984 61,334,305 70,080,812 59,299,501 Operational Daily sales volumes Oil (bbls per day) 1,214 1,312 1,299 1,464 Condensate (bbls per day) 65 41 55 51 NGL's (bbls per day) 161 50 138 94 Gas (mcf per day) 29,324 15,965 29,180 13,715 Total (boe per day) 6,327 4,064 6,355 3,895 Realized prices Oil (per bbl) $ 85.12 $ 89.48 $ 86.50 $ 92.16 Gas (per mcf) $ 2.38 $ 3.60 $ 2.24 $ 3.76 Field operating netbacks British Columbia (per boe) $ 8.95 $ 14.18 $ 7.43 $ 14.67 Saskatchewan (per boe) $ 40.84 $ 51.56 $ 49.12 $ 57.90 Company combined (per boe) $ 16.25 $ 26.73 $ 17.41 $ 32.66 ---------------------------------------------------------------------------- 1. This table contains the term "funds flow from operations", which should not be considered an alternative to, or more meaningful than "cash flows from operating activities" as determined in accordance with International Financial Reporting Standards ("IFRS") as an indicator of the Company's performance. Funds flow from operations and funds flow from operations per share (basic and diluted) does not have any standardized meaning prescribed by IFRS and may not be comparable with the calculation of similar measures for other entities. Management uses funds flow from operations to analyze operating performance and leverage and considers funds 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 funds flow from operations and cash flows from operating activities can be found in "Management's Discussion and Analysis". Funds flow from operations per share is calculated using the basic and diluted weighted average number of shares for the period, and after the deemed conversion of the Class B shares to Class A shares for 2011, consistent with the calculations of earnings per share. 2. Basic per share information is calculated on the basis of the weighted average number of Common (re-designated from Class A) shares outstanding in the period. 3. Diluted per share information reflects the potential dilution effect of options and, for 2011, the convertible Class B shares, each of which may be anti-dilutive. Comprehensive income is adjusted for the amount of finance expense applicable to the Class B shares for the period. The conversion of Class B shares into Class A shares, if dilutive, is computed by dividing $10 by the greater of $1.00 and the Current Trading Price, defined as the weighted average trading price of the Class A shares for the last 30 consecutive trading days. 4. Including decommissioning costs and share-based payments.
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. In addition, and without limiting the generality of the foregoing, the key assumptions underlying the forward-looking statements contained herein include the following: (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) operational constraints at the Blair gas processing facility will continue for the remainder of 2012; (vi) Painted Pony will have sufficient financial resources with which to conduct the capital program; and (vii) the current tax and regulatory regime will remain substantially unchanged. The reader is cautioned that certain or all of the forgoing assumptions may prove to be incorrect.
Certain information regarding Painted Pony set forth in this document, including its future plans and operations, anticipated well results, 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 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 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 (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 Disclosure of Reserves or Resources
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.
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