Painted Pony Announces Operational and Townsend Facility Update

CALGARY, Jan. 13, 2016 /CNW/ - Painted Pony Petroleum Ltd. ("Painted Pony" or the "Corporation") (TSX: PPY) is pleased to announce a strong operational start to 2016, ongoing success in obtaining firm transportation service, and an update on construction of the new gas processing facility in the Townsend area by AltaGas Ltd. ("AltaGas") ("AltaGas Townsend Facility" or the "Facility"). 

AltaGas Townsend Facility Ahead of Schedule
Construction of the Facility is progressing well ahead of schedule and is now approximately 70 percent complete.  As a result, AltaGas and Painted Pony expect to commission the Facility earlier than initially scheduled.  Recent photos and aerial videos of the construction site illustrating the ongoing progress can be viewed on the Painted Pony website at http://paintedpony.ca/investors/Media-Gallery/

Firm Transportation
Painted Pony has signed an agreement with TransCanada Corporation ("TransCanada") to participate in the Towerbirch Expansion Project that will provide the Corporation with 130 MMcf/d of firm transportation service.  When combined with Painted Pony's firm transportation service to Sunset Creek, this expansion will provide direct physical access into the AECO system.  This will greatly diversify Painted Pony's sales point options.  The Towerbirch Expansion Project could be completed as early as November 2017.  The 130 MMcf/d of firm transportation service will represent approximately 45 percent of Painted Pony's estimated natural gas sales volume at that time. 

Operational Update
Painted Pony is actively drilling three wells and plans to drill a total of 29 (net) wells in 2016 driving daily production volumes to over 240 Mmcfe/d (40,000 boe/d) by year end.  While Painted Pony had planned for a September 1, 2016 Facility commissioning, the Corporation is confident that the current drilling and completions schedule provides sufficient flexibility to meet an earlier start date. 

Pricing Update
Painted Pony currently delivers the majority of its natural gas production to Spectra's Station 2 receipt point in British Columbia ("Station 2").  Recent easing of third-party pipeline maintenance restrictions has narrowed the pricing differential between Station 2 and AECO.  Station 2 to AECO spot pricing differential, which averaged $0.89/Mcf in 2015, has averaged approximately $0.55/Mcf year-to-date in 2016 and continues to narrow. During the fourth quarter of 2015, the Station 2 spot price averaged approximately $1.13/Mcf while Painted Pony averaged a realized price of approximately $2.01/Mcfe.  Spot pricing at Station 2 on January 13, 2016 was $2.42/Mcf, just $0.01/Mcf below spot pricing offered at AECO of $2.43/Mcf.  Painted Pony has hedged 75 percent of current production at an average AECO price of $3.03/Mcf through 2016 and to the end of the first quarter of 2017.

Production
Painted Pony production averaged approximately 105 Mmcfe/d (17,500 boe/d) during the first ten days of January 2016, based on field estimates.  Production during the first quarter of 2016 is forecast to average approximately 16,500 boe/d. Production was curtailed in the fourth quarter of 2015 to average approximately 90 MMcf/d (15,000 boe/d) as a result of weak Station 2 pricing. 

ADVISORIES

Boe Conversions:  Barrel of oil equivalent amounts have been calculated by using the conversion ratio of six thousand cubic feet (6 Mcf) of natural gas to one barrel of oil (1 bbl).  Boe amounts may be misleading, particularly if used in isolation.  A boe conversion ratio of 6 Mcf to 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.

Mcfe Conversions:  Thousands of cubic feet of gas equivalent amounts have been calculated by using the conversion ratio of one barrel of oil (1 bbl) to six thousand cubic feet (6 Mcf) of natural gas.  Mcfe amounts may be misleading, particularly if used in isolation.  A conversion ratio of 1 bbl to 6 Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Forward-Looking Information:  This press release contains certain forward-looking information within the meaning of Canadian securities laws.  Forward-looking information relates to future events or future performance and is based upon the Corporation's current internal expectations, estimates, projections, assumptions and beliefs.  All information other than historical fact is forward-looking information.  Words such as "plan", "expect", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words that indicate events or conditions may occur are intended to identify forward-looking information.  In particular, this press release contains forward looking information relating to: the AltaGas Townsend Facility construction completion timeframe; the number of wells anticipated to be drilled in 2016; 2016 exit production rates; anticipated firm transportation service and the timing of such service, as a result of the planned TransCanada Towerbirch Expansion Project; anticipated firm transportation service to Sunset Creek; the Corporation's production volume anticipated in November 2017; an expectation that the differential between Station 2 and AECO pricing will continue to narrow and may return to historical levels; and first quarter 2016 expected average daily production. 

Forward-looking information is based on assumptions including but not limited to future commodity prices, currency exchange rates, drilling success, production rates future capital expenditures and the availability of labor and services.  With respect to future wells, a key assumption is the validity of geological and technical interpretations performed by the Corporation's technical staff, which indicate that commercially economic volumes can be recovered from the Corporation's lands.  Estimates as to production rates assume that no material unexpected outages occur in the infrastructure the Corporation relies upon to produce its wells, that existing wells continue to meet production expectations and that future wells scheduled to come on production meet timing and production rate expectations.

Undue reliance should not be placed on forward-looking information, as there can be no assurance that the plans, intentions or expectations on which they are based will occur.  Although the Corporation's management believes that the expectations in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.

Forward-looking information necessarily involves both known and unknown risks associated with oil and gas exploration, production, transportation and marketing.  There are risks associated with the uncertainty of geological and technical data, imprecision of reserve estimates, operational risks, risks associated with drilling and completions, the risk that anticipated project timelines change, environmental risks, risks of the change in government regulation of the oil and gas industry, risks associated with competition from others for scarce resources and risks associated with general economic conditions affecting the Corporation's ability to access sufficient capital.  Additional information on these and other risk factors that could affect operational or financial results are included in the Corporation's most recent Annual Information Form and in other reports filed with Canadian securities regulatory authorities. 

Forward-looking information is based on estimates and opinions of management at the time the information is presented.  The Corporation is not under any duty to update the forward-looking information after the date of this press release to revise such information to actual results or to changes in the Corporation's plans or expectations, except as required by applicable securities laws. 

ABBREVIATIONS

Natural Gas

Natural Gas Liquids

Mcf

thousand cubic feet

bbls

barrels

Mcf/d

thousand cubic feet per day

bbls/d

barrels per day

MMcf/d

million cubic feet per day

NGL

natural gas liquids

boe

barrels of oil equivalent

Mcfe

thousand cubic feet equivalent

boe/d

barrels of oil equivalent per day

Mcfe/d

thousand cubic feet equivalent per day



MMcfe

million cubic feet equivalent



MMcfe/d

million cubic feet equivalent per day

ABOUT PAINTED PONY
Painted Pony is a publicly-traded natural gas Corporation based in Western Canada.  The Corporation is primarily focused on the development of natural gas and natural gas liquids from the Montney formation in northeast British Columbia.  Painted Pony's common shares trade on the Toronto Stock Exchange under the symbol "PPY".

SOURCE Painted Pony Petroleum Ltd.

For further information: Patrick R. Ward, President and CEO, (403) 475-0440; John H. Van de Pol, Senior Vice President and CFO, (403) 475-0440; Jason Fleury, Director, Investor Relations, (403) 776-3261, www.paintedpony.ca

RELATED LINKS
www.paintedpony.ca

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