CALGARY, Jan. 31, 2018 /CNW/ - Painted Pony Energy Ltd. ("Painted Pony" or the "Corporation") (TSX: PONY) is pleased to announce preliminary 2017 fourth quarter average daily production volumes, an update on first quarter 2018 field operations as well as changes to the executive team.
Daily production volumes for the fourth quarter of 2017 averaged approximately 315 MMcfe/d (52,500 boe/d), based on preliminary results, and included approximately 9% liquids or approximately 4,500 Bbls/d. These production volumes are consistent with previous guidance range of 306 MMcfe/d (51,000 boe/d) to 318 MMcfe/d (53,000 boe/d) provided in the December 14, 2017 press release. Production volumes during the fourth quarter of 2017 were impacted by approximately 48 MMcfe/d (8,000 boe/d) of voluntary pricing-related production shut-ins.
Daily production volumes to-date during January 2018 averaged more than 360 MMcfe/d (60,000 boe/d), based on field estimates and included approximately 5,200 Bbls/d of liquids or approximately 9% of production volumes.
First quarter 2018 daily production volumes are expected to average between 360 MMcfe/d (60,000 boe/d) and 370 MMcfe/d (62,000 boe/d). Full-year 2018 annual average daily production guidance remains unchanged with volumes expected to average between 366 MMcfe/d (61,000 boe/d) and 378 MMcfe/d (63,000 boe/d). Liquids volumes for 2018 are expected to average approximately 9% and deliver between 5,200 Bbls/d and 5,500 Bbls/d, with approximately half of those expected liquids volumes to be high-netback condensate.
Commodity Risk Management
Painted Pony is well-positioned to mitigate much of the near-term commodity price weakness in western Canadian natural gas pricing through a combination of fixed-price physical delivery agreements, basis contracts, and financial hedging. Approximately 52% of expected 2018 production volumes are protected at a volume-weighted average price of $3.47/Mcfe. This includes 54% of projected 2018 natural gas production at a volume-weighted average fixed price of $2.97/Mcf and 62% of projected 2018 liquids production at a volume-weighted average fixed price of $64.16/Bbl. Painted Pony will continue to watch the forward commodity price curve and opportunistically hedge future production volumes to further mitigate commodity price volatility.
Patrick Ward, Painted Pony's President and CEO, remarked "We continue to manage our business in a financially prudent manner during a time of volatile natural gas pricing. While the current natural gas price outlook calls for caution, Painted Pony's sales points are well-diversified which should, when combined with our fixed prices contracts, provide significant pricing protection. We remain committed to ensuring the 2018 capital program is executed with precision and cost-discipline."
First quarter 2018 activity is expected to result in a total of 14 wells drilled. Four wells are expected in the liquids-rich area of Townsend of which one has been rig released. Nine wells are expected in the Blair area of which two have been rig released. One well was planned in the liquids-rich area of Beg and it has already been rig released.
Completions during the first quarter of 2018 are anticipated to total 13. In the Blair area, seven completions are expected with three already finished to-date. A total of six completions at Townsend are expected during the first quarter with four already finished to-date.
Capital costs during the first quarter of 2018 remain consistent with 2017 historical averages, with drill costs averaging approximately $1.9 million per well and completions costs averaging approximately $2.1 million per well.
Mr. Bruce Hall, Vice President, Land will retire effective February 28, 2018. Mr. Hall joined Painted Pony in May 2008 and was appointed Vice President, Land in September 2012. His contributions have been a significant part of the Corporation's success during the past 10 years. The Corporation and the Board of Directors thank him for his contributions and wish him all the best in his retirement.
Mr. Derek Aylesworth, Senior Vice President and Chief Financial Officer has advised the Corporation that he will resign, effective March 7, 2018, to pursue other business opportunities. Mr. Aylesworth will assist the Corporation in completing its year-end financial statement filing obligations prior to his departure. The Corporation and the Board of Directors thank Mr. Aylesworth for his contributions to Painted Pony and wish him well in his future endeavors. Painted Pony has commenced a search for Mr. Aylesworth's replacement and will be considering both internal and external candidates.
Effective March 7, 2018, Mr. Stuart Jaggard, Vice President, Finance, will be appointed Interim CFO of the Corporation until a successor to Mr. Aylesworth is determined.
Currency: All amounts referred to in this press release are stated in Canadian dollars unless otherwise specified.
Boe Conversions: Barrel of oil equivalent ("boe") 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. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalent of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Mcfe Conversions: Thousands of cubic feet of gas equivalent ("Mcfe") 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. Given that the value ratio based on the current price of natural gas as compared to oil is significantly different from the energy equivalent of 1:6, utilizing a conversion on a 1:6 basis may be misleading as an indication of value.
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 expected daily production volumes in the first quarter of 2018, the expected full-year 2018 annual average daily production volumes, the expected 2018 liquids volumes, the expected number of wells drilled and completed during the first quarter of 2018, and the expected capital costs, drill costs, and completions costs in the first quarter of 2018.
Forward-looking information is based on certain expectations and assumptions including but not limited to future commodity prices, currency exchange rates interest rates, royalty rates and tax rates; the state of the economy and the exploration and production business; the economic and political environment in which the Corporation operates; the regulatory framework; anticipate timing and results of capital expenditures; the sufficiency of budgeted capital expenditures to carry out planned operations; operating, transportation, marketing and general and administrative costs; 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 average annual and exit production 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 in the remainder of 2017 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. As a consequence, actual results may differ materially from those anticipated.
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, operational risks, risks associated with drilling and completions, 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.
Any "financial outlook" contained in this press release, as such term is defined by applicable securities laws, is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes
ABOUT PAINTED PONY
Painted Pony is a publicly-traded natural gas company 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 TSX under the symbol "PONY".
SOURCE Painted Pony Energy Ltd.
For further information: Patrick R. Ward, President and CEO, (403) 475-0440; W. Derek Aylesworth, Senior Vice President and CFO; (403) 475-0440; Jason W. Fleury, Director, Investor Relations, (403) 776-3261, [email protected], www.paintedpony.ca