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CALGARY, June 27, 2012 /CNW/ - Palliser Oil & Gas Corporation ("Palliser" or the "Company") (TSXV: PXL) is pleased to provide an operations update. The Company's second quarter 2012 production, based on field estimates, is anticipated to average approximately 1,950 boe/d, weighted 97% to heavy oil, up 8% from the first quarter of 2012 production average of 1,806 boe/d and up 59% compared to the second quarter of 2011 production average of 1,225 boe/d. The Company's current production, based on field estimates, is estimated to be approximately 2,300 boe/d. Palliser's production has grown in each of the last thirteen consecutive quarters achieving strong production per share growth in each of the last three consecutive years.
The second quarter 2012 heavy oil capital program included two (2.0 net) wells drilled or re-entered and two (2.0 net) wells reactivated with an overall success rate of 100%. In addition, the Company drilled one (1.0 net) salt water disposal ("SWD") well and one new SWD facility became operational during the quarter.
The Company has realized significant reductions in operating costs largely as a result of reduced water handling costs and increased production. Based on field estimates, second quarter 2012 operating costs are in the range of $23 - $24/boe and the Company is on track to average approximately $23/boe for the 2012 fiscal year.
Palliser continues to build an inventory of heavy oil prospects through the addition of new lands and the acquisition of additional proprietary seismic in the Company's greater Lloydminster core area. During the second quarter, the Company expanded its undeveloped Lloydminster heavy oil land position to 23,617 net acres, an increase of 20% from 19,618 net acres in the first quarter of 2012. The Company continues to grow its heavy oil prospect inventory which now stands at 160 locations, providing a multi-year drilling inventory and significant growth opportunities for future capital programs.
Capital spending in the second quarter is estimated to be $8 million and the Company is projecting to have spent approximately $17 million year to date out of the $30 million capital budget for 2012. At the end of the second quarter the Company estimates net debt to be approximately $32 million under a current total credit facility of $38 million. Palliser has a significant oil hedge position with approximately 50% of budgeted production volumes hedged for the second half of 2012 and comparable volumes hedged for the first half of 2013. These hedged volumes are at prices in the range of $20 - $25/bbl greater than current market prices, which provides the Company with greater cash flow support offsetting weaker commodity prices. Palliser is on track to meet its previously announced exit production guidance (December 2012 average) of 2,600 - 2,800 boe/d (98% oil weighting), with average daily production targeting the lower end of the guidance range of 2,250 - 2,350 boe/d, however, the Company is closely monitoring commodity prices and capital expenditures to ensure the integrity of its balance sheet.
For further information regarding Palliser Oil & Gas Corporation, the reader is invited to visit the Company's website at www.palliserogc.com. A copy of this press release is available at www.sedar.com or the Company's website at www.palliserogc.com.
Palliser is a Calgary-based emerging junior oil and gas company currently focused on high netback heavy oil production in the greater Lloydminster area of both Alberta and Saskatchewan.
Certain statements contained herein constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation, including, but not limited to management's assessment of future plans and operations, including: commodity focus; drilling plans and potential locations; expected production levels; development plans; reserves growth; production and operating sales and expenses; reservoir characteristics; the results of applying certain operational development techniques; certain economic factors; and capital expenditures. Forward-looking statements are typically identified by words such as "anticipate", "estimate", "expect", "forecast", "may", "will", "project" and similar words suggesting future events or performance or may be identified by reference to a future date. In addition, statements relating to oil and gas reserves and resources are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves or resources described, as the case may be, exist in the quantities predicted or estimated and can be profitably produced in the future. With respect to forward-looking statements herein, Palliser has made assumptions regarding, among other things; future capital expenditure levels; future oil and natural gas prices; "differentials" between West Texas Intermediate and Western Canadian Select benchmark pricing; future oil and natural gas production levels; future water disposal capacity; future exchange rates and interest rates; ability to obtain equipment and services in a timely manner to carry out development activities; ability to market oil and natural gas successfully to current and new customers; the impact of increasing competition; the ability to obtain financing on acceptable terms; and the ability to add production and reserves through development and exploitation activities. Although Palliser believes that the expectations reflected in the forward-looking statements contained herein, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included herein, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve numerous risks and uncertainties that contribute to the possibility that the forward-looking statements will not occur, which may cause Palliser's actual performance and financial results in future periods to differ materially from any estimates or projections. Additional information on these and other factors that could affect Palliser's results are included in reports on file with Canadian securities regulatory authorities, including the Company's Annual Information Form, and may be accessed through the SEDAR website at www.sedar.com.
The forward-looking statements contained herein speak only as of the date hereof. Except as expressly required by applicable securities laws, Palliser does not undertake any obligation to, nor does it intend to, publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained herein are expressly qualified by this cautionary statement. In addition, readers are cautioned that historical results are not necessarily indicative of future performance.
Production volumes are commonly expressed on a barrel of equivalent ("BOE") basis whereby natural gas volumes are converted at a ratio of six thousand cubic feet to one barrel of oil. The intention is to convert oil and natural gas measurement units into one basis for improved analysis of results and comparisons with other industry participants. The term BOE may be misleading, particularly if used in isolation. The conversion ratio is based on an energy equivalent method and does not represent an economic value equivalency at the wellhead.
Neither the 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 Press release.
For further information:
President and CEO
Allan B. Carswell
Vice President, Exploration and COO
Ivan J. Condic
Vice President, Finance and CFO