/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES/
CALGARY, Jan. 26 /CNW/ - Palliser Oil & Gas Corporation ("Palliser" or the "Company") (TSXV: PXL) is pleased to announce that it has acquired certain heavy oil
properties (the "Acquired Properties") which are currently producing
approximately 310 bbl/d (net) of heavy oil (the "Acquisition"). The
Acquired Properties are located adjacent to Palliser's existing Manitou
properties in the greater Lloydminster area. The total consideration
for the Acquisition is $14.0 million ($44,900 per bbl/d), comprised of
$9.5 million cash and 3.0 million Palliser common shares at a deemed
price of $1.50 per share. The Acquisition, which closed on January 26,
2011, with an effective date of January 1, 2011, is consistent with
Palliser's strategy of acquiring assets with large reserves of oil in
place and historically low recovery factors. The acquired assets are
100% working interest operated properties and include a battery and
salt water disposal facility.
Combined corporate production is currently 1,400 to 1,500 boe/d (96%
heavy oil weighting), after accounting for the Acquisition.
The following table outlines the forecasted Company interest reserves
for the Acquired Properties, effective January 1, 2011:
Total Proved plus Probable
10% NPV (1)
Estimated net present values do not represent fair market value.
Company interest reserves are working interest reserves prior to the
deduction of royalties and include royalty interests.
The Acquired Properties were evaluated based on Palliser's internal
engineering report in accordance with NI 51-101, using GLJ's price
forecast effective January 1, 2011.
The Acquired Properties provide Palliser with another opportunity to
utilize the High Volume Lift (HVL) methodology which the Company has
been developing, with excellent results to date in the Edam,
Saskatchewan field. Palliser intends to increase production from the
Acquired Properties through optimization of existing producing wells,
conversion of an existing shut in well to water disposal (for which
regulatory approval has already been received) and reactivation of
wells which are currently shut in. The Company expects that several
drilling locations will be identified by utilizing the existing 3
dimensional seismic which was acquired as part of the Acquisition.
The cash to close the Acquisition of approximately $9.5 million was
funded through bank debt. The Company also issued 3.0 million common
shares to the vendor. As at January 26, 2011, the Company has 37.6
million common shares outstanding and 40.2 million common shares on a
fully diluted basis.
Concurrent with this property acquisition, the Company's credit facility
with its lender has been increased from $7.0 million to $16.0
million. The $16.0 million credit facility consists of a $12.0
million operating loan facility ("Facility 1") with interest payable at
prime plus 2.0% per annum and no set terms of repayment, and a $4.0
million operating loan facility ("Facility 2") with interest payable at
prime plus 3.5% per annum and payable in full on the earlier of demand
or May 31, 2011. The next annual review is scheduled for March 31,
2011. If Facility 1 is increased subsequent to the next annual review,
then Facility 2 will be decreased by the amount of that increase.
Outlook and Revised 2011 Guidance
Palliser anticipates that the heavy oil focused capital program in 2011
will be funded from the substantial free cash flow generated by the
asset base and the Company's credit facility. Palliser's revised
guidance for 2011 is for a $39.1 million capital program (including the
Acquired Properties cost of $14.0 million), average yearly production
between 1,900 to 2,050 boe/d (97% crude oil weighting), and 2011 exit
production between 2,350 to 2,600 boe/d. The Company's guidance
includes maintaining a strong balance sheet, with quarterly debt to
annualized cash flow of less than 1.0 throughout the year and continued
top quartile capital efficiency.
The Company's corporate presentation has been updated and is available
on 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 conventional heavy oil production in
the greater Lloydminster area of both Alberta and Saskatchewan.
Certain statements contained in this news release constitute
forward-looking statements that involve known and unknown risks,
uncertainties and other factors that may cause actual results or events
to differ materially from those anticipated in such forward-looking
statements. No assurance can be given that these expectations will
prove to be correct and such forward-looking statements included in
this release should not be unduly relied upon. Information and
statements in this news release relating to "resources" are deemed to
be forward looking information and statements, as they involve the
implied assessment, based on certain estimates and assumptions, that
the resources described exist in the quantities predicted or estimated,
and that the resources described can be profitably produced in the
future. Actual results could differ materially as a result of changes
in Palliser's plans, changes in commodity prices, regulatory changes,
general economic, market and business conditions as well as production,
development and operating performance and other risks associated with
oil and gas operations including anticipated success of resource
prospects and the expected characteristics of resource prospects;
uncertainties inherent in estimating quantities of resources;
anticipated capital requirements, project rates of return and estimated
project life; estimates of original discovered resource; estimates of
recovery factors; lack of diversification; and overall technical and
economic feasibility of the Company's projects. These statements speak
only as of the date of this release or as of the date specified in the
documents accompanying this release, as the case may be. The Company
undertakes no obligation to publicly update or revise any
forward-looking statements except as expressly required by applicable
Disclosure provided herein in respect of boes 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. All boe conversions in this press release are derived
by converting gas to oil according to this 6 mcf to 1 bbl ratio.
The TSX Venture Exchange has neither approved nor disapproved the
contents of this press release.
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
SOURCE Palliser Oil
For further information: