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CALGARY, Oct. 13, 2014 /CNW/ - Palliser Oil & Gas Corporation ("Palliser" or the "Company") (TSX VENTURE: PXL) wishes to provide an operations update.
In the third quarter of 2014, Palliser completed a seven (4.25 net) well capital program. The seven well capital program was a part of farmout agreements in which the capital expenditures on the program were completed at minimal cash cost to Palliser, with certain surface equipment for most of the wells supplied from Palliser's inventory of surplus equipment.
At Manitou, Saskatchewan, one (0.3 net before payout & 0.5 net after payout) well was drilled, cased and completed for heavy oil production and placed on production in September.
At Marwayne, Alberta, four (2.8 net) wells were reactivated in August and September. All four Marwayne wells have been completed for heavy oil production and placed on production in September.
At Neilburg, Saskatchewan, two (1.15 net) wells were drilled, cased and completed for heavy oil production and placed on production in September.
Palliser is the operator of all of these wells. Early results from the capital program are encouraging. However, these project wells had minimal contribution (approximately five (5) bbl/d) to Q3 production and are expected in the aggregate to contribute significantly to Q4 production.
Based on field estimates, average net production for the 3rd quarter was approximately 1,180 boe/d, representing a 13% shortfall as compared to the July 30, 2014 forecast of 1,360 boe/d for Q3 and a 32% decrease over the prior quarter of 1,739 boe/d. Production in the third quarter was impacted by four significant items. Firstly, Palliser sold approximately 125 bbl/d, effective June 1, 2014, to Maha Energy Inc. ("Maha") in a negotiated business deal. Secondly, Palliser intentionally conducted short term shut-ins of some producing wells for asset protection due to the off-setting drilling operations discussed above. Thirdly, Palliser intentionally shut-in approximately 250 bbl/d of uneconomic production in the core area of Edam. Finally, a forecast decline of approximately 30% per annum in existing wells was observed due to their maturity.
The 250 bbl/d that was shut-in at Edam had high operating costs and the resulting loss of production had a neutral impact on cash flow from production. The producing wells that were shut-in due to off-setting drilling have all returned to production. Palliser expects production to increase significantly over the fourth quarter as the new drills and reactivations are optimized and the previously sold production is consolidated in the pro-forma company. Fourth quarter pro-forma production guidance of 1,550 – 1,650 boe/d is maintained. The Company forecasts net debt as at September 30, 2014 in the amount of approximately $47.7 million which is consistent with the July 30, 2014 forecast.
Palliser is a Calgary-based junior oil and gas company focused on high netback heavy oil production in the greater Lloydminster area of Alberta and Saskatchewan.
Forward Looking Statements
Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to, the completion and timing of the proposed amalgamation with Maha and matters related or incidental thereto, timing for recompleting or drilling wells, and the characteristics and plans of the pro-forma consolidated company. Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect. Although Palliser believes that the expectations reflected in its forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because Palliser can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding and are implicit in, among other things, the timely receipt of any required regulatory approvals (including shareholder approvals). Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.
Forward-looking information is based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Palliser and described in the forward-looking information. The forward-looking information contained in this press release is made as of the date hereof and Palliser undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.
United States Matters
This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Any financial outlook or future oriented financial information in this presentation, as defined by applicable securities legislation, has been approved by management of Palliser. Such financial outlook or future oriented financial information 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.
All calculations converting natural gas to barrels of oil equivalent ("boe") have been made using a conversion ratio of six thousand cubic feet (six "Mcf") of natural gas to one barrel of oil, unless otherwise stated. The use of boe may be misleading, particularly if used in isolation, as the conversion ratio of six Mcf of natural gas to one barrel of oil 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 crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
THE TECHNICAL INFORMATION CONTAINED IN THIS RELEASE HAS NOT BEEN FULLY REVIEWED BY THE TSX VENTURE EXCHANGE AND, AS SUCH, REMAINS SUBJECT TO CONTINUING REVIEW AND ACCEPTANCE BY THE EXCHANGE.
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 RELEASE.
SOURCE: Palliser Oil & Gas Corporation
For further information: PALLISER OIL & GAS CORPORATION: Kevin J. Gibson, President & CEO, [email protected], (403) 209-5717; or Ivan J. Condic, Vice President, Finance & CFO, [email protected], (403) 209-5718