Press release from Marketwire
Painted Pony Reports Second Quarter 2012 Financial Results
Tuesday, August 21, 2012
Painted Pony Reports Second Quarter 2012 Financial Results08:30 EDT Tuesday, August 21, 2012CALGARY, ALBERTA--(Marketwire - Aug. 21, 2012) -Painted Pony Petroleum Ltd. (TSX VENTURE:PPY) ("Painted Pony" or the "Company") is pleased to report its financial and operating results for the six and three month periods ending June 30, 2012. Highlights include:grew production in the first half of 2012 to average 6,369 boe per day (weighted 76% gas and 24% oil and liquids), an increase of 67% over the same period in 2011; produced funds flow from operations of $7.7 million, $0.11 per basic and diluted share in the second quarter of 2012; drilled 12 (9.7 net) wells in the first half of 2012, with 2 (1.9 net) wells drilled in the second quarter; generated an average second quarter 2012 field operating netback of $5.11 per boe for British Columbia gas weighted assets and $50.78 per boe for Saskatchewan oil weighted assets; and exited the quarter with a positive working capital position of $42.3 million and an undrawn demand credit facility of $100 million. NORTHEAST BC MONTNEY GAS OPERATIONS Painted Pony continues to develop its natural gas asset in the Montney formation of northeastern British Columbia. During the first half of 2012, Painted Pony completed drilling operations on 4 (2.2 net) new Montney wells. The Company is currently completing 4 (1.4 net) Montney wells. During the third quarter, the Company plans to conduct completion and testing operations on a total of 5 (2.4 net) Montney wells. In the balance of this year, the Company expects to drill up to 3 (2.2 net) additional Montney wells, of which 2 (2.0 net) wells are expected to be completed and tested in the fourth quarter.The third party gas plant expansion at Blair (previously announced in the Company's December 21, 2011 press release) became fully operational on August 19, 2012. Painted Pony's allocated firm processing capacity has increased to 32 mmcf/d, with additional processing available on an interruptible basis. As part of this expansion, the forecast gas liquids recovery at the new Blair facility is expected to increase to between 15 and 20 bbls/mmcf. Accordingly, Painted Pony expects to realize an average liquids recovery of double its current rate at Blair once this expansion is optimized. Earlier this year, the Company completed the acquisition of certain working interests in the Cypress area Montney gas trend. As a result of this transaction, coupled with additional mineral rights obtained at recent Crown land sales, Painted Pony currently has 101,700 net acres of Montney rights, or approximately 160 net sections.The Company continues to pursue a strong interest in the BC LNG Export Cooperative group and anticipates that additional details will become available during the second half of 2012. The BC LNG Co-operative group has indicated they expect the export facility to become operational in 2014. LIGHT OIL OPERATIONS In Saskatchewan, operations are continuing on the Company's Bakken and Mississippian light oil projects. In the first half of 2012, the Company drilled 7 (6.5 net) wells and have drilled an additional 7 (5.4 net) wells to-date in the third quarter. In the balance of 2012, the Company is planning to drill an additional 9 (4.6 net) wells. Painted Pony expects to commence water injection on its planned Bakken pressure maintenance scheme at Midale late in the third quarter. During the first half of 2012, the Company expanded its exploration program in western Canada to include several new light oil projects in Alberta. While the recently completed and tested first exploratory well targeting Viking light oil in the Wimborne district failed to produce commercial volumes of oil, Painted Pony continues to evaluate other Viking opportunities throughout central Alberta, including possible additional locations at Wimborne. The Company's current budget contemplates the drilling of up to 2 (2.0 net) additional Viking test wells in the last half of 2012.PRODUCTION During the second quarter, Painted Pony's production averaged 5,745 boe/d (weighted 75% gas and 25% oil and liquids), representing an increase of 60% over second quarter 2011 volumes of 3,593 boe/d. Sales from Saskatchewan operations averaged 1,489 boe/d in the quarter (93% oil and liquids), while sales from northeast British Columbia averaged 4,256 boe/d (99% gas). To date, during the third quarter of 2012, field estimated sales have averaged approximately 5,400 boe/d, weighted 76% gas. With the expanded third party Blair facility on-stream this past weekend, the Company's curtailed Montney gas volumes (previously announced in the Company's July 30, 2012 press release) are expected to be placed on-stream. FINANCIAL RESOURCES Over the second quarter, Painted Pony generated funds flow from operations of $7.7 million equating to $0.11 per basic and diluted share. The Company remains strong financially, exiting the second quarter of 2012 with a positive working capital position of $42.3 million, combined with an undrawn demand credit facility of $100 million.OUTLOOK Painted Pony's operations in the second half of 2012 will be focused on high netback, light oil opportunities and further delineation of our large resource liquids rich Montney gas assets in northeast BC. We continue to pursue opportunities to be a supplier of gas to the west coast LNG projects, and are closely watching recent industry consolidations of Montney gas assets. An updated presentation incorporating the Company's second quarter 2012 financial results will be available on the Company's website. Painted Pony Common Shares trade on the TSX Venture Exchange under the symbol "PPY". Financial and Operational Highlights(unaudited)Three months ended June 30,Six months ended June 30,2012201120122011Financial (000s, except per share)Petroleum and natural gas revenue$15,111$17,446$34,625$36,761Funds flow from operations(1)$7,695$10,376$18,486$22,474Per share - basic and diluted(2)(3)$0.11$0.17$0.26$0.39Cash flow from operating activities$7,986$11,854$19,833$23,409Net income (loss) and comprehensive income (loss)$(3,523)$(1,824)$(4,848)$320Per share - basic and diluted(2)(3)$(0.05)$(0.03)$(0.07)$0.01Capital expenditures(4)$13,402$37,406$50,949$62,492Working capital$42,343$40,327$42,343$40,327Total assets$450,606$326,471$450,606$326,471Shares outstandingClass A/ Common70,427,02759,532,67370,427,02759,532,673Class B-1,173,600-1,173,600Basic weighted-average shares70,036,44559,359,27669,888,63757,232,566Diluted weighted-average shares70,036,44559,359,27669,888,63758,350,719OperationalDaily sales volumesOil (bbls per day)1,2701,2741,3411,541Condensate (bbls per day)39595057NGL's (bbls per day)11691126116Gas (mcf per day)25,92013,01229,10712,572Total (boe per day)5,7453,5936,3693,809Realized pricesOil (per bbl)$83.27$102.10$87.13$93.32Gas (per mcf)$2.01$3.95$2.16$3.86Field operating netbacksBritish Columbia (per boe)$5.11$15.66$6.64$14.99Saskatchewan (per boe)$50.78$66.48$53.01$60.41Company combined (per boe)$16.94$35.76$17.98$35.85This table contains the term "funds flow from operations", which should not be considered an alternative to, or more meaningful than "cash flows from operating activities" as determined in accordance with International Financial Reporting Standards ("IFRS") as an indicator of the Company's performance. Funds flow from operations and funds flow from operations per share (basic and diluted) does not have any standardized meaning prescribed by IFRS and may not be comparable with the calculation of similar measures for other entities. Management uses funds flow from operations to analyze operating performance and leverage and considers funds flow from operations to be a key measure as it demonstrates the Company's ability to generate the cash necessary to fund future capital investment. The reconciliation between funds flow from operations and cash flows from operating activities can be found in "Management's Discussion and Analysis". Funds flow from operations per share is calculated using the basic and diluted weighted average number of shares for the period, and after the deemed conversion of the Class B shares to Class A shares for 2011, consistent with the calculations of earnings per share.Basic per share information is calculated on the basis of the weighted average number of Common (re-designated from Class A) shares outstanding in the period.Diluted per share information reflects the potential dilution effect of options and, for 2011, the convertible Class B shares, each of which may be anti-dilutive. Comprehensive income is adjusted for the amount of finance expense applicable to the Class B shares for the period. The conversion of Class B shares into Class A shares, if dilutive, is computed by dividing $10 by the greater of $1.00 and the Current Trading Price, defined as the weighted average trading price of the Class A shares for the last 30 consecutive trading days.Including decommissioning costs and share-based payments.For more information please visit www.paintedpony.ca. Painted Pony Petroleum Ltd. was recognized as a TSX Venture 50® Company in 2012. TSX Venture 50 is a trade-mark of TSX Inc. and is used under license.Advisory Special Note Regarding Forward-Looking Information This news release contains certain forward-looking statements, which are based on numerous assumptions including but not limited to: (i) drilling success; (ii) production; (iii) future capital expenditures; and (iv) cash flow from operating activities. In addition, and without limiting the generality of the foregoing, the key assumptions underlying the forward-looking statements contained herein include the following: (i) commodity prices will be volatile, and natural gas prices will remain low, throughout 2012; (ii) capital, undeveloped lands and skilled personnel will continue to be available at the level Painted Pony has enjoyed to date; (iii) Painted Pony will be able to obtain equipment in a timely manner to carry out exploration, development and exploitation activities; (iv) production rates in 2012 are expected to show growth from 2011; (v) Painted Pony will have sufficient financial resources with which to conduct the capital program; and (vi) the current tax and regulatory regime will remain substantially unchanged. The reader is cautioned that certain or all of the forgoing assumptions may prove to be incorrect.Certain information regarding Painted Pony set forth in this document, including its future plans and operations, anticipated well results, and the planning and development of certain prospects, may constitute forward-looking statements under applicable securities laws and necessarily involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Painted Pony's control, including without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, environmental risks, inability to obtain drilling rigs or other services, capital expenditure costs, including drilling, completion and facility costs, unexpected decline rates in wells, wells not performing as expected, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, and stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof. Readers are cautioned that the foregoing list of factors is not exhaustive. Painted Pony's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Company will derive therefrom. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.Additional information on these and other factors that could affect Painted Pony's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) or Painted Pony's website (www.paintedpony.ca).The forward-looking statements contained in this document are made as at the date of this news release and Painted Pony does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. Special Note Regarding Disclosure of Reserves or Resources BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 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 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 Mcf: 1 bbl, utilizing a conversion ratio at 6 Mcf: 1 bbl may be misleading as an indication of value.FOR FURTHER INFORMATION PLEASE CONTACT: Patrick R. WardPainted Pony Petroleum Ltd.President & CEO(403) 475-0440(403) 238-1487 (FAX)ORJoan E. DunnePainted Pony Petroleum Ltd.Vice President, Finance & CFO(403) 475-0440(403) 238-1487 (FAX)OR300, 602 - 12 Ave SWPainted Pony Petroleum Ltd.Calgary, AB T2R 1J3(403) 475-0440(403) 238-1487 (FAX)www.paintedpony.caNeither 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 news release.