Painted Pony Reports 2012 Year-End Reserves of 1.15 Tcfe and Montney Contingent Resources of 3.15 Tcfe

Painted Pony Reports 2012 Year-End Reserves of 1.15 Tcfe and Montney Contingent 
Resources of 3.15 Tcfe 
CALGARY, ALBERTA -- (Marketwire) -- 02/27/13 -- Painted Pony
Petroleum Ltd. ("Painted Pony" or the "Company") (TSX VENTURE:PPY) is
pleased to announce the Company's December 31, 2012 reserves report,
contingent resources estimate and undeveloped land report. 
The highlights of these reports include: 


 
--  increased proved plus probable ("P+P") reserves to 1.15 Tcfe, equating
    to 191 mmboe, up 40% from 137 mmboe at December 31, 2011, and an
    associated NPV, discounted at 10%, of $1.07 billion; 
--  a best estimate of contingent resources for the Company's Montney asset
    of 3.15 trillion cubic feet of gas equivalent ("Tcfe") equating to 525
    million boe ("mmboe"), with a net present value ("NPV"), discounted at
    10%, of $1.45 billion; 
--  grew P+P reserves per weighted average share by 18%; 
--  replaced 2012 production by 23.5 times; 
--  realized a year end P+P reserve life index ("RLI") of 71.3 years and a
    proved RLI of 16.0 years;  
--  achieved a 2012 P+P recycle ratio of 1.9 times, including future
    development costs ("FDC"), excluding the Kobes (Townsend) acquisition,
    based on the fourth quarter 2012 internally estimated netback of
    $21.21/boe; and 
--  increased the value of the Company's undeveloped net acreage to $196
    million.

 
CONSOLIDATED COMPANY RESERVES  
At December 31, 2012, the Company's consolidated P+P reserves were
191.1 mmboe (1.15 Tcfe), up 40% from 136.9 mmboe (0.82 Tcfe) at
December 31, 2011. Total proved reserves were 43.0 mmboe, as compared
to 31.4 mmboe at December 31, 2011, an increase of 37%. The NPV
associated with P+P reserves and proved reserves at December 31,
2012, discounted at 10%, was $1.07 billion and $345 million,
respectively. 
Painted Pony's internal production estimates are: 6,590 boe/d (77%
gas) for 2012 average production, and 7,290 boe/d (76% gas) for
average fourth quarter 2012 production. The Company's 2012 P+P
reserves additions replaced 2012 production by 23.5 times.  
The reserves data of the Company are based upon independent
evaluations by GLJ Petroleum Consultants Ltd. ("GLJ") and Sproule
Associates Limited ("Sproule") each with an effective date of
December 3
1, 2012 as contained in the consolidated report of GLJ
dated February 26, 2013 (the "Painted Pony Reserves Report"). The
tables below summarize Painted Pony's crude oil, natural gas liquids
("NGLs") and natural gas reserves and the NPV of future net revenue
attributable to such reserves, as evaluated in the Painted Pony
Reserves Report, based on GLJ's January 1, 2013 forecast prices and
costs assumptions. GLJ evaluated the Company's reserves on its
British Columbia properties and Sproule evaluated the Company's
reserves on its Saskatchewan properties. Sproule incorporated the GLJ
forecast prices and costs assumptions in their evaluation. GLJ
prepared the Painted Pony Reserves Report by consolidating the GLJ
evaluation results with the Sproule evaluation results, all run on
the GLJ forecast prices and costs assumptions. 


 
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Summary of Company Reserves(1),(3),(5)                                      
Forecast Prices and Costs                                                   
----------------------------------------------------------------------------
                                                                       As at
                                                                    December
                                           As at December 31, 2012  31, 2011
                                                 Natural                    
                           Light and   Natural       Gas                    
                          Medium Oil       Gas  Liquids     Total     Total 
                              (mbbl) (mmcf)(4)    (mbbl) (mboe)(2) (mboe)(2)
----------------------------------------------------------------------------
Proved                                                                      
 Developed producing           1,951    60,404     1,036    13,054     9,269
 Developed non-producing          19       247         5        65     2,017
 Undeveloped                     838   157,256     2,812    29,859    20,098
----------------------------------------------------------------------------
Total proved                   2,807   217,907     3,853    42,978    31,383
Probable                       2,145   794,744    13,563   148,165   105,494
----------------------------------------------------------------------------
Total proved plus probable     4,952 1,012,651    17,416   191,143   136,877
----------------------------------------------------------------------------

 
Notes: 
(1) Painted Pony's total working interest reserves are before
royalties owned by others.  
(2) Oil equivalent amounts (boe) have been calculated using a
conversion rate of six thousand cubic feet of natural gas per barrel
of oil (6 mcf: 1 bbl).  
(3) One thousand barrels is equal to 1 mbbl, and one tho
usand boe is
equal to 1 mboe. One million cubic feet of natural gas is equal to 1
mmcf.  
(4) Includes non-associated gas, associated gas and solution gas.  
(5) Numbers in this table are subject to rounding error. 


 
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Summary of Net Present Values of Future Net Revenue (1),(2),(3),(4)         
Forecast Prices and Costs ($ millions)                                      
Before Income Taxes                                                         
----------------------------------------------------------------------------
                          As at December 31, 2012    As at December 31, 2011
                             5%       8%      10%       5%       8%      10%
----------------------------------------------------------------------------
Proved                                                                      
  Developed producing       219      197      185      191      171      160
  Developed non-                                                            
   producing                  1        1        1       34       28       26
  Undeveloped               263      194      160      243      185      157
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Total proved                483      392      345      468      385      343
Probable                  1,327      909      720    1,279      892      719
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Total proved plus                                                           
 probable                 1,810    1,301    1,066    1,747    1,277    1,062
----------------------------------------------------------------------------

 
Notes: 
(1) Painted Pony's total working interest reserves are before
royalties owned by others. The estimated future net revenues are
stated before deducting income taxes and future estimated site
restoration costs and are reduced for estimated future abandonment
costs, the Saskatchewan Capital Tax and estimated capital for future
development associated with the reserves.  
(2) It should not be assumed that the undiscounted and discounted NPV
represent the fair market value of the reserves.  
(3) The price deck used for the evaluation as at December 31, 2012
was the GLJ price deck dated January 1, 2013.  
(4) Numbers in this table are subject to rounding error. 
The net change in FDC associated with the P+P reserves is $496
million and with the proved reserves is $100 million. Of the FDC
expenditures included in the Painted Pony Reserves Report for P+P
reserves, approximately 24% or $363 million are expected to be
incurred in 2013 and 2014, with the remainder expected to be invested
through 2019. The following table outlines the expected timing and
amounts of FDC. 


 
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Future Development Costs ($ millions)(1)                                    
                                                          Proved Proved plus
                                                                    Probable
----------------------------------------------------------------------------
As at December 31, 2012                                                     
2013                                                        81.0       112.5
2014                                                        96.3       250.7
2015                                                        41.2       228.4
2016                                                        70.6       271.4
2017                                                         9.2       335.3
2018                                                           -       242.5
2019                                                           -        82.4
----------------------------------------------------------------------------
Total                                                      298.3     1,523.2
----------------------------------------------------------------------------
As at December 31, 2011                                    197.9     1,027.3
----------------------------------------------------------------------------

 
Note: 
(1) Numbers in this table are subject to rounding error.  
The Company's reserves provide a proved RLI of 16.0 years and a P+P
RLI of 71.3 years, as compared to 16.4 and 71.7 years, respectively,
at December 31, 2011, based on fourth quarter annualized sales. The
growth in reserves volumes resulted from Painted Pony's successful
2012 drilling and acquisition program. 
Painted Pony's total capital expenditures (unaudited) in 2012 were
$241 million, including $109.3 million for the Kobes (Townsend)
acquisition and non-cash charges such as share-based payments and
decommissioning costs of approximately $7 million. 
BRITISH COLUMBIA MONTNEY CONTINGENT RESOURCES EVALUATION 
In addition to evaluating the Company's reserves, GLJ was engaged to
prepare an independent contingent resources evaluation of the
Company's BC Montney properties, using forecast prices and costs,
dated effective December 31, 2012. The most significant positive and
negative factors with respect to the contingent resources estimates
relate to the fact that the field is currently at an
evaluation/delineation stage. The Montney formation is aerially
extensive in this region, however well control is limited. Both
resources-in-place and productivity may be higher or lower than
current estimates. Additional drilling and testing are required to
confirm volumetric estimates and reservoir productivity for the
contingent resources to be reclassified as reserves.  


 
--------
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Summary of Company Montney Contingent Resources                             
Net Present Values of Future Revenue(1),(2),(3),(4),(5)                     
Forecast Prices and Costs                                                   
Before Income Taxes ($millions)                                             
----------------------------------------------------------------------------
                                                     As at December 31, 2012
                                            5%        8%       10%       12%
----------------------------------------------------------------------------
Low Estimate                             2,001     1,120       774       540
Best Estimate                            3,597     2,047     1,449     1,045
High Estimate                            5,421     3,103     2,217     1,621
----------------------------------------------------------------------------

 
Notes: 
(1) Painted Pony's total working interest contingent resources are
before royalties owned by others. The estimated future net revenues
are stated before deducting income taxes and future estimated site
restoration costs, and are reduced for estimated future abandonment
costs and estimated capital for future development associated with
the contingent resources.  
(2) It should not be assumed that the undiscounted a
nd discounted NPV
represent the fair market value of the contingent resources.  
(3) The estimates of NPV for individual properties may not reflect
the same confidence level as estimates of NPV for all properties, due
to the effects of aggregation.  
(4) The price deck used for the evaluation as at December 31, 2012
was the GLJ price deck dated January 1, 2013.  
(5) Numbers in this table are subject to rounding error. 


 
----------------------------------------------------------------------------
Summary of Company Montney Contingent Resources (1),(2),(3),(4),(5),(6)     
Forecast Prices and Costs                                                   
As at December 31, 2012                                                     
----------------------------------------------------------------------------
                      Low Estimate       Best Estimate       High Estimate  
                                                                            
                   (Bcfe)    (mmboe)    (Bcfe)   (mmboe)    (Bcfe)   (mmboe)
----------------------------------------------------------------------------
Gas                  2,008       335     2,980       497     4,116       686
Liquids                115        19       170        28       235        39
----------------------------------------------------------------------------
Total                2,123       354     3,150       525     4,352       725
----------------------------------------------------------------------------

 
Notes: 
(1) Painted Pony's total working interest of the contingent resources
are before royalties owned by others.   
(2) Oil equivalent amounts (boe) have been calculated using a
conversion rate of six thousand cubic feet of natural gas per barrel
of oil (6 mcf: 1 bbl).  
(3) Natural gas equivalent amounts (mcfe) have been calculated using
a conversion rate of 1 barrel of oil per six thousand cubic feet of
natural gas (1 bbl: 6 mcf).  
(4) One million boe is equal to 1 mmboe. One billion cubic feet of
gas equivalent is equal to 1 Bcfe.  
(5) The estimates of resources for individual properties may not
reflect the same confidence level as estimates of resources for all
properties, due to the effects of aggregation.  
(6) Numbers in this table are subject to rounding error. 
Contingent resources are those quantities of petroleum estimated, as
of a given date, to be potentially recoverable from known
accumulations using established technology or technology under
development, but which are not currently considered to be
commercially recoverable due to one or more contingencies
("contingent resources"). Contingencies which must be overcome to
enable the reclassification of contingent resources as reserves can
be categorized as economic, non-technical and technical. The Canadian
Oil and Gas Evaluation Handbook identifies nontechnical contingencies
as legal, economic, environmental, political and regulatory matters
or a lack of markets. There are several non-technical contingencies
that prevent the classification of the contingent resources estimated
above as being classified as reserves. The primary contingency which
prevents the classification of the Company's contingent resources as
reserves is the current early stage of development. Additional
drilling, completion and testing data is generally required before
Painted Pony can commit to their development. It is also appropriate
to classify as contingent resources the estimated discovered
recoverable quantities associated with a project in the early
evaluation stage. Contingent resources are further classified in
accordance with the level of certainty associated with the estimates
and may be subclassified based on project maturity and/or
characterized by their economic status. As additional drilling takes
place, it is expected that the contingent resources will be booked
into the reserves category. Estimates of contingent resources
described herein, including the corresponding estimates of before tax
present value estimates, are estimates only; the actual resources may
be higher or lower than those calculated in the GLJ British Columbia
Montney Contingent Resources Evaluation. There is no certainty that
it will be commercially viable or technically feasible to produce any
portion of the resources described in the evaluation. 
The most significant positive and negative factors with respect to
the contingent resource estimates relate to the fact that the field
is currently at an evaluation/delineation stage. Resource-in-place,
productivity and capital costs may be higher or lower than current
estimates. Additional drilling and testing are required to confirm
volumetric estimates and reservoir productivity for the contingent
resources to be reclassified as reserves. 
FDC associated with the best estimate contingent resources are $5
billion beginning in 2015 until 2037. For the first three years, from
2015 until 2017, inclusive, allocated FDC are $289 million. 
METHOD OF PREPARATION 
In this press release, "working interest" reserves are calculated as
the Company's share of reserves, excluding royalty interest reserves
and before the deduction of royalty burdens payable. The reserves
report was prepared utilizing definitions as set out under NI 51-101
- Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). 
UNDEVELOPED LAND  
At December 31, 2012, the Company's undeveloped lands in
Saskatchewan, British Columbia and Alberta were valued at $196
million. The land valuation was prepared by Seaton-Jordan &
Associates Ltd. in accordance with NI 51-101. 
Painted Pony is a Canadian oil and gas exploration company that
trades on the TSX Venture Exchange under the symbol "PPY". 
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 flows 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 2013; (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
2013 are expected to show growth from the fourth quarter of 2012; (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 assumptions used in the preparation of such information may
prove to be incorrect. 
Certain information regarding Painted Pony set forth in this
document, including estimates of the Company's reserves and
resources, estimates of future net revenue from the Company's
reserves and resources, pricing, inflation and exchange rates and
future development costs 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, including the amount of proceeds, 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  
Operating netback reflects revenues less royalties and transportation
and operating costs divided by production for the period. Painted
Pony's method of calculating operating netbacks may not be comparable
to that used by other companies. 
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.  
Mcfes may be misleading, particularly if used in isolation. A mcfe
conversion ratio of 1 bbl: 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 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.  
Estimates of reserves for individual properties may not reflect the
same confidence level as estimates of reserves for all properties due
to the effects of aggregation. 
Neither 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. 
Contacts:
Painted Pony Petroleum Ltd.
Patrick R. Ward
President & CEO
(403) 475-0440
(403) 238-1487 (FAX) 
Painted Pony Petroleum Ltd.
Joan E. Dunne
Vice President, Finance & CFO
(403) 475-0440
(403) 238-1487 (FAX) 
Painted Pony Petroleum Ltd.
300, 602 - 12 Ave SW
Calgary, AB T2R 1J3