Painted Pony Announces Second Quarter 2013 Financial Results, Operational Update and $125 Million Credit Facility

Painted Pony Announces Second Quarter 2013 Financial Results, Operational 
Update and $125 Million Credit Facility 
CALGARY, ALBERTA -- (Marketwired) -- 08/13/13 -- Painted Pony
Petroleum Ltd. ("Painted Pony" or the "Company") (TSX VENTURE:PPY) is
pleased to report its financial and operating results for the three
and six month periods ending June 30, 2013. Highlights for the second
quarter of 2013 include: 
OPERATIONS UPDATE 


 
--  production averaged 7,928 barrels ("bbls") of oil equivalent ("boe") per
    day ("boe/d") (weighted 82% gas), an increase of 38% over the second
    quarter of 2012. During the quarter, over 1,500 boe/d remained shut-in
    due to weather related curtailments and infrastructure capacity
    constraints. During the first week of August, field estimated volumes
    averaged over 9,200 boe/d; 
--  generated funds flow from operations of $12.6 million, representing an
    increase of 64% over the second quarter of 2012; 
--  achieved funds flow from operations per basic and diluted share of
    $0.14, an increase of 27% over the second quarter of 2012; 
--  generated average field operating netbacks of $19.96 per boe. British
    Columbia field operating netbacks grew to $14.61 per boe, an increase of
    186% from the second quarter of 2012; 
--  participated in the drilling of 2 (1.3 net) wells, with 1 (1.0 net) well
    targeting Montney gas and 1 (0.3 net) wells targeting light oil. In the
    first half of 2013, the Company participated in the drilling of 9 (5.0
    net) wells, with 6 (3.6 net) wells targeting Montney gas and 3 (1.4 net)
    wells targeting light oil. Overall to date, Painted Pony has
    participated in the drilling of 42 (22.7 net) wells on the Company's
    Montney gas project; and 
--  exited the second quarter of 2013 with a positive working capital
    position of $7.3 million and an undrawn demand credit facility of $100
    million.

 
CORPORATE UPDATE 
Painted Pony also announces the following corporate developments: 


 
--  Painted Pony entered into $125 million syndicated credit facilities with
    three chartered banks (the "Facilities"); and 
--  Painted Pony applied for Depository Trust Company ("DTC") eligibility
    with respect to the Company's common shares.

 
MONTNEY GAS OPERATIONS 
Painted Pony continues to pursue the development and expansion of its
Montney gas assets in northeastern British Columbia. During the
second quarter of 2013, the Company drilled a second 100% well on the
91-F/94-B-16 pad, targeting the upper Montney. To date during 2013,
the Company has drilled or is currently drilling a total of 8 (5.6
net) Montney horizontal wells. A further 5 (4.0 net) horizontal wells
are expected to be drilled during the balance of 2013, including 2
(2.0 net) new wells on the liquids-rich project at Townsend. 
Townsend 
In the second quarter of 2013, the Company equipped two 100% working
interest wells on the 11-J/94-B-09 pad, which were completed and
tested during the first half of 2013 on lands acquired in December
2012. Earlier this year, Painted Pony announced two 100% working
interest wells in the Townsend block (please refer to press release
dated March 27, 2013). 
These wells proved to be a challenge to bring on production due to
their robust wellhead flow rates and high associated liquids content.
Both wells have experienced intermittent production due to area
facility constraints associated with the higher than expected gas
production rates and free condensate liquids yields of the wells.  
The Lower Montney well on the Townsend 11-J pad was produced for 7.1
days during the second quarter of 2013 and it flowed at approximately
1,819 boe/d of field-estimated raw gas, including wellhead
condensate. This well has continued to produce through a third party
facility since early July. The Upper Montney well on the Townsend
11-J pad was then produced for a period of 5.2 days during the second
quarter of 2013, at which time it flowed at approximately 2,230 boe/d
of field-estimated raw gas, including wellhead condensate. This well
is expected to remain shut-in until late in 2013, when a new operated
gas processing facility, including enhanced liquids-handling
capacity, is expected to come on-stream. This facility will have
sufficient additional capacity for the next two (2.0 net) Townsend
wells planned for the fourth quarter of 2013.  
Blair 
During the second quarter of 2013, Painted Pony drilled a second 100%
working interest Upper Montney horizontal well on the 91-F/94-B-16
pad. The two Upper Montney wells on this pad were subsequently
completed and tested, and have now been placed onto production, after
flowing at a total peak 24-hour rate of 15.3 million cubic feet of
gas per day (please refer to press release dated July 25, 2013). They
were completed using different completion and stimulation techniques;
one was completed using an open-hole ball drop system, and the other
was completed using a cased-hole perf-and-plug system. The Company
continues to closely monitor the performance of these wells, as they
provide important comparative data concerning the efficiency of
open-hole ball-drop completions in the Blair area. Previously,
Painted Pony had enjoyed success with ball-drop style completions in
the Townsend area. 
In the third quarter to-date, Painted Pony has drilled two 100%
working interest Montney horizontal wells on the 14-F/94-B-16 pad
targeting the Middle Montney and the Lower Montney. These wells are
scheduled to be completed immediately and tied in to the Blair Creek
gas plant for testing and production. 
Gundy/Cameron 
In the first quarter of 2013, 2 (0.4 net) additional horizontal wells
were drilled on the Gundy 75-J/94-B-09 pad and are currently being
completed and production tested. Test results from these wells are
expected later in this quarter. 
Cypress 
In May 2013, following the completion of repairs to an area pipeline,
production resumed from the Cypress area. In addition, the Company is
continuing its field reactivation activities which include various
upgrades to processing and disposal facilities. 
LIGHT OIL OPERATIONS 
In Saskatchewan, Painted Pony has participated in the drilling of 3
(1.4 net) wells to-date this year, of which 1 (0.3 net) Bakken well
was drilled at Flat Lake during the second quarter of 2013. This well
has been completed and is expected be placed onto production
immediately. 
At Midale, Saskatchewan, the Company has received all necessary
approvals to implement a pilot pressure maintenance program on its
Bakken project. This water injection scheme is expected to improve
overall oil recovery by up to 50 percent from current levels.
Injection is expected to commence during the third quarter of 2013.  
Painted Pony continues to maintain an inventory of light oil
opportunities, focusing on the continuing development of lower-risk
projects in southeastern Saskatchewan. A further 5 (3.1 net) wells
targeting light oil are expected to be drilled during the balance of
this year.  
PRODUCTION 
During the second quarter of 2013, Painted Pony's production averaged
7,928 boe/d (weighted 82% gas), a 38% increase over the same period
in 2012. Spring break-up and adverse weather conditions along with
scheduled and un-scheduled plant turnarounds in both British Columbia
and Saskatchewan affected several of the Company's key producing
properties during the second quarter. Consequently, over 1,500 boe/d
of production was shut-in during this period (please refer to press
release dated July 25, 2013). 
Painted Pony's field-estimated sales volumes for July were
approximately 8,700 boe/d (82% gas-weighted). During the first week
of August, field-estimated volumes averaged over 9,200 boe/d.  
FINANCIAL RESOURCES 
In the second quarter of 2013, Painted Pony generated funds flow from
operations of $12.6 million, equating to $0.14 per basic and diluted
share. Cash flow from operations in the second quarter of 2013 was
$15.7 million. The Company exited the second quarter of 2013 with a
positive working capital position of $7.3 million and a demand credit
facility of $100 million. 
SYNDICATED CREDIT FACILITIES 
On August 8, 2013, the Company entered into the $125 million
syndicated credit Facilities with three chartered banks consisting of
the National Bank of Canada (as administrative agent), Alberta
Treasury Branches and the Canadian Imperial Bank of Commerce.  
The Facilities have a committed borrowing base of $125 million and
replaces Painted Pony's demand credit facility of $100 million. The
Facilities revolve for a 364 day period plus a one year term-out,
which are extendible annually, and are subject a semi-annual review.  
DTC ELIGIBILITY 
The Company has applied for eligibility status for its common shares
by DTC, a subsidiary of the Depository Trust & Clearing Corporation.
DTC is the world's largest post-trade financial services company. DTC
provides electronic clearance, settlement, and information services
for the vast majority of the equities and other securities in the
U.S. Trading of securities through DTC allows for cost-effective
clearing and guaranteed settlement, thus enhancing the attractiveness
of DTC eligible shares to investors. 
PERSONNEL 
Painted Pony has welcomed Nereus L. Joubert to the Company's Board of
Directors. Dr. Joubert was elected by the shareholders at the
Company's annual and special meeting of shareholders held on June 5,
2013. Dr. Joubert has held several executive positions in the Sasol
Group of companies in the past 19 years including the role of Country
President of Sasol Canada between March 2011 and June 2013, when he
retired from Sasol. He has served as director on the boards of
subsidiaries of Sasol Limited (a NYSE and Johannesburg Securities
Exchange listed company) including Sasol Petroleum International
(Pty) Limited, Sasol Synfuels (Pty) Limited and Sasol's Canadian
legal entities.  
The Company also welcomes Mr. John Van de Pol as the Company's
Vice-President, Finance and Chief Financial Officer, effective
September 3, 2013. Mr. Van de Pol is a Chartered Accountant with more
than 33 years of oil and gas industry experience (please refer to
press release dated July 22, 2013). Mr. Van de Pol will replace Ms.
Joan E. Dunne, upon her retirement as Vice President, Finance and
Chief Financial Officer of the Company. Ms. Dunne will continue with
the Company in an advisory role until December 31, 2013. The Board
would like to thank Ms. Dunne for her leadership as a founder and as
the Chief Financial Officer of the Company since inception, and
wishes her all the best in her retirement. 
Financial and Operating Highlights 
(unaudited) 


 
----------------------------------------------------------------------------
                               Three months ended          Six months ended 
----------------------------------------------------------------------------
                             June 30,    June 30,     June 30,     June 30, 
                                 2013        2012         2013         2012 
----------------------------------------------------------------------------
Financial ($ millions, except per share and                                 
 shares outstanding)                                                        
Petroleum and natural gas                                                   
 revenue(1)                      24.4        15.1         49.4         34.6 
Funds flow from                                                             
 operations(2)                   12.6         7.7         26.7         18.5 
  Per share - basic(3)                                                      
   and diluted(4)                0.14        0.11         0.30         0.26 
Cash flow from operating                                                    
 activities                      15.7         8.0         27.3         19.8 
Comprehensive income                                                        
 (loss)                           0.7        (3.5)        (1.1)        (4.8)
  Per share - basic(3)                                                      
   and diluted(4)                0.01       (0.05)       (0.01)       (0.07)
Capital expenditures(5)          15.2        13.4         67.7         50.9 
Working capital(6)                7.3        42.3          7.3         42.3 
Total assets                    595.4       450.6        595.4        450.6 
Shares outstanding(7)      88,488,760  70,427,027   88,488,760   70,427,027 
Diluted weighted-average                                                    
 shares                    88,653,311  70,036,445   88,383,367   69,888,637 
                                                                            
Operational                                                                 
Daily sales volumes                                                         
  Gas (mmcf per day)             39.2        25.9         40.0         29.1 
  Oil (bbls per day)            1,006       1,270        1,205        1,341 
  NGL's (bbls per day)            385         155          393          176 
  Total (boe per day)           7,928       5,745        8,260        6,369 
Realized prices                                                             
  Gas ($ per mcf)                3.79        2.01         3.56         2.16 
  Oil ($ per bbl)               93.30       83.27        90.05        87.13 
Field operating                                                             
 netbacks(8)($ per boe)                                                     
  British Columbia              14.61        5.11        14.30         6.64 
  Saskatchewan                  51.87       50.78        49.25        53.01 
  Company combined              19.96       16.94        20.07        17.98 
----------------------------------------------------------------------------
 
1.  Before royalties 
2.  This 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, consistent with the calculations of earnings
    per share. 
3.  Basic per share information is calculated on the basis of the weighted
    average number of shares outstanding in the period. 
4.  Diluted per share information reflects the potential dilution effect of
    options, which may be anti-dilutive. 
5.  Including decommissioning expenditures and share-based payments. 
6.  This table contains the term "working capital". Working capital does not
    have any standardized meaning prescribed by IFRS and may not be
    comparable with the calculation of similar measures for other entities.
    Management calculates working capital as current assets less current
    liabilities and uses working capital to analyze operating performance
    and leverage. 
7.  Class A shares at December 31, 2011 were re-designated as Common shares
    effective June 7, 2012. 
8.  This table contains the term "field operating netbacks". Field operating
    netback does not have any standardized meaning prescribed by IFRS and
    may not be comparable with the calculation of similar measures for other
    entities. Management calculates field operating netback on a per unit
    basis as oil gas and natural gas liquids revenues less royalties and
    transportation and operating costs.

 
Painted Pony is a Canadian oil and gas exploration company that
trades on the TSX Venture Exchange under the symbol "PPY". 
For more information please visit www.paintedpony.ca.   
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.  
Advisory 
This news release also contains other industry benchmarks and terms,
such as working capital (calculated as current assets less current
liabilities), funds flow from operations (calculated by adding to
cash flows from operating activities the changes in non-cash working
capital and decommissioning expenditures) and field operating
netbacks (calculated on a per unit basis as oil, gas and natural gas
liquids revenues less royalties and transportation and operating
costs), which are not recognized measures under IFRS. These measures
are commonly utilized in the oil and gas industry and are considered
informative for management and stakeholders. Painted Pony's method of
calculating field operating netbacks may not be comparable to that
used by other companies. Field operating netbacks should not be
viewed as an alternative to cash flow from operations or other
measures of financial performance calculated in accordance with IFRS.
Per unit field operating netbacks reflect revenues less royalties,
transportation and operating costs divided by production for the
period. Painted Pony's method of calculating field operating netbacks
may not be comparable to the method used by other companies. 
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 2012; (v) Painted Pony will
have sufficient financial resources with which to conduct the
proposed capital program; (vi) Painted Pony's timing estimates for
completion and bringing wells onto production will prove correct and
(vii) 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 news
release, including its future plans and operations, anticipated well
results, and the planning and development of certain prospects, may
constitute forward-looking statements and forward-looking information
(collectively the "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 the
Company's Management's Discussion and Analysis for the year ended
December 31, 2012 and the Company's Annual Information Form for the
year ended December 31, 2012 and in reports which are on file with
the 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. 
Barrels of oil equivalent ("boe") may be misleading, particularly if
used in isolation. A boe conversion ratio of six thousand cubic feet
of gas ("mcf") to one barrel of oil ("bbl") (6 mcf:1 bbl) is used as
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 news release are derived by
converting natural gas to oil in the ratio of six mcf of gas to one
barrel of oil. 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 ratio of
6:1 may be misleading as an indication of value.  
The well test results disclosed in this news release represent
short-term results, which may not necessarily be indicative of
long-term well performance or ultimate hydrocarbon recovery
therefrom.
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)
www.paintedpony.ca
 
 
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