Palliser Oil & Gas Corporation Reports Third Quarter 2013 Results

Palliser Oil & Gas Corporation Reports Third Quarter 2013 Results 
/NOT FOR DISTRIBUTION IN THE UNITED STATES NEWSWIRE SERVICES OR FOR 
DISSEMINATION IN THE UNITED STATES/ 
CALGARY, Nov. 14, 2013 /CNW/ - Palliser Oil & Gas Corporation ("Palliser" or 
the "Company") (TSX VENTURE:PXL) is pleased to announce financial and 
operating results for the three and nine months ended September 30, 2013. 
Certain selected financial and operational information is set out below and 
should be read in conjunction with Palliser's unaudited condensed financial 
statements complete with the notes to the financial statements and related 
MD&A which will be available on SEDAR at www.sedar.com and will also be posted 
on the Company's website at www.palliserogc.com on November 14, 2013. 
Operating & Financial Highlights - Three and Nine Months Ended September 30, 
2013 and 2012 (unaudited) 
 


                                                                           
                       Three months ended             Nine months ended 
                                               
                           September 30                  September 30

Operating                                   %                             %
                       2013       2012 Change        2013       2012 Change

Wells drilled,
re-entered or
reactivated                                    
(gross and
net)                                                                       

Oil                       3          6   -50%          15         12    25%

Salt water                                     
disposal                  1          1     0%           2          3   -33%

Total                     4          7   -43%          17         15    13%

Success (%)            100%       100%     0%        100%        93%     8%

Undeveloped
land Greater                                   
Lloydminster
(net acres)          36,007     29,760    21%      36,007     29,760    21%

Undeveloped
land Medicine                                  
Hat (net
acres)               12,885     33,522   -62%      12,885     33,522   -62%

Total
undeveloped                                    
land (net                                                
acres)               48,892     63,282   -23%      48,892     63,282   -23%

Average daily                                  
production                                                                 

Crude oil (bbl                                 
per day)              2,302      2,185     5%       2,400      1,936    24%

Natural gas                                    
(Mcf per day)           219        344   -36%         257        370   -31%

Barrels of oil
equivalent                                     
(boe per day,
6:1)                  2,339      2,242     4%       2,443      1,998    22%

Crude oil                                      
production (%)          98%        97%     1%         98%        97%     1%

Average sales                                  
prices                                                                     

Crude oil ($                                   
per bbl)          $   86.98  $   61.43    42%    $  69.80  $   64.02     9%

Natural gas ($                                 
per Mcf)          $    2.54  $    2.16    18%    $   2.97  $    2.03    46%

Barrels of oil
equivalent ($                                  
per boe, 6:1)     $   85.85  $   60.19    43%    $  68.90  $   62.43    10%

Operating
netback ($ per                                 
boe)                                                                       

Petroleum and
natural gas                                    
sales             $   85.85  $   60.19    43%    $  68.90  $   62.43    10%

Realized gain
(loss) on                                      
financial                                               
derivatives       $ (11.34)  $    7.92  -243%    $ (0.99)  $    3.43  -129%

Royalties         $   22.13  $   15.32    44%    $  16.96  $   14.73    15%

Production,
operating &                                    
transportation
expenses          $   26.59  $   21.45    24%    $  26.20  $   23.07    14%

Operating                                      
netback ((1))     $   25.79  $   31.34   -18%    $  24.75  $   28.06   -12%

  

                                                                                           

Financial ($000's except per                                          
share amounts)                                                                             
                             Three months ended                     Nine months ended 
                                                      
                                 September 30                          September 30
                                                   %                                      %
                           2013          2012 Change            2013          2012   Change
                                                                                           

Oil and natural                                                                     
gas sales         $      18,473 $      12,417    49%          45,942 $      34,174      34%
                                                                                           

Funds flow from                                                                            

  operating
  activities (                                                                      
  (2))            $       4,090 $       5,101   -20%   $      11,876 $      11,468       4%

Per share -
basic and                                                                           
diluted           $        0.06 $        0.09   -33%   $        0.19 $        0.21     -10%
                                                                                           

Net income                                                                          
(loss) and                                                                                 

  comprehensive                                                                     
  income (loss)   $     (1,443) $     (3,087)   -53%   $     (6,541) $       2,052    -419%

Per share -
basic and                                                                           
diluted           $      (0.02) $      (0.06)   -67%   $      (0.10) $        0.04    -350%
                                                                                           

Weighted                                                                            
average                                                                                    

  shares                                                                            
  outstanding        63,915,979    54,708,261    17%      63,348,213    54,324,392      17%

Shares                                                                              
outstanding          63,915,979    57,453,348    11%      63,915,979    57,453,348      11%
                                                                                           

Capital
expenditures (                                                                      
(3))              $       6,132 $      12,873   -52%   $      18,842 $      28,470     -34%

Working capital
(net debt) (                                                                        
(4))              $    (41,581) $    (35,884)    16%   $    (41,581) $    (35,884)      16%

Shareholders'                                                                       
equity            $      42,319 $      44,945    -6%   $      42,319 $      44,945      -6%
                                                                                           

((1))  Operating netback is a non-GAAP measure and is the net of
       petroleum and natural gas sales, realized gain or loss on
       financial derivatives, royalties and production, operating and
       transportation expenses.

((2))  Funds flow from operating activities is a non-GAAP measure that
       represents cash flow from operations less decommissioning
       expenditures and changes in non-cash working capital related to
       operating activities. Funds flow per share amounts are
       calculated using weighted average shares outstanding consistent
       with the calculation of net income per share. Funds flow from
       operating activities is a key measure as it demonstrates the
       Company's ability to generate the funds necessary to achieve
       future growth through capital investment.

((3))  Capital expenditures exclude decommissioning liability costs and
       capitalized share-based compensation.

((4))  Working capital (net debt) is a non-GAAP measure representing
       the total bank loan, accounts payable and accrued liabilities,
       less accounts receivable, deposits and prepaid expenses.

Management believes these are useful supplemental measures of, firstly, the 
total net position of current assets and current liabilities of the Company 
and secondly, the profitability relative to commodity prices. Other entities 
may calculate these figures differently than Palliser.

Third Quarter 2013 Highlights
    --  Achieved production of 2,339 boe per day. Production rose 4%
        compared to the third quarter of 2012;
    --  Achieved production, operating, and transportation expenses of
        $26.59 per boe. Production, operating and transportation
        expenses increased 24% compared to the third quarter of 2012;
    --  Achieved operating netback of $25.79 per boe. Operating
        netbacks decreased 18% compared to the third quarter of 2012;
    --  Recorded funds flow from operating activities of $4.1 million,
        or $0.06 per share in the third quarter. Funds flow from
        operating activities decreased 20% compared to $5.1 million in
        the third quarter of 2012;
    --  Executed a $6.1 million capital program in the third quarter.
        The third quarter capital program included three wells
        completed for heavy oil production with a 100% success rate;
    --  Increased undeveloped heavy oil land position. The Company's
        undeveloped heavy oil land position at September 30, 2013 was
        36,007 net acres, a 3% increase from June 30, 2013;
    --  Maintained a significant prospect inventory. The Company's
        prospect inventory stands at 140 locations, none of which are
        included in the 2012 independent reserves report; and
    --  Increased rail shipments to improve operating netbacks.
        Palliser increased rail shipments in the third quarter to 1,112
        barrels per day, or 48% of total sales volumes for the quarter.

Operations

The third quarter of 2013 saw capital expenditures totalling $6.1 million, 
representing 25% of the budgeted yearly capital program of $24 million. This 
100% working interest capital program included one new drill, one re-entry and 
one heavy oil reactivation. The Company also drilled a salt water disposal 
well and expanded its salt water disposal infrastructure during the quarter. 
Year to date, capital expenditures of $18.8 million include 15 wells completed 
for heavy oil production with a 100% success rate. The Company also increased 
its net undeveloped heavy oil land holdings to 36,007 net acres as at 
September 30, 2013.

As anticipated and previously announced, the third quarter of 2013 saw lower 
average production compared to the record production achieved in the second 
quarter of 2013. A prolonged spring breakup, which continued well into the 
third quarter contributed to significant downtime on several wells and delayed 
budgeted capital projects until late in the quarter. As a result, production 
declines outpaced additions.

Palliser continues to expand crude shipments by rail. The Company completed 
construction of a clean oil treating facility in the third quarter, which is 
estimated to increase capacity to ship crude by rail to 75% of total volumes, 
up from the previous capacity of approximately 50%.

Production, operating and transportation expenses in the third quarter were 
$26.59 per barrel, which represents a 24% increase from the third quarter of 
2012 and a 16% increase from the second quarter of 2013. The transportation 
component increased from $1.21 per boe in the third quarter of 2012 to $2.10 
per boe in the third quarter of 2013 as the Company intentionally incurred 
additional trucking costs to deliver oil to more lucrative rail contracts, 
which provide significantly higher netbacks. Production, operating and 
transportation costs for the nine month period ended September 30, 2013 were 
$26.20 per boe. The Company remains focused on being a sustainable low 
operating cost heavy oil producer.

Financial

The third quarter of 2013 saw a significant increase in West Texas 
Intermediate ("WTI") crude oil pricing, which averaged $106 per barrel. 
Palliser's realized crude oil sales price increased by 42% from $61 per barrel 
in the third quarter of 2012 to $87 per barrel in the third quarter of 2013. 
Palliser had a significant portion of volumes hedged in the current quarter at 
WTI CAD pricing of $96 per barrel. As a result, the Company realized hedging 
losses in the quarter that offset a portion of the increase in the realized 
crude oil sales price. Operating netbacks in the third quarter were $25.79 per 
boe which is an 18% reduction from the prior year comparative quarter. Funds 
flow from operating activities for the quarter amounted to $4.1 million, or 
$0.06 per share, compared to $5.1 million, or $0.09 per share in the third 
quarter last year.

The Company's net debt at the end of the third quarter was $42 million, 
relative to a current total credit facility of $52 million. A reduction of 
funds flow in the third quarter compared to the second quarter, resulted in a 
third quarter debt to annualized funds flow from operating activities ratio of 
2.5 times, compared to 1.6 times in the second quarter. The remaining $6 
million capital program budgeted for 2013 will be financed through funds flow 
from operating activities and existing credit facilities with year-end net 
debt forecast to be approximately $44 million.

Outlook

The majority of third quarter capital projects were delayed until late in the 
third quarter and early fourth quarter. As a result, production additions from 
these wells will not be seen until the fourth quarter. In addition, the 
Company experienced water breakthrough in a number of CHOPS wells in the 
Manitou area, resulting in a loss of approximately 250 barrels per day of oil 
production. The Company has been installing a new salt water disposal facility 
and pipelines, and anticipates that the new facility will be operational by 
the end of November. This new salt water disposal infrastructure will allow 
the affected wells to be optimized using high volume lift.

The fourth quarter capital program has been very busy thus far with 
approximately $5 million spent, leaving approximately $1 million of the 2013 
capital budget remaining to be spent. Production additions from the third and 
fourth quarter capital program are anticipated to result in production gains 
through the remainder of the year.

Based on field estimates, October production averaged approximately 2,200 boe 
per day, and the Company is forecasting fourth quarter production to average 
between 2,400 - 2,450 boe per day. Similarly, 2013 annual production is now 
forecast to average between 2,400 - 2,450 boe per day, approximately 100 boe 
per day lower than previously forecast.

To reduce funds flow risk from commodity price volatility, Palliser has 
significant crude oil volumes hedged. The Company currently has approximately 
64% of forecasted fourth quarter 2013 production volumes hedged at an average 
WTI CAD price of approximately $96 per barrel and approximately 14% of fourth 
quarter 2013 volumes hedged at an average Western Canada Select (WCS) price of 
approximately $72 per barrel. The Company also has significant volumes hedged 
at WTI CAD fixed price swaps for calendar 2014.

Palliser is currently shipping approximately 60% of its oil production by rail 
to the Gulf Coast. The Company is realizing a significant price premium on 
volumes shipped by rail. The Company will look to continue to increase its oil 
shipments by rail in light of the currently wide heavy oil differentials.

Management Changes

The Company announces the departure of Mr. Brett Frostad, Vice President 
Exploration. Mr. Frostad is leaving Palliser to pursue other opportunities. 
Palliser would like to thank Brett for his contributions to the Company. 
Palliser also announces the appointment of Mr. Lamont Brooks as Exploration 
Manager. Mr. Brooks has been a long standing employee with the Company, most 
recently as Senior Explorationist.

On behalf of the Board of Directors,

"Signed" Kevin J. Gibson
Chief Executive Officer

"Signed" Allan B. Carswell
President and Chief Operating Officer

November 14, 2013 Calgary, Alberta

For further information regarding Palliser Oil & Gas Corporation, the reader 
is invited to visit the Company's website at www.palliserogc.com.

Palliser is a Calgary-based emerging junior oil and gas company currently 
focused on high netback heavy oil production in the greater Lloydminster area 
of both Alberta and Saskatchewan.

Advisory Regarding Forward-Looking Statements
Certain statements contained herein constitute forward-looking statements or 
information (collectively "forward-looking statements") within the meaning of 
applicable securities legislation, including, but not limited to management's 
assessment of future plans and operations, including: commodity focus; 
drilling plans and potential locations; expected production levels; expected 
transportation methods; development and acquisition plans; reserves growth; 
production and operating sales and expenses; reservoir characteristics; the 
results of applying certain operational development techniques; certain 
economic factors; and capital expenditures. In addition, statements relating 
to oil and gas reserves and resources are deemed to be forward-looking 
statements as they involve the implied assessment, based on certain estimates 
and assumptions, that the reserves or resources described, as the case may be, 
exist in the quantities predicted or estimated and can be profitably produced 
in the future. With respect to forward-looking statements herein, Palliser has 
made assumptions regarding, among other things; future capital expenditure 
levels; future oil and natural gas prices; "differentials" between West Texas 
Intermediate and Western Canada Select benchmark pricing; future oil and 
natural gas production levels; future water disposal capacity; future exchange 
rates and interest rates; ability to obtain equipment and services in a timely 
manner to carry out development activities; ability to market oil and natural 
gas successfully to current and new customers; the ability to ship volumes by 
rail; the impact of increasing competition; the ability to obtain financing on 
acceptable terms; and the ability to add production and reserves through 
development and exploitation activities.

Although Palliser believes that the expectations reflected in the 
forward-looking statements contained herein, and the assumptions on which such 
forward-looking statements are made, are reasonable, there can be no assurance 
that such expectations will prove to be correct. Readers are cautioned not to 
place undue reliance on forward-looking statements included herein, as there 
can be no assurance that the plans, intentions or expectations upon which the 
forward-looking statements are based will occur. By their nature, 
forward-looking statements involve numerous risks and uncertainties that 
contribute to the possibility that the forward-looking statements will not 
occur, which may cause Palliser's actual performance and financial results in 
future periods to differ materially from any estimates or projections. 
Additional information on these and other factors that could affect Palliser's 
results are included in reports on file with Canadian securities regulatory 
authorities, including the Company's Annual Information Form, and may be 
accessed through the SEDAR website at www.sedar.com.

The forward-looking statements contained herein speak only as of the date 
hereof. Except as expressly required by applicable securities laws, Palliser 
does not undertake any obligation to, nor does it intend to, publicly update 
or revise any forward-looking statements. The forward-looking statements 
contained herein are expressly qualified by this cautionary statement. In 
addition, readers are cautioned that historical results are not necessarily 
indicative of future performance.

Barrels of Oil Equivalent Conversions
Production volumes are commonly expressed on a barrel of equivalent (boe) 
basis whereby natural gas volumes are converted at a ratio of six thousand 
cubic feet to one barrel of oil. The intention is to convert oil and natural 
gas measurement units into one basis for improved analysis of results and 
comparisons with other industry participants. The term boe may be misleading, 
particularly if used in isolation. The conversion ratio is based on an energy 
equivalent method and does not represent an economic value equivalency at the 
wellhead.

Non-GAAP Measurements
The Company evaluates its performance using several criteria, including funds 
flow from operating activities and funds flow from operating activities per 
share. Funds flow from operating activities is a non-GAAP measure that 
represents cash flow from operating activities less decommissioning 
expenditures and changes in non-cash working capital related to operating 
activities. Funds flow per share amounts are calculated using weighted average 
shares outstanding consistent with the calculation of net income per share. 
Funds flow from operating activities is a key measure as it demonstrates the 
Company's ability to generate the funds necessary to achieve future growth 
through capital investment.

The Company also assesses its performance utilizing operating netback. 
Operating netback represents the profit margin associated with the production 
and sale of petroleum and natural gas, and is calculated as petroleum and 
natural gas revenue, less realized gain or loss on financial derivatives, 
royalties and production, operating and transportation expenses, on a barrel 
of oil equivalent basis.

Working capital (net debt) is a non-GAAP measure representing the total bank 
loan, accounts payable and accrued liabilities, less accounts receivable, 
deposits and prepaid expenses.

These non-GAAP measures are not standardized and therefore may not be 
comparable to similar measures utilized by other entities.

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 release.





SOURCE  Palliser Oil & Gas Corporation 
Kevin J. Gibson CEO kgibson@palliserogc.com (403) 209-5717 
or 
Allan B. Carswell President and COO acarswell@palliserogc.com (403) 209-5709 
or 
Ivan J. Condic Vice President, Finance and CFO icondic@palliserogc.com (403) 
209-5718 
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CO: Palliser Oil & Gas Corporation
ST: Alberta
NI: OIL ERN  
-0- Nov/14/2013 23:34 GMT