Painted Pony Petroleum Ltd. (TSX VENTURE:PPY.A) (TSX VENTURE:PPY.B) ("Painted
Pony" or the "Company") is pleased to announce the Company's 2010 year-end
reserves and land valuation.
HIGHLIGHTS
The highlights of the 2010 reserve report and undeveloped land report include:
-- Replacing 2010 production by 26 times (2,606%),
-- Increasing the net present value (discounted at 10%, before income
taxes) of proved plus probable reserves by 144% to $354 million,
-- Increasing proved plus probable reserves by 401% to 32,538.7 mboe,
-- Increasing the value of undeveloped land holdings to $168.1 million, an
80% increase, and
-- Increasing proved Reserve Life Index ("RLI") to 8.9 years and proved
plus probable RLI to 25.7 years.
RESERVES
The reserves report was prepared by Sproule Associates Limited ("Sproule") using
forecast prices and costs and is dated effective December 31, 2010.
At December 31, 2010 the Company's proved plus probable working interest
reserves were 32,538.7 mboe (weighted 24% oil and natural gas liquids) compared
to 6,491.0 mboe at December 31, 2009. The total proved working interest reserves
were 11,335.5 mboe (weighted 35% oil and natural gas liquids) compared to
3,944.1 mboe as at December 31, 2009. The Company's proved RLI, determined using
fourth quarter annualized production, increased to 8.9 years, while the proved
plus probable RLI increased to 25.7 years, as compared to 5.3 years and 8.8
years, respectively, in 2009. The growth in reserves volumes resulted from
Painted Pony's successful 2010 drilling and acquisition program. In 2010, the
Company drilled 51 (34.9 net) wells at a net success rate of 92%, including 6
(1.2 net) joint venture wells.
Painted Pony's average production for 2010 was 2,848 boe/d, with fourth quarter
production averaging 3,443 boe/d. The Company's 2010 proved plus probable
working interest reserves growth before production was 27,087.2 mboe, replacing
2010 production by 26 times. The net change in the future development costs
associated with the reserves is $200 million for proved plus probable reserves
and $64 million for proved reserves.
Painted Pony's total capital expenditures in 2010 were $123.3 million, including
$1.8 million of non-cash stock based compensation, $1.3 million of asset
retirement obligation charges and $27.5 million in land sales.
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 reserve report was prepared utilizing
definitions as set out under NI 51-101.
Summary of Company Gross Oil and Gas Working Interest Reserves(1),(2)
Forecast Prices and Costs
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As at Dec
As At December 31, 2010 31, 2009
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Natural
Natural Light and Gas
Gas(3) Medium Oil Liquids Total Total
(mmcf) (mbbl) (mbbl) (mboe(4))(mboe(4))
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Proved
Developed producing 13,167 2,026.0 256.0 4,476.6 2,712.8
Developed non-producing 259 2.6 2.3 48.1 64.0
Undeveloped 30,922 1,067.5 589.7 6,810.9 1,167.3
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Total proved 44,348 3,096.1 848.0 11,335.5 3,944.1
Probable 104,028 1,871.1 1,994.1 21,203.2 2,546.9
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Total proved plus probable 148,376 4,967.2 2,842.1 32,538.7 6,491.0
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1. Painted Pony's total working interest reserves before royalties owned by
others.
2. Numbers in this table are subject to rounding error.
3. Includes non - associated gas, associated gas and solution gas.
4. Natural gas is converted to barrels of oil equivalent ("boe") at a
ratio of six thousand standard cubic feet to one barrel of oil.
Summary of Net Present Values of Future Net Revenue
(1),(2),(3),(4),(5)
Forecast Prices and Costs
($000s)
Before Income Taxes
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As at December
As at December 31, 2010 31, 2009
0% 5% 10% 15% 20% 0% 10%
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Proved
Developed producing 144,600 123,121 108,131 97,051 88,512 101,965 73,733
Developed non-
producing 366 318 278 245 217 315 227
Undeveloped 122,825 75,587 48,819 31,821 20,136 38,659 23,465
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Total proved 267,790 199,025 157,229 129,117 108,865 140,939 97,426
Probable 484,748 292,789 196,511 140,507 104,514 99,542 47,269
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Total proved plus
probable 752,538 491,815 353,740 269,623 213,379 240,481 144,695
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1. Numbers in this table are subject to rounding error.
2. Values are net of abandonment liabilities.
3. The net present values of future net revenue do not represent fair
market value.
4. Sproule price decks dated December 31, 2009 and 2010.
5. The estimated future net revenues are stated before deducting future
estimated site restoration costs and reduced for estimated future well
abandonment costs, the Saskatchewan Capital Tax and estimated capital
for future development associated with the reserves..
UNDEVELOPED LAND
At December 31, 2010, the Company's undeveloped lands in Saskatchewan and
British Columbia were valued at $168.1 million (2009: $93.2 million). The land
valuation was prepared by Seaton-Jordan & Associates Ltd. in accordance with
National Instrument 51-101 ("NI 51-101").
Painted Pony Class A Shares and Class B Shares trade on the TSX Venture Exchange
under the symbols "PPY.A" and "PPY.B", respectively.
Advisory
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. 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
management's assessment of Painted Pony's future plans and operations, number,
type and timing of wells to be drilled, the planning and development of certain
prospects, production estimates, and expected production growth 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.
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.
Net present value of future net revenue does not represent fair market value of
the reserves. There is no assurance that the forecast prices and cost
assumptions will be attained and variances could be material.
Grafico Azioni Painted Pony Petroleum Ltd., Class A (TSXV:PPY.A)
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