Painted Pony Announces Closing of $20.8 Million NE BC Acquisition, Operational Update and Investor Relations Activities

2008-04-01 07:50:00

Painted Pony Announces Closing of $20.8 Million NE BC Acquisition, Operational Update and Investor Relations Activities

CALGARY, ALBERTA–( EMWNews – April 1, 2008) –

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Painted Pony Petroleum Ltd. (TSX VENTURE:PPY.A) (TSX VENTURE:PPY.B) (“Painted Pony” or the “Company”) is pleased to announce that it has closed the acquisition previously announced on March 18, 2008 of certain natural gas properties focused in the multi-zone gas-prone Cameron River/ Blair fairway in northeast British Columbia (the “Assets”) from Crescent Point Energy Trust (“Crescent Point”). The consideration given for the acquisition was 4,110,000 Class A Shares of Painted Pony issued to Crescent Point at a deemed price of $4.33 per share and approximately $3.0 million cash, for a total purchase price of $20.8 million, before closing adjustments and related costs.

The Assets are located in the Company’s northeast British Columbia core area, where Painted Pony has access to 1,200 km2 of three dimensional seismic through an area of mutual interest agreement. Painted Pony will continue to evaluate the acquisition asset base for potential exploration, development and exploitation opportunities.

Current production from the acquired properties is estimated to be approximately 450 Boe/d, consisting of 20 Bbls/d of natural gas liquids and 2,580 Mcf/d of natural gas, based on field estimates. The Assets include 73,339 net acres of undeveloped lands. A significant portion of the Assets will be operated by Painted Pony.

In connection with the acquisition of the Assets, Painted Pony had a reserve report prepared in accordance with National Instrument 51-101. At December 31, 2007, Sproule Associates Limited (“Sproule”), estimated the proved reserves for the Assets to be 993.0 Mboe and the proved and probable reserves to be 1,572.6 Mboe. At a 10% discount rate, the estimated net present value before income taxes of the proved and probable oil and gas reserves for the assets was estimated as at December 31, 2007, using Sproule’s Forecast Prices, to be $16.777 Million. A sensitivity run done using Sproule’s February 29, 2008 Forecast Prices indicated at a 10% discount rate, the estimated net present value before income taxes of the proved and probable oil and gas reserves for the assets was estimated to be $18.763 Million. The net present values of future net revenue do not represent fair market value.

Reserve acquisition costs on a proven plus probable basis, before future capital and transaction costs, are approximately $13.22 per boe. With an allocation of $4.0 million to the 73,339 net acres of undeveloped land, the net acquisition cost of the reserves, before future capital and transaction costs, equates to approximately $16.92 per proved boe and $10.68 per proved and probable boe.

In Painted Pony’s SE Saskatchewan exploration and development program, the Company has drilled to date a total of 16 (5.65 net) successful Bakken horizontal wells. Currently 12 (4.0 net) Bakken formation wells are producing and an additional 3 (1.16 net) wells are expected to be on production before the end of the second quarter of 2008. Production field estimates for the third week of March 2008 averaged 325 bbls/d net to Painted Pony, from 4.0 net Bakken formation wells. During spring break-up, potential temporary production disruptions may occur due to an inability to access locations to truck production or conduct maintenance procedures. Painted Pony estimates a drilling inventory of over 200 potential drilling locations for Bakken oil within the approximately 87,000 net acres it owns or has access to within SE Saskatchewan.

The Company will be undertaking a series of presentations to interested parties over the next couple of weeks in various cities in Canada and the United States. An updated investor presentation will be available on the Company’s website (www.paintedpony.ca) after the close of the TSX today.

Reserves Details

METHOD OF PREPARATION

In this press release both “Gross” reserves (being working interest reserves, excluding royalty interest reserves, before deduction of royalty burdens payable) and “Net” reserves (being working interest reserves and royalty interests less royalty burdens payable) are disclosed. The reserve reports were prepared utilizing definitions as set out under National Instrument 51-101.



----------------------------------------------------------------------------
Summary of Reserves (1)
As at December 31, 2007
Reserves Category
Non-Assoc, Assoc Gas NGLs Grand Total
(MMcf) (Mbbl) (Mboe)
Gross(2) Net(3) Gross(2) Net(3) Gross(2) Net(3)
----------------------------------------------------------------------------
Proved
Developed producing 3,114 2,342 28.9 23.0 547.8 413.3
Developed non-producing 711 533 6.8 5.4 125.3 94.2
Undeveloped 1,836 1,358 14.0 11.2 320.0 237.6
----------------------------------------------------
Total proved 5,660 4,233 49.7 39.6 993.0 745.2
----------------------------------------------------
Probable
Developed producing 1,273 957 11.4 9.1 223.6 168.5
Developed non-producing 1,266 942 12.1 9.7 223.1 166.7
Undeveloped 762 563 5.9 4.7 132.8 98.5
----------------------------------------------------
Total probable 3,301 2,462 29.4 23.5 579.5 433.8
----------------------------------------------------
Total proved plus
probable 8,961 6,695 79.1 63.1 1,572.6 1,178.9
----------------------------------------------------------------------------
(1) Numbers in this table are subject to rounding error.
(2) "Gross" means Painted Pony's total working interest reserves before
royalties owned by others.
(3) "Net" means Painted Pony's total working interest reserves after
deducting amounts attributable to royalties owned by others.
(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.


The following is summary of Sproule's Forecast Pricing as at December 31,
2007.

Summary of Pricing and Inflation Rate Assumptions
Forecast Prices and Costs
Effective December 31, 2007
----------------------------------------------------------------------------

WTI Cushing Edmonton Par AECO-C Spot
Oklahoma Price 40 degree
($US/bbl) API ($Cdn/bbl) ($Cdn/MMBtu)
----------------------------------------------------------------------------
2008 89.61 88.17 6.51
2009 86.01 84.54 7.22
2010 84.65 83.16 7.69
2011 82.77 81.26 7.70
2012 82.26 80.73 7.61
2013 82.81 81.25 7.78
2014 84.46 82.88 7.96
2015 86.15 84.55 8.14
2016 87.87 86.25 8.32
2017 89.63 87.98 8.51
Thereafter +2%/ yr +2%/ yr +2%/ yr
----------------------------------------------------------------------------

----------------------------------------------------------------------------
B.C. Henry Hub
Westcoast Inflation Exchange
Station 2 Rates Rate
($Cdn/MMBtu) ($US/MMBtu) %/ Year ($US/ $Cdn)
----------------------------------------------------------------------------
2008 5.96 7.56 2.0 1.0
2009 6.67 8.27 2.0 1.0
2010 7.14 8.74 2.0 1.0
2011 7.15 8.75 2.0 1.0
2012 7.06 8.66 2.0 1.0
2013 7.23 8.83 2.0 1.0
2014 7.41 9.01 2.0 1.0
2015 7.59 9.19 2.0 1.0
2016 7.77 9.37 2.0 1.0
2017 7.96 9.56 2.0 1.0
Thereafter +2%/ yr +2%/ yr 2.0 1.0
----------------------------------------------------------------------------


The following is summary of Sproule's Forecast Pricing as at February 29,
2008.

Summary of Pricing and Inflation Rate Assumptions
Forecast Prices and Costs
Effective February 29, 2008

----------------------------------------------------------------------------
WTI Cushing Edmonton AECO-C Spot
Oklahoma Butanes
($US/bbl) (US$/bbl) ($Cdn/MMBtu)
----------------------------------------------------------------------------
2008 91.07 70.16 7.75
2009 89.01 65.27 7.73
2010 87.85 64.39 7.50
2011 80.94 59.23 7.54
2012 81.18 59.39 7.61
2013 82.81 60.58 7.78
2014 84.46 61.80 7.96
2015 86.15 63.04 8.14
2016 87.87 64.31 8.32
2017 89.63 65.60 8.51
2018 91.42 66.92 8.70
Thereafter +2%/ yr +2%/ yr +2%/ yr
----------------------------------------------------------------------------

----------------------------------------------------------------------------
B.C. Henry Hub
Westcoast Inflation Exchange
Station 2 Rates Rate
($Cdn/MMBtu) ($US/MMBtu) %/ Year ($US/ $Cdn)
----------------------------------------------------------------------------
2008 7.20 8.80 2.0 1.0
2009 7.18 8.78 2.0 1.0
2010 6.95 8.55 2.0 1.0
2011 6.99 8.59 2.0 1.0
2012 7.06 8.66 2.0 1.0
2013 7.23 8.83 2.0 1.0
2014 7.41 9.01 2.0 1.0
2015 7.59 9.19 2.0 1.0
2016 7.77 9.37 2.0 1.0
2017 7.96 9.56 2.0 1.0
2018 8.15 9.75 2.0 1.0
Thereafter +2%/ yr +2%/ yr 2.0 1.0
----------------------------------------------------------------------------

 

Investor Information

Painted Pony is a junior Canadian oil and gas exploration company that trades on the TSX Venture Exchange under the symbols “PPY.A” and “PPY.B” respectively. With the shares issued to Crescent Point in conjunction with this transaction, Painted Pony has 19,392,700 Class A Shares, 1,173,600 Class B Shares and 1,347,000 options issued and outstanding.

Advisory

This news release contains certain forward-looking statements, which include assumptions with respect to (I) drilling success (ii) production; (iii) future capital expenditures; and (iv) cash flow. 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 plan and development of certain prospects, production estimates, undeveloped land holdings, 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, the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, environmental risks, competition, the lack of availability of qualified personnel or management, 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, stock market volatility, 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, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. 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 Corporation will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to the Corporation 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.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

For more information, please contact

Painted Pony Petroleum Ltd.
Patrick R. Ward
President & CEO
(403) 475-0440
(403) 238-1487 (FAX)

or

Painted Pony Petroleum Ltd.
Joan E. Dunne
Vice President, Finance & CFO
(403) 475-0440
(403) 238-1487 (FAX)
Website: www.paintedpony.ca

free cash grants, free grant money, free money, cash grants, scholarships, business grants, foundation grants, government grants, debt grants, consolidation, college tuition, financial aid, medical grants, personal grants, medical bills, unsecured loans, no interest loans, financing, loans, capital, non profit organizations

Major Newsire & Press Release Distribution with Basic Starting at only $19 and Complete OTCBB / Financial Distribution only $89

Get Unlimited Organic Website Traffic to your Website 
TheNFG.com now offers Organic Lead Generation & Traffic Solutions





























Leave a Reply

Your email address will not be published. Required fields are marked *

*