ENP Newswire -
Release date- 30042014 -
Certain selected financial and operational information is set out below and should be read in conjunction with Palliser's financial statements complete with the notes to the financial statements and related MD&A which is expected to be available at www.sedar.com and the Company's website at www.palliserogc.com on
Increased total proved plus probable reserves. Total proved reserves decreased 2% to 5.49 million boe and proved plus probable reserves increased 19% to 9.41 million boe with the proved plus probable reserve life index increasing to 12.6 years (based on average Q4 2013 production, annualized).
Achieved proved plus probable finding, development and acquisition costs (including future development capital) of
Yearly production averaged 2,340 boe/d, up 10% from the prior year, and fourth quarter 2013 production averaged 2,037 boe/d, down 18% from fourth quarter 2012; Increased operating costs 24%. Production and operating expenses averaged
The 2013 capital program included 18.6 net wells completed for heavy oil production, expansion of the Company's salt water disposal infrastructure, and a key strategic property acquisition which added 140 bbl/d of heavy oil production and 2 salt water disposal wells and associated facilities; Increased undeveloped heavy oil land position. The Company's undeveloped heavy oil land position at year-end 2013 was 37,144 net acres, a 14% increase from 2012; maintained a significant prospect inventory.
The Company's heavy oil prospect inventory stands at 169 locations, 83 of which are included in the 2013 independent reserves report and 86 locations that are not included in the reserves report and Increased rail shipments to 60% of production and the capability to ship production by rail to 75% in the fourth quarter, with the commissioning of the
Average production for the year was 2,340 boe/d, representing a 10% increase over 2012. Palliser previously provided operational updates which noted that water breakthrough has been experienced in a number of CHOPS wells in
The Company is considering the merits of implementing a pressure maintenance scheme at
The Company reacted to this development by expanding its salt water disposal take away capacity in order to produce those specific wells at higher total fluid rates and by recompleting new uphole zones in two wells to replace production from the depleted zones in these wells. The Company has successfully stabilized production in the range of 1,800 - 1,900 boe/d.
Operating costs for the fourth quarter were higher on a per unit basis due to lower production volumes and increased propane costs. Over the winter months, propane unit prices increased nearly three-fold. Propane is used to heat production tanks and power wellhead equipment, with the majority of the propane being consumed at
Capital expenditures for the full year 2013 were limited to
In the fourth quarter, the Company farmed out 160 acres of land to an industry partner, which resulted in one (0.575 net) oil well being drilled and completed on the property at no cost to Palliser. The Company incurred 57.5% of the costs to equip the well for production. Palliser operates the property and the partner has a one year option to drill three more wells on the same terms.
The 2013 year end independent reserves evaluation was completed by
Financial & Outlook
Production and operating expenses averaged
In the first quarter of 2014, the Company successfully drilled one (0.575 net) well at
In 2013, Palliser added 14% to our undeveloped land total in the
The credit facility is composed of a
The Company's bank indebtedness does not have a specific maturity date as it is a demand facility. This means that the lender has the ability to demand repayment of all outstanding indebtedness or a portion thereof at any time. If that were to occur the Company would be required to source alternate credit facilities, sell assets or issue new shares to repay the indebtedness. The Company is required to maintain a current ratio (current assets adjusted to include the undrawn credit facility balance) of not less than 1.0:1.0. As at
In light of financial constraints facing the Company, the board of directors of Palliser is conducting a strategic review of the Company's business plan to identify appropriate actions for the Company. The strategic review is examining and considering the alternatives available to the Company with a view to enhancing shareholder value. The alternatives being considered include but are not limited to the sale of assets or the entire Company, joint ventures and the refinancing of some or all of Palliser's debt. Management and the Board are committed to acting in the best interests of the Company and its shareholders.
President & CEO
Tel: (403) 209-5717
Tel: (403) 209-5718
Palliser is a
Statements in this document may contain forward-looking information including matters related to the strategic review. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. These risks include, but are not limited to: the risks associated with the oil and gas industry; commodity prices, and exchange rate changes.
Industry related risks could include, but are not limited to: operational risks in exploration; proposed dispositions not being completed or if completed, not providing the benefits expected; development and production; delays or changes in plans; risks associated to the uncertainty of reserve estimates; health and safety risks, and; the uncertainty of estimates and projections of production, costs and expenses. In addition, forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect.
Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct.
In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: the ability of the Company to obtain financing on acceptable terms; the impact of increasing competition; the general stability of the economic and political environment in which the Company operates; the timely receipt of any required regulatory approvals; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manner; field production rates and decline rates; the ability to replace and expand reserves through acquisition, development and exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Company to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates and the ability of the Company to successfully market its oil and natural gas products.
Readers are cautioned that the foregoing lists of factors and assumptions are not exhaustive. Additional information on these and other factors that could affect the Company'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), at the Company's website (www.palliserogc.com).
Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company 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.
The Company has adopted the industry standard of 6:1 Mcf to Bbl when converting natural gas to barrels of oil equivalent. Disclosure provided herein in respect of 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. 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 Mcf:1 Bbl, utilizing a conversion ratio of 6:1 may be misleading as an indication of value.
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