John Festival, President of BlackPearl, commenting on the recent activities indicated that, "Our 2012 reserve and resource evaluations are in-line with our expectations. Our goal is to develop the properties and shift barrels from resource to reserves. We were able to achieve that in 2012 with 180 million barrels associated with the first phase of commercial development at Blackrod being converted from resource into the reserves category. At Mooney, the reserve evaluation engineers are waiting for longer production history from the ASP flood before additional volumes could be transferred from resource to reserves. We saw a modest decline in reserves at Onion Lake primarily attributable to the recent decline in production of some of our mature wells; however, our thermal resource volumes have increased from last year. Values in the 2012 reserve and resource reports have been impacted by changes in the price forecast including wider heavy oil differentials, increased forecast operating costs and increased cost estimates used for future facility capital at Blackrod.
"In our last four years at the helm of BlackPearl, we have commercialized two of our four heavy oil and oil sands projects on our three core project areas. The two projects that have reached commercial status are the Mooney ASP flood and Onion Lake primary production. The two projects that are left to develop are much more significant and more expensive to develop - Onion Lake SAGD and Blackrod SAGD. Mooney and Onion Lake primary production have provided the near term growth and cash flow needed to tackle the two SAGD projects. Production from the first phase of the ASP flood at Mooney has just started to ramp up over the past 18 months. There is up to four additional phases with flood potential. While the recent production declines at Onion Lake have occurred sooner than forecasted, the average well achieves above average economic returns compared to many oil plays in western Canada. The recent declines from some of the older Onion Lake wells have come from wells that have achieved over 10% recovery, which is top decile performance for heavy oil wells. We fell short of our year-end production guidance of 10,000 boe per day as a result of these production declines. We will continue to drill additional primary heavy oil wells at Onion Lake in 2013, to mitigate some of the production declines from existing wells, when heavy oil price differentials recover to more normal levels.
"We anticipate that heavy oil differentials will tighten later in 2013 as several refineries come back on-line and certain pipeline systems are debottlenecked.
"In order to commercialize our two SAGD projects, we will need external financing and we continue to progress towards a funding solution, expected within the next couple of quarters. We continue to review all of our alternatives in order to minimize dilution and financial leverage, while retaining the ability to move our projects forward."
The Company is planning to release its 2012 year-end financial and operating results on February 26, 2013.
Certain of the statements made and information contained herein is forward-looking statements and forward looking information (collectively referred to as "forward-looking statements") within the meaning of Canadian securities laws. All statements other than statements of historic fact are forward-looking statements. Forward-looking statements are typically identified by such words as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "potential", "targeting", "intend", "could", "might", "should", "believe" or similar words suggesting future events or future performance. In addition, statements relating to "reserves" or "resources", "contingent resource" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resource described exist in the quantities predicted or estimated and can be profitably produced in the future. In particular, this document contains forward-looking statements pertaining to, the volumes and estimated value of BlackPearl's proved and probable reserves, the volumes and estimated value of BlackPearl's contingent resource of bitumen and heavy oil, forecasted future production levels and timing of reaching these production levels, capital spending plans for the first quarter of 2013, timing of financing decisions to develop our properties and forecast future heavy oil differentials.
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