Additional information on these and other factors that could affect Painted Pony's operations and financial results are included in the Company's Management's Discussion and Analysis for the year ended December 31, 2012 which will be filed on SEDAR later today and the Company's Annual Information Form for the year ended December 31, 2011 and in reports which are on file with the 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.
Special Note Regarding Oil and Gas Disclosure
The reserves data of the Company are based upon independent evaluations by GLJ Petroleum Consultants Ltd. ("GLJ") and Sproule Associates Limited ("Sproule") each with an effective date of December 31, 2012 as contained in the consolidated report of GLJ dated February 26, 2013 (the "Painted Pony Reserves Report"). The information contained in this news release in respect of Painted Pony's crude oil, NGLs and natural gas reserves and the net present values of future net revenue attributable to such reserves, are as evaluated in the Painted Pony Reserves Report, based on GLJ's January 1, 2013 forecast prices and costs assumptions. GLJ evaluated the Company's reserves on its British Columbia properties and Sproule evaluated the Company's reserves on its Saskatchewan properties. Sproule incorporated the GLJ forecast prices and costs assumptions in their evaluation. GLJ prepared the Painted Pony Reserves Report by consolidating the GLJ evaluation results with the Sproule evaluation results, all run on the GLJ forecast prices and costs assumptions.
Operating netback reflects revenues less royalties and transportation and operating costs divided by production for the period. Painted Pony's method of calculating operating netbacks may not be comparable to that used by other companies.
Barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of gas ("mcf") to one barrel of oil ("bbl") (6 mcf:1 bbl) is used as an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this news release are derived by converting natural gas to oil in the ratio of six mcf of gas to one barrel of oil. 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 6:1, utilizing a conversion ratio of 6:1 may be misleading as an indication of value. Mcfes may be misleading, particularly if used in isolation. A mcfe conversion ratio of 1 bbl: 6 mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
In addition to evaluating the Company's reserves, GLJ was engaged to prepare an independent contingent resources evaluation of the Company's BC Montney properties, using forecast prices and costs, dated effective December 31, 2012. The most significant positive and negative factors with respect to the contingent resources estimates relate to the fact that the field is currently at an evaluation/delineation stage. The Montney formation is aerially extensive in this region, however well control is limited. Both resources-in-place and productivity may be higher or lower than current estimates. Additional drilling and testing are required to confirm volumetric estimates and reservoir productivity for the contingent resources to be reclassified as reserves.
Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies (the "contingent resources"). Contingencies which must be overcome to enable the reclassification of contingent resources as reserves can be categorized as economic, non-technical and technical. The Canadian Oil and Gas Evaluation Handbook identifies nontechnical contingencies as legal, economic, environmental, political and regulatory matters or a lack of markets. There are several non-technical contingencies that prevent the classification of the contingent resources estimated above as being classified as reserves. The primary contingency which prevents the classification of the Company's contingent resources as reserves is the current early stage of development. Additional drilling, completion, and testing data is generally required before Painted Pony can commit to their development. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent resources are further classified in accordance with the level of certainty associated with the estimates and may be subclassified based on project maturity and/or characterized by their economic status. As additional drilling takes place, it is expected that the contingent resources will be booked into the reserves category. Estimates of contingent resources described herein, including the corresponding estimates of before tax present value estimates, are estimates only; the actual resources may be higher or lower than those calculated in the GLJ British Columbia Montney Contingent Resources Evaluation. There is no certainty that it will be commercially viable or technically feasible to produce any portion of the resources described in the evaluation.
The most significant positive and negative factors with respect to the contingent resource estimates relate to the fact that the field is currently at an evaluation/delineation stage. Resource-in-place, productivity and capital costs may be higher or lower than current estimates. Additional drilling and testing are required to confirm volumetric estimates and reservoir productivity for the contingent resources to be reclassified as reserves.
Estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation.
Neither 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 news release.
Painted Pony Petroleum Ltd.
Patrick R. Ward
President & CEO
(403) 238-1487 (FAX)
Painted Pony Petroleum Ltd.
Joan E. Dunne
Vice President, Finance & CFO
(403) 238-1487 (FAX)
Painted Pony Petroleum Ltd.
300, 602 - 12 Ave SW
Calgary, AB T2R 1J3
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