Painted Pony Petroleum presents at EnerCom’s The Oil & Gas Conference®
During Painted Pony’s breakout sessions, management was asked the following questions:
- Birchcliff did a big acquisition in the Montney is that something that you would consider?
- Have you looked at other regions of the Montney?
- Are you running into specific regulations that are affecting operations? Plans to move back into Alberta?
- What would peak rate look like for a 90 day or 1 year well production?
- What are the odds of Western Exports happening?
- Where is there pipeline capacity to off-take Montney gas?
- If you look at growth in gas production, does this resemble Marcellus?
- Firm transport for the next 3 years?
- What percentage of next 3 years of expected production do you have hedged?
- What does return on growth look like inclusive of infrastructure?
- How do you expect oversupply at ACO to play out? Have you been approached by Trans-Canada Pipeline for eastern expansion?
- How worried are you about Progress in Canada’s LNG project?
- Is there a high risk of Progress in Canada flooding the market with gas from wells already drilled and completed?
- Are you capturing any economic benefit from high prices from export?
- Are you working with the Kitimat facility on the west coast? Will that facility come online?
- Is there competition in the eastern Canadian gas market?
Painted Pony Petroleum (ticker: PPY) is a Canadian exploration and production company headquartered in Calgary, Alberta, operating in the natural gas liquids Montney play in northern British Columbia.
The company had production of 99.6MMcfe/d (16,601 boe/d) in the first quarter 2016. The company’s production mix is 95% Natural Gas and 5% NGL’s; this mix has remained relatively consistent over the past 18 months. The company drilled 12 wells and completed 9 during the first quarter with 100% working interest, and expects to continue at this pace of drilling. The company has reduced the capex program by 9% ($197M CAD to $179M CAD) for 2016, based on anticipated capital efficiencies, and without changing the expected production profile. The reduction in capital expenditures is based on improved DC&E cost of $4.8 million per well.
The company estimated 1P reserves of 2.0 Tcfe, and 2P reserves of 4.6 Tcfe as of year-end 2015. This would give the company a 2P reserve life of 126 years at the annualized Q1 2016 production rate. The company has been able to increase 2P reserves by proving acreage and by increasing the reserves per well.
AltaGas Townsend Facility
Painted Pony has been working with AltaGas (PPY’s primary natural gas and NGL marketer) toward the construction of the AltaGas Townsend Facility, a gas processing plant. The completed facility will have a capacity of 198 MMcf/d.
Painted Pony put out a press release July 19, 2016, “The Facility began producing natural gas sales volumes on July 7, 2016 with commercial operations beginning on July 10, 2016, more than 30 days ahead of Painted Pony’s schedule.” The completion of the facility allows Painted Pony to increase natural gas production due to the expanded mid-stream capacity now available. PPY foresees an increase of more than 540%in NGL production from year end 2015 to year end 2017.
Through the latter half of 2016, PPY expects to ramp up output to reach a 2016 exit rate of 240 MMcfe/d worth of production. The plant commissioning comes nearly two months ahead of the expected September completion projected in a June 2016 presentation. There is potential for the early completion of the AltaGas Townsend Facility to materially impact the full year financial results for Painted Pony.
Based on design, the expected efficiency of the Facility is anticipated to improve natural gas liquids yields from Blair Creek in addition to allowing for higher production volumes from the liquids-rich Townsend area. As a result, Painted Pony’s NGL volumes are expected to increase from approximately 5% of total production volumes currently to approximately 10% of total production volumes in the fourth quarter of 2016.
Painted Pony has hedges outstanding to cover 63% of expected production for the remainder of 2016 at an average price of $3.31/Mcf on AECO swaps (74% of hedged volumes) and an average price of $2.09/Mcf on Station 2 swaps (26% of hedged volumes).
The credit facility was reassessed by lenders in line with standard biannual redetermination on April 30, 2016, and the facility was confirmed at $325M CAD. As of May 11, 2016 there was $100M CAD outstanding under the facility.