BlackPearl Resources Inc.
BLACKPEARL ANNOUNCES FIRST QUARTER 2014 FINANCIAL AND OPERATING RESULTS

DGAP-News: BlackPearl Resources Inc. /

07.05.2014 / 23:01

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CALGARY, ALBERTA - BlackPearl Resources Inc. ('BlackPearl' or the 'Company')
(TSX:PXX) (NASDAQ OMX Stockholm:PXXS) is pleased to announce its financial and
operating results for the three months ended March 31, 2014. 



Highlights include:

  -- The Board of Directors sanctioned development of the Onion Lake thermal
     project in Saskatchewan and construction began on the first 6,000 barrel
     per day phase of the project; target date for completion of construction
     and first steam is mid-2015. Initial oil production from the project is
     expected within three months of steam injection and peak production rates
     are expected 9 to 12 months thereafter;
  -- At Blackrod, the second SAGD pilot well pair was converted to SAGD
     operation (production phase) in March and we expect to reach peak
     production rates in 12 to 15 months; we continue to expect approval of our
     80,000 barrel per day commercial development application later in 2014;
  -- At Mooney, development drilling continued on phase two lands and our ASP
     flood will be expanded to this area later in 2014 or early 2015; initial
     development of phase 3 lands was initiated in the quarter;
  -- Strong heavy oil prices resulted in revenues increasing 46% to $59.6
     million, funds flow from operations increased 129% to $23 million compared
     to Q1 2013;
  -- Funding for our 2014 capital projects was secured with $88 million of
     equity financings and an expansion of our credit facilities to $150
     million;
  -- Production averaged 9,363 barrels of oil equivalent (boe) per day, a 3%
     increase over Q1 2013 volumes.



John Festival, President of BlackPearl, commenting on Q1 2014 activities,
indicated that 'the most significant events in the first quarter was securing
financing for our projects and initiating construction of our thermal project
at Onion Lake. It has been a very challenging market to secure financing for
oil sands and thermal projects over the last 18 months and we are pleased to
have been able to complete a combination of debt and equity financings to fully
fund the first phase of our Onion Lake thermal project. Once we secured the
financing we moved quickly into the construction phase of this project, which
will likely take 12 to 15 months to complete. Initiation of construction of
this project is an important milestone for our Company. Our long term growth
and value creation is directly linked to development of our thermal assets.
Thermal projects in Saskatchewan provide very attractive economics with lower
capital costs and quicker production ramp-up times compared to Alberta oil
sands projects, and we are pleased and excited to begin this development.' 




Property Review

Onion Lake

At Onion Lake, construction of the initial phase of thermal development began
in the first quarter. Capital spending on the thermal project during the
quarter was near $30 million. Major equipment packages have been ordered and
fabrication of the facility modules is underway. Field construction and
assembly of the equipment modules is expected to commence in the third quarter.
Three water source wells will be drilled and construction of the water pipeline
infrastructure is expected to begin during the third quarter. 

Thermal development of the Onion Lake area will utilize a combination of the
traditional SAGD process (two horizontal wells drilled approximately 5 metres
apart) and a modified SAGD process (using existing and new vertical wells as
steam injectors and horizontal producers). The initial 6,000 barrel phase of
the project will utilize the modified SAGD process. The advantage of using
vertical injectors is that it utilizes existing wellbores and provides us with
the flexibility to steam upper hole zones at a later date. The wells are
expected to be drilled during the third and fourth quarters this year. 

The Company's target for initial steam injection for the commercial facility is
mid-2015. Peak oil production rates are expected 12 to 15 months after
commencement of steam injection. Capital costs for the first phase of the
project are still estimated to be between $200 and $210 million. 

We have also begun to assemble our thermal operations team for the project.
When we are in full operation next year we expect to have up to 20 staff
allocated to thermal operations. 

No conventional development drilling occurred at Onion Lake during the first
quarter; however, we are planning to begin a 20 well drilling program at Onion
Lake after spring-break-up. 



Blackrod SAGD Project

At Blackrod, after four months of steam circulation, we converted the second
well pair to SAGD operation (production phase) in late March. The second well
pair is currently producing approximately 150 barrels of oil per day and is
expected to ramp-up and reach peak rates in 12 to 15 months. The initial pilot
well pair has recovered in excess of 225,000 barrels of oil and continues to
produce in excess of 200 barrels of oil per day. Due to limited steam capacity
with our pilot facilities more of our steam is being directed to the second
well pair and the lower steam injection rates in the first well pair will
impact production rates going forward. 

The AER is continuing to review our 80,000 barrel per day commercial SAGD
application which we filed in May 2012. No significant issues or opposition to
the proposed development have been raised to date in the review process. The
initial phase of the project is expected to be designed for 20,000 barrels of
oil per day. We continue to expect to receive regulatory approval for the
project in 2014. Once we receive development approvals for the project and we
obtain more production history from the second well pair we will actively
pursue joint venture opportunities to accelerate development of the project. 



Mooney

At Mooney, during the first quarter we drilled seven horizontal wells,
including two wells on the phase two lands and five wells on phase three lands.
We are planning to expand our ASP flood to these lands later this year. 

In addition, during the first quarter we expanded our pipeline, facility and
road infrastructure to accommodate development of the phase three lands. The
wells drilled during the first quarter will be placed on production during the
second quarter when the infrastructure expansion is completed. We are planning
additional drilling on phase three lands later this year. 

We continue to see a favourable response from the ASP flood on the phase one
lands at Mooney. Current production from the phase one lands is approximately
2,200 barrels of oil equivalent per day. The response to the ASP flood has been
slower in the southern portion of the pool where the oil and reservoir quality
is lower than the other areas of the pool. When these southern areas of the
pool begin to respond to the flood we expect to reach peak production rates of
2,500 to 3,000 barrels of oil per day later this year. 



Production

Oil and gas production averaged 9,363 barrels of oil equivalent per day in the
first quarter of 2014, a 3% increase compared with the first quarter of 2013.
The increase in oil production in Q1 2014 compared to Q1 2013 is primarily
attributable to successful drilling programs at Onion Lake and John Lake in
2013 and a continued positive re-pressurization response form the first phase
of the ASP flood at Mooney. 

Production volumes in Q1 2014 were 10% lower than Q4 2013 production volumes.
The decrease in production is attributable to natural production declines at
Onion Lake, as well as, selectively shutting-in some of our wells in the area
to prepare for thermal activities in certain portions of the field. The
production declines at Onion Lake were not unexpected. The Onion Lake field is
a maturing area and many of the wells drilled over the last seven years have
reached or are near the end of their productive life. We intend to continue
conventional drilling at Onion Lake after spring break-up to flatten the
field's primary production profile until we transition to thermal production.
The decrease in Q1 2014 production volumes is also partially due to lower
volumes at Mooney caused by cold weather issues and the need to temporarily
take certain wells off production to facilitate drilling and pipeline work
during the first quarter of 2014. 



Average Daily Sales Volume

                                       
                     Three months ended
                     March 31          
(boe/day)                2014      2013
---------------------------------------
Onion Lake              4,274     4,322
Mooney                  3,696     3,892
John Lake               1,069       781
Other                     113        19
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                        9,014     9,014
Blackrod SAGD pilot       211        73
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                        9,363     9,087
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Financial Results

Oil and gas revenues increased 46% in the first quarter of 2014 to $59.6
million compared with $40.7 million in Q1 2013. The increase in revenues is
attributable to the 3% increase in production volumes as well as higher
realized oil prices in 2014. Our realized oil price (before the effects of risk
management activities) in Q1 2014 was $73.23 per barrel compared to $50.64 per
barrel in 2013. The increase in realized wellhead price reflects higher WTI
reference oil prices in Q1 2014 compared with  Q1 2013 (US$98.68/bbl vs
US$94.34/bbl),  significantly tighter heavy oil differentials (US$23.11/bbl vs
US$31.95/bbl) and a weaker Canadian dollar relative to the US dollar ($0.906 vs
$0.991). 

Operating costs were $19.7 million or $23.88 per boe in Q1 2014 compared to
$18.7 million or $23.05 per boe in Q1 2013. In 2014 we began to expense all
operating costs associated with the first phase of the ASP flood at Mooney.
During the initial re-pressurization of the reservoir these costs were being
capitalized. 

The increase in production and higher wellhead prices partially offset by
higher operating costs resulted in a 129% increase in funds flow from
operations in Q1 2014 to $23.0 million compared to $10.0 million for the same
period in 2013. 

On March 18, 2014, the Company completed a bought deal equity offering of
26,500,000 common shares at a price of $2.65 per common share for gross
proceeds of $70.2 million. Subsequent to March 31, 2014, the Company completed
a private placement of 3,773,585 common shares at a price of $2.65 per share
for gross proceeds of $10.0 million and the underwriters of the bought deal
equity offering exercised their over-allotment option on 3,100,000 common
shares at a price of $2.65 per share, for additional gross proceeds of $8.2
million. Upon completion of these share issuances, the Company's lending
syndicate increased the Company's existing credit facilities from $115 million
to $150 million. The increase in debt and equity funding is intended to finance
the Company's capital expenditure program in 2014. 



Financial and Operating Highlights

--------------------------------------------------------------------------------
                                                          Three months ended    
                                                                March 31        
                                                               2014         2013
--------------------------------------------------------------------------------
                                                                                
Daily production / sales volumes (1)                                            
                  Oil (bbl/d)                                 9,122        8,941
                  Natural gas (mcf/d)                         1,448          879
                  Combined  (boe/d)                           9,363        9,087
                                                                                
Product pricing ($) (before the effects of hedging                              
 transactions)                                                                  
                  Crude oil - per bbl                         73.23        50.64
                  Natural gas - per mcf                        5.41         3.18
                  Combined - per boe                          72.30        50.13
                                                                                
($000's, except per share and boe amounts)                                      
Revenue                                                                         
Oil and gas revenue - gross                                  59,555       40,671
                                                                                
Royalties ($/boe)                                             14.00         7.80
Transportation costs ($/boe)                                   1.87         3.60
Operating costs ($/boe)                                       23.88        23.05
                                                                                
Loss for the period                                         (1,126)      (5,644)
Per share, basic and diluted                                 (0.00)       (0.02)
                                                                                
Funds flow from operations(2)                                23,037       10,039
                                                                                
Capital expenditures                                         49,360       19,101
                                                                                
Working Capital, end of period                               28,192      (4,624)
Long term debt                                                    -       11,915
                                                                                
Shares outstanding, end of period                       328,398,308  296,108,308
                                                                                

(1) Boe amounts are based on a conversion ratio of 6 mcf of gas to 1 barrel of
oil. Boe's may be misleading, particularly if used in isolation.  A boe
conversion ratio of 6 mcf: 1 barrel is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not represent
a value equivalency at the wellhead. 

(2)Funds flow from operations is a non-GAAP measure that represents cash flow
from operating activities before decommissioning costs incurred and changes in
non-cash working capital related to operations. Funds flow from operations does
not have a standardized meaning prescribed by Canadian GAAP and therefore may
not be comparable to similar measures used by other companies. 



OUTLOOK

2014 Guidance                           Initial Guidance      Q1 Update
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Production (boe/d)                                                     
Annual average                           10,000 - 10,500  9,000 - 9,500
                                                                       
Funds flow from operations ($millions)           80 - 85        75 - 80
Capital expenditures ($millions)               260 - 270      280 - 300
                                                                       
Year-end debt ($millions)                       95 - 105      135 - 140
                                                                       
Pricing Assumptions (annual average)                                   
Crude oil - WTI                                US $92.00      US $95.50
Light/heavy differential                       US $21.00      US $20.50
Foreign Exchange (Cdn$ to US$)                      0.94           0.92
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We have increased our planned capital spending for 2014 from $260 - $270
million to $280 - $300 million. The increase is primarily attributable to
timing of expenditures on the Onion Lake thermal project. Delivery of certain
equipment modules originally planned for the first half of 2015 is now expected
to be accelerated and delivered in 2014. The total capital costs for the first
phase of the project continue to be in the range of $200 to $210 million. The
increase in planned capital spending has resulted in an increase in our
anticipated year-end debt levels to $135 to $140 million. 

Due to strong first quarter oil prices we have increased our average pricing
assumptions for the year. In our Q1 2014 update we have used an average 2014
WTI price of US$95.50 per barrel and a heavy oil differential of US$20.50 per
barrel. 

We have lowered our average oil production from 10,000 - 10,500 boe/d to 9,000
- 9,500 boe/d due to weather related issues at Mooney. We were not able to
complete our Q1 infrastructure plans (roads and pipelines); this work will get
pushed out into Q3 when the ground is drier. As a result, the wells drilled in
phase 3 in Q1 and implementation of our ASP flood on our phase 2 lands will be
delayed, causing our full year corporate guidance to be lowered. 



The 2014 first quarter report to shareholders, including the financial
statements, management's discussion and analysis and notes to the financial
statements are available on the Company's website (www.blackpearlresources.ca)
or SEDAR (www.sedar.com). 



This news release includes terms commonly used in the oil and natural gas
industry, such as funds flow and funds flow from operations which represent
cash flow from operating activities expressed before changes in non-cash
working capital. These terms are used by the Company to analyze operating
performance, leverage and liquidity and to provide shareholders and investors
with additional information to measure the Company's performance and efficiency
and its ability to fund a portion of its future activities and to service any
long-term debt if incurred in the future. These terms do not have standardized
meanings prescribed by GAAP and therefore may not be comparable with the
calculation of similar measures by other entities. Consequently, these are
referred to as non-GAAP measures. 



FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements and forward-looking
information (collectively referred to as 'forward-looking statements') within
the meaning of applicable Canadian securities laws. All statements other than
statements of historical fact are forward-looking statements. Forward-looking
information typically contains statements with words such as 'anticipate',
'anticipated', 'planning', 'planned', 'potential', 'could', 'continue',
'continued', 'continuing', 'estimate', 'estimates', 'estimated', 'forecast',
'likely', 'expect', 'expected', 'may', 'intend', 'intends', 'intended',
'intention', 'deferred', 'successful', 'will', 'project', 'timing', 'in the
event', 'move toward', 'should', 'scheduled', 'outlook' or similar words
suggesting future outcomes. 

In addition, statements relating to 'reserves', 'resources' or 'contingent
resources' 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, but without limiting the foregoing, this report contains
forward-looking statements pertaining to our business plans and strategies;
capital expenditure and drilling programs including the target date of mid-2015
for completion of construction and first steam at Onion Lake and anticipated
timing of initial and peak oil production rates at the Onion Lake EOR project,
anticipated lower capital costs and quicker production ramp-up times for
Saskatchewan thermal projects, reaching peak production rates 12 to 15 months
after steam injection at Onion Lake, estimated capital costs of $200 and $210
million for the first phase of thermal development at Onion Lake, estimated
timing to begin a 20 well conventional drilling program at Onion Lake after
spring break-up, timing and expected ramp-up time to reach peak production
rates of the second pilot well pair at Blackrod, expected timing to receive
regulatory approval for our commercial development application at Blackrod,
anticipated expansion of the ASP flood to phase two lands at Mooney in 2014,
and timing and expected peak production rates of 2,500 to 3,000 barrels of oil
from the first phase of the ASP flood at Mooney as well as all the information
contained in the Outlook section. 

The forward-looking information is based on expectations and assumptions by
management regarding future production levels, future oil and natural gas
prices, continuation of existing tax, royalty and regulatory regimes, foreign
exchange rates, estimates of future operating costs, timing and amount of
capital expenditures, performance of existing and future wells, the ability to
obtain financing on acceptable terms, availability of skilled labour and
drilling and related equipment, general economic and financial market
conditions and the ability to market oil and natural gas successfully to
current and new customers. Although management considers these assumptions to
be reasonable based on information currently available to it, they may prove to
be incorrect. 

Undue reliance should not be placed on forward-looking statements. There can be
no assurance that the plans, intentions or expectations upon which
forward-looking statements are based will be realized. Actual results will
differ, and the differences may be material and adverse to the Company and its
shareholders. 

By their very nature, forward-looking statements involve inherent risks and
uncertainties (both general and specific) and risks that the goals or figures
contained in forward-looking statements will not be achieved. These factors
include, but are not limited to, risks associated with fluctuations in market
prices for crude oil, natural gas and diluent, general economic, market and
business conditions, volatility of commodity inputs, substantial capital
requirements, customary conditions including receipt of necessary regulatory
and stock exchange approvals on the issuance of common shares, uncertainties
inherent in estimating quantities of reserves and resources, extent of, and
cost of compliance with, government laws and regulations and the effect of
changes in such laws and regulations from time to time, the need to obtain
regulatory approvals on projects before development commences, environmental
risks and hazards and the cost of compliance with environmental regulations,
aboriginal claims, inherent risks and hazards with operations such as fire,
explosion, blowouts, mechanical or pipe failure, cratering, oil spills,
vandalism and other dangerous conditions, financial loss associated with
derivative risk management contracts, potential cost overruns, variations in
foreign exchange rates, variations in interest rates, diluent and water supply
shortages, competition for capital, equipment, new leases, pipeline capacity
and skilled personnel, uncertainties inherent in the SAGD bitumen and ASP
recovery process, credit risks associated with counterparties, the failure of
the Company or the holder of licences, leases and permits to meet requirements
of such licences, leases and permits, reliance on third parties for pipelines
and other infrastructure, changes in royalty regimes, failure to accurately
estimate abandonment and reclamation costs, inaccurate estimates and
assumptions by management, effectiveness of internal controls, the potential
lack of available drilling equipment and other restrictions, failure to obtain
or keep key personnel, title deficiencies with the Company's assets,
geo-political risks, risks that the Company does not have adequate insurance
coverage, risk of litigation and risks arising from future acquisition
activities. Further information regarding these risk factors may be found under
'Risk Factors' in the Annual Information Form. 

Readers are cautioned that these factors and risks are difficult to predict and
that the assumptions used in the preparation of such information, although
considered reasonably accurate at the time of preparation, may prove to be
incorrect. Readers are also cautioned that the foregoing list of factors is not
exhaustive. Consequently, there is no representation by the Corporation that
actual results achieved will be the same in whole or in part as those set out
in the forward-looking information. Furthermore, the forward-looking statements
contained in this report are made as of the date hereof, and the Corporation
does not undertake any obligation, except as required by applicable securities
legislation, to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information, future
events or otherwise. The forward-looking statements contained herein are
expressly qualified by this cautionary statement. 




         For further information, please contact:
         John Festival - President and Chief Executive Officer, Tel.: (403)
215-8313 
         Don Cook - Chief Financial Officer, Tel: (403) 215-8313
News Source: NASDAQ OMX


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Language:    English                    
Company:     BlackPearl Resources Inc.  
 
 
             Sweden                     
ISIN:        SE0002060863               
 
 
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267134 07.05.2014