BlackPearl Resources Inc.
BLACKPEARL ANNOUNCES FIRST QUARTER 2015 FINANCIAL AND OPERATING RESULTS

DGAP-News: BlackPearl Resources Inc.

2015-05-06 / 23:19

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CALGARY, ALBERTA - BlackPearl Resources Inc. ('BlackPearl' or the 'Company')
(TSX: PXX) (NASDAQ Stockholm: PXXS) is pleased to announce its financial and
operating results for the three months ended March 31, 2015. 

Highlights include:

  -- Construction of the 6,000 barrels per day first phase of the Onion Lake
     thermal project is complete and commissioning of the facilities has begun,
     the project was ahead of schedule and within budget;
  -- At Blackrod, the pilot results from the second SAGD well pair continue to
     be positive, the well is currently producing in excess of 500 barrels of
     oil per day with a steam oil ratio of under 3;
  -- Despite low oil prices which resulted in a 63% decrease in revenues to
     $22.1 million, funds flow from operations was $13 million;
  -- Production averaged 8,269 barrels of oil equivalent (boe) per day, a 12%
     decrease compared to Q1 2014 volumes - the lower production volumes
     reflect, in part, the Company's decision to shut-in 40 wells during a
     period of extremely low oil prices.

John Festival, President of BlackPearl commented 'Low crude oil prices made for
a challenging Q1 for BlackPearl and most of industry. However, Q1 was a very
exciting period for us. We recently completed construction of the first phase
of the Onion Lake thermal project and we have started commissioning the
facilities. The project was completed ahead of schedule and capital costs were
right in line with our budget of $223 million. We are looking forward to
commencing steam injection in the wells later this month and initial oil
production should begin three to six months after that. This is an important
milestone for BlackPearl. Our first thermal project has been completed
successfully and it is the largest project the Company has undertaken.
Production from the Onion Lake thermal project should be some of our lowest
cost production, which is critical in this lower oil price environment'. 



Property Review

Onion Lake

In 2015, we achieved some important milestones with the Onion Lake thermal
project. Construction of the first phase of the thermal project was completed
in April and we started commissioning various components of the central
processing facilities, well pads and source water facilities. Commissioning is
expected to take four to eight weeks. We are planning to begin steam injection
to the first well pad (seven wells) by the end of May. First oil production is
expected approximately three to six months after we start steam injection. Oil
production ramp-up to design capacity of 6,000 barrels per day is expected to
take 12 to 18 months after initial steam injection. 

This phase of the project includes 13 horizontal production wells on two well
pad sites. All of these wells were drilled in late 2014 and were completed
during the first quarter of 2015. In addition, we have 35 vertical steam
injection wells which were completed during the first quarter. The steam
generation facilities are designed to generate approximately 17,000 barrels of
steam per day. Final capital costs for this phase of the project are estimated
to be between $220 and $225 million, which is in line with our original budget
estimates. No new conventional drilling occurred during the first quarter of
2015 due to low oil prices. In addition, after an extensive well by well review
of our operations we shut-in 40 producing wells at Onion Lake during the first
quarter. These wells were some of the higher cost wells to operate in the field
and were not economic at current oil prices. These 40 wells were cumulatively
producing approximately 1,000 barrels of oil per day before they were shut-in.
We plan to bring these wells back on production as oil prices improve. 



Blackrod

We continue to achieve encouraging results from the second pilot well pair at
Blackrod. Technical analysis indicated that the steam chamber was continuing to
build and that the well was still in its production ramp-up phase. In order to
optimize well performance a planned well intervention was scheduled for
February which impacted production rates in the first quarter. The well was put
back on production in March and in April produced in excess of 500 barrels of
oil per day at a steam oil ratio of 2.6, and is continuing to ramp up.
Cumulatively, the well has produced in excess of 115,000 barrels of oil. 

We continue to advance our regulatory application for an 80,000 barrel per day
commercial development project at Blackrod. The Alberta Energy Regulator
('AER') is continuing with their final review of the application. We have not
received any additional supplemental requests for information from the AER.
During this time we have continued consultations with First Nations and other
stakeholders in the area to ensure their concerns have been addressed. It is
expected that final approval of the application will be obtained in the next
few months. 



Mooney

No new activities were initiated at Mooney during the first quarter due to low
oil prices. Expansion of the ASP flood to the phase two lands has been deferred
until oil prices improve. Our focus during the first quarter was to review
operations and flood development. As a result of this review, we were able to
significantly reduce operating costs at Mooney, primarily by optimizing the
amount of chemical injection in certain areas of the reservoir due to the
maturity of the flood in those areas. 



Production

Oil and gas production averaged 8,269 barrels of oil equivalent per day in the
first quarter of 2015, a 12% decrease compared with the first quarter of 2014.
The decrease in oil production in the first quarter of 2015 is attributable to
a number of factors. Due to low oil prices we did not undertake any new
drilling activities during the quarter. No new drilling combined with natural
production declines at Onion Lake and Mooney resulted in an overall drop in
production from these areas. In addition, 40 producing wells in the Onion Lake
area were shut-in during the quarter due to low oil prices. In many instances,
these were wells with high operating costs that required well servicing and we
chose to shut them in rather than incur the expenses to bring them back on
production. At the time these wells were shut-in they were producing
approximately 1,000 barrels of oil per day. We plan to put these wells back on
production when oil prices recover to a level that they can contribute positive
cash flow to our operations. Finally, at Blackrod, we shut-in the second pilot
well pair for part of the quarter to complete a workover on the well which
resulted in lower average production from the area during the quarter. 



Average Daily Sales Volume

-----------------------------------------------------
Production by area (boe/d)  Q1 2015  Q4 2014  Q1 2014
-----------------------------------------------------
Onion Lake                    3,959    4,651    4,274
Mooney                        2,797    3,236    3,696
John Lake                     1,011    1,109    1,069
Other                            96      120      113
Blackrod                        406      523      211
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                              8,269    9,639    9,363
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Financial Results

Oil and gas revenues decreased 63% in the first quarter of 2015 to $22.1
million compared with $59.6 million in Q1 2014. The decrease in revenues is
attributable to a 57% decrease in our average sales price and a 12% decrease in
production volumes. Our realized oil price (before the effects of risk
management activities) in Q1 2015 was $32.05 per barrel compared to $73.23 per
barrel in 2014. The decrease in our realized wellhead price reflects
significantly lower WTI reference oil prices in Q1 2015 compared with  Q1 2014
(US$48.63/bbl vs US$98.68/bbl), partially offset by tighter heavy oil
differentials (US$14.71/bbl vs US$23.11/bbl) and a weaker Canadian dollar
relative to the US dollar ($0.806 vs $0.906). 

Our oil hedging program has helped mitigate some of the negative impact of the
low oil price environment in 2015. During the first quarter we realized a gain
of $13.7 million from our oil hedging program, which was the equivalent of
adding $19.37 per barrel to our wellhead price in the quarter. The following
summarizes the hedging contracts we currently have outstanding: 



Subject of    Volume    Term                    Refere  Strike     Option Traded
 Contract                                       nce      Price                  
--------------------------------------------------------------------------------
Oil           2,500     April 1, 2015 to June   CDN$    CDN$       Swap         
               bbls/d    30, 2015                WCS     80.00/bb               
                                                        l                       
Oil           1,000     July 1, 2015 to         CDN$    CDN$       Swap         
               bbls/d    December 31, 2015       WCS     64.45/bb               
                                                        l                       
Oil           1,000     July 1, 2015 to         CDN$    CDN$       Swap         
               bbls/d    December 31, 2015       WCS     61.00/bb               
                                                        l                       
Oil           1,000     July 1, 2015 to         CDN$    CDN$       Swap         
               bbls/d    December 31, 2015       WCS     62.25/bb               
                                                        l                       
Oil           1,000     July 1, 2015 to         CDN$    CDN$       Swap         
               bbls/d    December 31, 2015       WCS     72.00/bb               
                                                        l                       
Oil           1,000     January 1, 2016 to      CDN$    CDN$       Sold Call    
               bbls/d    December 31, 2016       WTI     80.00/bb   Swaption(1) 
                                                        l                       
Oil           1,000     January 1, 2016 to      USD$    USD$       Sold Call    
               bbls/d    December 31, 2016       WTI     65.00/bb   Swaption(1) 
                                                        l                       
Oil           1,000     January 1, 2016 to      USD$    USD$       Sold Call    
               bbls/d    December 31, 2016       WTI     65.00/bb               
                                                        l                       
Oil           1,000     January 1, 2016 to      USD$    USD$       Sold Call    
               bbls/d    December 31, 2016       WTI     65.00/bb               
                                                        l                       
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(1) The Company sold a European call option to a counterparty whereby the
counterparty can elect on December 31, 2015 to exercise the option to enter
into the oil swap. 



Operating costs decreased 19% in the first quarter of 2015 to $15.9 million
from $19.7 million in the same period in 2014. On a per boe basis, production
costs were $22.48 per boe in Q1 2015, a decrease from $23.88 per boe in Q1
2014. The decrease in production expenses in 2015 is attributable, in part, to
decreased production volumes.  In addition, due to the current low oil price
environment the Company has been focusing on reducing production costs. This
included negotiating lower service rates with certain suppliers and
contractors, deferring well servicing work and shutting-in specific wells that
are not economic at current oil prices. 

The significantly reduced revenue, partially offset by lower royalties,
transportation costs and operating costs resulted in a 44% decrease in funds
flow from operations in Q1 2015 to $12.9 million compared to $23.0 million for
the same period in 2014. 



Financial and Operating Highlights

--------------------------------------------------------------------------------
                                                           Three months ended   
                                                                March 31        
                                                               2015         2014
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                                                                                
Daily production / sales volumes(1)                                             
        Oil (bbl/d)                                           7,885        9,122
        Natural gas (mcf/d)                                   2,303        1,448
        Combined  (boe/d)                                     8,269        9,363
                                                                                
Product pricing ($) (before the effects of hedging                              
 transactions)                                                                  
        Crude oil - per bbl                                   32.05        73.23
        Natural gas - per mcf                                  2.63         5.41
        Combined - per boe                                    31.25        72.30
                                                                                
($000's, except per share and boe amounts)                                      
Revenue                                                                         
        Oil and gas revenue - gross                          22,115       59,555
                                                                                
        Gain (loss) on risk management contracts:                               
        Risk management contracts - realized                 13,708        (666)
        Risk management contracts - unrealized             (11,374)      (5,301)
                                                       -------------------------
                                                              2,334      (5,967)
                                                       -------------------------
                                                       -------------------------
                                                                                
Royalties ($/boe)                                              5.78        14.00
Transportation costs ($/boe)                                   1.10         1.87
Operating costs ($/boe)                                       22.48        23.88
                                                                                
                                                                                
Loss for the period                                        (10,944)      (1,126)
        Per share, basic and diluted                         (0.03)       (0.00)
                                                                                
Funds flow from operations(2)                                12,940       23,037
                                                                                
Capital expenditures                                         42,981       49,360
                                                                                
Working capital, end of period                             (11,137)       28,192
Long term debt                                               78,000            -
                                                                                
Shares outstanding, end of period                       335,638,226  328,398,308
                                                                                

(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. 



The 2015 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 decommissioning costs
incurred and 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 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 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 the end
of May for first steam injection at the Onion Lake EOR project and anticipated
timing of initial oil production three to four months after steam injection at
the Onion Lake EOR project, anticipated final capital costs of between $220 and
$225 million for the first phase of the Onion Lake EOR project, reaching peak
production rates 12 to 18 months after steam injection at Onion Lake, timing as
to when we would bring back on production the Onion Lake wells that were
shut-in due to low oil prices and expected timing to receive regulatory
approval for our commercial development application at Blackrod. 

The forward-looking statements in this document reflect certain assumptions and
expectations by management. The key assumptions that have been made in
connection with these forward-looking statements include the continuation of
current or, where applicable, assumed industry conditions, the continuation of
existing tax, royalty and regulatory regimes, commodity price and cost
assumptions, the continued availability of cash flow or financing on acceptable
terms to fund the Company's capital programs, the accuracy of the estimate of
the Company's reserves and resource volumes and that BlackPearl will conduct
its operations in a manner consistent with past operations. Although management
considers these assumptions to be reasonable based on information currently
available to it, they may prove to be incorrect. 

By their very nature, forward-looking statements involve inherent risks and
uncertainties which could cause actual results to differ materially from those
contained in forward-looking statements. These factors include, but are not
limited to, risks associated with fluctuations in market prices for crude oil,
natural gas and diluent; risks related to the exploration, development and
production of crude oil, natural gas and NGLs reserves; general economic,
market and business conditions; substantial capital requirements; 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; potential cost overruns; variations
in foreign exchange rates; diluent supply shortages; competition for capital,
equipment, new leases, pipeline capacity and skilled personnel; uncertainties
inherent in the SAGD bitumen and ASP recovery processes; credit risks
associated with counterparties; the failure of the Company or the holder of
licenses, leases and permits to meet requirements of such licenses, 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 and others may be found under 'Risk Factors' in the Annual
Information Form. 

Undue reliance should not be placed on these forward-looking statements.
Readers are cautioned that the actual results achieved will vary from the
information provided herein and the variations could be material. Readers are
also cautioned that the foregoing list of assumptions, risks and factors is not
exhaustive. Consequently, there is no assurance by the Company that actual
results achieved will be the same in whole or in part as those set out in the
forward-looking statements. Furthermore, the forward-looking statements
contained in this document are made as of the date hereof, and the Company 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    Don Cook - Chief Financial     
 Officer                                          Officer                       
Tel.: (403) 215-8313                             Tel: (403) 215-8313            

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For the complete report see attached file.
News Source: NASDAQ OMX



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2015-05-06 Dissemination of a Corporate News, transmitted by DGAP - a
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Language:    English                    
Company:     BlackPearl Resources Inc.  
 
 
             Sweden                     
ISIN:        SE0002060863               
 
 
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