BlackPearl Resources Inc.
BLACKPEARL ANNOUNCES FOURTH QUARTER AND FULL YEAR 2013 FINANCIAL AND OPERATING RESULTS

DGAP-News: BlackPearl Resources Inc. /

28.02.2014 / 00:28

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CALGARY, ALBERTA - BlackPearl Resources Inc. ('we', 'our', 'us', 'BlackPearl'
or the 'Company') (TSX: PXX) (NASDAQ OMX Stockholm: PXXS) is pleased to
announce its financial and operating results for the three and twelve months
ended December 31, 2013. 

Highlights and accomplishments in 2013 included:

  -- Q4 2013 oil and gas production was 10,454 boe/day, up 15% from the same
     quarter in 2012; oil and gas production for the year increased 4% in 2013
     to 9,730 boe/day;

  -- Q4 2013 revenues were up 14% to $54 million compared to Q4 2012 and funds
     flow from operations (a non-GAAP measure) in the fourth quarter was $21
     million, an increase of 17% from the same quarter in 2012; oil and gas
     revenues for the year increased 9% in 2013 to $222 million and funds flow
     from operations increased 4% to $86 million;

  -- Q4 2013 net income was $0.2 million compared to a loss of $4.3 million in
     Q4 2012. Net income for the year increased to $6.4 million in 2013 compared
     with net income of $45,000 in 2012; 2013 net income included a gain of $3.6
     million on the disposition of certain minor oil and gas properties;

  -- As reported on January 30, 2014, 
Sproule Unconventional Limited ('Sproule'), our independent reserves
     evaluator, increased
BlackPearl's year-end 2013 oil and gas proved plus probable reserves 36% to
     291 million barrels of oil equivalent, before royalties and contingent
     resources (best estimate) for our three core properties were 631 million
     barrels of oil equivalent, before royalties (see cautionary statement on
     contingent resources below);

  -- At Blackrod, we have been steaming the second pilot well pair since
     November and we expect to convert this well pair to steam assisted gravity
     drainage (SAGD) operation in March. We are testing a commercial well design
     after incorporating our learnings from the first pilot well pair. The first
     well pair has been operating for over two years and has produced in excess
     of 215,000 barrels of oil. Regulatory bodies are continuing to review our
     commercial development application. The
 80,000 barrel per day SAGD commercial development application was filed in
     May 2012 with the Alberta Energy Regulator (formerly the Energy Resources
     Conservation Board and Alberta Environment). We are planning to build
     Blackrod in phases, with the first phase of the project expected to be
     20,000 barrels of oil per day. At December 31, 2013, Sproule assigned 182
     million barrels of probable reserves and 566 million barrels of contingent
     resources (best estimate) to the Blackrod project. This included 90 million
     barrels of contingent resources related to the acquisition last year of an
     additional 10 sections of land contiguous to our existing acreage position.
     We are planning to seek a joint venture arrangement at Blackrod to
     accelerate development.

  -- At Mooney, in 2013 we continued to see positive production response from
     the first phase of the ASP (Alkali Surfactant Polymer) flood. Production
     from the flood area was 2,164 bbls/day in Q4 2013 which were the highest
     production volumes since the ASP flood was initiated in 2011. Further
     production increases are anticipated in 2014 as more of the flooded area
     responds to the re-pressurization of the reservoir. In addition, we
     successfully drilled four horizontal wells in Q4 2013 on phase two lands
     and one well was drilled to delineate potential future phases at Mooney.
     Further drilling on phase two and three lands is planned in 2014. We are
     also planning to expand the ASP flood to the phase two lands in the second
     half of 2014.

  -- At Onion Lake, in 2013 we drilled 35 vertical wells as part of our
     continuing primary development program. We have a development drilling
     inventory of approximately 120 wells, with 20 to 25 wells planned in 2014.
     During 2013, we received regulatory approval for the 12,000 barrels of oil
     per day Onion Lake enhance oil recovery (EOR) project and commenced with
     associated commercial engineering designs. Subsequent to December 31, 2013,
     the Company's Board of Directors approved development of the first phase of
     the Onion Lake EOR project. This first phase is being designed for
     production of approximately 6,000 barrels of oil per day. Capital costs for
     the first phase are expected to be approximately $200 million, which
     includes some pre-investment in infrastructure for the second phase of
     development. Construction of the first phase will take 13 to 16 months,
     with initial steam injection targeted for mid-2015. In preparation for
     drilling horizontal wells for thermal operations we have shut-in some of
     our existing primary production at Onion Lake. This will impact our Onion
     Lake production during the first half of 2014 until we complete our summer
     drilling program.



John Festival, President of BlackPearl, commenting on activities indicated that
'BlackPearl made some significant achievements in 2013. Receiving regulatory
approval for our Onion Lake EOR project and securing the financing for the
first phase of this project in early 2014 were important milestones for
BlackPearl. The $80 million in equity financings we recently announced combined
with an expansion of our existing credit facilities to $150 million ensures we
have a fully financed capital program for the year. Our long term growth is
tied to development of our thermal projects and it is exciting for our
organization to begin construction of the first phase of this project this
year. 

We continued to see a positive response from our ASP flood at Mooney in 2013
which gives us the confidence to expand the flood to the phase two lands in
2014. 

At Blackrod, a successful pilot operation combined with the applicable
regulatory approvals, which we expect in 2014, should provide a very attractive
opportunity as we seek a joint venture partner to accelerate commercial
development of this project.' 



Financial and Operating Highlights

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                                     Three months ended  Twelve months ended
                                        December 31,        December 31,    
                                         2013      2012       2013      2012
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Daily sales volumes (1)                                                     
         Oil (bbls/d) (2)              10,243     8,994      9,491     9,304
         Natural gas (mcf/d)            1,266       440      1,434       374
         Combined  (boe/d)             10,454     9,067      9,730     9,366
                                                                            
Product pricing ($)                                                         
         Crude oil - per bbl            58.44     58.77      65.09     61.76
         Natural gas - per mcf           3.50      3.18       3.16      2.45
         Combined - per boe             57.67     58.45      64.11     61.45
($000s, except where noted)                                                 
                                                                            
Oil and natural gas revenue - gross    54,072    47,569    222,157   204,525
                                                                            
Net income (loss) for the period          226   (4,277)      6,449        45
Per share, basic ($)                     0.00    (0.01)       0.02      0.00
Per share, diluted ($)                   0.00    (0.01)       0.02      0.00
                                                                            



Funds flow from operations (3)             20,735   17,684   86,206   82,595
                                                                            
Capital expenditures                       22,749   34,635   93,491  139,548
Property dispositions                     (5,011)        -  (5,011)        -
                                                                            
Working capital, end of period            (8,782)  (7,963)  (8,782)  (7,963)
Long term debt                                  -        -        -        -
                                                                            
Shares outstanding, end of period (000s)  300,425  295,766  300,425  295,766
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(1)  Boe is based on a conversion ratio of 6 mcf of natural gas to 1 bbl of
oil. Boe may be misleading, particularly if used in isolation. A boe conversion
ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method
primarily applicable at the burner tip and is not intended to represent a value
equivalency at the wellhead. 

(2)  Includes production from the Blackrod SAGD pilot. All sales and expenses
from the Blackrod SAGD pilot are being recorded as an adjustment to the
capitalized costs of the project until the technical feasibility and commercial
viability of the project is established. 

(3)  Funds flow from operations is a non-GAAP measure (as defined herein) 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 standardized meanings prescribed by Canadian
generally accepted accounting principles ('GAAP') and therefore may not be
comparable to similar measures used by other companies. Management uses this
non-GAAP measurement for its own performance measures and to provide its
shareholders and investors with a measurement of the Company's efficiency and
its ability to fund a portion of its growth expenditures. 



FOURTH QUARTER 2013 ACTIVITIES

Oil and gas revenues were $54.1 million in the fourth quarter of 2013 compared
to $47.6 million in the same quarter of 2012. The increase in revenues was
primarily attributable to an increase in production on a boe basis. 

Lower wellhead prices in Q4 2013 were the result of wider heavy oil
differentials. The heavy oil differential (between WTI and Western Canadian
Select) was US$32.21 per barrel in Q4 2013 compared to US$18.46 per barrel in
the same quarter of 2012. Increased production and refinery shutdowns for
maintenance contributed to the widening of the differential. 

BlackPearl sold an average of 10,454 boe per day during the fourth quarter of
2013, an increase of 15% over the same quarter in 2012. The increase in sales
volumes were mostly attributable to continued development drilling at Onion
Lake and John Lake, as well as the continued positive re-pressurization
response from the first phase of the ASP flood at Mooney. 

Royalty rates decreased to 21% in the fourth quarter of 2013 compared to 23% in
the same quarter of 2012, which reflects the proportionate increase in
production from the Mooney field, which has lower royalties than our other
producing areas due to incentive programs for EOR projects. Production costs
increased by 26% in the fourth quarter of 2013 compared to the same quarter in
2012. The increase in production costs is attributable to increased costs at
Onion Lake due to the relative maturity of the field and to injection and
polymer costs associated with the ASP flood at Mooney. Prior to 2013, all
operating costs associated with the ASP flood were capitalized while the
reservoir was being re-pressurized. G&A expenses were $2.1 million in the
fourth quarter compared to $2 million in the fourth quarter of 2012. 

Funds flow from operations in the fourth quarter of 2013 was $20.7 million
compared to $17.7 million in the fourth quarter of 2012. The increase in funds
flow from operations was primarily due to the increase in production volumes as
compared to the same quarter in 2012. Net income in the fourth quarter of 2013
was $0.2 million compared to a loss of $4.3 million in the fourth quarter of
2012. Net income in 2013 included a $3.6 million gain on the sale of one of our
minor non-core assets and also included an asset impairment charge of $3
million related to our assets in the Salt Lake Saskatchewan area. 

Capital expenditures in the fourth quarter of 2013 were $22.7 million, a 34%
decrease compared to the fourth quarter of 2012. The decrease is a result of
reduced drilling activity in Q4 2013. 


Production

                            Three months ended  Twelve months ended
                               December 31,        December 31,    
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Production by Area (boe/d)       2013     2012       2013      2012
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---------------------------                                        
Onion Lake                      5,186    4,857      4,797     5,947
Mooney                          3,837    3,329      3,685     2,537
John Lake                       1,066      649        898       573
Blackrod SAGD Pilot               262      221        236       272
Other                             103       11        114        37
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                               10,454    9,067      9,730     9,366
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Operating Statistics

                             Three months ended  Twelve months ended
                                December 31,        December 31,    
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($/boe)                          2013      2012       2013      2012
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Oil and natural gas revenue     57.67     58.45      64.11     61.45
Royalties                       11.87     13.29      12.62     13.68
Transportation costs             1.77      3.07       2.77      2.76
Production costs                19.65     17.89      20.84     17.82
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Operating netback(1)            24.38     24.20      27.88     27.19
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(1)  Operating Netback is a non-GAAP measure. Operating netback does not have a
standardized meaning prescribed by GAAP and, therefore, may not be comparable
to similar measures used by other companies in the oil and gas industry. 



The Company's financial statements, notes to the financial statements,
management's discussion and analysis and Annual Information Form have been
filed on SEDAR (www.sedar.com) and are available on the Company's website
(www.blackpearlresources.ca). The Annual Information Form includes the
Company's reserves and resource data for the period ended December 31, 2013 as
evaluated by Sproule and other oil and natural gas information prepared in
accordance with National Instrument 51-101 Standards of Disclosure for Oil and
Gas Activities. BlackPearl's annual general meeting of shareholders will be
held on May 8, 2014 in Calgary Alberta. 



2014 Guidance

BlackPearl also announced its initial financial and operating guidance for
2014. BlackPearl has established a capital expenditure budget of $260 - 270
million for 2014. Over 70% of the budget will be spent on the construction of
the first phase of the thermal EOR project at Onion Lake. This first phase of
the project will have design capacity for production of 6,000 barrels of oil
per day. The project entails construction of central processing facilities for
steam generation, water handling and oil treating, drilling 10 SAGD well pairs
on two pads, drilling water source and disposal wells, as well as installation
of water, steam and emulsion pipeline infrastructure. Our total cost estimate
for this phase of the project is approximately $200 million. We anticipate
construction will take 13 to 16 months and steam injection will begin in mid
2015. Construction of the thermal project will not impact our 2014 plans to
continue primary development at Onion Lake and we expect to drill 20 to 25
vertical wells in 2014. 

At Mooney, following the success of the initial phase of the ASP flood we are
planning to expand the flood to the Phase 2 lands. We have drilled 33
horizontal wells to date on the Phase 2 lands and we have two remaining wells
to be drilled on these lands to complete the flood patterns, which we plan to
drill in the first quarter. Commencement of ASP injection will begin later in
the year which will entail the conversion of about 18 wells from producers to
ASP injectors. In 2014, we also expect to begin development drilling on the
Phase 3 lands, with 10 to 12 horizontal wells planned, five of which will be
drilled in the first quarter. 

At Blackrod, we anticipate obtaining regulatory approval for the construction
of the first 20,000 barrel per day phase of development of our commercial SAGD
project in 2014. We will continue to monitor results from the initial pilot
well pair which has been producing for over two years and has produced 215,000
barrels of oil. In addition, we look forward to the initial results from the
second pilot well pair where we recently commenced steam injection. We are
continuing to look for a joint venture partner for this large project that
would allow us to accelerate commercial development. 

Our total production is expected to average between 10,000 and 10,500 barrels
of oil per day in 2014. This yearly production guidance incorporates lower
first half 2014 production at Onion Lake due to the shut-in of some production
in preparation for thermal operations and having some wells reach their
economic limit in early 2014 after having produced an average of over 90,000
barrels of oil per well. Onion Lake production is expected to increase again
after completion of our summer drilling program. Funds flow from operations is
estimated to be between $80 and $85 million, based on a WTI oil price of
US$92.00 per barrel and a WCS (a heavy oil reference price) price of C$76.60
per barrel. 

In order to mitigate some of the risk of changes in commodity prices and reduce
some of the volatility in our future revenue stream BlackPearl has entered into
several WCS fixed price swaps. For the period from March to December 2014, we
have hedged 3,500 barrels of oil per day (or approximately 35% of our current
production) at an average WCS swap price of C$82.07 per barrel. 

The capital program is expected to be funded from cash flow from operating
activities, the Company's bank credit facilities and expected proceeds from the
recently announced public offering and private placement of BlackPearl common
shares. 



Forward-Looking Statements

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 'anticipated', 'plan', 'planned', 'continue', 'continued',
'estimate', 'expect', 'may', 'will', 'project', 'potential', 'could', 'should'
or similar words suggesting future events or future performance.  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 resources, as
applicable, 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 of BlackPearl's proved and
probable reserves, the volumes BlackPearl's contingent resources, potential
production levels for the Blackrod SAGD project and the Onion Lake thermal
project, the probable reserves and contingent resources assigned to the
Blackrod project, anticipated production increases from the ASP flood at Mooney
in 2014, timing for expansion of the Mooney ASP flood, the estimated drilling
inventory at Onion Lake, and the capital costs, timing of construction and
target date  for initial steam injection for the first phase of the Onion Lake
EOR project, the estimated capital budget of $260 to $270 million for 2014, the
number of vertical wells to be drilled at Onion Lake in 2014, the number of
wells to be drilled at Mooney and the timing for conversion of the phase 2
lands to ASP flood, timing to receive regulatory approval for the Blackrod SAGD
project, estimated oil production levels for 2014, the estimated 2014 funds
flow from operations of $80 to $85 million, expected proceeds from the recently
announced public offering and private placement of BlackPearl common shares and
the sufficiency of the recent financings to fund our capital program for the
year. 

The forward-looking information contained herein is based on expectations and
assumptions by management regarding, among other things, 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, 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 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. 



Cautionary Statement on Contingent Resources

This news release makes reference to contingent resources. Contingent resources
are defined in the COGE Handbook as 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 are not currently
considered to be commercially recoverable due to one or more contingencies.
Contingencies may include factors such as economic, legal, environmental,
political and regulatory matters or a lack of markets. In the case of the
contingent resources assigned to BlackPearl's three core projects the
contingencies include the requirement for more evaluation drilling to better
define the resource, the absence of submission of commercial SAGD development
applications (for future phases of development at Blackrod), the likelihood of
attaining regulatory approvals for commercial SAGD development (for our Onion
Lake SAGD project), further establishment of increased oil production response
from the ASP flood at Mooney and the uncertainty of the timing of production
and development. There is no certainty that it will be commercially viable to
produce any of the contingent resources. .These volumes are the arithmetic sums
of the Best Estimate Resources for Blackrod, Mooney and Onion Lake. Best
Estimate (P50) is a classification of estimated resources described in the COGE
Handbook as being considered to be the best estimate of the quantity that will
be actually recovered. It is equally likely that the actual remaining
quantities recovered will be greater or less than the best estimate. If
probabilistic methods are used, there should be at least a 50% probability that
the quantities actually recovered will equal or exceed the best estimate.
Please refer to our Annual Information Form for a more detailed discussion of
our contingent resources. 



Non-GAAP Measures

'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. Cash 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. 

'Operating Netback' is a non-GAAP measure. Operating netback does not have a
standardized meaning prescribed by GAAP and, therefore, may not be comparable
to similar measures used by other companies in the oil and gas industry. 




         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               
 
 
End of News    DGAP News-Service  
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254921 28.02.2014