BlackPearl Resources Inc.
BLACKPEARL ANNOUNCES THIRD QUARTER 2013 FINANCIAL AND OPERATING RESULTS

BlackPearl Resources Inc. 

08.11.2013 00:21
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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 and nine months ended September 30, 2013. 

Third quarter highlights include:

  -- Higher crude oil prices and narrower heavy oil differentials contributed to
     a 38% increase in revenues to $69.1 million compared to Q3 2012;
  -- Record cash flow from operations of $32.6 million, a 57% increase from a
     year earlier;
  -- Net earnings for the quarter were $9.3 million compared to $0.5 million in
     Q3 2012;
  -- At Onion Lake, we received environmental approval for our thermal enhanced
     oil recovery (EOR) project; we now have all key regulatory approvals
     required to initiate construction of the project; we drilled 24 successful
     conventional oil wells in Q3 which will positively impact Q4 production;
  -- At Blackrod, results from the SAGD pilot continue to meet our expectations;
     cumulative production from the pilot has reached 200,000 barrels of oil.
     Steam injection in the second well pair commenced in early November;
  -- At Mooney, production growth from the ASP flood was temporarily impacted by
     facility and pipeline maintenance work during the quarter; current field
     production is near 4,000 barrels of oil per day.

John Festival, President of BlackPearl, commenting on Q3 2013 activities,
stated that: 

'Strong crude oil prices and tighter differentials contributed to BlackPearl
posting record revenues and cash flow during the third quarter. 

Production volumes were temporarily lower due to maintenance work at Mooney
during the quarter; however, corporate production levels are now back over
10,000 barrels per day and we are on target to reach the upper end of our exit
rate production guidance for the year of 10,500 barrels per day. 

Operationally, a key component of our strategy is to move our thermal assets
into development and we made very good progress in the third quarter. At Onion
Lake, we received regulatory approval to commence construction of our project
and we made the decision to develop the project in phases, with the first phase
planned for 6,000 barrels per day. Financing thermal projects in the current
environment is a challenge; however, by reducing the size of the initial phase
of the Onion Lake thermal project and lowering our capital requirements we
believe the project is financially and technically more manageable. We are
currently evaluating a number of financing options for the first phase of the
project and we are targeting to have a fully funded financing plan in place by
year-end. At Blackrod, the regulatory review of our commercial development
application is progressing and we have recently started steam injection into
the second well pair of our pilot expansion. 

From 2009 to 2013, our compounded average growth rate (CAGR) in oil and gas
production was about 16%. With phase one of the Onion Lake EOR project
producing 6,000 barrels of oil per day by early  2016, we will exceed that
historical CAGR with little or no dilution. We should be able to achieve that
growth with a debt to cash flow under two times. In addition, our ability to
find a partner for our commercially proven Blackrod project would further
enhance that growth rate.' 



Property Review

Blackrod SAGD Pilot Project

We have been operating the SAGD pilot at Blackrod for over two years. The
single well pair pilot has produced in excess of 200,000 barrels of oil during
this period. The objective of the pilot was to, in part, show that we are able
to achieve commercial production rates and steam oil ratios from the Grand
Rapids formation in the Athabasca oil sands region. In addition to meeting this
objective the pilot has allowed us to test and refine some of our operating
procedures to optimize production before we transition to a commercial
operation. The existing pilot continues to produce in excess of 300 barrels of
oil per day at a steam oil ratio of between 3.5 and 4. 

Earlier this year we expanded the pilot by drilling a second well pair. This
well pair was drilled longer (950 metres) and deeper in the reservoir which we
expect will result in an increase in production rates compared to the original
well. The objective of the second well pair is to continue to refine some of
our operating strategies including well start-up procedures, steam distribution
and sand control methods. We initiated steam injection in the second well pair
in early November and, after a three to six month warm-up period (when steam is
injected into both the injector and producer wells) the well pair will be
converted to SAGD operation. 

The Alberta Energy Regulator (AER) is continuing to review our 80,000 barrel
per day commercial development application at Blackrod. We have received and
responded to the AER's first set of supplemental information requests (SIR) and
we recently received a second set of SIRs, which we expect to respond to in
early December. In addition, we continue to discuss our application with
stakeholders in the area and address any of their concerns regarding the
proposed development. We are continuing to target receipt of regulatory
approval for the commercial project during the first half of 2014. 

Due to the size of the Blackrod project and the financial resources required to
initiate the first phase of development we will look at joint venture
opportunities to accelerate development and reduce our financial exposure in
the project. If we are unable to find a joint venture partner on attractive
terms we will likely defer development until after we have completed
construction of the Onion Lake EOR thermal project, when we are, financially,
in a better position to tackle a larger thermal project. 

We have a 100% working interest in the Blackrod project and as at December 31,
2012 our independent reserves evaluator assigned 180 million barrels of
probable reserves to the first phase of commercial development and a
best-estimate recoverable contingent resource of 476 million barrels for the
remainder of the project (see cautionary statement regarding contingent
resources later in this release). 



Onion Lake

The Onion Lake area continues to be BlackPearl's most active area, accounting
for 50% of total corporate production. Production in the third quarter averaged
4,678 barrels of oil per day, 6% lower than Q2 2013 production. The decrease in
production is mainly attributable to natural declines. 

We drilled 24 conventional heavy oil wells at Onion Lake during the third
quarter with a 100% success rate. The majority of these wells were completed
and placed on production in October. 

During the third quarter, our application to construct a 12,000 barrel per day
thermal EOR project at Onion Lake was approved by Indian Oil and Gas Canada,
which was the final major regulatory hurdle before development could begin.
With all key regulatory approvals in hand, internally we estimate that we could
move 70+ million barrels of oil from the resource category to the reserve
category for our year-end reserve reports. 

We have decided to develop the Onion Lake thermal project in phases, with the
first phase designed for 6,000 barrels of oil per day, rather than proceeding
directly with a 12,000 barrel per day project, which was our original plan. The
phased approach allows us to reduce our financial exposure and technical risks
while allowing us to benefit from learnings gathered from reviewing similar
sized thermal projects near Onion Lake. A number of other operators have
demonstrated that these Saskatchewan thermal projects tend to be smaller than
projects typically developed in the Alberta oil sands, but they also have
certain cost advantages which can provide very attractive economics. 

We have begun detailed engineering work for a 6,000 barrel per day project but
we will defer procurement and construction until financing is in place for the
project, which we expect to have in place by the end of the year. Capital costs
for a 6,000 barrel per day first phase is anticipated to be approximately $175
million. 

At December 31, 2012, the Company's independent reserves evaluator assigned 74
million barrels of 'best estimate' contingent resources to the thermal project
at Onion Lake (see cautionary statement regarding contingent resources later in
this release). 



Mooney

At Mooney, no new drilling occurred during the third quarter due to wet weather
conditions. The ASP flood continues to perform in-line with our expectations;
achieving a record production rate of 2,200 boe/day in October. Twenty three
wells in Phase one of the flood have seen increased pressure and are
experiencing production response.  We anticipate further production increases
as these wells continue to respond to the ASP flood. 

Third quarter production from the ASP flood as well as the Phase two expansion
lands was temporarily impacted due to preventative maintenance work undertaken
on the production facilities as well as the flow-line infrastructure in the
field. In the third quarter total field production was 3,324 boe/day, a 33%
increase compared to the third quarter in 2012 and 10% lower than second
quarter production volumes.  The maintenance work was completed in September
and the production ramp-up from the ASP flood resumed. During the month of
October, the Mooney field produced almost 4,000 boe/day. 

In the fourth quarter we are planning to drill an additional six horizontal
wells on the Phase 2 expansion lands. We have drilled 29 horizontal wells on
these lands to date and the average production rate on these wells has exceeded
the primary production rates from the Phase one wells. We have received
regulatory approval to expand the ASP flood to the Phase 2 lands and we expect
to convert these lands to ASP flood by the second half of 2014. 



Production

Oil and gas production averaged 9,382  boe/day in the third quarter, comparable
to the same quarter in 2012. 

Higher production volumes associated with the ASP flood at Mooney were offset
by natural production declines at Onion Lake. Our year-end exit production rate
is expected to be between 10,000 and 10,500 boe/day. 

            Three months ended  Nine months ended
               September 30,      September 30,  
           --------------------------------------
(boe/day)       2013      2012      2013     2012
           --------------------------------------
Onion Lake     4,678     5,889     4,666    6,313
Mooney         3,324     2,495     3,634    2,271
John Lake        940       624       841      547
Blackrod         303       318       227      289
Other            137        14       117       47
                                         --------
               9,382     9,340     9,485    9,467
           --------------------------------------



Financial Results

Oil and gas revenues increased 38% in the third quarter of 2013 to $69.1
million compared with $50.1 million in Q3 2012. The increase is mainly
attributable to higher realized oil prices in 2013. The increase in our
realized wellhead price reflects higher WTI reference oil prices in Q3 2013
compared with  Q3 2012 (US$105.83/bbl vs US$92.17/bbl), as well as narrower
heavy oil differentials (US$17.48/bbl vs US$21.71/bbl). 

Operating costs were $19.95 per boe in Q3 2013 compared with $16.99 per boe in
Q3 2012. The increase in operating costs in 2013 is primarily due to starting
to expense injection and polymer costs associated with the ASP flood at Mooney.
During the initial re-pressurization of the reservoir these costs were
capitalized. 

Cash flow from operations  increased 57% in Q3 2013 to $32.6 million compared
to $20.8 million in Q3 2012. The increase is attributable to higher oil prices. 

At September 30, 2013, long term debt was $10 million.



Financial and Operating Highlights

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                                  Three months ended  Nine months ended
                                     September 30        September 30  
     ($000, except where noted)       2013      2012      2013     2012
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Daily production / sales volumes                                       
     Oil (bbl/d) (2)                 9,108     9,259     9,237    9,408
     Natural gas (mcf/d)             1,643       485     1,491      352
     Combined  (boe/d) (1)           9,382     9,340     9,485    9,467
                                                                       
Product pricing ($)                                                    
     Crude oil - per bbl             84.85     60.76     67.57    62.73
     Natural gas - per mcf            2.38      2.20      3.06     2.16
     Combined - per boe              82.72     60.34     66.50    62.41
                                                                       
Revenue                                                                
Oil and gas revenue - gross         69,092    50,081   168,085  156,956
                                                                       
Royalties ($/boe)                    17.39     13.05     12.90    13.80
Transportation costs ($/boe)          2.50      3.07      3.14     2.67
Operating costs ($/boe)              19.95     16.99     21.28    17.79
                                                                       

Net income for the period           9,270          530        6,223        4,322
Per share, basic                     0.03         0.00         0.02         0.02
diluted                              0.03         0.00         0.02         0.01
Cash flow from operations(3)       32,609       20,781       65,471       64,911
                                                                                
Capital expenditures               24,326       28,991       70,742      104,913
                                                                                
Working Capital                   (2,380)        1,394      (2,380)        1,394
 (deficiency), end of period                                                    
Long term debt                     10,000            -       10,000            -
                                                                                
Shares outstanding, end of    296,305,808  285,401,346  296,305,808  285,401,346
 period                                                                         
                                                                                

(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) includes production from the Blackrod SAGD pilot.

(3)Cash 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. 



Outlook

We expect our oil and gas production to average between 9,500 to 10,000 boe/d
for the year, unchanged from our Q2 update. Cash flow from operations for the
year is anticipated to bebetween $80 to $85 million. This is slightly higher
than our Q2 outlook as a result of higher realized oil prices during the third
quarter. Capital spending for the year is anticipated to be between $90 to $95
million,  a slight decrease from the $95 to $100 million forecast in our Q2
update. During the fourth quarter our capital spending will be focused on
drilling six horizontal wells at Mooney as well as facility upgrades and
continuing work on the Onion Lake thermal project.  It is expected that this
capital program will be funded from anticipated cash flow from operations,
proceeds from the recent sale of a non-core assets sale ($5 million) and the
Company's credit facilities. The Company's long term debt is expected to
between $10 and $15 million at year-end. 

The 2013 third 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). 



Non-GAAP Measures

This news release includes terms commonly used in the oil and natural gas
industry, such as cash flow and cash flow from operations which represent cash
flow from operating activities expressed before changes in non-cash working
capital and decommission costs incurred during the period. 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. 



Contingent Resources

This document 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. 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. For further discussion
regarding our contingent resources see our 2012 Annual Information Form
available on the Company's website (www.blackpearlresources.ca) or SEDAR
(www.sedar.com). 



Forward-Looking Statements

This news 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', 'believe', 'appears', 'plan',
'target', 'continue', 'continuing', 'estimate', 'expect', 'hope', 'may',
'intends', 'deferred', 'will', 'project', 'timing', 'in the event', 'move
toward', 'should', 'scheduled', 'outlook' or similar words suggesting future
outcomes. 

In particular, this document contains forward-looking statements pertaining to
the estimated exit rate production guidance of 10,500 barrels per day, future
CAGR as a result of bringing the Onion Lake EOR project on production as well
as discussion of debt to cash flow ratios and dilution from financing the Onion
Lake EOR project, our target date to have financing in place for the Onion Lake
EOR project, expected transfer of 70+ million barrels of oil from the resource
category to the reserve category as a result of having regulatory approval to
proceed with the project,  anticipated increase in production rates from the
second well pair at the Blackrod pilot, estimated timing of receipt of
regulatory approval for the Blackrod commercial project, estimated capital
costs of $175 million for the first 6,000 barrel per day phase of the Onion
Lake EOR project, drilling plans for Mooney for the remainder of the year as
well as the timing of converting the Phase 2 lands to ASP flood, and the
corporate guidance for 2013 included in the 'Outlook' section of this release. 

Statements relating to reserves and contingent resources are forward-looking,
as they involve the implied assessment, based on certain estimates and
assumptions, that the reserves and contingent resources described exist in the
quantities predicted or estimated and can profitably be produced in the future. 

The forward-looking statements in this report 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, 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 Alkali Surfactant Polymer 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 decommissioning
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. 

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.  There can be 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 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.
              
               
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ISIN:         SE0002060863
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