- ISIN SE0002060863
BlackPearl Resources Inc.
BLACKPEARL ANNOUNCES THIRD QUARTER 2012 FINANCIAL AND OPERATING RESULTS
BlackPearl Resources Inc.
07.11.2012 23:55
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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, 2012.
Third quarter highlights include:
-- Oil and gas production averaged 9,340 boe/day in the third quarter, a 14%
increase from 2011;
-- Blackrod pilot has performed in line with expectations, pilot to be
expanded with a second well pair to be drilled in Q1 2013;
-- Continued favourable response from the ASP (Alkali, Surfactant, Polymer)
flood at Mooney; total field production of 2,500 boe/day in Q3;
-- At Onion Lake, third quarter drilling activity identified additional
primary drilling locations and a potential extension to our planned SAGD
development;
-- Revenues increased 12% to $50.1 million compared to Q3 2011;
-- Cash flow from operations increased 9% to $20.7 million in Q3 compared
with $18.9 million in Q3 2011 due primarily to higher production volumes;
-- No debt at September 30 and planned 2013 capital program fully funded with
existing credit facilities.
John Festival, President of BlackPearl, commenting on Q3 2012 activities,
indicated that:
'We continued to move all of our projects forward during the quarter. The
commercialization of the Blackrod SAGD project is rapidly moving ahead. We are
assembling our project management team and will select EPC contractors in the
next few weeks. Response from the Mooney ASP flood is very encouraging and
gives us confidence we will be able to achieve our anticipated production
levels for the flood during 2013. Production from Onion Lake continues to be
our main source of operating cash flows and we will continue our conventional
development program while we advance a thermal development plan.
Our next step is to put in place our financing strategy for the continued
development of these projects, which we expect to finalize in the next few
months.'
Property Review
Blackrod SAGD Pilot Project
The SAGD pilot continues to perform in-line with our expectations. The well has
produced in excess of 100,000 barrels of oil since start-up and reached
commercial production rates of over 400 barrels of oil per day in May. We took
the well down for facility inspection and well servicing to re-configure the
downhole set-up. The well was brought back on production in June. Now that we
have confirmed the reservoir can perform at commercial rates we have begun
testing alternate operating strategies in an effort to better understand the
best way to operate these wells and potentially incorporate these strategies in
the final commercial development design. Some of the items we have been testing
since the well was brought back on production include changes to the steam
delivery system to ensure uniform heat distribution, different pump types, and
testing different steam chamber operating pressures.
We have received regulatory approval to expand our existing pilot and we are
planning to drill the second horizontal well pair during the first quarter of
2013. This well will be drilled longer and deeper in the reservoir than the
original horizontal well pair, which should have a positive impact on
production rates and steam oil ratios compared to the first well pair which was
only 700 metres long. The second well pair will closely follow the design
anticipated for the first phase of commercial development. Optimal production
strategies learned from operating the first well pair will be incorporated in
this second well pair.
We are assembling our project management team for the construction of the first
commercial phase of the Blackrod project. One of the initial decisions for the
team is the selection of EPC (Engineering, Procurement and Construction)
contractors for the project. The team is currently evaluating contractor
proposals and expects to award the contracts before year-end.
Regulatory authorities are continuing to review our commercial development
application which was filed in May. Typically, applicants receive an initial
set of supplementary information requests (SIRs) several months after filing of
the application. We expect to receive our first SIRs by year-end. While it is
difficult to establish a project time line until regulatory approval is
received, our current plans assume 2013 will include detailed engineering
design and ordering of long lead time items, field construction will occur in
2014 and 2015, and first steam in the ground will occur in late 2015.
Onion Lake
At Onion Lake, we drilled seven conventional wells in September. These wells
will be completed and put on production in the fourth quarter. We also plan to
drill an additional 11 wells during the remainder of 2012. This recent drilling
has extended the pool to the south and has increased our primary drilling
inventory in the area. In addition, some of the recent wells drilled indicated
that the net pay is likely sufficient to extend our planned thermal SAGD
development.
Regulatory authorities are continuing to review our 12,000 barrel per day SAGD
commercial development application.
Mooney
At Mooney, we continue to see favourable response from our ASP flood.
Production during Q3 was 843 barrels of oil per day from the flood area. This
represents an 11% production increase from Q2 2012 volumes and an increase of
over 200% since the flood was initiated in 2011. Production from the ASP flood
in November is now in excess of 1,200 barrels of oil per day. We expect
production to continue to ramp-up, with peak production levels of 3,000 to
4,000 barrels per day sometime during 2013.
New activity on the Phase 2 lands was limited in Q3 as a result of wet weather.
However, we plan to drill 15 to 20 horizontal wells on these lands in Q4 and
the first quarter of 2013. A portion of these lands could be added to the
existing ASP flood as early as Q4 2013.
In addition, the construction of the heavy oil processing facility to handle
the increasing fluid volumes from the Mooney area was commissioned in
September.
The Alberta government has indicated that it is considering the adoption of a
new royalty scheme for EOR projects in the province. Our initial evaluation of
the proposed scheme is that it would be neutral or slightly positive for our
Mooney project.
Production
Oil and gas production averaged 9,340 boe (barrels of oil equivalent) per day
in the third quarter of 2012, a 14% increase from the comparable quarter in
2011. The increase in production is mainly attributable to response from the
ASP flood at Mooney and drilling last fall on the Phase 2 lands at Mooney.
Production at Onion Lake during Q3 2012 was lower than the comparable quarter
last year due to natural production declines and limited new drilling to offset
these declines.
As with a number of oil producers, BlackPearl has started to ship some of its
Onion Lake and Mooney volumes by rail to the Gulf Coast and West Coast to avoid
the pipeline bottlenecks, particularly in the US mid-continent, and improve our
sales prices for our oil. Although shipping by rail is more expensive than
shipping by pipeline, the improved sales price for our oil more than offsets
the increase in transportation costs. Currently, BlackPearl is railing between
1,200 and 1,500 barrels of oil per day.
Three months ended Nine months ended
September 30, September 30,
--------------------------------------
(boe/day) 2012 2011 2012 2011
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Onion Lake 5,889 7,065 6,313 6,092
Mooney
ASP flood area 843 175 680 274
Non-flood areas 1,652 334 1,591 408
John Lake 624 401 547 320
Blackrod 318 49 289 16
Other 14 138 47 135
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9,340 8,162 9,467 7,245
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Financial Results
Oil and gas revenues increased 12% in the third quarter of 2012 to $50.1
million compared with $44.6 million in Q3 2011. The increase is primarily
attributable to an 11% increase in oil and gas sales volumes in 2012 and a
small increase in our wellhead sales price.
Our realized oil wellhead price was $60.76 per barrel in Q3 2012 compared with
$59.87 per barrel in 2011, reflecting higher WTI reference oil prices in Q3
2012 compared with Q3 2011, partially offset by wider heavy oil differentials.
Operating costs were $16.99 per boe in Q3 2012 compared with $18.31 per boe in
Q3 2011. The decrease is primarily a result of lower work-over and well
servicing costs at Mooney and Onion Lake. Transportation costs increased
significantly in the third quarter of 2012 compared to 2011 as a result of
increased trucking costs of Mooney production to further delivery locations as
a result of infrastructure constraints in the area and due to the movement of
some barrels to rail loading facilities.
Cash flow from operations (before working capital adjustments) increased 9% in
Q3 2012 to $20.7 million compared to $18.9 million in Q3 2011, primarily as a
result of the increase in sales volumes and a slightly improved realized oil
price.
Financial and Operating Highlights
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Three months ended Nine months ended
September 30 September 30
2012 2011 2012 2011
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Daily production / sales volumes
Oil (bbl/d) (2) 9,259 8,077 9,408 7,049
Natural gas (mcf/d) 485 512 352 1,176
Combined (boe/d) (1) 9,340 8,162 9,467 7,245
Product pricing ($)
Crude oil - per bbl 60.76 59.87 62.73 62.18
Natural gas - per mcf 2.20 4.10 2.16 3.91
Combined - per boe 60.34 59.70 62.41 61.46
Revenue
Oil and gas revenue - gross 50,081 44,564 156,956 121,283
Royalties ($/boe) 13.05 13.82 13.80 15.84
Transportation costs ($/boe) 3.07 0.31 2.67 0.49
Operating costs ($/boe) 16.99 18.31 17.79 17.80
Net income (loss) for the 530 (51) 4,322 3,407
period
Per share, Basic 0.00 0.00 0.02 0.01
Diluted 0.00 0.00 0.01 0.01
Cash flow from operating 20,678 18,924 64,027 49,355
activities, before working
capital adjustments
Capital expenditures 28,991 40,499 104,913 135,660
Working Capital, end of 1,394 64,167 1,394 64,167
period
Long term debt - - - -
Shares outstanding, end of 285,401,346 284,732,011 285,401,346 284,732,011
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
Outlook
2013 Guidance
In 2013, we have planned a capital expenditure program of between $140 and $160
million. Over 40% of the budget will be at Blackrod, where we will expand the
pilot with a second well pair, commence detailed engineering for the project
and order long lead-time equipment for the commercial processing facility. At
Mooney we will continue development of the phase 2 lands with 20 to 25
horizontal wells planned to be drilled and we will upgrade the road and
pipeline infrastructure on these expansion lands. We expect these lands will
then be converted to ASP flood injection late in 2013 or early 2014. At Onion
Lake we will continue primary development and drill 20 to 30 vertical wells and
upgrade the water handling facilities.
It is expected that this capital program will be funded from anticipated cash
flow from operations and the Company's undrawn credit facilities of $115
million. We have a lot of flexibility in our capital program and can adjust
capital spending if required. In 2013, we also expect to put our longer term
financing strategy in place to fund the first phase of development at Blackrod.
Exit production levels for 2013 are expected to be between 11,000 and 12,000
boe per day, 10 - 20% higher than 2012. The most significant increase in
production is expected to come from the response of phase one of the ASP flood
at Mooney and additional conventional production from phase 2 lands.
Cash flow from operations is expected to be between $75 and $85 million, using
a WTI oil reference price of US$88 per barrel. Operating costs will increase as
we expect to begin expensing the Mooney polymer injection costs sometime in
2013 which, to date, have been capitalized during the re-pressurization phase
of the ASP flood.
The 2012 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).
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. 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 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', 'believe', 'plan', 'target', 'continuous',
'estimate', 'expect', 'may', 'will', 'project', 'should', or similar words
suggesting future outcomes. In particular, this document contains
forward-looking statements pertaining to the potential production of the
Blackrod SAGD pilot well, determination of commercial rates for the Blackrod
project, anticipated timing for the design and construction of the first phase
of the Blackrod SAGD project, potential new drilling locations and expansion of
thermal development from the recent drilling activity at Onion Lake, timing and
potential production from the Mooney ASP flood, timing to finance capital
expenditure programs and the guidance information included in the Outlook
section above.
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.
Undue reliance should not be placed on forward-looking statements, which are
inherently uncertain, are based on estimates and assumptions, and are subject
to known and unknown risks and uncertainties (both general and specific) that
contribute to the possibility that the future events or circumstances
contemplated by the forward-looking statements will not occur. 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.
With respect to forward-looking statements contained in this press release,
management has made assumptions regarding future production levels; future oil
and natural gas prices; future operating costs; timing and amount of capital
expenditures; the ability to obtain financing on acceptable terms; availability
of skilled labour and drilling and related equipment; general economic and
financial market conditions; continuation of existing tax and regulatory
regimes; 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.
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.
Accordingly, 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 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 complete report see attached file.
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
07.11.2012 Dissemination of a Corporate News, transmitted by DGAP -
a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
DGAP's Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
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Language: English
Company: BlackPearl Resources Inc.
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ISIN: SE0002060863
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