/NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR
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CALGARY, Feb. 5, 2013 /CNW/ - Palliser Oil & Gas
Corporation ("Palliser" or the "Company")
(TSXV: PXL) is pleased to announce its capital budget and
outlook for 2013, and management appointments.
Unaudited fourth quarter and year-end 2012
results proved a record year for the Company in many respects.
Average production for 2012 is estimated at 2,125 boe/d,
representing a 54% increase over the 2011 average. Similarly,
fourth quarter 2012 average production is estimated at 2,480 boe/d,
representing a 50% increase over the same period in 2011.
Palliser's production has grown in each of the last fifteen
consecutive quarters while also achieving strong production per
share growth during this time period. The Company realized
significant reductions in operating expenses in 2012, largely as a
result of expansion of Company owned and operated salt water
disposal infrastructure. Operating expenses are estimated to be
approximately $23/boe for the 2012
average, representing a greater than 25% improvement over the 2011
average.
The result of increased production and reduction
in operating expenses is estimated to boost the Company's 2012
funds flow from operating activities to $17
million, a 286% increase from 2011. Although differentials
between West Texas Intermediate ("WTI") and Western Canadian Select
("WCS") widened late in the fourth quarter, the Company's funds
flow from operating activities are estimated to reach a record
$5.5 million for the fourth quarter
of 2012, supported by the Company's hedge position and increased
shipments of heavy oil by rail.
2013 Capital Budget and Outlook
In light of the current wider heavy oil
differential, the Board of Directors has approved a 2013 capital
budget of $24 million. This
capital program is anticipated to increase average production in
2013 by approximately 30% to 2,700 - 2,800 boe/d, with a 98% heavy
oil weighting. This internally generated, organic growth driven
capital program is to be funded by cash flow and credit facilities.
On January 14, 2013 the Company
announced an increase to its credit facility to a total of
$52 million. The credit facility
increase provides the Company with increased financial flexibility.
The current 2013 budget forecasts funds flow from operating
activities of $20 million with
year-end net debt of $39 million,
assuming $93.00 WTI per barrel and
$63.00 WCS per barrel pricing.
Management anticipates heavy oil differentials
will narrow toward the second half of 2013, largely as a result of
the BP Whiting refinery coming back into service and will look to
prudently expand capital expenditures at that time.
Management will also closely monitor, and look to take advantage of
the current attractive heavy oil acquisition market. Although the
Company's projects are economic at current heavy oil prices,
Palliser is in a strong position to see where differentials trend
through the first half of 2013 as the majority of its capital
spending typically takes place in the second half of the year.
Despite current wider heavy oil differentials,
the Company is expecting 2013 realized operating netbacks to be
approximately $26 per boe due to the
Company's forecasted strong operational efficiencies, augmented by
its hedge position and its increasing shift to shipping heavy oil
by rail. Palliser commenced shipping by rail in September 2012, and is targeting 1000 bbl/d by
the end of the first quarter of 2013, representing over 30% of
corporate production shipped by rail. With minimal additional
capital, Palliser can increase its percentage shipped by rail to in
excess of 50% by year-end, if current wide heavy oil differentials
persist. Palliser is benefiting from its operating infrastructure
philosophy, whereby the majority of its production has double tank
systems installed at its single well batteries, allowing the
majority of its production to be able to ship clean and making it
available to meet the specifications of the rail terminals.
The Company's high volume lift ("HVL") strategy
has not only proven its consistency with a track record of 15
consecutive quarters of production growth, but has also proven to
be economically viable with sustainable low operating expenses and
high netbacks in comparison to our peers in the Lloydminster heavy oil area. Generally
well performances continue to meet or exceed internal estimates,
and further performance history continues to demonstrate additional
increases to recovery factors.
Palliser continues to expand its heavy oil
prospect inventory which currently stands at 170 locations, all of
which are unbooked in the 2011 independent reserve report.
This inventory provides the Company with a multi-year drilling and
re-activation program, and significant growth opportunities for
future capital programs. As of December 31,
2012, the Company's undeveloped heavy oil land position was
32,542 net acres.
Palliser anticipates releasing fourth quarter
and year-end audited 2012 financial and operating results in late
March to early April. The Company anticipates release of its
year-end independent reserve report either prior to, or in
conjunction with the year-end 2012 financial results.
Management Appointments
Palliser is pleased to announce the appointment
of Mr. Brett Frostad to the position
of Vice President Exploration. Mr. Frostad has been with Palliser
since June 2012 as Exploration
Manager. The Company is also pleased to announce the appointment of
Mr. Ken Staniforth to the position
of Production Manager. Mr. Staniforth has been with the
Company since April 2011 as Senior
Production Engineer.
Corporate Presentation
An updated corporate presentation may be viewed
on the Company's website at www.palliserogc.com.
About Palliser Oil & Gas
Corporation
Palliser is a Calgary-based junior oil and gas company
focused on high netback heavy oil production in the greater
Lloydminster area of Alberta and Saskatchewan.
Forward-Looking Statements
Certain statements contained herein
constitute forward-looking statements or information (collectively
"forward-looking statements") within the meaning of
applicable securities legislation, including, but not limited to
management's assessment of future plans and operations, including:
commodity focus; drilling plans and potential locations; expected
production levels; development plans; reserves growth; production
and operating sales and expenses; reservoir characteristics; the
results of applying certain operational development techniques;
certain economic factors; and capital expenditures.
Forward-looking statements are typically identified by words such
as "anticipate", "estimate", "expect", "forecast", "may", "will",
"project" and similar words suggesting future events or performance
or may be identified by reference to a future date. In addition,
statements relating to oil and gas reserves and resources are
deemed to be forward-looking statements as they involve the implied
assessment, based on certain estimates and assumptions, that the
reserves or resources described, as the case may be, exist in the
quantities predicted or estimated and can be profitably produced in
the future. With respect to forward-looking statements
herein, Palliser has made assumptions regarding, among other
things; future capital expenditure levels; future oil and natural
gas prices; "differentials" between West Texas Intermediate and
Western Canadian Select benchmark pricing; future oil and natural
gas production levels; future water disposal capacity; future
exchange rates and interest rates; ability to obtain equipment and
services in a timely manner to carry out development activities;
ability to market oil and natural gas successfully to current and
new customers; the impact of increasing competition; the ability to
obtain financing on acceptable terms; and the ability to add
production and reserves through development and exploitation
activities. Although Palliser believes that the expectations
reflected in the forward-looking statements contained herein, and
the assumptions on which such forward-looking statements are made,
are reasonable, there can be no assurance that such expectations
will prove to be correct. Readers are cautioned not to place undue
reliance on forward-looking statements included herein, as there
can be no assurance that the plans, intentions or expectations upon
which the forward-looking statements are based will occur. By their
nature, forward-looking statements involve numerous risks and
uncertainties that contribute to the possibility that the
forward-looking statements will not occur, which may cause
Palliser's actual performance and financial results in future
periods to differ materially from any estimates or
projections. Additional information on these and other
factors that could affect Palliser's results are included in
reports on file with Canadian securities regulatory authorities,
including the Company's Annual Information Form, and may be
accessed through the SEDAR website at www.sedar.com.
The forward-looking statements contained
herein speak only as of the date hereof. Except as expressly
required by applicable securities laws, Palliser does not undertake
any obligation to, nor does it intend to, publicly update or revise
any 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. In addition, readers are cautioned that
historical results are not necessarily indicative of future
performance.
Production volumes are commonly expressed on
a barrel of equivalent ("BOE") basis whereby natural gas volumes
are converted at a ratio of six thousand cubic feet to one barrel
of oil. The intention is to convert oil and natural gas
measurement units into one basis for improved analysis of results
and comparisons with other industry participants. The term BOE may
be misleading, particularly if used in isolation. The
conversion ratio is based on an energy equivalent method primarily
applicable at the burner tip and does not represent an economic
value equivalency at the wellhead.
Non-IFRS Terms
Within this press release, references are
made to terms commonly used in the oil and gas industry which are
not defined within International Financial Reporting Standards
("IFRS"), including, but not limited to funds flow from operating
activities and operating netbacks (the "Non-IFRS Measures").
Management of the Company believes these Non-IFRS Measures are a
useful tool in analyzing operating performance. The Company's
method of calculating the Non-IFRS Measures may differ from methods
used by other issuers. Therefore, the Company's use of the Non-IFRS
Measures may not be comparable to similar measures presented by
other issuers. These Non-IFRS Measures should be read in
conjunction with the financial statements (or other financial
information) of the Company and should not be viewed as an
alternative to other measures of financial performance calculated
in accordance with IFRS.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this press release.
SOURCE Palliser Oil & Gas Corporation