|By Marketwired .||
|November 6, 2012 05:44 PM EST||
CALGARY, ALBERTA -- (Marketwire) -- 11/06/12 -- Pace Oil & Gas Ltd. ("Pace" or the "Company") (TSX:PCE) is pleased to provide an update of its operations and its financial results for the three and nine months ended September 30, 2012.
During Q3, 2012, Pace continued to focus on its primary oil operations at Dixonville and Matziwin. At Matziwin, the Company advanced its play concept completing and putting on stream 2 gross (2.0 net) wells that continue to exceed the Company's production type curve. At Dixonville, the Company completed its last phase of the waterflood expansion and now has the entire pool under water injection. The pool continues to show positive results from the waterflood and modest future capital programs will focus on increasing sweep efficiency and optimizations leading to improved operating costs, faster recoveries and minimized field downtime.
In Q3 2012 Pace moderated its capital program and spent within funds from operations. Pace generated $14.0 million ($0.30 per share) of funds from operations with capital investment of $12.9 million. The Company's operations continued to be impacted by unscheduled shut-ins at third party facilities in the quarter causing production to be approximately 800 boe/d lower than forecast (including approximately 600 bbls/d of oil). Production for the quarter averaged 12,681 boe/d including 5,996 bbls/d of oil & NGLs and 40.1 mmcf/d of natural gas compared to 13,558 boe/d in Q3 2011.
At Matziwin, Pace now controls over 69,000 net acres of land and early results continue to exceed expectations. The Company completed 2.0 gross (2.0 net) wells in the quarter that were placed on stream in late July and early August. The first well was completed with a 15 stage slick water frac and approximately 300 tonnes of sand and 4,000 m3 of water. The well continues to produce ahead of the type curve with production averaging approximately 150 bbls/d of oil in September with stable watercuts. The second well was completed with a 20 stage slick water frac with approximately 300 tonnes of sand and 4,000 m3 of water. This well had initial 30 day production rate of approximately 250 bbls/d of oil and has maintained its strong production rate and averaged 210 bbls/d of oil in September.
Matziwin has good vertical well control and the Company has identified 87 low to medium risk horizontal locations for future development. The Company has identified a large captured oil resource on 100% Pace owned lands in an area with excellent access. Pace owns a 100% working interest in a recently expanded oil battery and with continued development the Company believes it will be able to further reduce its capital costs and strengthen its returns. There is upside to the Company's current type curve and this large oil resource play has potential to generate significant oil growth.
At Retlaw the Company completed its waterflood implementation on the operated Mannville BBB/NNN pool in Q2 2012. The pool shows initial signs of a positive waterflood response with a full production response expected in 2013.
The Company's Dixonville property with its large Montney "C" oil pool continues to show strong waterflood response. With well conversions in Phases 4 & 5 now complete, Pace has the full pool under waterflood and expects continued stable low decline oil production and minimal future capital investment. The Company will continue to optimize this field by reducing operating costs in increasing recovery. With 188 mmbbl of original oil in place the Company's independent reserve auditor have assigned proved reserves that equate to a recovery factor of less than 12% for total proved reserves and a recovery factor of approximately 15% for proved plus probable reserves. With a relatively low overall recovery from this pool, Pace continues to review the potential of an enhanced recovery scheme for this pool.
Rainbow lake spill update
As previously reported, on May 19, 2012 an oil spill was discovered at a Pace operated Rainbow Lake water disposal well. The release was sweet Bluesky oil that leaked from an above ground section of piping. The release occurred as a result of a hole caused by internal pitting corrosion that was accelerated through stray electrical currents in the surrounding area. The source of the stray current is under investigation. Similar piping systems in the area were shut down and checked and did not exhibit corrosion concerns. A corrosion engineering firm has been retained by Pace to perform an assessment of Pace's operating infrastructure. Pace has completed a substantial amount of clean-up and continues to work collaboratively with all government agencies to ensure the site is remediated. Costs to the end of September 30, 2012 were estimated at $19.9 million and total clean-up costs are estimated at $25 million (including contingent costs for excavation around the wellhead) which is within the company's total insurance coverage of $30 million. The majority of the site is being bio-remediated and naturally attenuated to minimize surface disturbance while an excavation contingency plan for the area surrounding the well head is being developed if the need arises.
Pace has received confirmation of coverage from all insurance providers and expects to recover all costs in excess of its deductibles. Pace has received $10.0 million to date including $1.0 million in Q3 2012 and $9.0 million subsequent to quarter end.
Financial Highlights ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Financial (000s, except per share amounts) Q3 2012 Q3 2011 Q2 2012 YTD 2012 YTD 2011 ---------------------------------------------------------------------------- Funds from operations $ 14,006 $ 21,174 $ 16,485 $ 45,218 $ 71,693 Per share- Basic 0.30 0.45 0.35 0.96 1.51 Per share- Diluted 0.30 0.45 0.35 0.96 1.50 ---------------------------------------------------------------------------- Net income (loss) $ (4,859) $ 5,524 $(56,581) $(66,426) $ 16,253 Per share- Basic (0.10) 0.12 (1.20) (1.41) 0.34 Per share- Diluted (0.10) 0.12 (1.20) (1.41) 0.34 ---------------------------------------------------------------------------- Total capital expenditures $ 12,909 $ 21,794 $ 13,688 $ 68,293 $ 83,436 Net acquisitions (dispositions) - - - - (2,000) Net debt 210,348 166,273 210,765 210,348 166,273 ---------------------------------------------------------------------------- Operations Average daily production Oil & NGLs (bbls/d) 5,996 6,061 6,375 6,519 6,002 Natural gas (mcf/d) 40,109 44,981 44,340 42,869 47,894 ---------------------------------------------------------------------------- Combined (boe/d) 12,681 13,558 13,765 13,664 13,985 % Oil & NGLs 47% 45% 46% 48% 43% ---------------------------------------------------------------------------- ($/boe) Sales price $ 42.31 $ 46.58 $ 40.04 $ 43.50 $ 47.40 Royalties (8.69) (10.53) (8.46) (9.97) (10.22) Operating expenses (14.99) (13.38) (15.34) (15.51) (13.36) Transportation expenses (2.08) (2.27) (2.11) (2.10) (2.03) ---------------------------------------------------------------------------- Operating netback $ 16.55 $ 20.40 $ 14.13 $ 15.92 $ 21.79 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------
Field operations experienced both planned and unexpected downtime resulting in production of 5,996 bbls/d of liquids and a total of 12,681 boe/d for Q3 2012. Pace previously reported downtime in Northwest Alberta and Red Earth and had expected all production to be back online in Q3. In Northwest Alberta, the majority of the production is still offline with continued infrastructure problems with two third party operators. The Company is pursuing alternative options to bring the production back online and now expects volumes to return in early 2013. Estimated production to be brought back on line is between 500 and 600 boe/d (approx. 75% oil). At Red Earth production resumed in September, but Q3 2012 production averaged approximately 160 boe/d less than Q2 2012 as the wells were brought on late in Q3 2012. In addition, Pace experienced both scheduled and unscheduled downtime at Dixonville and also converted producing wells to injectors as part of its full scale plan to complete the waterflood project.
Over the past two years, Pace has been focused and disciplined in its transition to an oil weighted intermediate sized producer. Pace has been successful in increasing its oil production, oil reserves and its oil opportunity base. The Company has a large production base with solid, oil-weighted reserves; a stable low decline production base and a large inventory of low risk oil and gas exploitation opportunities. The Company now has the entire Dixonville pool under waterflood which will generate significant free cash flow in the future with minimal capital investment. At Matziwin the Company has acquired a significant land position and its latest drilling results are exceeding its type curve expectations.
For the balance of the year, the Company's capital program will be focused in the Matziwin area. Since the end of the quarter Pace has drilled one horizontal well and has recently spud another horizontal well on its land base. The Company will have both of these wells completed and on stream by mid December 2012. The Company expects to drill 1-2 additional wells in this area before year end with these wells to be completed and on stream prior to the end of January 2013.
With the unexpected downtime and continued shut in production in Northwest Alberta, Pace expects production to average approximately 13,400 boe/d for 2012. The Company had originally forecast shut in volumes back on production by the end of Q3 2012 but 500 to 600 boe/d (approx. 75% oil) remains shut in and are not forecast to be online until Q1 2013.
Pace is committed to unlocking value for its shareholders by delivering on its resource plays and maintaining financial discipline. The challenges of the global economy have had a significant impact on capital markets and commodity markets in all sectors. In order to increase its financial flexibility and provide more focus to Pace's operations, the Company is reviewing options including non-core/non-strategic asset sales or pursuing joint venture partnerships that could improve the Company's financial flexibility and accelerate the development of its resource plays.
For 2013 the Company will continue development of its oil resource play at Matziwin and continue to enhance its waterfloods in Dixonville and Southern Alberta. Pace plans to drill up to 25 wells at Matziwin in 2013 with infrastructure capital of approximately $5 million to increase oil handling capacity to between 3,000 - 4,000 bbls/d and to drill a water disposal well. Pace will also continue optimizing its waterfloods and will allocate capital to enhance or speed up recovery and to reduce operating costs. Additional details of the Company's 2013 capital program and guidance are expected to be released in December 2012. Pace has developed a strong stable reserve base and has added an oil resource opportunity. The Company plans to reduce its leverage and focus its operations to execute an efficient, predictable capital program. With planned asset divestures and focused development of its core assets Pace will be well positioned to transition to a sustainable dividend paying corporation. The Company will continue to review its strategic plan with a view of providing long-term value to its shareholders.
Pace Oil & Gas Ltd. is a Calgary, Alberta based intermediate sized oil-weighted company with a large portfolio of near term oil resource opportunities in the Western Canadian Sedimentary Basin. Pace has a growing oil production base in the Peace River Arch area with its large Montney pool at Dixonville, its Slave Point light oil resource play at Red Earth and in Southern Alberta, is successfully developing and exploiting a large inventory of identified Mannville channels and is very encouraged by its new resource opportunity at Matziwin. The Company has a large land inventory of over 870,000 net acres and a large 3-D seismic database to identify drilling opportunities and uses the newest proven technologies in horizontal drilling, multi-stage completions, and enhanced oil recovery processes to grow its production and reserve base.
Pace's common shares trade under the symbol PCE on the TSX and PACEF on the OTC.
Natural gas is converted to barrels of oil equivalent ("boe") at a ratio of six thousand cubic feet to one barrel of oil. Boe's may be misleading, particularly if used in isolation.
Certain statements contained within this press release constitute forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward -looking statements. The use of any of the words "targeting", "continue", "until", "forecast", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. In particular, statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be profitably produced in the future. In addition, this press release contains forward-looking statements with respect to: (i) production volumes and expectations regarding the timing of when additional production volumes will be brought on stream; (ii) Pace's drilling plans and the results therefrom including expectations regarding well completions and the start-up of new wells; (iii) future development and exploration activities and the timing thereof; (iv) Pace's plans for the development of its proven and probable undeveloped reserves. With respect to the forward-looking statements contained in this press release, Pace has made assumptions regarding:
-- prevailing commodity prices and exchange rates; -- availability of labour and drilling equipment; -- future operating expenses including processing and gathering fees; -- timing and amount of capital expenditures; -- government regulation in the areas of taxation, royalty rates and environmental protection; -- production of new and existing wells and the timing of new wells coming on-stream; and -- the performance characteristics of oil and natural gas properties.
Although Pace believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Pace can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. These statements speak only as of the date of this press release or as of the date specified in the documents incorporated by reference into this press release, as the case may be. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to:
-- volatility in market prices for oil and natural gas, and in exchange rates; -- liabilities inherent in oil and natural gas operations and limitations on insurance; -- changes or fluctuations in production levels; -- stock market volatility and market valuation of our stock; -- uncertainties associated with estimating oil and natural gas reserves; -- competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; -- incorrect assessments of the value of acquisitions and exploration and development programs; -- geological, technical, drilling, production and processing problems; -- changes in legislation including changes in tax laws, royalty rates and incentive programs relating to the oil and natural gas industry; and
other factors which are included under "Risk Factors" in Pace's Annual Information Form on file with the Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement. The forward-looking statements contained in this document speak only as of the date of this document and Pace does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.
The IoT has the potential to create a renaissance of manufacturing in the US and elsewhere. In his session at 18th Cloud Expo, Florent Solt, CTO and chief architect of Netvibes, will discuss how the expected exponential increase in the amount of data that will be processed, transported, stored, and accessed means there will be a huge demand for smart technologies to deliver it. Florent Solt is the CTO and chief architect of Netvibes. Prior to joining Netvibes in 2007, he co-founded Rift Technol...
Apr. 28, 2016 07:00 PM EDT Reads: 1,460
Join IBM June 8 at 18th Cloud Expo at the Javits Center in New York City, NY, and learn how to innovate like a startup and scale for the enterprise. You need to deliver quality applications faster and cheaper, attract and retain customers with an engaging experience across devices, and seamlessly integrate your enterprise systems. And you can't take 12 months to do it.
Apr. 28, 2016 04:45 PM EDT Reads: 1,717
This is not a small hotel event. It is also not a big vendor party where politicians and entertainers are more important than real content. This is Cloud Expo, the world's longest-running conference and exhibition focused on Cloud Computing and all that it entails. If you want serious presentations and valuable insight about Cloud Computing for three straight days, then register now for Cloud Expo.
Apr. 28, 2016 04:30 PM EDT Reads: 1,604
IoT device adoption is growing at staggering rates, and with it comes opportunity for developers to meet consumer demand for an ever more connected world. Wireless communication is the key part of the encompassing components of any IoT device. Wireless connectivity enhances the device utility at the expense of ease of use and deployment challenges. Since connectivity is fundamental for IoT device development, engineers must understand how to overcome the hurdles inherent in incorporating multipl...
Apr. 28, 2016 02:45 PM EDT Reads: 1,353
Machine Learning helps make complex systems more efficient. By applying advanced Machine Learning techniques such as Cognitive Fingerprinting, wind project operators can utilize these tools to learn from collected data, detect regular patterns, and optimize their own operations. In his session at 18th Cloud Expo, Stuart Gillen, Director of Business Development at SparkCognition, will discuss how research has demonstrated the value of Machine Learning in delivering next generation analytics to im...
Apr. 28, 2016 02:30 PM EDT Reads: 1,542
Manufacturers are embracing the Industrial Internet the same way consumers are leveraging Fitbits – to improve overall health and wellness. Both can provide consistent measurement, visibility, and suggest performance improvements customized to help reach goals. Fitbit users can view real-time data and make adjustments to increase their activity. In his session at @ThingsExpo, Mark Bernardo Professional Services Leader, Americas, at GE Digital, will discuss how leveraging the Industrial Interne...
Apr. 28, 2016 01:15 PM EDT Reads: 1,074
The paradigm has shifted. A Gartner survey shows that 43% of organizations are using or plan to implement the Internet of Things in 2016. However, not just a handful of companies are still using the old-style ad-hoc trial-and-error ways, unaware of the critical barriers, paint points, traps, and hidden roadblocks. How can you become a winner? In his session at @ThingsExpo, Tony Shan will present a methodical approach to guide the holistic adoption and enablement of IoT implementations. This ov...
Apr. 28, 2016 01:00 PM EDT Reads: 1,488
SYS-CON Events announced today that Stratoscale, the software company developing the next generation data center operating system, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Stratoscale is revolutionizing the data center with a zero-to-cloud-in-minutes solution. With Stratoscale’s hardware-agnostic, Software Defined Data Center (SDDC) solution to store everything, run anything and scale everywhere...
Apr. 28, 2016 12:45 PM EDT Reads: 1,441
Angular 2 is a complete re-write of the popular framework AngularJS. Programming in Angular 2 is greatly simplified – now it's a component-based well-performing framework. This immersive one-day workshop at 18th Cloud Expo, led by Yakov Fain, a Java Champion and a co-founder of the IT consultancy Farata Systems and the product company SuranceBay, will provide you with everything you wanted to know about Angular 2.
Apr. 28, 2016 12:15 PM EDT Reads: 1,590
Digital payments using wearable devices such as smart watches, fitness trackers, and payment wristbands are an increasing area of focus for industry participants, and consumer acceptance from early trials and deployments has encouraged some of the biggest names in technology and banking to continue their push to drive growth in this nascent market. Wearable payment systems may utilize near field communication (NFC), radio frequency identification (RFID), or quick response (QR) codes and barcodes...
Apr. 28, 2016 12:00 PM EDT Reads: 524
SYS-CON Events announced today that Men & Mice, the leading global provider of DNS, DHCP and IP address management overlay solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. The Men & Mice Suite overlay solution is already known for its powerful application in heterogeneous operating environments, enabling enterprises to scale without fuss. Building on a solid range of diverse platform support,...
Apr. 28, 2016 11:30 AM EDT Reads: 2,162
You deployed your app with the Bluemix PaaS and it's gaining some serious traction, so it's time to make some tweaks. Did you design your application in a way that it can scale in the cloud? Were you even thinking about the cloud when you built the app? If not, chances are your app is going to break. Check out this webcast to learn various techniques for designing applications that will scale successfully in Bluemix, for the confidence you need to take your apps to the next level and beyond.
Apr. 28, 2016 11:00 AM EDT Reads: 1,384
The increasing popularity of the Internet of Things necessitates that our physical and cognitive relationship with wearable technology will change rapidly in the near future. This advent means logging has become a thing of the past. Before, it was on us to track our own data, but now that data is automatically available. What does this mean for mHealth and the "connected" body? In her session at @ThingsExpo, Lisa Calkins, CEO and co-founder of Amadeus Consulting, will discuss the impact of wea...
Apr. 28, 2016 10:30 AM EDT Reads: 521
Whether your IoT service is connecting cars, homes, appliances, wearable, cameras or other devices, one question hangs in the balance – how do you actually make money from this service? The ability to turn your IoT service into profit requires the ability to create a monetization strategy that is flexible, scalable and working for you in real-time. It must be a transparent, smoothly implemented strategy that all stakeholders – from customers to the board – will be able to understand and comprehe...
Apr. 28, 2016 10:15 AM EDT Reads: 927
SYS-CON Events announced today that Ericsson has been named “Gold Sponsor” of SYS-CON's @ThingsExpo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. Ericsson is a world leader in the rapidly changing environment of communications technology – providing equipment, software and services to enable transformation through mobility. Some 40 percent of global mobile traffic runs through networks we have supplied. More than 1 billion subscribers around the world re...
Apr. 28, 2016 10:00 AM EDT Reads: 666
So, you bought into the current machine learning craze and went on to collect millions/billions of records from this promising new data source. Now, what do you do with them? Too often, the abundance of data quickly turns into an abundance of problems. How do you extract that "magic essence" from your data without falling into the common pitfalls? In her session at @ThingsExpo, Natalia Ponomareva, Software Engineer at Google, will provide tips on how to be successful in large scale machine lear...
Apr. 28, 2016 10:00 AM EDT Reads: 704
SYS-CON Events announced today that Fusion, a leading provider of cloud services, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Fusion, a leading provider of integrated cloud solutions to small, medium and large businesses, is the industry's single source for the cloud. Fusion's advanced, proprietary cloud service platform enables the integration of leading edge solutions in the cloud, including cloud...
Apr. 28, 2016 09:30 AM EDT Reads: 2,494
There is an ever-growing explosion of new devices that are connected to the Internet using “cloud” solutions. This rapid growth is creating a massive new demand for efficient access to data. And it’s not just about connecting to that data anymore. This new demand is bringing new issues and challenges and it is important for companies to scale for the coming growth. And with that scaling comes the need for greater security, gathering and data analysis, storage, connectivity and, of course, the...
Apr. 28, 2016 09:00 AM EDT Reads: 517
The IETF draft standard for M2M certificates is a security solution specifically designed for the demanding needs of IoT/M2M applications. In his session at @ThingsExpo, Brian Romansky, VP of Strategic Technology at TrustPoint Innovation, will explain how M2M certificates can efficiently enable confidentiality, integrity, and authenticity on highly constrained devices.
Apr. 28, 2016 09:00 AM EDT Reads: 940
In his session at @ThingsExpo, Chris Klein, CEO and Co-founder of Rachio, will discuss next generation communities that are using IoT to create more sustainable, intelligent communities. One example is Sterling Ranch, a 10,000 home development that – with the help of Siemens – will integrate IoT technology into the community to provide residents with energy and water savings as well as intelligent security. Everything from stop lights to sprinkler systems to building infrastructures will run ef...
Apr. 28, 2016 08:45 AM EDT Reads: 401