Pearl Exploration and Production Ltd.



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  Feb 25, 2010 - 17:35 ET
BlackPearl Announces 2009 Financial and Operating Results

 

CALGARY, ALBERTA--(Marketwire - Feb. 25, 2010) - BlackPearl Resources Inc. ("BlackPearl" or the "Company") (TSX:PXX)(FIRST NORTH:PXXS) is pleased to announce its financial and operating results for the three and twelve months ended December 31, 2009.

Highlights/key accomplishments in 2009 included:

  • At Onion Lake, the Company completed a 28 well development drilling program during the fourth quarter, which added approximately 2,000 boe/day (1,750 net to BlackPearl) of production. Over 200 further drilling locations were identified. In addition, we prepared a conceptual development plan for a SAGD thermal recovery project on a portion of the Onion Lake lands.
  • At Blackrod, we filed an application to construct and operate a single well SAGD pilot. In connection with the planned pilot, we drilled 10 strat wells to confirm the areal extent of the reservoir, completed construction of the steam generator and commenced building a 31 kilometre road to the planned pilot facility site.
  • At Mooney, we continued to operate and monitor a successful pilot polymer flood. Incremental oil recovery rates in excess of 11% have been achieved to date. We also commissioned external studies to optimize the type and quality of polymer to use, as well as to determine the applicability of adding alkaline or a surfactant as part of the polymer flood. A regulatory application to commence the first phase of a commercial polymer flood was filed late in the year.
  • Enhanced the strength of the balance sheet with a $46 million equity financing; at December 31, 2009 the Company was debt free and had working capital of $58 million.
  • Oil and gas production averaged 5,254 boe/day in 2009, a 32% decrease from 2008. The decrease in production in 2009 reflects the sale of 3,200 boe/day in mid 2008, as well as reduced drilling activity in 2009. Year-end production has increased to 6,400 boe/d.
  • Revenues were impacted by lower commodity prices in 2009. Crude oil prices (WTI) averaged US$61.80 per barrel in 2009 compared with US$99.65 per barrel in 2008. As a result, revenues were $89.6 million in 2009, a 51% drop from 2008. The decrease also reflects a reduction of production levels as discussed above.
  • Significantly reduced operating costs and administrative expenses. Operating costs were $15.36 per boe, a 14% drop from 2008 and general and administrative costs were $3.60 per boe compared with $5.34 per boe in 2008.

John Festival, President of BlackPearl, commenting on 2009 activities indicated that, "2009 was an interesting year for BlackPearl. The new management group was introduced at the beginning of the year and our immediate challenge was to deal with the effects of the global economic slowdown; oil prices were in the mid $30's and our focus was on reducing expenses and maintaining a strong financial position. Oil prices started to recover in the spring and our focus changed to undertaking a detailed technical and economic review of all of our properties. During this time we determined which properties would be core areas for us and we made significant progress in establishing development plans for each of these core areas. Finally, in the fourth quarter we began to execute on our development plans, which included completing a 28 well drilling program at Onion Lake and filing development applications for our projects at Blackrod and Mooney. Implementation of this plan will continue throughout 2010 as we advance each of our three core areas. Capital expenditures were modest in 2009; however, we are now entering the execution stage of our strategy and we will triple our capital expenditures in 2010 compared to 2009. We continue to believe that our three core projects have the potential of providing up to 50,000 boe/day of production over the next few years." 

Commenting on fourth quarter results, Mr. Festival indicated that, "Crude oil prices were significantly higher in Q4 compared with 2008. As a result, our cash flow was over 400% more than in the fourth quarter in 2008. In addition, due to the recent drilling at Onion Lake, our year-end production was about 6,400 boe/day, 26% higher than our Q3 production."

2010 Guidance

BlackPearl's Board of Directors has approved a revised capital expenditure budget of $85-90 million for 2010, which will allow us to significantly advance the development of each of our three core areas. The major elements of this program will include drilling up to 50 development wells at Onion Lake, construction of the single well SAGD pilot at Blackrod and implementation of the first phase of the ASP (alkaline surfactant polymer) flood at Mooney.

With this planned capital program, we anticipate 2010 oil and gas production averaging about 6,400 boe/day, over 20% higher than 2009. This estimate is based on the Company selling about 600 boe/day of production through asset sales. We expect to exit 2010 at between 7,000 and 7,500 boe/d. Most of the production growth will come from the Onion Lake area. With the current pricing environment, this level of production is expected to generate $45-50 million in cash flow from operations (before working capital adjustments).

Financial and Operating Highlights 

    Three months ended
December 31
Twelve months ended
December 31
    2009 2008 2009 2008
         
Daily sales volumes (1)        
  Oil (bbl/d) 4,506 4,952 4,324 6,182
  Natural gas (mcf/d) 4,801 7,478 5,582 8,942
  Combined  (boe/d) 5,306 6,198 5,254 7,672
           
Product pricing        
  Oil ($/bbl) 61.77 34.35 51.44 69.07
  Natural gas ($/mcf) 4.62 6.51 4.10 8.11
  Combined ($/boe) 56.69 36.28 46.74 65.36
           



($000's, except per share and boe amounts)
     
Revenue           
Oil and gas revenue - gross 27,674 20,687 89,637 183,536
         
Royalties ($/boe) 13.79 7.62 11.09 16.11
Transportation costs ($/boe) 1.52 1.36 1.81 1.30
Operating costs ($/boe) 14.85 18.06 15.36 17.77
         
Net income (loss) for the period (3,897) (83,686) (47,315) (78,862)
         Per share, basic and diluted (0.01) (0.44) (0.19) (0.42)
         
Cash flow from operating activities, before working capital adjustments 14,677 3,623
29,004

72,120
         
Capital expenditures 17,559 32,769 27,878 107,367
         
Working Capital, end of period 57,995 6,452 57,995 6,452
Long term debt - - - -
         
Shares outstanding, end of period 261,960,717 189,241,716 261,960,717 189,241,716
         

(1) boe based on a conversion ratio of 6 mcf of gas to 1 barrel of oil. Boes 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.

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 data for the period ended December 31, 2009 as evaluated by Sproule Associates Limited and other oil and gas information prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. 

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 historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "believe", "plan", "continuous", "estimate", "expect", "may", "will", "project", "should", "predict", "targeting", "seek", "intend", "could", "potential" or similar words. 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. The Company believes the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. In particular, this document contains forward-looking statements pertaining to the Company's 2010 capital expenditure program, estimated production levels and anticipated cash flow from operations, estimated production lost from asset sales, development plans at Onion Lake, Blackrod and Mooney, and future drilling locations at Onion Lake.

The actual results could differ materially from those results anticipated in these forward-looking statements as a result of several risk factors. These factors include, but are not limited to, volatility of oil and natural gas prices, ability to replace reserves, uncertainties associated with estimating oil and gas reserves, substantial capital requirements and the Corporation's ability to access additional capital, risks and uncertainties inherent in exploration and development activities, government regulation and changes in legislation, environmental matters, aboriginal claims, dependence on key personnel, availability of drilling equipment and skilled personnel, expiration of licenses and leases, competition, conflicts of interest, issuance of debt or equity, title to properties, variations in exchange rates and hedging and uncertainty in global financial markets. Further information regarding these risk factors may be found under the heading "Risk Factors" in the Company's Annual Information Form.

With respect to forward-looking statements contained in this news release, we have made assumptions regarding future production levels; future oil and 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. The forward-looking information in this release related to 2010 cash flow from operations were based on a US$72 per barrel WTI oil price, a Bow River heavy oil differential of US$10 per barrel and a US/Canadian dollar foreign exchange rate of 0.95. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

Statements relating to "reserves" are forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the reserves 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 in fact be realized. Actual results will differ, and the difference may be material and adverse to the Corporation and its shareholders.

Readers are also cautioned that the foregoing list of factors and risks 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 news release 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.

BlackPearl's Certified Advisor on First North is E. Öhman J:or Fondkommission AB.

Company Registration Number: 409596-1

The report for the three months ending March 31, 2010 will be published on or before May 14, 2010.



FOR FURTHER INFORMATION PLEASE CONTACT:

BlackPearl Resources Inc.
John Festival
President and Chief Executive Officer
(403) 215-8313
or
BlackPearl Resources Inc.
Don Cook
Chief Financial Officer
(403) 215-8313
(403) 265-8324 (FAX)
www.blackpearlresources.ca
 
 

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