Pipestone Energy Corp. Appoints Chief Operating Officer And Closing Of The Previously Announced Midstream Transaction

Pipestone Energy Corp. (“Pipestone Energy”) (TSX-V: PIPE) announces the appointment of Dustin Hoffman as Chief Operating Officer (COO) to be effective September 9, 2019.

Mr. Hoffman has over 25 years of professional experience, at Encana Corporation and its predecessor companies, where he held several senior management roles in different operating groups such as Deep Basin, Peace River Arch, Montney, Duvernay and most recently as Senior Manager, D&C Sourcing.  Mr. Hoffman is a Professional Engineer and holds a B.Sc. Chemical Engineering from the University of Alberta.

Paul Wanklyn, President and Chief Executive Officer of Pipestone Energy said, “I am extremely pleased to have Dustin join the team at Pipestone Energy as our COO.  Dustin brings proven senior leadership capabilities and a tremendous amount of experience in both the Montney and other unconventional resource plays across Canada. His significant experience in managing the start-up of new projects and working knowledge of the Pipestone area will add immediate value to forthcoming production ramp-up and future field development.”

Pipestone Energy is pleased to welcome Mr. Hoffman and would like to extend our great appreciation to Mr. Rosine who has served as our Senior Vice President & Chief Operating Officer since Pipestone Energy completed its plan of arrangement and reverse takeover of Blackbird Energy Inc. on January 4, 2019.  Mr. Rosine has been instrumental in the success of Pipestone Energy to date and we are very fortunate to be able to have Mr. Rosine work with Mr. Hoffman through this period of transition. 

MIDSTREAM TRANSACTION

Pipestone Energy closed its previously announced Midstream Transaction with Tidewater Midstream and Infrastructure Ltd. on August 15, 2019, which included the receipt of approximately $14 million in proceeds. Pipestone Energy will be utilizing these proceeds to fund the completion of three delineation wells on its 9-14 pad with pumping operations to commence prior to the end of Q3 2019.

 

Advisory Regarding Forward-Looking Statements

In the interest of providing shareholders of Pipestone Energy and potential investors information regarding Pipestone Energy, this news release contains certain information and statements (“forward-looking statements”) that constitute forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking statements relate to future results or events, are based upon internal plans, intentions, expectations and beliefs, and are subject to risks and uncertainties that may cause actual results or events to differ materially from those indicated or suggested therein. All statements other than statements of current or historical fact constitute forward-looking statements. Forward-looking statements are typically, but not always, identified by words such as “anticipate”, “estimate”, “expect”, “intend”, “forecast”, “continue”, “propose”, “may”, “will”, “should”, “believe”, “plan”, “target”, “objective”, “project”, “potential” and similar or other expressions indicating or suggesting future results or events.

Forward-looking statements are not promises of future outcomes. There is no assurance that the results or events indicated or suggested by the forward-looking statements, or the plans, intentions, expectations or beliefs contained therein or upon which they are based, are correct or will in fact occur or be realized (or if they do, what benefits Pipestone Energy may derive therefrom).

In particular, but without limiting the foregoing, this news release contains forward-looking statements pertaining to accelerated timing for the completion of three drilled uncompleted wells on Pipestone’s 9-14 pad.

With respect to the forward-looking statements contained in this news release, Pipestone Energy has assessed material factors and made assumptions regarding, among other things: future commodity prices and currency exchange rates, including consistency of future oil, natural gas liquids (NGLs) and natural gas prices with current commodity price forecasts; the ability to integrate Blackbird Energy Inc.’s and Pipestone Oil Corp.’s historical businesses and operations and realize financial, operational and other synergies from the combination transaction completed on January 4, 2019; Pipestone Energy’s continued ability to obtain qualified staff and equipment in a timely and cost-efficient manner; the predictability of future results based on past and current experience; the predictability and consistency of the legislative and regulatory regime governing royalties, taxes, environmental matters and oil and gas operations, both provincially and federally; Pipestone Energy’s ability to successfully market its production of oil, NGLs and natural gas; the timing and success of drilling and completion activities (and the extent to which the results thereof meet expectations); Pipestone Energy’s future production levels and amount of future capital investment, and their consistency with Pipestone Energy’s current development plans and budget; future capital expenditure requirements and the sufficiency thereof to achieve Pipestone Energy’s objectives; the successful application of drilling and completion technology and processes; the applicability of new technologies for recovery and production of Pipestone Energy’s reserves and other resources, and their ability to improve capital and operational efficiencies in the future; the recoverability of Pipestone Energy's reserves and other resources; Pipestone Energy’s ability to economically produce oil and gas from its properties and the timing and cost to do so; the performance of both new and existing wells; future cash flows from production; future sources of funding for Pipestone Energy’s capital program, and its ability to obtain external financing when required and on acceptable terms; future debt levels; geological and engineering estimates in respect of Pipestone Energy’s reserves and other resources; the accuracy of geological and geophysical data and the interpretation thereof; the geography of the areas in which Pipestone Energy conducts exploration and development activities; the timely receipt of required regulatory approvals; the access, economic, regulatory and physical limitations to which Pipestone Energy may be subject from time to time; and the impact of industry competition.

Information and statements regarding Pipestone Energy’s reserves and resources also are forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources exist in the quantities predicted or estimated and can be profitably produced in the future. In addition, with respect to the type curves and test rates, there is no certainty that future wells will generate results to match type curves or test rates presented herein.

The forward-looking statements contained herein reflect management's current views, but the assessments and assumptions upon which they are based may prove to be incorrect. Although Pipestone Energy believes that its underlying assessments and assumptions are reasonable based on currently available information, undue reliance should not be placed on forward-looking statements, which are inherently uncertain, depend upon the accuracy of such assessments and assumptions, and are subject to known and unknown risks, uncertainties and other factors, both general and specific, many of which are beyond Pipestone Energy’s control, that may cause actual results or events to differ materially from those indicated or suggested in the forward-looking statements. Such risks and uncertainties include, but are not limited to, volatility in market prices and demand for oil, NGLs and natural gas and hedging activities related thereto; the ability to successfully integrate Blackbird Energy Inc.’s and Pipestone Oil Corp.’s historical businesses and operations; general economic, business and industry conditions; variance of Pipestone Energy’s actual capital costs, operating costs and economic returns from those anticipated; the ability to find, develop or acquire additional reserves and the availability of the capital or financing necessary to do so on satisfactory terms; and risks related to the exploration, development and production of oil and natural gas reserves and resources. Additional risks, uncertainties and other factors are discussed in Blackbird’s management information circular dated November 21, 2018, a copy of which is available electronically on Pipestone Energy’s SEDAR at www.sedar.com.

The forward-looking statements contained in this news release are made as of the date hereof and Pipestone Energy assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. All forward-looking statements herein are expressly qualified by this advisory.

Pipestone Energy Corp.

Pipestone Energy Corp. is an oil and gas exploration and production company with its head office located in Calgary, Alberta. The company is focused on developing its pure-play condensate-rich Montney asset in the Pipestone area near Grande Prairie. Pipestone Energy is committed to building long term value for our shareholders and values the partnerships that it is developing within its operating community. Pipestone Energy shares trade under the symbol PIPE on the TSX Venture Exchange. For more information, visit www.pipestonecorp.com.

Pipestone Energy Contacts:

Paul Wanklyn

President and Chief Executive Officer

(403) 228-8684

paul.wanklyn@pipestonecorp.com

Craig Nieboer

Chief Financial Officer

(403) 206-0966

craig.nieboer@pipestonecorp.com

 

Dan van Kessel

VP Corporate Development

(403) 228-8688

dan.vankessel@pipestonecorp.com

Pipestone Energy Corp. Reports Second Quarter 2019 Results And Gives An Operations Update

Pipestone Energy Corp. (“Pipestone Energy” or the “Company”) is pleased to report its Q2 2019 financial and operational results and provide a progress report on its 2019 development program. The Company has filed its unaudited financial statements and related management’s discussion and analysis (“MD&A”) for the quarter ended June 30, 2019 on SEDAR. A conference call has been scheduled for Thursday, August 8 at 9:00 a.m. Mountain Daylight Time (11:00 a.m. Eastern Daylight Time) for interested investors, analysts, brokers and media representatives.

“We are extremely proud of the operational performance of our team over the past few months. As of this news release, we have completed substantially all the capital projects required to achieve our corporate guidance of increasing production 10-fold to between 14,000 and 16,000 boe/d by the end of 2019.  During June and July, we completed an additional 7 wells on our 3-1 pad for an average estimated cost of $4.0 million. This is a significant savings compared to both our development budget of $5.1 million, and from our previous 15-14 pad completion costs of $4.5 million per well. Pipestone Energy is reviewing the results on our 3-1 pad and applying advanced technologies to further improve our completion design and execution.  The objective is to reduce costs while improving well productivity” stated Paul Wanklyn, Pipestone Energy President and Chief Executive Officer. “Additionally, the midstream transaction we entered into with Tidewater Midstream in late July will allow us to delineate two Montney zones in three previously drilled wells in the Northeastern portion of our acreage. We plan to utilize high intensity fracs and the transaction will also fund the necessary infrastructure to produce from that area, further enhancing the value proposition of Pipestone Energy to investors.”

SECOND QUARTER 2019 CORPORATE HIGHLIGHTS

  • Pipestone Energy successfully completed 7 wells (7 net) at the 03-01 pad-site for an average estimated final cost of $4.0 million per well, which is approximately 22 percent less than Pipestone Energy’s type well budget of $5.1 million. These wells were completed utilizing high intensity plug and perf designs and will be brought on-stream later this fall;

  • Subsequent to the end of Q2, Pipestone Energy entered into a $30 million midstream transaction with Tidewater Midstream and Infrastructure Ltd. (“Tidewater”), which will provide the capital required to construct the East Battery (05-14-071-07W6); the initial $14 million of capital to be received by Pipestone Energy in mid-August from Tidewater pursuant to this transaction will be deployed to accelerate a three-well completion program at the 09-14-071-07W6 (“9-14”) pad into late Q3 2019; the approximately $16 million remaining balance will be funded by Tidewater in installments as construction of the East Battery progresses into 2020;

  • During Q2, the Company spent a total of $14.6 million on the fabrication, and substantial completion of on-site production facilities at its 15-14 pad-site, 03-01 pad-site, and other production facilities in preparation to bring these pads into production later this fall;

  • Pipestone Energy invested $7.6 million to substantially complete construction of its major 17.5 km infield gathering system, oriented north / south along the primary development corridor through its western acreage. As at the date of this press release the gathering system is substantially complete and is ready to be commissioned;

  • Legacy Blackbird production from South of the Wapiti river was re-started in early April 2019 as the third party owned and operated Gold Creek gas plant came back online. During Q2, including minor interruptions, production from this area averaged 1,407 boe/d; and

  • Pipestone Energy continued to implement its robust commodity price risk management program, which is primarily designed to reduce cash flow volatility, enhance certainty regarding funding availability for the Company’s capital expenditure program, and service debt.

Pipestone Energy Corp. Financial and Operating Highlights

 

Three months ended June 30,

Six months ended June 30,

($ thousands, except per unit and per share amounts)

9

2019

2018

2019

2018

Financial

 

 

 

 

 

 

 

 

Sales of liquids and natural gas

$

5,457

$

598

$

5,917

$

1,569

Cash used in operating activities

 

(777)

 

(180)

 

(13,562)

 

(17)

Funds flow from (used in) operations (1)

 

(2,423)

 

132

 

(11,086)

 

612

Per share, basic and diluted (2)

 

(0.01)

 

0.00

 

(0.06)

 

0.01

Income (loss)

 

4,869

 

(539)

 

567

 

(1,170)

Per share, basic and diluted (2)

 

0.03

 

(0.01)

 

0.00

 

(0.02)

Capital expenditures

 

46,835

 

13,026

 

96,303

 

43,584

Acquisitions

$

91

$

-

 

116

 

-

Working capital (deficit) (end of period)

 

 

 

 

 

(8,026)

 

(2,630)

Bank debt (end of period)

 

 

 

 

 

115,754

 

30,992

Shareholders equity (end of period)

 

 

 

 

 

383,843

 

87,010

Available funding (end of period) (3)

 

 

 

 

$

46,033

$

24,606

Shares outstanding (end of period) (2)

 

 

 

 

 

189,627

 

52,782

Weighted-average basic shares outstanding (2)

 

189,624

 

52,782

 

187,096

 

52,782

Weighted-average diluted shares outstanding (2)

 

189,625

 

52,782

 

187,116

 

52,782

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operations

 

 

 

 

 

 

 

 

Production

 

 

 

 

 

 

 

 

Condensate and crude oil (bbls/d)

 

595

 

106

 

340

 

146

Natural gas liquids (NGL) (bbls/d)

 

88

 

-

 

53

 

-

Natural gas (Mcf/d)

 

4,341

 

-

 

2,340

 

-

Total (boe/d) (4)

 

1,407

 

106

 

783

 

146

Condensate-gas ratio (CGR) (bbls/MMcf)

 

137

 

-

 

145

 

-

Benchmark prices

 

 

 

 

 

 

 

 

Crude oil WTI (C$/bbl)

$

79.98

$

79.52

$

76.47

$

83.62

Condensate Edmonton Condensate (C$/bbl)

 

73.69

 

80.30

 

71.20

 

83.37

Natural gas AECO 5A (C$/GJ)

 

1.04

 

1.24

 

1.75

 

1.66

Average realized prices (5)

 

 

 

 

 

 

 

 

Condensate and crude oil (per bbl)

 

71.83

 

61.94

 

68.34

 

59.50

NGL (per bbl)

 

29.24

 

-

 

28.55

 

-

Natural gas (per Mcf)

 

3.37

 

-

 

3.39

 

-

 

 

 

 

 

 

 

 

 

Netbacks

 

 

 

 

 

 

 

 

Revenue (per boe)

 

42.62

 

61.94

 

41.75

 

59.50

Royalties (per boe)

 

(2.15)

 

(3.08)

 

(2.11)

 

(4.19)

Operating expenses (per boe)

 

(13.83)

 

(7.61)

 

(15.26)

 

(6.95)

Transportation (per boe)

 

(5.72)

 

-

 

(9.85)

 

-

Operating netback (per boe) (3)

 

20.92

 

51.25

 

14.53

 

48.36

Funds flow netback (per boe) (3)

$

(18.93)

$

13.50

$

(78.22)

$

23.19

Note: All defined terms referenced in quotations below refer to terms or notes found within the Pipestone Energy Corp. Q2 2019 MD&A.

(1)       See “Additional subtotal – Funds flow from operations” under “Critical Accounting Judgments, Estimates and Policies”.

(2)       The number of common shares has been adjusted retrospectively to reflect the 10:1 share consolidation, as well as the 0.5996 exchange ratio, as part of the corporate acquisition transaction completed on January 4, 2019 when Pipestone Oil Corp. and Blackbird Energy Inc. (“Blackbird”) amalgamated to form Pipestone Energy Corp..

(3)       See “Non-GAAP measures”.

(4)       For a description of the boe conversion ratio, see “Basis of Barrel of Oil Equivalent”.

(5)       Before hedging.

(6)       IFRS 16, Leases, was adopted on January 1, 2019 using the modified retrospective approach; therefore, comparative information was not restated. See “Critical Accounting Judgments, Estimates and Policies”.

(7)       NMN – not meaningful number at this time as Pipestone Energy is at a pre-production stage.

 

 

2019 CAPITAL PROGRAM AND OPERATIONS UPDATE

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To date, Pipestone Energy’s 2019 capital program execution has been exceptional.  Projects have been completed as scheduled and have come in at or below budgeted cost.  Based on the work completed to date, and the combined savings achieved, Pipestone is reducing its 2019 net capital guidance to a range of $145 - $155 million, for a reduction to the top-end of previous guidance of $10 million. As at the date of this press release, approximately 75% of the expected 2019 net capital program has been completed with the bulk of the remaining 2019 spend focused on drilling 9 new wells at the 6-24 and 6-30 pads and on the accelerated three-well completion program at its 09-14-pad. All of these wells will be brought on production in 2020, and as such the required drilling, completion and infrastructure capital to achieve our 2019 exit production guidance of 14,000 to 16,000 boe/d has already been incurred.

Pipestone Energy Montney Operated Horizontal Well Status Summary

 

Current

(August 2019)

Sept 30, 2019

(Estimate)

Dec 31, 2019

(Estimate)

North of Wapiti River (1)

(Keyera Wapiti & Tidewater Pipestone Processing Facilities)

 

 

 

Drilled

27

29

36

Drilled + Completed

23

26

26

Tied-In / Available for Production

 

20

20

South of Wapiti River (1)

(CNRL Gold Creek Processing Facility)

 

 

 

Drilled + Completed

9

9

9

Tied-In / On-Production

8

8

8

(1)     Tied-In / Available for Production is a subset of the Drilled + Completed category which is a subset of the Drilled category.

Drilling & Completions

Pipestone Energy successfully completed 7 wells on the 03-1 pad site during Q2 2019 utilizing a high intensity plug and perf fracture program and up to approximately 8,500 tonnes per well. The average estimated final completion cost for these seven wells is $4.0 million, a $1.1 million (22%) cost savings per well from the budgeted development frac cost of $5.1 million. These wells will be brought on production during fall 2019. The Company is preparing to complete the three wells on the 9-14 pad during September 2019 utilizing a similar high intensity plug and perf fracture program to the 3-1 pad.

Pipestone Energy has completed the construction of the 6-24 pad, which will ultimately accommodate up to 24 wells and associated wellsite facilities. The Company has contracted a rig, which will commence drilling six new wells on this pad beginning in mid-August.

Infrastructure & 3rd Party Processing

Pipestone Energy’s infield gathering infrastructure is substantially complete and ready to be commissioned for production start-up into the Keyera and Tidewater natural gas processing facilities this fall. The Company has completed the equipping and tie-in on the 15-14 pad (10 wells) and the equipping of the 3-1 pad (9 wells) is expected to be finished in September 2019. A single well on the 6-24 pad, drilled and completed during 2017, will also be equipped and tied-in for production later during fall 2019.

As disclosed previously, Phase 1 of the Keyera Wapiti Gas Plant is now operational and processing third party volumes.  Pipestone Energy has 60 MMcf/d of raw priority one firm service at the Keyera plant with an option to expand to 90 MMcf/d with the completion of Phase 2. Construction of Phase 2 at the Keyera facility has begun and is expected to be commissioned by mid-2020, taking the plant’s gas processing capacity to 300 MMcf/d with 25,000 barrels per day of condensate handling capacity. The Keyera compressor station (at 08-15-70-08W6 and Pipestone Energy operated) and gathering system connecting to the Wapiti gas plant is expected to be complete by late Q3 2019, and is on-track for a Q4 2019 production ramp-up. The Tidewater Pipestone Sour Gas Plant (at 12-34-70-09W6) and associated gathering system remains on track to be commissioned in late Q3 2019.

Gold Creek Production – Legacy Production South of the Wapiti River

Pipestone Energy produced into the 3rd party Gold Creek processing facility with an ~90% on-stream time during Q2 2019. The Company averaged 4.3 MMcf per day of sales natural gas and 683 bbl/d of condensate and natural gas liquids (87% condensate) during the quarter.

OUTLOOK

Since closing the successful merger with Blackbird on January 4, 2019, the Company has met its critical development and capital expenditure milestones to achieve its 2019 exit production guidance of 14,000 to 16,000 boe per day for December 2019.

The Company's 2019 net capital investment program continues to be on-track, on-time, and either on or underbudget resulting in a reduced net capital guidance range for 2019 of $145 million to $155 million. The 2019 capital program is focused on drilling, completing, and tying-in condensate-rich Montney wells, and on the build-out of the required infrastructure that will enable Pipestone Energy to grow efficiently in future years.

Pipestone Energy is in the initial stage of executing a multi-year development strategy that meets its full-cycle investment return requirements and cashflow generation hurdles based on a flat future price deck of US$55 per bbl WTI crude oil and $1.40 per GJ AECO natural gas. Given its current outlook on commodity prices, and the actions taken to capture these prices through its hedging program, Pipestone Energy is confident it can meet its future development objectives.

EMPLOYEE SHARE PURCHASE PLAN

Pipestone Energy has implemented an employee share purchase plan (“ESPP”) to provide its employees with an opportunity to purchase common shares in the capital of the Company (“Shares”), thereby encouraging share ownership and enhancing Pipestone Energy’s ability to attract, retain and motivate its employees. Employees may direct up to 10% of their salary for the purchase of Shares under the ESPP at the 5-day volume weighted average trading price of the Shares on the TSXV, and the Company will match such personal contributions 100%. Under the terms of the ESPP, Shares may be acquired by the plan administrator on the open market or issued from treasury. 1,750,000 Shares have been reserved for issuance pursuant to the ESPP.           

 

Conference Call August 8, 2019

9:00 a.m. MT (11:00 a.m. ET)

Pipestone Energy will host a conference call on August 8, 2019, starting at 9:00 a.m. MT (11:00 a.m. ET). To participate please dial toll free in North America (866) 953-0776 or International (630) 652-5852 and enter 2595762 when prompted.

An archived recording of the conference call will be available shortly after the event and will be available until August 15, 2019. To access the replay please dial toll free in North America (855) 859-2056 or International (404) 537-3406 and enter 2595762 when prompted. The conference call will also be archived on Pipestone Energy’s website at www.pipestonecorp.com.

 

Advisory Regarding Non-GAAP Measures

This new release includes references to financial measures commonly used in the oil and natural gas industry. The terms “operating netback”, “funds flow netback” and “available funding” are not defined under IFRS, which have been incorporated into Canadian GAAP, as set out in Part 1 of the Chartered Professional Accountants Canada Handbook – Accounting, are not separately defined under GAAP, and may not be comparable with similar measures presented by other companies.

Management believes the presentation of the non-GAAP measures provide useful information to investors and shareholders as the measures provide increased transparency and the opportunity to better analyze and compare performance against prior periods.

Operating netback and funds flow netback

Operating netback is calculated on a per-unit-of-production basis and is determined by deducting royalties, operating and transportation expenses from liquids and natural gas sales, after adjusting for realized commodity financial derivative instrument gains or losses.

Funds flow netback reflects funds flow on a per-unit-of-production basis and is determined by dividing funds flow by total production on a per-boe basis. Funds flow netback can also be determined by deducting G&A, transaction costs and cash financing expenses and adding financing income on a per-unit-of-production basis from the operating netback.

Operating netback and funds flow netback are common metrics used in the oil and natural gas industry and are used by Company management to measure operating results on a per boe basis to better analyze and compare performance against prior periods, as well as formulate comparisons against peers.

Available funding

Available funding is comprised of adjusted working capital and undrawn portions of the Company’s credit facility. Adjusted working capital is comprised of current assets less current liabilities on the Company’s consolidated statement of financial position and excludes the current portion of financial derivative instruments and lease liabilities. The available funding measure allows management and others to evaluate the Company’s short-term liquidity.

Advisory Regarding Forward-Looking Statements

In the interest of providing shareholders of Pipestone Energy and potential investors information regarding Pipestone Energy, this news release contains certain information and statements (“forward-looking statements”) that constitute forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking statements relate to future results or events, are based upon internal plans, intentions, expectations and beliefs, and are subject to risks and uncertainties that may cause actual results or events to differ materially from those indicated or suggested therein. All statements other than statements of current or historical fact constitute forward-looking statements. Forward-looking statements are typically, but not always, identified by words such as “anticipate”, “estimate”, “expect”, “intend”, “forecast”, “continue”, “propose”, “may”, “will”, “should”, “believe”, “plan”, “target”, “objective”, “project”, “potential” and similar or other expressions indicating or suggesting future results or events.

Forward-looking statements are not promises of future outcomes. There is no assurance that the results or events indicated or suggested by the forward-looking statements, or the plans, intentions, expectations or beliefs contained therein or upon which they are based, are correct or will in fact occur or be realized (or if they do, what benefits Pipestone Energy may derive therefrom).

In particular, but without limiting the foregoing, this news release contains forward-looking statements pertaining to: future completion costs and productivity; future reserves values and financial returns; infrastructure funding; commissioning of Pipestone Energy’s major 17.5 km infield gathering system; commissioning of the Keyera facility and timing thereof; commissioning of the Tidewater Pipestone Sour Gas Plan and timing thereof; drilling plans;  ; receipt of funding from Tidewater and timing thereof; accelerated timing for the completion of three drilled uncompleted wells on Pipestone’s 9-14 pad;  Pipestone Energy’s 2019 capital guidance range; Pipestone Energy’s 2019 exit production guidance, and Pipestone Energy’s proposed drilling locations and entry points per well.

With respect to the forward-looking statements contained in this news release, Pipestone Energy has assessed material factors and made assumptions regarding, among other things: future commodity prices and currency exchange rates, including consistency of future oil, natural gas liquids (NGLs) and natural gas prices with current commodity price forecasts; the ability to integrate Blackbird’s and Pipestone Oil’s historical businesses and operations and realize financial, operational and other synergies from the combination transaction completed on January 4, 2019; Pipestone Energy’s continued ability to obtain qualified staff and equipment in a timely and cost-efficient manner; the predictability of future results based on past and current experience; the predictability and consistency of the legislative and regulatory regime governing royalties, taxes, environmental matters and oil and gas operations, both provincially and federally; Pipestone Energy’s ability to successfully market its production of oil, NGLs and natural gas; the timing and success of drilling and completion activities (and the extent to which the results thereof meet expectations); Pipestone Energy’s future production levels and amount of future capital investment, and their consistency with Pipestone Energy’s current development plans and budget; future capital expenditure requirements and the sufficiency thereof to achieve Pipestone Energy’s objectives; the successful application of drilling and completion technology and processes; the applicability of new technologies for recovery and production of Pipestone Energy’s reserves and other resources, and their ability to improve capital and operational efficiencies in the future; the recoverability of Pipestone Energy's reserves and other resources; Pipestone Energy’s ability to economically produce oil and gas from its properties and the timing and cost to do so; the performance of both new and existing wells; future cash flows from production; future sources of funding for Pipestone Energy’s capital program, and its ability to obtain external financing when required and on acceptable terms; future debt levels; geological and engineering estimates in respect of Pipestone Energy’s reserves and other resources; the accuracy of geological and geophysical data and the interpretation thereof; the geography of the areas in which Pipestone Energy conducts exploration and development activities; the timely receipt of required regulatory approvals; the access, economic, regulatory and physical limitations to which Pipestone Energy may be subject from time to time; and the impact of industry competition.

Information and statements regarding Pipestone Energy’s reserves and resources also are forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources exist in the quantities predicted or estimated and can be profitably produced in the future. In addition, with respect to the type curves and test rates, there is no certainty that future wells will generate results to match type curves or test rates presented herein.

The forward-looking statements contained herein reflect management's current views, but the assessments and assumptions upon which they are based may prove to be incorrect. Although Pipestone Energy believes that its underlying assessments and assumptions are reasonable based on currently available information, undue reliance should not be placed on forward-looking statements, which are inherently uncertain, depend upon the accuracy of such assessments and assumptions, and are subject to known and unknown risks, uncertainties and other factors, both general and specific, many of which are beyond Pipestone Energy’s control, that may cause actual results or events to differ materially from those indicated or suggested in the forward-looking statements. Such risks and uncertainties include, but are not limited to, volatility in market prices and demand for oil, NGLs and natural gas and hedging activities related thereto; the ability to successfully integrate Blackbird’s and Pipestone Oil’s historical businesses and operations; general economic, business and industry conditions; variance of Pipestone Energy’s actual capital costs, operating costs and economic returns from those anticipated; the ability to find, develop or acquire additional reserves and the availability of the capital or financing necessary to do so on satisfactory terms; and risks related to the exploration, development and production of oil and natural gas reserves and resources. Additional risks, uncertainties and other factors are discussed in Blackbird’s management information circular dated November 21, 2018, a copy of which is available electronically on Pipestone Energy’s SEDAR at www.sedar.com.

The forward-looking statements contained in this news release are made as of the date hereof and Pipestone Energy assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. All forward-looking statements herein are expressly qualified by this advisory.

Pipestone Energy Corp.

Pipestone Energy Corp. is an oil and gas exploration and production company with its head office located in Calgary, Alberta. The company is focused on developing its pure-play condensate-rich Montney asset in the Pipestone area near Grande Prairie. Pipestone Energy is committed to building long term value for our shareholders and values the partnerships that it is developing within its operating community. Pipestone Energy shares trade under the symbol PIPE on the TSX Venture Exchange. For more information, visit www.pipestonecorp.com.

 

Pipestone Energy Contacts:

Paul Wanklyn

President and Chief Executive Officer

(403) 228-8684

paul.wanklyn@pipestonecorp.com

Craig Nieboer

Chief Financial Officer

(403) 206-0966

craig.nieboer@pipestonecorp.com

Dan van Kessel

VP Corporate Development

(403) 228-8688

dan.vankessel@pipestonecorp.com

 

Pipestone Energy Corp. Announces A Midstream Transaction To Fund The Acceleration Of A Three Well Completion Program To Delineate Its Eastern Montney Acreage.

Pipestone Energy Corp. (“Pipestone Energy” or the “Company”) is pleased to announce it has entered into a strategic midstream transaction (the “Midstream Transaction”) with Tidewater Midstream and Infrastructure Ltd. (“Tidewater”). The initial capital to be received by Pipestone Energy from Tidewater pursuant to the Midstream Transaction will be deployed to accelerate a three-well completion program at its 9-14-71-07W6 (“9-14”) well pad. The Midstream Transaction includes the physical extension of a pre-existing infrastructure arrangement with Tidewater.

MIDSTREAM TRANSACTION

Pipestone Energy has entered into an agreement with Tidewater to finance the construction of its East Battery (5-14-71-07W6), which will service the 9-14 well pad. The East Battery is designed to handle 30 MMcf/d of raw gas compression, 5,400 bbl/d of condensate production and associated water disposal. The raw gas and condensate will be transported through the existing Tidewater-owned gathering system and into the Tidewater Pipestone Sour Gas Plant which is scheduled to be completed in September 2019.

Paul Wanklyn, CEO of Pipestone said, “We are very pleased with this transaction from a strategic and financial standpoint as it allows us to advance our completion activities and facility construction in a highly prospective area significantly eastward from our current development activity. This transaction expands the current agreement with Tidewater to include all the significant functional units supporting Pipestone’s continued development in Tidewater-directed gas and condensate production. We are highly confident in Tidewater’s ability to advance their Pipestone plant infrastructure and the expanded relationship will benefit both companies in the future.

Key Terms of the Midstream Transaction:

  • Pipestone Energy has entered into a 10-year integrated compression, gathering and processing agreement;

  • Tidewater to purchase existing East Battery tangible equipment from Pipestone Energy for approximately $14 million (“Tranche A”), which is being funded on-closing scheduled for August 15th, 2019.;

  • Tidewater to provide up to an additional approximately $16 million to fund the remaining capital required to complete the East Battery over the next 12 months (“Tranche B”);

  • Pipestone Energy to construct the facility, and will contract operate the East Battery once commissioned;

  • In conjunction with this transaction, Pipestone Energy has relinquished its purchase options for the Tidewater Sour Gas Plant and associated gas gathering system; and

  • Pipestone Energy has also made a commitment to the second phase of Tidewater’s Pipestone Sour Gas Plant for 20 MMcf/d of processing, contingent on: a) Tidewater reaching a final investment decision by December 31, 2019, and b) Tidewater commissioning this second phase by Q2 2022.

Transaction Rationale:

  • Proceeds from Tranche A will allow Pipestone Energy to accelerate the completion of three drilled uncompleted wells on its 9-14 pad in Q3 2019, which otherwise were not expected to be completed until mid-2020;

  • Provides non-dilutive capital to construct the East Battery on an accelerated timeline;

  • Tidewater is a strategic partner and is expected to be a long-term owner of the assets given the integration with their existing gathering and processing facilities.

 

2019 CAPITAL PROGRAM REVISION

In conjunction with the Midstream Arrangement, the Company has elected to accelerate the completion of three wells, which have been landed in two of the four prospective Montney zones, located on the 9-14 pad, which is approximately six miles east of the current development corridor. Pipestone Energy will utilize a high intensity plug and perf fracture program on these delineation wells. The proceeds from Tranche A are expected to fully fund the completion expenditures and as such on a net basis will not change the Company’s 2019 capital expenditure guidance range of $145 - $165 million. The information garnered from completing and testing the 9-14 pad will enhance the Company’s understanding of its extensive acreage base and improve its ability to optimize the East Battery facility design and location. The 9-14 pad is not expected to contribute meaningfully to the Company’s production until mid-2020.

Revised Pipestone Energy 5 Quarter Capital Program Overview (Q4 2018 – Q4 2019)

Overview.png

 

Current

(July 2019)

Sept 30, 2019

(Estimate)

Dec 31, 2019

(Estimate)

North of Wapiti River (1)

(Keyera Wapiti & Tidewater Pipestone Processing Facilities)

 

 

 

Drilled

27

29

36

Drilled + Completed

23

26

26

Tied-In / Available for Production

 

20

20

South of Wapiti River (1)

(CNRL Gold Creek Processing Facility)

 

 

 

Drilled + Completed

9

9

9

Tied-In / On-Production

8

8

8

(1)     Tied-In / Available for Production is a subset of the Drilled + Completed category which is a subset of the Drilled category.

PIPESTONE ISSUES LONG TERM INCENTIVE AWARDS

Pipestone is pleased to report that the board of directors of Pipestone Energy have approved the issuance of 192,647 restricted share units (“RSUs”) and 288,970 performance share units (“PSUs”) to certain officers of the Company under the long term incentive plan for the Company (the “LTIP”). The RSUs are subject to vesting as to one-third on each anniversary of the award date and the PSUs are subject to vesting in July 2022. All of the RSUs and PSUs were issued at the current trading price of PIPE’s shares on the TSX Venture Exchange (“TSXV”) and are subject to forfeiture in certain circumstances.

The Company has made an application to the TSXV pursuant to TSXV Policy 4.4 – Incentive Stock Options for approval of the LTIP. The LTIP and the grants approved to date are subject to TSXV and shareholder approval. Following the completion of these grants to certain officers, Pipestone Energy has the following long-term incentive awards outstanding, all of which are governed by the LTIP: (a) 12,696,438 legacy pre-amalgamation Blackbird Energy Inc. stock options entitling the holders thereof to acquire 1,269,643 Common Shares (as a result of the 10:1 share consolidation pursuant to the amalgamation of Blackbird Energy Inc. with Pipestone Oil Corp. to form Pipestone Energy on January 4, 2019); (b) 96,000 new Options entitling the holder thereof to acquire 96,000 Common Shares; (c) 468,970 PSUs entitling the holders thereof to acquire up to 937,940 Common Shares; and (d) 518,981 RSUs entitling the holders thereof to acquire 518,981 Common Shares, all subject to the terms thereof and the LTIP, are outstanding.

 

SECOND QUARTER 2019 RESULTS CONFERENCE CALL

Pipestone expects to release its second quarter 2019 results and updated operational report before market open on Thursday, August 8th, 2019 with a conference call scheduled for 9:00 AM Mountain Time (11:00 AM Eastern Time) for interested investors, analysts, brokers and media representatives.

Conference Call August 8, 2019

9:00 a.m. MT (11:00 a.m. ET)

Pipestone Energy will host a conference call on August 8, 2019, starting at 9:00 a.m. MT (11:00 a.m. ET). To participate please dial toll free in North America (866) 953-0776 or International (630) 652-5852 and enter 2595762 when prompted.

 

An archived recording of the conference call will be available shortly after the event and will be available until August 15, 2019. To access the replay please dial toll free in North America (855) 859-2056 or International (404) 537-3406 and enter 2595762 when prompted. The conference call will also be archived on Pipestone Energy�s website at www.pipestonecorp.com.

Advisory Regarding Forward-Looking Statements

In the interest of providing shareholders of Pipestone Energy and potential investors information regarding Pipestone Energy, this news release contains certain information and statements (“forward-looking statements”) that constitute forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking statements relate to future results or events, are based upon internal plans, intentions, expectations and beliefs, and are subject to risks and uncertainties that may cause actual results or events to differ materially from those indicated or suggested therein. All statements other than statements of current or historical fact constitute forward-looking statements. Forward-looking statements are typically, but not always, identified by words such as “anticipate”, “estimate”, “expect”, “intend”, “forecast”, “continue”, “propose”, “may”, “will”, “should”, “believe”, “plan”, “target”, “objective”, “project”, “potential” and similar or other expressions indicating or suggesting future results or events.

Forward-looking statements are not promises of future outcomes. There is no assurance that the results or events indicated or suggested by the forward-looking statements, or the plans, intentions, expectations or beliefs contained therein or upon which they are based, are correct or will in fact occur or be realized (or if they do, what benefits Pipestone Energy may derive therefrom).

In particular, but without limiting the foregoing, this news release contains forward-looking statements pertaining to: Pipestone Energy’s raw gas and condensate being transported through the existing Tidewater-owned gathering system and into the Tidewater Pipestone Sour Gas Plant; timing of completion of the Tidewater Pipestone Sour Gas Plant; closing of the funding of Tranche A from Tidewater; timing for Tidewater to provide additional funding required to complete the East Battery; accelerated timing for the completion of three drilled uncompleted wells on Pipestone’s 9-14 pad; timing for production from the 9-14 pad; Tidewater’s future ownership of the East Battery facilities; Pipestone Energy’s 2019 capital guidance range; and Pipestone Energy’s proposed drilling locations and entry points per well.

With respect to the forward-looking statements contained in this news release, Pipestone Energy has assessed material factors and made assumptions regarding, among other things: future commodity prices and currency exchange rates, including consistency of future oil, natural gas liquids (NGLs) and natural gas prices with current commodity price forecasts; the ability to integrate Blackbird’s and Pipestone Oil’s historical businesses and operations and realize financial, operational and other synergies from the combination transaction completed on January 4, 2019; Pipestone Energy’s continued ability to obtain qualified staff and equipment in a timely and cost-efficient manner; the predictability of future results based on past and current experience; the predictability and consistency of the legislative and regulatory regime governing royalties, taxes, environmental matters and oil and gas operations, both provincially and federally; Pipestone Energy’s ability to successfully market its production of oil, NGLs and natural gas; the timing and success of drilling and completion activities (and the extent to which the results thereof meet expectations); Pipestone Energy’s future production levels and amount of future capital investment, and their consistency with Pipestone Energy’s current development plans and budget; future capital expenditure requirements and the sufficiency thereof to achieve Pipestone Energy’s objectives; the successful application of drilling and completion technology and processes; the applicability of new technologies for recovery and production of Pipestone Energy’s reserves and other resources, and their ability to improve capital and operational efficiencies in the future; the recoverability of Pipestone Energy's reserves and other resources; Pipestone Energy’s ability to economically produce oil and gas from its properties and the timing and cost to do so; the performance of both new and existing wells; future cash flows from production; future sources of funding for Pipestone Energy’s capital program, and its ability to obtain external financing when required and on acceptable terms; future debt levels; geological and engineering estimates in respect of Pipestone Energy’s reserves and other resources; the accuracy of geological and geophysical data and the interpretation thereof; the geography of the areas in which Pipestone Energy conducts exploration and development activities; the timely receipt of required regulatory approvals; the access, economic, regulatory and physical limitations to which Pipestone Energy may be subject from time to time; and the impact of industry competition.

Information and statements regarding Pipestone Energy’s reserves and resources also are forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources exist in the quantities predicted or estimated and can be profitably produced in the future. In addition, with respect to the type curves and test rates, there is no certainty that future wells will generate results to match type curves or test rates presented herein.

The forward-looking statements contained herein reflect management's current views, but the assessments and assumptions upon which they are based may prove to be incorrect. Although Pipestone Energy believes that its underlying assessments and assumptions are reasonable based on currently available information, undue reliance should not be placed on forward-looking statements, which are inherently uncertain, depend upon the accuracy of such assessments and assumptions, and are subject to known and unknown risks, uncertainties and other factors, both general and specific, many of which are beyond Pipestone Energy’s control, that may cause actual results or events to differ materially from those indicated or suggested in the forward-looking statements. Such risks and uncertainties include, but are not limited to, volatility in market prices and demand for oil, NGLs and natural gas and hedging activities related thereto; the ability to successfully integrate Blackbird’s and Pipestone Oil’s historical businesses and operations; general economic, business and industry conditions; variance of Pipestone Energy’s actual capital costs, operating costs and economic returns from those anticipated; the ability to find, develop or acquire additional reserves and the availability of the capital or financing necessary to do so on satisfactory terms; and risks related to the exploration, development and production of oil and natural gas reserves and resources. Additional risks, uncertainties and other factors are discussed in Blackbird’s management information circular dated November 21, 2018, a copy of which is available electronically on Pipestone Energy’s SEDAR at www.sedar.com.

The forward-looking statements contained in this news release are made as of the date hereof and Pipestone Energy assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. All forward-looking statements herein are expressly qualified by this advisory.

Pipestone Energy Corp.

Pipestone Energy Corp. is an oil and gas exploration and production company with its head office located in Calgary, Alberta. The company is focused on developing its pure-play condensate-rich Montney asset in the Pipestone area near Grande Prairie. Pipestone Energy is committed to building long term value for our shareholders and values the partnerships that it is developing within its operating community. Pipestone Energy shares trade under the symbol PIPE on the TSX Venture Exchange. For more information, visit www.pipestonecorp.com.

 

Pipestone Energy Contacts:

Paul Wanklyn

President and Chief Executive Officer

(403) 228-8684

paul.wanklyn@pipestonecorp.com

Craig Nieboer

Chief Financial Officer

(403) 206-0966

craig.nieboer@pipestonecorp.com

 

 

Dan van Kessel

VP Corporate Development

(403) 228-8688

dan.vankessel@pipestonecorp.com

 

Pipestone Energy Corp. Implements Long Term Incentive Plan

Pipestone Energy Corp. (“Pipestone Energy” or the “Company”) is pleased to report that the board of directors (the “Board”) of Pipestone Energy have approved a long term incentive plan for the Company (the “LTIP”) allowing for the issuance of stock options (“Options”) exercisable for up to 5,688,690 common shares of the Corporation (“Common Shares”), restricted share units (“RSUs”) exercisable for up to 5,688,690 Common Shares and performance share units (“PSUs”) exercisable for up to 5,688,690 Common Shares, for a total of 17,066,070 Common Shares issuable to Pipestone Energy’s directors, officers, employees and consultants pursuant to awards.

On May 23 the Board authorized the granting of 158,334 RSUs to the directors of Pipestone Energy who are neither employees or officers of Pipestone nor nominated by Pipestone Energy’s controlling shareholder Canadian Non-Operated Resources L.P. The RSUs were issued at $1.80, being the 5-day volume weighted average trading price of the Common Shares prior to the date of issuance, are subject to vesting as to one-third on each anniversary of the award date, and are not subject to forfeiture for directors.

The Company has made an application to the TSX Venture Exchange (“TSXV”) pursuant to TSXV Policy 4.4 – Incentive Stock Options for approval of the LTIP. The LTIP and the grants approved to date are subject to TSXV and shareholder approval. Following the completion of these grants to certain directors, Pipestone Energy will have the following longterm incentive awards outstanding, all of which are governed by the LTIP: (a) 13,246,438 legacy pre-amalgamation Blackbird Energy Inc. stock options entitling the holders thereof to acquire 1,324,643 Common Shares (as a result of the 10:1 share consolidation pursuant to the amalgamation of Blackbird Energy Inc. with Pipestone Oil Corp. to form Pipestone Energy on January 4, 2019); (b) 48,000 new Options entitling the holder thereof to acquire 48,000 Common Shares; (c) 180,000 PSUs entitling the holders thereof to acquire up to 360,000 Common Shares; and (d) 302,334 RSUs entitling the holders thereof to acquire 302,334 Common Shares, all subject to the terms thereof and the LTIP, are outstanding.

Pipestone Energy Corp.

Pipestone Energy Corp. is an oil and gas exploration and production company with its head office located in Calgary, Alberta. The company is focused on developing its pure-play condensate-rich Montney asset in the Pipestone area near Grande Prairie. Pipestone Energy is committed to building long term value for our shareholders and values the partnerships that it is developing within its operating community. Pipestone Energy shares trade under the symbol PIPE on the TSX Venture Exchange.

Pipestone Energy Contacts:

Paul Wanklyn
President and Chief Executive Officer
(403) 228-8684
paul.wanklyn@pipestonecorp.com

Craig Nieboer
Chief Financial Officer
(403) 206-0966
craig.nieboer@pipestonecorp.com

Dan van Kessel
VP Corporate Development
(403) 228-8688
dan.vankessel@pipestonecorp.com

Pipestone Energy Corp. Reports First Quarter 2019 Results and Gives an Operations Update

image.jpg

Pipestone Energy Corp. (“Pipestone Energy” or the “Company”) is pleased to report its Q1 2019 financial and operational results and provide a progress report on its 2019 development program. The Company has filed its unaudited financial statements and related management’s discussion and analysis (“MD&A”) for the quarter ended March 31, 2019 on SEDAR. A conference call has been scheduled for Wednesday, May 15that 9:00 a.m. Mountain Daylight Time (11:00 a.m. Eastern Daylight Time) for interested investors, analysts, brokers and media representatives.

“Pipestone Energy’s 2019 fully-funded capital program is on-budget and on-track to achieve our exit guidance of 14,000 – 16,000 boe/d from production in the condensate-rich Montney corridor. We are commencing completion operations for the seven wells on our 3-1 pad, bringing the total number of completed wells north of the Wapiti River to 23. Pipestone Energy will tie-in 20 wells into our gathering system which will be available for production by the end of Q3 2019. Our north-south Pipestone Energy operated infield gathering system is substantially completed and pad equipment construction is proceeding on schedule. Our two third party midstream providers are completing their gathering, compression and processing facilities for our anticipated Q4 2019 production start-up. I am very proud of our Company for the level of performance on execution that has been achieved to date as we move from pre-production to full start-up later in 2019,” stated Paul Wanklyn, Pipestone Energy President and Chief Executive Officer. “This is an important first phase in our long-term growth plan for the asset base.”

FIRST QUARTER 2019 CORPORATE HIGHLIGHTS

  • On January 4, 2019, Pipestone Oil Corp. completed the previously announced reverse takeover of, and amalgamation with, Blackbird Energy Inc. to form Pipestone Energy (the “Corporate Acquisition”);

  • Pipestone Energy secured a $198.5 million first lien credit facility (the “Credit Facility”) with a syndicate of lenders, comprised of a $10.0 million revolving operating line, a $20.0 million letter of credit facility and a $168.5 million delayed draw term loan;

  • Continuing its Q4 2018 drilling program, the Company spent $9.1 million and drilled four gross (four net) wells at the 3-1 pad in the quarter;

  • Pipestone Energy invested $18.8 million in the continued construction of its major 17.5 km infield gathering system, oriented north / south along the primary development corridor through its western acreage;

  • At Pipestone Energy’s 15-14 padsite, 3-1 padsite, and other production facilities, the Company spent a total of $17.0 million to complete civil work, finish final fabrication, deliver all major equipment, and commence construction of on-site production facilities; and

  • Pipestone Energy initiated its commodity price risk management program, which is primarily designed to reduce cash flow volatility, enhance certainty on funding availability for the Company’s capital expenditure program, and to service debt obligations.

Pipestone Energy Corp. – Financial and Operating Highlights

   
  Three months ended March 31,
($ thousands, except per unit and per share amounts)
  2019 2018 (6) 
Financial        
Sales of liquids and natural gas    $460 $971 
Cash from (used in) operating activities     (12,785) 163 
Funds flow from (used in) operations (1)     (8,663) 480 
  Per share, basic and diluted (2)     (0.05) 0.01 
Loss     (4,302) (631)
  Per share, basic and diluted (2)     (0.02) (0.01)
Capital expenditures     49,468  30,558 
Acquisitions     234,722  - 
Working capital (end of period)     2,411  10,264 
Bank debt (end of period)     80,735  30,181 
Shareholders’ equity (end of period)     378,896  87,549 
Available funding (end of period) (3)    $98,427 $38,123 
Shares outstanding (end of period) (2)     189,609  52,782 
Weighted-average basic shares outstanding (2)     184,540  52,782 
Weighted-average diluted shares outstanding (2)     184,540  52,782 
         
Operations        
Production        
  Crude oil and condensate (bbls/d)     82  186 
  Natural gas liquids (NGL) (bbls/d)     17  - 
  Natural gas (Mcf/d)     318  - 
  Total (boe/d) (4)     152  186 
Condensate-gas ratio (CGR) (bbls/MMcf)     55  - 
Benchmark prices        
  Crude oil – WTI (C$/bbl)    $73.25 $79.52 
  Condensate – Edmonton condensate (C$/bbl)     68.73  80.30 
  Natural gas – AECO 5A (C$/Mcf)     2.60  2.07 
Average realized prices (5)        
  Crude oil and condensate (per bbl)     42.71  58.00 
  NGL (per bbl)     25.04  - 
  Natural gas (per Mcf)     3.69  - 
         
  Revenue (per boe)     33.53  58.00 
  Royalties (per boe)     (1.65) (4.83)
  Operating expenses (per boe)     (28.62) (6.63)
  Transportation (per boe)     (48.35) - 
Operating netback (per boe) (3)     (45.09) 46.54 
Funds flow netback (per boe) (3)    $(631.58)$28.69 

(1) See “Additional subtotal – Funds flow from operations” under “Critical Accounting Judgments, Estimates and Policies” in Pipestone Energy’s Q1 2019 MD&A.
(2) The number of common shares have been adjusted retrospectively to reflect the 10:1 share consolidation, as well as the 0.5996 exchange ratio, as part of the corporate acquisition.
(3) See “Non-GAAP measures” in Pipestone Energy’s Q1 2019 MD&A.
(4) For a description of the boe conversion ratio, see “Basis of Barrel of Oil Equivalent” in Pipestone Energy’s Q1 2019 MD&A.
(5) Before hedging.
(6) IFRS 16, Leases, was adopted January 1, 2019 using the modified retrospective approach; therefore, comparative information has not been restated. See “Critical Accounting Judgments, Estimates and Policies” in Pipestone Energy’s Q1 2019 MD&A. Comparative figures are to the Pipestone Oil Corp. December 31, 2018 financial statements.

2019 CAPITAL PROGRAM AND OPERATIONS UPDATE

Revised Pipestone Energy 5 Quarter Capital Program Overview (Q4 2018 – Q4 2019)

A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/71201705-8a30-45b8-a45b-8077b4d72cdb 

Pipestone Energy Montney Operated Horizontal Well Status Summary

 Current
(May 2019)
Sept 30, 2019
(Estimate)
Dec 31, 2019
(Estimate)
North of Wapiti River (1)
(Keyera Wapiti & Tidewater Pipestone Processing Facilities)
   
Drilled273136
Drilled + Completed162323
Tied-In / Available for Production2020
South of Wapiti River (1)
(CNRL Gold Creek Processing Facility)
   
Drilled + Completed999
Tied-In / On-Production888

(1) Tied-In / Available for Production is a subset of the Drilled + Completed category which is a subset of the Drilled category.

Drilling & Completions

Pipestone Energy expects to commence drilling six wells on its 6-24 pad beginning in early Q3 2019, followed by an additional three wells (of six) on a new pad in the northwest portion of its acreage prior to year end. With respect to completions, the Company expects to begin completing seven wells on its 3-1 pad in late May 2019. 

Infrastructure & 3rd Party Processing

Pipestone Energy’s major infield gathering infrastructure build-out has advanced significantly since Q4 2018. The system is ~95% complete and is expected to be ready for commissioning by early Q3 2019. Construction on padsite facilities at our 15-14 and 3-1 pads is advancing on schedule with a target availability for production start-up of September 2019. 

Phase 1 of the Keyera Wapiti Gas Plant is complete and processing third party volumes.  Pipestone Energy has 60 MMcf/d of raw Priority One firm service at the Keyera plant with an option to expand to 90 MMcf/d with the completion of Phase 2. Construction of Phase 2 at the Keyera facility has begun and is expected to be completed in mid-2020 taking the plant’s gas processing capacity to 300 MMcf/d with 25,000 barrels per day of condensate handling capacity. The Keyera compressor station (at 08-15-70-08W6 and Pipestone Energy operated) and gathering system connecting to the Wapiti gas plant is on-track for Q4 2019 production ramp-up.

The Tidewater Pipestone Sour Gas Plant (at 12-34-70-09W6) and associated gathering system is currently tracking to a Q3 2019 commissioning. Our production guidance continues to be predicated on an expected October and November 2019 start-up for the Tidewater and Keyera gas plants, respectively.

Gold Creek Production – Legacy Production South of the Wapiti River

Effective April 3, 2019, Pipestone Energy resumed production into the 3rd party Gold Creek gas processing facility for the first time since November 2018. During the calendar month of April 2019, the Company’s production averaged approximately 3.1 MMcf per day of raw natural gas and approximately 495 bbl per day of field condensate, which equates to approximately 990 boe per day of sales volumes. Volumes in the first half of May 2019 have averaged approximately 5.3 MMcf per day of raw natural gas and approximately 555 bbl per day of field condensate, which equates to approximately 1,400 boe per day of sales volumes. These volumes are in line with Pipestone Energy’s previous disclosure and planning.

Natural Gas Transportation

During early Q2 2019, Pipestone Energy acquired an additional 25 MMcf per day of firm natural gas transportation on the TC Energy system from a 3rd party producer. This additional firm transportation is effective starting September 1, 2019, and expires on April 30, 2021, with no premium to the posted transportation toll to AECO. This additional transportation will facilitate production volumes, should either of the Tidewater or Keyera facilities be available earlier than our budgeted start-up timing, as the next tranche of firm transportation does not commence until November 1, 2019. Under this contract, any or all of the contract transportation volumes can be extended further with a noticed period of one year. For the foreseeable future, this transportation will remain at a meter station upstream of both the Tidewater and Keyera meter stations.  Pipestone Energy has the flexibility to move this transportation downstream on an “out-and-back” basis, subject to TC Energy hydraulics review and approval.

Commodity Price Hedging

Beginning in March 2019, Pipestone Energy initiated a systematic hedging program to mitigate commodity price risk and to reduce cash flow volatility in Q4 2019 and 2020. The Company expects the majority of its future revenue to be generated from liquids, particularly condensate. As a result, the derivative contracts that Pipestone Energy has entered into are primarily CAD denominated WTI swaps / collars, as well as Edmonton Condensate (CC5) differential to WTI hedges and fixed price Edmonton Condensate swaps. Details of these derivative contracts can be found in Pipestone Energy’s Q1 2019 MD&A.

OUTLOOK

Since closing the successful merger with Blackbird on January 4th, 2019, the Company has met its critical development and capital expenditure milestones to achieve its 2019 exit production guidance of 14,000 to 16,000 boe per day for December 2019.  

The Company's 2019 capital investment program continues to be on-track, on-time, and on-budget in the range of $145 to $165 million. The 2019 capital program is focused on drilling, completing, and tying-in condensate-rich Montney wells, and on the build-out of the required infrastructure that will enable Pipestone Energy to grow efficiently in future years.

Pipestone Energy is in the initial stage of executing a multi-year development strategy that meets its full-cycle investment return requirements and cashflow generation hurdles based on a flat future price deck of US$55 per bbl WTI crude oil prices and $1.40 per GJ AECO natural gas prices. Given the recent improvements in commodity prices, and the actions taken to capture these prices through its hedging program, Pipestone Energy is confident it can meet its future development objectives.

Conference Call

Pipestone Energy will host a conference call to discuss the operational update and updated reserves and resources evaluation. The details of the conference call are below. An updated corporate presentation is also available on Pipestone Energy’s website at www.pipestonecorp.com.

Conference Call May 15, 2019
9:00 a.m. MT (11:00 a.m. ET)

Pipestone Energy will host a conference call on May 15, 2019, starting at 9:00 a.m. MT (11:00 a.m. ET). To participate please dial toll free in North America (866) 953-0776 or International (630) 652-5852 and enter 2466358 when prompted. 

An archived recording of the conference call will be available shortly after the event and will be available until May 22, 2019. To access the replay please dial toll free in North America (855) 859-2056 or International (404) 537-3406 and enter 2466358 when prompted. The conference call will also be archived on Pipestone Energy’s website at www.pipestonecorp.com.

Advisory Regarding Forward-Looking Statements

In the interest of providing shareholders of Pipestone Energy and potential investors information regarding Pipestone Energy, this news release contains certain information and statements (“forward-looking statements”) that constitute forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking statements relate to future results or events, are based upon internal plans, intentions, expectations and beliefs, and are subject to risks and uncertainties that may cause actual results or events to differ materially from those indicated or suggested therein. All statements other than statements of current or historical fact constitute forward-looking statements. Forward-looking statements are typically, but not always, identified by words such as “anticipate”, “estimate”, “expect”, “intend”, “forecast”, “continue”, “propose”, “may”, “will”, “should”, “believe”, “plan”, “target”, “objective”, “project”, “potential” and similar or other expressions indicating or suggesting future results or events.

Forward-looking statements are not promises of future outcomes. There is no assurance that the results or events indicated or suggested by the forward-looking statements, or the plans, intentions, expectations or beliefs contained therein or upon which they are based, are correct or will in fact occur or be realized (or if they do, what benefits Pipestone Energy may derive therefrom).

In particular, but without limiting the foregoing, this news release contains forward-looking statements pertaining to: timing for the construction and completion of necessary facilities and their timing to become production-ready; completion of Pipestone Energy’s 3-1 pad; anticipated 2019 exit production; 2019 production generally; attribution of future revenue to certain products; 2019 capital expenditure and investment plans; 2019 drilling plans, including proposed drilling locations, and anticipated costs per well; 2019 well completion plans; Pipestone Energy’s ability to accelerate completion of its wells; processing plans and locations involving third parties; transportation availability, timing and volumes involving third parties; and marketing optionality for Pipestone Energy afforded by physical connection to third party facilities.

With respect to the forward-looking statements contained in this news release, Pipestone Energy has assessed material factors and made assumptions regarding, among other things: future commodity prices and currency exchange rates, including consistency of future oil, natural gas liquids (NGLs) and natural gas prices with current commodity price forecasts; the ability to integrate Blackbird’s and Pipestone Oil’s historical businesses and operations and realize financial, operational and other synergies from the combination transaction completed on January 4, 2019; Pipestone Energy’s continued ability to obtain qualified staff and equipment in a timely and cost-efficient manner; the predictability of future results based on past and current experience; the predictability and consistency of the legislative and regulatory regime governing royalties, taxes, environmental matters and oil and gas operations, both provincially and federally; Pipestone Energy’s ability to successfully market its production of oil, NGLs and natural gas; the timing and success of drilling and completion activities (and the extent to which the results thereof meet expectations); Pipestone Energy’s future production levels and amount of future capital investment, and their consistency with Pipestone Energy’s current development plans and budget; future capital expenditure requirements and the sufficiency thereof to achieve Pipestone Energy’s objectives;  the recoverability of Pipestone Energy's reserves and other resources; Pipestone Energy’s ability to economically produce oil and gas from its properties and the timing and cost to do so; the performance of both new and existing wells; future cash flows from production; future sources of funding for Pipestone Energy’s capital program, and its ability to obtain external financing when required and on acceptable terms; future debt levels; geological and engineering estimates in respect of Pipestone Energy’s reserves and other resources; the accuracy of geological and geophysical data and the interpretation thereof; the geography of the areas in which Pipestone Energy conducts exploration and development activities; the timely receipt of required regulatory approvals; the access, economic, regulatory and physical limitations to which Pipestone Energy may be subject from time to time; and the impact of industry competition.

Information and statements regarding Pipestone Energy’s reserves and resources are forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources exist in the quantities predicted or estimated and can be profitably produced in the future. In addition, with respect to the type curves and test rates, there is no certainty that future wells will generate results to match type curves or test rates presented herein.

The forward-looking statements contained herein reflect management's current views, but the assessments and assumptions upon which they are based may prove to be incorrect. Although Pipestone Energy believes that its underlying assessments and assumptions are reasonable based on currently available information, undue reliance should not be placed on forward-looking statements, which are inherently uncertain, depend upon the accuracy of such assessments and assumptions, and are subject to known and unknown risks, uncertainties and other factors, both general and specific, many of which are beyond Pipestone Energy’s control, that may cause actual results or events to differ materially from those indicated or suggested in the forward-looking statements. Such risks and uncertainties include, but are not limited to, volatility in market prices and demand for oil, NGLs and natural gas and hedging activities related thereto; the ability to successfully integrate Blackbird’s and Pipestone Oil’s historical businesses and operations; general economic, business and industry conditions; variance of Pipestone Energy’s actual capital costs, operating costs and economic returns from those anticipated; the ability to find, develop or acquire additional reserves and the availability of the capital or financing necessary to do so on satisfactory terms; and risks related to the exploration, development and production of oil and natural gas reserves and resources. Additional risks, uncertainties and other factors are discussed in Blackbird’s management information circular dated November 21, 2018, a copy of which is available electronically on Pipestone Energy’s SEDAR at www.sedar.com.

The forward-looking statements contained in this news release are made as of the date hereof and Pipestone Energy assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. All forward-looking statements herein are expressly qualified by this advisory.

Oil and Gas Measures

Barrels of Oil Equivalent – This news release discloses certain production information on a barrels of oil equivalent (“boe”) basis with natural gas converted to barrels of oil equivalent using a conversion factor of six thousand cubic feet of gas (Mcf) to one barrel (bbl) of oil (6 Mcf:1 bbl). Condensate and other NGLs are converted to boe at a ratio of 1 bbl:1 bbl. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:1 bbl is based roughly on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at Blackbird’s and Pipestone Oil’s sales point. Although the 6:1 conversion ratio is an industry-accepted norm, it is not reflective of price or market value differentials between product types. Based on current commodity prices, the value ratio between crude oil, NGLs and natural gas is significantly different from the 6:1 energy equivalency ratio. Accordingly, using a conversion ratio of 6 Mcf:1 bbl may be misleading as an indication of value.

Pipestone Energy Corp.

Pipestone Energy Corp. is an oil and gas exploration and production company with its head office located in Calgary, Alberta. The company is focused on developing its pure-play condensate-rich Montney asset in the Pipestone area near Grande Prairie. Pipestone Energy is committed to building long term value for our shareholders and values the partnerships that it is developing within its operating community. Pipestone Energy shares trade under the symbol PIPE on the TSX Venture Exchange. For more information, visit www.pipestonecorp.com.

Pipestone Energy Contacts:

Paul Wanklyn
President and Chief Executive Officer
(403) 228-8684
paul.wanklyn@pipestonecorp.com
Craig Nieboer
Chief Financial Officer
(403) 206-0966
craig.nieboer@pipestonecorp.com
 
Dan van Kessel
VP Corporate Development
(403) 228-8688
dan.vankessel@pipestonecorp.com
 

Pipestone Energy Corp. Files The Pipestone Oil Corp. December 31, 2018 Audited Financial Statements

Pipestone Energy Corp. (“Pipestone Energy”) (TSX-V: PIPE) announces that in accordance with the requirements of National Instrument 51-102 - Continuous Disclosure Obligations (“NI 51-102”) it has filed the audited financial statements for its predecessor Pipestone Oil Corp. (“POC”) for the year ended December 31, 2018. As Pipestone Energy was the “reverse takeover acquirer” (as defined in NI 51-102) of Blackbird Energy Inc. (“Blackbird”) in the amalgamation of POC and Blackbird pursuant to a series of steps under a plan of arrangement under section 193 of the Business Corporations Act (Alberta) completed on January 4, 2019 (the “Arrangement”), Pipestone Energy is required to make this historical filing. The financial statements have been filed on SEDAR under Pipestone Energy’s profile at www.sedar.com.

Q1 2019 will be the first quarter that the combined entity financial statements and accompanying Managements Discussion & Analysis will be published. The first quarter of 2019 financial results of Pipestone Energy are expected to be released and filed on SEDAR on or about May 15, 2019

About Pipestone Energy Corp.

Pipestone Energy Corp. is a premier pure-play Pipestone Montney company focused on developing the condensate rich Pipestone area of Alberta. Pipestone Energy is committed to building long term value for our shareholders and values the partnerships that it is developing within its operating community. Pipestone Energy’s head office is in Calgary and its field operations are conducted from Grand Prairie. Pipestone Energy’s common shares are publicly traded though the facilities of the TSX Venture Exchange under the trading symbol PIPE. Pipestone Energy’s listed warrants are publicly traded though the facilities of the TSX Venture Exchange under the trading symbol PIPE.WT.

This news release does not constitute an offer to buy or the solicitation of an offer to sell any of the securities Pipestone Energy.

Further Information

Paul Wanklyn

President and Chief Executive Officer

(403) 228-8684

paul.wanklyn@pipestonecorp.com

 

Craig Nieboer

Chief Financial Officer

(403) 206-0966

craig.nieboer@pipestonecorp.com

 

Dan van Kessel

VP Corporate Development

(403) 228-8688

dan.vankessel@pipestonecorp.com

Pipestone Energy Corp. Announces Progress On Its Development Program And A Significant Increase In The Value Of Its Reserves And Resources

Calgary, March 20, 2019 (PIPE – TSX-V) Pipestone Energy Corp. (“Pipestone Energy” or the “Company”) is pleased to provide an operational update as well as updated reserves and resources information effective as of January 4, 2019, which was the closing date of the amalgamation (the “Amalgamation”) of Pipestone Oil Corp. (“Pipestone Oil”) and Blackbird Energy Inc. (“Blackbird”). A conference call has been scheduled for Wednesday, March 20th at 9:00 a.m. Mountain Standard Time (11:00 a.m. Eastern Standard Time) for interested investors, analysts, brokers and media representatives.

 “Pipestone Energy continues to successfully execute on its development program in 2019, which includes the construction of an integrated in-field gathering and third-party compression system, capable of supporting approximately 33,000 boe/d of sales production. We recently completed drilling the final well of a 7 well program on our 3-1 pad and are preparing to complete these wells in late spring. We have been extremely pleased with the drilling performance on this pad over the past few months as we have set several new operational milestones, including a new performance pacesetter on our final well. Pipestone Energy is well positioned to meet our 2019 exit production guidance of 14,000 – 16,000 boe/d,” stated Paul Wanklyn, Pipestone Energy President and Chief Executive Officer. “The capital efficiencies we achieved during the most recent drilling and completions activities in Q4 2018 and Q1 2019 has resulted in an 11% decrease in our well costs from $9.7 million to $8.6 million. With our large contiguous land position in the condensate-rich Pipestone Montney, committed access to processing infrastructure, product egress, and a strong balance sheet, we expect to deliver strong shareholder value.”

HIGHLIGHTS

  • Increased the net present value before tax, discounted at 10% (“NPV10%”) of Pipestone Energy’s Proved (“1P”) reserves from $554 million to $839 million, an increase of 51% since August 1, 2018

  • Increased the NPV10% of Pipestone Energy’s Proved + Probable (“2P”) reserves from $1,170 million to $1,394 million, an increase of 19% since August 1, 2018

  • Development program to achieve 2019 exit production of 14,000 – 16,000 boe/d is on-track and on-budget

  • Average final 24 hour test rate on all wells completed north of the Wapiti River of ~1,790 boe/d (45% condensate) based on raw gas and wellhead condensate production (excludes natural gas liquids) (1)

  • Infield operated gathering infrastructure project is 95% complete

(1)    Based on the latest test results (16 tests) for each well as available (excludes initial test if the well has been subsequently retested)

2019 CAPITAL PROGRAM UPDATE

Due to weather-related delays in Q4 2018, Pipestone Energy spent ~$10 million less than expected causing a shift of the capital expenditure program into Q1 2019. As a result, Pipestone Energy plans to spend between $145 - $165 million on the 2019 capital program. The Company recently finished drilling its fourth and final well for Q1 and expects to drill 9 additional wells in H2 2019.  Pipestone Energy is planning to complete 7 wells in 2019 and will have a balance of 12 wells drilled but uncompleted (“DUC”) at year end 2019. The Company may elect to accelerate the completion of 3 additional DUCs into Q4 2019 depending on prevailing market conditions.

Pipestone Energy 5 Quarter Capital Program Overview (Q4 2018 – Q4 2019)

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Pipestone Energy Corp. Appoints Chief Financial Officer

Calgary, Alberta – January 29, 2019

Pipestone Energy Corp. (“Pipestone Energy”) (TSX-V: PIPE) announces the appointment of Craig Nieboer as Chief Financial Officer to be effective February 11, 2019.

Mr. Nieboer has over 30 years of professional experience, including approximately 20 years in the Canadian and international oil and gas industries. He most recently served as Chief Financial Officer of TSX-listed CES Energy Solutions Corp. since 2008.

Mr. Nieboer is a Chartered Accountant with a Bachelor of Commerce degree from the University of Calgary.

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Pipestone Energy Corp. Files Financial Statements

CALGARY, Alberta, Jan. 09, 2019 (GLOBE NEWSWIRE) -- Pipestone Energy Corp. (“Pipestone Energy”) (TSX-V: PIPE) announces that in accordance with the requirements of National Instrument 51-102 - Continuous Disclosure Obligations (“NI 51-102”) it has filed the unaudited interim financial statements for its predecessor Pipestone Oil Corp. (“POC”) for the three and nine month periods ended September 30, 2018. As Pipestone Energy was the “reverse takeover acquirer” (as defined in NI 51-102) of Blackbird Energy Inc. (“Blackbird”) in the amalgamation of POC and Blackbird pursuant to a series of steps under a plan of arrangement under section 193 of the Business Corporations Act (Alberta) completed on January 4, 2019 (the “Arrangement”), Pipestone is required to make this historical filing. The financial statements have been filed on SEDAR under Pipestone Energy’s profile at www.sedar.com. Readers are cautioned that these unaudited interim financial statements were prepared and approved by the POC board of directors in advance of the closing of the Arrangement and make no disclosure regarding the Arrangement, Blackbird’s results for the period or Blackbird’s assets contributed to the Corporation under the Arrangement.

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Blackbird Energy Inc. And Pipestone Oil Corp. Announce The Closing Of A Strategic Merger

Blackbird Energy Inc. (“Blackbird”) (TSX-V: BBI) and Pipestone Oil Corp. (“Pipestone Oil”) are pleased to announce that they have closed their previously announced business combination (the “Transaction”), which was completed by way of a plan of arrangement (the “Arrangement”). Concurrent with the Transaction, Blackbird and Pipestone Oil have closed equity financings totaling $111.0 million with certain existing shareholders and Pipestone Oil has arranged $198.5 million of debt financing (collectively, the “Financings”). The closing of the Transaction and Financings results in the strategic combination of two adjacent and contiguous Pipestone Montney land bases under a single well capitalized, high growth company that will operate under the name Pipestone Energy Corp. (“Pipestone Energy”).

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