Painted Pony Petroleum Ltd. has entered into an asset exchange agreement, which includes Montney acreage, wells and non-operated facility interests with a large industry partner on jointly held acreage in the Daiber, Cameron and Blair areas of Painted Pony's Northeast B.C. Montney asset.
As a result of this swap, Painted Pony's average working interest across its Montney acreage will increase from 75 per cent currently to greater than 86 per cent at closing. All of the land and wells acquired in the transaction will be held by Painted Pony at 100 per cent working interest.
Painted Pony and the counterparty have agreed to exchange 15.4 net sections (9,856 net acres). The swap transaction is anticipated to have a neutral impact on Painted Pony's reserves.
Painted Pony will receive three Montney horizontal wells, which will be 100 per cent working interest and will be redirected to produce at the new AltaGas Ltd. Townsend facility. The counterparty will receive wells that Painted Pony has a 20 per cent working interest in, which produce into a facility owned and operated by the counterparty. The counterparty will receive approximately four mmcf equivalent per day of production and once the acquired wells have been tied into Painted Pony facilities, Painted Pony will receive 9.4 mmcfe a day of production, a net 5.4 mmcfe a day (900 boe per day) gain.
"This is a great deal for our company," said Patrick Ward, president and CEO of Painted Pony. "This strategic asset exchange enables Painted Pony to increase the average working interest on our lands while consolidating adjacent acreage offsetting some of Painted Pony's most productive wells.
“In addition, this swap allows us to control the pace and direction of our capital program on a new 100 per cent owned and operated core development in the highly productive Daiber area, located immediately adjacent to existing Painted Pony-owned natural gas processing facilities. Drilling and facility capacity expansion on this new block is planned for 2017. Increasing our operatorship and 100 per cent working interest in lands and facilities will simplify and streamline the development of our world-class Montney asset."
The swap has an effective date of Jan. 1, 2016 and closing is subject to usual closing conditions and regulatory approvals, including approvals required by the Competition Act (Canada).