​New $276.6-million Painted Pony Montney acquisition ‘fits like a glove’: CEO

Painted Pony CEO Pat Ward. Image: Shaun Robinson/JWN

Painted Pony will invest $276.6 million to acquire north Montney neighbour and partner UGR Blair Creek Ltd., the company announced on Wednesday.

Montney-focused Painted Pony, which produced about 23,000 boe/d in 2016, says the transaction is a strategic fit in that it expands its existing project area, includes ready-to-be-filled processing capacity and presents an opportunity to grow production at lower costs than UGR.

“Several of our most prolific Montney wells have been drilled on lands adjacent to or on jointly-held UGR lands,” Painted Pony CEO Pat Ward said in a statement.

“UGR's assets fit like a glove with our existing asset base. While the acquired under-utilized processing capacity and transportation service will facilitate prudent growth in production and cash flow in the near term, Painted Pony's significantly lower drilling and completion costs relative to UGR will generate material synergies and accretion as we execute our business plan on an expanded land base.”

Here are some stats about what the deal adds to Painted Pony’s portfolio:

  • Current production of about 8,500 boe/d
  • Proved reserves of 128 million boe
  • A 52 percent increase in net Montney acreage, to 314 net sections
  • UGR-owned and third-party firm processing capacity of 155 MMcf/d, approximately 105 MMcf/d of which Painted Pony says is currently unutilized by UGR
  • Anticipated production increase in 2017 to 48,400 boe/d and to 84,800 boe/d in 2018
  • Additional firm transportation of 106 MMcf/d on the Enbridge T-North pipeline system
  • ARC and EnCap as indirect investors and nominees to the Painted Pony board of directors

UGR Blair Creek is a privately-held subsidiary of Unconventional Gas Resources Canada LP, which is a portfolio investment vehicle held in equity funds advised by ARC Financial and EnCap Investments.

Painted Pony also announced it has entered into a $100-million equity financing.