/NOT FOR DISTRIBUTION IN THE UNITED
STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES/
CALGARY,
Aug. 21, 2013 /CNW/ - Palliser Oil
& Gas Corporation ("Palliser" or the
"Company") (TSX VENTURE:PXL) is pleased to announce
financial and operating results for the three and six months ended
June 30, 2013. Certain selected
financial and operational information is set out below and should
be read in conjunction with Palliser's unaudited condensed
financial statements complete with the notes to the financial
statements and related MD&A which will be available at
www.sedar.com and the Company's website at www.palliserogc.com.
Operating & Financial Highlights - Three
and Six Months Ended June 30, 2013
and 2012 (unaudited)
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Three months ended |
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Six months ended |
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June 30 |
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June 30 |
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2013 |
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2012 |
% Change |
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2013 |
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2012 |
% Change |
Operating |
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Wells drilled, re-entered or reactivated (gross
and net) |
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Oil |
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2 |
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4 |
-50% |
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12 |
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6 |
100% |
Salt water disposal |
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- |
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1 |
-100% |
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1 |
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2 |
-50% |
Total |
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2 |
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5 |
-60% |
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13 |
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8 |
63% |
Success (%) |
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100% |
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100% |
0% |
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100% |
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88% |
14% |
Undeveloped land Greater Lloydminster (net
acres) |
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34,922 |
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23,617 |
48% |
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34,922 |
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23,617 |
48% |
Undeveloped land Medicine Hat (net acres) |
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24,410 |
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29,042 |
-16% |
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24,410 |
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29,042 |
-16% |
Total undeveloped land (net acres) |
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59,332 |
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52,659 |
13% |
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59,332 |
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52,659 |
13% |
Average daily production |
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Crude oil (bbl per day) |
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2,730 |
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1,877 |
45% |
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2,449 |
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1,810 |
35% |
Natural gas (Mcf per day) |
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257 |
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390 |
-34% |
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276 |
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383 |
-28% |
Barrels of oil equivalent (boe per day, 6:1) |
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2,773 |
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1,942 |
43% |
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2,495 |
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1,874 |
33% |
Crude oil production (%) |
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98% |
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97% |
1% |
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98% |
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97% |
1% |
Average sales prices |
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Crude oil ($ per bbl) |
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$ |
69.30 |
$ |
60.67 |
14% |
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$ |
61.59 |
$ |
65.50 |
-6% |
Natural gas ($ per Mcf) |
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$ |
3.43 |
$ |
1.80 |
91% |
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$ |
3.16 |
$ |
1.97 |
60% |
Barrels of oil equivalent ($ per boe, 6:1) |
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$ |
68.54 |
$ |
59.00 |
16% |
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$ |
60.82 |
$ |
63.79 |
-5% |
Operating netback ($ per boe) |
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Petroleum and natural gas sales |
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$ |
68.54 |
$ |
59.00 |
16% |
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$ |
60.82 |
$ |
63.79 |
-5% |
Realized gain (loss) on financial derivatives |
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$ |
2.20 |
$ |
3.53 |
-38% |
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$ |
3.93 |
$ |
0.72 |
446% |
Royalties |
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$ |
16.88 |
$ |
12.69 |
33% |
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$ |
14.50 |
$ |
14.37 |
1% |
Production, operating & transportation
expenses |
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$ |
22.95 |
$ |
21.75 |
6% |
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$ |
26.02 |
$ |
24.05 |
8% |
Operating netback (1) |
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$ |
30.91 |
$ |
28.09 |
10% |
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$ |
24.23 |
$ |
26.09 |
-7% |
Financial ($000's except per share amounts)
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Three months ended |
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Six months ended |
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June
30 |
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June
30 |
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2013 |
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2012 |
% Change |
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2013 |
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2012 |
% Change |
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Oil and natural gas sales |
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$ |
17,294 |
$ |
10,428 |
66% |
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$ |
27,470 |
$ |
21,756 |
26% |
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Funds flow from |
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operating activities (2) |
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$ |
6,103 |
$ |
3,666 |
66% |
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$ |
7,785 |
$ |
6,366 |
22% |
Per share - basic and diluted |
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$ |
0.10 |
$ |
0.07 |
43% |
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$ |
0.12 |
$ |
0.12 |
0% |
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Net income (loss) and |
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comprehensive income (loss) |
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$ |
(610) |
$ |
4,538 |
- |
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$ |
(5,097) |
$ |
5,139 |
- |
Per share - basic and diluted |
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$ |
(0.01) |
$ |
0.08 |
- |
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$ |
(0.08) |
$ |
0.09 |
- |
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Weighted average |
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shares outstanding |
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63,915,979 |
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54,130,348 |
18% |
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63,059,625 |
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54,130,348 |
16% |
Shares outstanding |
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63,915,979 |
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54,130,348 |
18% |
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63,915,979 |
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54,130,348 |
18% |
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Capital expenditures (3) |
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$ |
3,987 |
$ |
6,491 |
-39% |
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$ |
12,711 |
$ |
15,597 |
-19% |
Working capital (net debt) (4) |
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$ |
(39,539) |
$ |
(30,098) |
31% |
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$ |
(39,539) |
$ |
(30,098) |
31% |
Shareholders' equity |
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$ |
43,602 |
$ |
45,698 |
-5% |
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$ |
43,602 |
$ |
45,698 |
-5% |
(1) |
Operating netback is a non-GAAP
measure and is the net of petroleum and natural gas sales, realized
gain or loss on financial derivatives, royalties and production,
operating and transportation expenses. |
(2) |
Funds flow from operating activities
is a non-GAAP measure that represents cash flow from operations
less decommissioning expenditures and changes in non-cash working
capital related to operating activities. Funds flow per share
amounts are calculated using weighted average shares outstanding
consistent with the calculation of net income per share. Funds flow
from operating activities is a key measure as it demonstrates the
Company's ability to generate the funds necessary to achieve future
growth through capital investment. |
(3) |
Capital expenditures exclude
decommissioning liability costs and capitalized share-based
compensation. |
(4) |
Working capital (net debt) is a
non-GAAP measure representing the total bank loan, accounts payable
and accrued liabilities, less accounts receivable, deposits and
prepaid expenses. |
Management believes these are useful supplemental measures of,
firstly, the total net position of current assets and current
liabilities of the Company and secondly, the profitability relative
to commodity prices. Other entities may calculate these
figures differently than Palliser.
Second Quarter 2013 Highlights
- Achieved record production of 2,773 boe/d. Production
increased 25% compared to the first quarter of 2013 and increased
43% compared to the second quarter of 2012;
- Achieved production, operating, and transportation expenses
of $22.95 per boe.
Production, operating and transportation expenses decreased 23%
compared to the first quarter of 2013 and increased 6% compared to
the prior year comparative quarter. The Company remains
focused on being a low operating cost producer;
- Achieved operating netback of $30.91 per boe. Operating netbacks
improved 96% compared to the first quarter of 2013 and 10% compared
to the second quarter of 2012;
- Record funds flow from operating activities of $6.1 million, or $0.10 per share in the second quarter.
Funds flow from operating activities increased 263% compared to
$1.7 million in the first quarter of
2013 and increased 66% compared to $3.7
million in the second quarter of 2012;
- Executed a $4.0 million
capital program in the second quarter. The capital program
included two wells completed for heavy oil production with a 100%
success rate. Year to date capital expenditures of $12.7 million include 12 wells completed for
heavy oil production with a 100% success rate;
- Increased undeveloped heavy oil land position. The
Company's undeveloped heavy oil land position at June 30, 2013 was 34,922 net acres, a 3% increase
from March 31, 2013;
- Maintained a significant prospect inventory. The
Company's prospect inventory stands at 140 locations, none of which
are included in the 2012 independent reserves report; and
- Increased rail shipments to improve operating netbacks.
Palliser increased rail shipments in the second quarter to 1,101
boe/d, or 40% of the Company's production.
Operations
The second quarter of 2013 was a relatively
quiet quarter for Palliser with capital expenditures totalling
$4.0 million, representing 17% of the
budgeted yearly capital program of $24
million. Activity levels were lower than the first quarter
primarily due to spring breakup conditions. This 100% working
interest capital program included reactivating two heavy oil wells,
as well as upgrades and expansions to salt water disposal "SWD"
facilities at Edam, Lloydminster and Manitou. The Company also expanded its net
undeveloped heavy oil land holdings to 34,922 net acres as at
June 30, 2013.
Second quarter production exceeded budgeted
levels due primarily to production from 10 new wells drilled during
the first quarter but not brought on stream until late in that
quarter. These higher production volumes resulted in production,
operating and transportation expenses of $22.95 per barrel in the second quarter of 2013,
which represents a 23% reduction from the first quarter of 2013 and
a 6% increase from the second quarter of 2012. The transportation
component increased from $1.01 in the
second quarter of 2012 to $2.01 per
boe in the second quarter of 2013 as the Company intentionally
incurred additional trucking costs to deliver oil to more lucrative
rail contracts, which provide significantly higher netbacks per
boe.
Financial
Differentials improved dramatically in the
second quarter of 2013, with a narrowing of heavy oil differentials
between West Texas Intermediate "WTI" and Western Canadian Select
"WCS" pricing relative to the first quarter. This resulted in a 34%
increase in net sales price from the first quarter of 2013 and a
16% increase in net sales price from the second quarter of the
previous year. Operating netbacks were $30.91 per boe which is a 96% increase over the
first quarter of 2013 and 10% higher than the second quarter of
2012.
The Company's net debt at the end of the second
quarter was $39.5 million, relative
to a current total credit facility of $52
million. The significant improvement in funds flow in the
second quarter, relative to the first quarter, resulted in a second
quarter debt to annualized funds flow ratio of 1.6 times. The
remaining $11.3 million capital
program budgeted for 2013 will be financed through funds flow and
existing credit facilities with year-end net debt budgeted to be
approximately $39 million.
Outlook
The second quarter of 2013 represented a strong
quarter for Palliser, on the heels of an active first quarter
capital program. Production ramped up through the second quarter
from ten new wells brought on stream late in the first quarter. A
prolonged spring breakup along with wet weather late in the second
quarter, which extended into the third quarter, caused some
production downtime in the field and the delay of numerous capital
projects further into the third quarter. As a result, current
production levels are approximately 2,500 boe/d, based on field
estimates.
The third quarter drilling program commenced in
August with two new heavy oil wells and one salt water disposal
well for a 100% success rate to date. Production additions from the
ongoing capital program, as well as improved run time on existing
production with improved weather conditions, should result in
production growth through the remainder of the third and fourth
quarters.
With approximately 40% of budgeted capital
expenditures remaining to be spent, the Company is on track to
achieve its 2013 production guidance of 2,700 - 2,800 boe/d.
Production, operating and transportation costs returned to the
$23 per boe level in the second
quarter and the Company remains on track to be a sustainable low
operating cost heavy oil producer.
Heavy oil differentials, narrowed favorably
during the second quarter, returning to more historic averages at
or below the $20 per barrel level.
Funds flow from operating activities in the second quarter exceeded
$6 million due to improved heavy oil
pricing, growing production, and a return to lower operating
expenses. Palliser is on track to achieve its 2013 budget: funds
flow from operating activities of approximately $20 million, operating netbacks of $26 per boe, and year-end net debt of
$39 million.
To reduce funds flow risk from commodity price
volatility, Palliser has recently added to its hedge positions. The
Company currently has approximately 40% of budgeted second half
2013 production volumes hedged at an average WTI CAD price of
approximately $96 per barrel and
approximately 20% of budgeted second half 2013 volumes hedged at an
average WCS price of approximately $75 per barrel. The Company has also entered into
WTI CAD fixed price swaps for calendar 2014. This should provide
the Company with greater price certainty and funds flow
support.
Palliser is currently shipping approximately 45%
of its oil production by rail to the Gulf Coast. The Company is
realizing a significant price premium on volumes shipped by rail.
By year end, we will have the ability to increase our rail
shipments to in excess of 50% of production, if market conditions
are favourable, with minimal incremental capital expenditure
required.
Our original $24
million capital budget for 2013 assumed US$93 WTI per barrel and CAD$63 WCS per barrel pricing. Our internally
driven capital program is to be funded by cash flow and credit
facilities. With pricing in the second half of the year forecast to
be higher than budgeted, the Company will be well positioned with
flexibility to deploy any excess funds flow to the most prudent use
of funds.
On behalf of the Board of Directors,
"Signed"
Kevin J. Gibson
Chief Executive Officer
"Signed"
Allan B. Carswell
President and Chief Operating Officer
August 21, 2013
Calgary, Alberta
For further information regarding Palliser Oil
& Gas Corporation, the reader is invited to visit the Company's
website at www.palliserogc.com.
Palliser is a Calgary-based emerging junior oil and gas
company currently focused on high netback heavy oil production in
the greater Lloydminster area of
both Alberta and Saskatchewan.
Forward-Looking Statements
Certain statements contained herein constitute forward-looking
statements or information (collectively "forward-looking
statements") within the meaning of applicable securities
legislation, including, but not limited to management's assessment
of future plans and operations, including: commodity focus;
drilling plans and potential locations; expected production levels;
expected transportation methods; development and acquisition plans;
reserves growth; production and operating sales and expenses;
reservoir characteristics; the results of applying certain
operational development techniques; certain economic factors; and
capital expenditures. Forward-looking statements are
typically identified by words such as "anticipate", "estimate",
"expect", "forecast", "may", "will", "project" and similar words
suggesting future events or performance or may be identified by
reference to a future date. In addition, statements relating to oil
and gas reserves and resources are deemed to be forward-looking
statements as they involve the implied assessment, based on certain
estimates and assumptions, that the reserves or resources
described, as the case may be, exist in the quantities predicted or
estimated and can be profitably produced in the future. With
respect to forward-looking statements herein, Palliser has made
assumptions regarding, among other things; future capital
expenditure levels; future oil and natural gas prices;
"differentials" between West Texas Intermediate and Western
Canadian Select benchmark pricing; future oil and natural gas
production levels; future water disposal capacity; future exchange
rates and interest rates; ability to obtain equipment and services
in a timely manner to carry out development activities; ability to
market oil and natural gas successfully to current and new
customers; the ability to ship volumes by rail; the impact of
increasing competition; the ability to obtain financing on
acceptable terms; and the ability to add production and reserves
through development and exploitation activities. Although Palliser
believes that the expectations reflected in the forward-looking
statements contained herein, and the assumptions on which such
forward-looking statements are made, are reasonable, there can be
no assurance that such expectations will prove to be correct.
Readers are cautioned not to place undue reliance on
forward-looking statements included herein, as there can be no
assurance that the plans, intentions or expectations upon which the
forward-looking statements are based will occur. By their nature,
forward-looking statements involve numerous risks and uncertainties
that contribute to the possibility that the forward-looking
statements will not occur, which may cause Palliser's actual
performance and financial results in future periods to differ
materially from any estimates or projections. Additional
information on these and other factors that could affect Palliser's
results are included in reports on file with Canadian securities
regulatory authorities, including the Company's Annual Information
Form, and may be accessed through the SEDAR website at
www.sedar.com.
The forward-looking statements contained
herein speak only as of the date hereof. Except as expressly
required by applicable securities laws, Palliser does not undertake
any obligation to, nor does it intend to, publicly update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise. The forward-looking
statements contained herein are expressly qualified by this
cautionary statement. In addition, readers are cautioned that
historical results are not necessarily indicative of future
performance.
Production volumes are commonly expressed on
a barrel of equivalent ("BOE") basis whereby natural gas volumes
are converted at a ratio of six thousand cubic feet to one barrel
of oil. The intention is to convert oil and natural gas
measurement units into one basis for improved analysis of results
and comparisons with other industry participants. The term BOE may
be misleading, particularly if used in isolation. The
conversion ratio is based on an energy equivalent method and does
not represent an economic value equivalency at the
wellhead.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this Press release.
SOURCE Palliser Oil & Gas Corporation