Painted Pony Pete Ltd PDPYF

RE:Time Factor (Production Rampup)

[UppersDowners]

The 2ndQ results answer some of your questions as to production below:

ALTAGAS TOWNSEND FACILITY

The Townsend Facility began producing natural gas sales volumes on July 7, 2016 more than 30 days ahead of Painted Pony's schedule.  The early commissioning of the Townsend Facility has provided Painted Pony the opportunity to accelerate production volume growth in the second half of 2016.  Painted Pony expects raw natural gas production volumes through the Townsend Facility to average over 50 MMcf/d during August 2016; 100 MMcf/d duringSeptember 2016; and 150 MMcf/d during October 2016.  Currently at approximately 50 MMcf/d of production throughput, the Townsend Facility has been performing per expectations with no material operating concerns or deficiencies. Painted Pony continues to anticipate a 2016 year-end exit production rate of approximately 240 MMcfe/d (40,000 boe/d). 

Based on its design, the expected efficiency of the Townsend Facility is anticipated to improve natural gas liquids ("NGL") yields from Blair Creek in addition to allowing for higher production volumes from the liquids-rich Townsend area.  As a result, NGL volumes are expected to increase from approximately 5% of total production volumes currently to approximately 10% of total production volumes in the fourth quarter of 2016.  This will result in a liquids production increase of approximately 300% from current rates of approximately 1,000 bbls/d to an expected year-end production rate of approximately 4,000 bbls/d.  Painted Pony expects the increased NGL production to be comprised of approximately 50% condensate with the remaining volumes to be split evenly between propane and butane.