TSX, NYSE MKT: BXE
CALGARY, Jan. 7, 2014 /CNW/ - Bellatrix Exploration Ltd. ("Bellatrix" or
the "Company") (TSX, NYSE MKT: BXE) is pleased to announce it exited
2013 with record production and provides an update of its recent
commodity price risk management activities.
2013 has been an extraordinary year earmarked by record production
growth, announcing three separate joint ventures designed to accelerate
our program on a promoted basis, an equity financing, redemption of its
convertible debentures and closing on December 11, 2013 of an impactful
corporate acquisition. These strategic transactions strengthen the
Company by accelerating our ability to provide shareholder value
accretion.
2013 Exit and 2014 Guidance
Bellatrix exited 2013 with a record production level of 38,000 boe/d
(weighted total crude oil, condensate and NGLs representing 37%) and
with approximately 2,000 boe/d behind pipe waiting to be brought on
production due to infrastructure constraints. These current
Infrastructure constraints are anticipated to be removed by mid-January
2014 after which time the Company's field production is expected to
be at +/- 40,000 boe/d (weighted total crude oil, condensate and NGLs
representing 37%). First quarter 2014 production is also expected to
average +/- 40,000 boe/d (weighted total crude oil, condensate and
NGLs exit at approximately 37%).
The Company navigated through severe weather challenges during the
summer and fall of 2013 which contributed to significant unscheduled
down time at plants that process Bellatrix's natural gas and which
negatively impacted the Company's average annual 2013 production
levels. Bellatrix was also negatively impacted during 2013 by
regulatory delays in receiving well licenses which significantly
delayed the start of the Q4 2014 drilling program. In addition, as
previously announced in November 2013, as part of agreement with Troika
Resources Private Equity Fund ("Troika"), Troika acquired 14 gross
wells (as included in the total expected 63 gross well program) for
wells that had been drilled since January 1, 2013 resulting in net
proceeds of $16.7 million that was received by Bellatrix. This
agreement resulted in the sale of approximately 1,300 boe/d to Troika
at closing which negatively impacted production post-closing. Despite
these many challenges in 2013 the Company exited 2013 with record
production levels of 38,000 boe/d which represented a 95% increase over
its 2012 exit production level of 19,500 boe/d. Bellatrix's expects its
2013 calendar year average daily production will be +/- 22,000 boe/d
which represents a 32% increase over 2012 average production of 16,686
boe/d.
Since November 2013 and for all of 2014, Bellatrix plans to continue to
be active in drilling with 10-12 rigs operating in its two core
resource plays, the Cardium oil (Bellatrix is the second largest land
holder with 338 net sections in the Cardium play) and Mannville
condensate rich gas, utilizing horizontal drilling multi-fracturing
technology. With the closing of the acquisition of Angle Energy Inc.
("Angle") in December 2013, an initial gross budget of $610 million
(including JV partner capital) for a net capital budget of $370 million
has been set for fiscal 2014. Based on the timing of proposed
expenditures, downtime for anticipated plant turnarounds and normal
production declines, execution of the 2014 budget is anticipated to
provide 2014 average daily production of approximately +/- 44,000 boe/d
and an exit rate of approximately +/- 47,000 boe/d.
The 2014 net capital budget of $370 million is comprised of drilling and
completion costs of $250 million; facility and infrastructure costs of
$100 million and land, geological and other related costs of $20
million. The Company plans to drill/participate in 146 gross (76.27
net) wells in 2014 resulting in 115 gross (65.71 net) Cardium oil wells
and 31 gross (10.56 net) Mannville condensate rich gas wells.
2014 funds from operations are expected to be $360 million or $2.10 per
basic share which when combined with the Company's existing $500
million credit facilities, will provide ample funds to execute the
budget while maintaining a strong balance sheet.
Based on an assumed 2014 average Edmonton Light oil price of $90/bbl and
AECO $4.00/mcf, average 2014 royalty rates of 18.8% and average 2014
operating costs of $7.50 boe/d, the Company expects to exit 2014 with
net debt of approximately $410 million or 1.06 times net debt to
trailing estimated fourth quarter 2014 funds from operations.
Additional 2014 Price Risk Management Contracts
In summary, Bellatrix has the following crude oil and natural gas
commodity price risk management contracts in place for 2014. The
conversion of $/GJ to $/mcf is based on an average corporate heat
content of 40.8 Mj/m3. The conversion to CDN$ from US$ is based on an exchange rate of $0.94
CDN/$1.00US.
Product
|
Term
|
Volume
|
Average Price
|
Crude Oil
|
Jan. 1, 2014 to Dec. 31, 2014
|
6,000 bbl/d
|
$97.07 CDN/bbl
|
Natural gas
|
Jan. 1, 2014 to Dec. 31, 2014
|
63.8 mmcf/d
|
$4.04 CDN/mcf
|
Bellatrix recently entered into five commodity price risk management
contracts consisting of two natural gas fixed price swaps for the
period February 1, 2014 to December 31, 2014 for 10,000 GJ/d each at
prices of CDN$3.79/GJ (CDN$4.36/mcf) and CDN$3.80/GJ (CDN$4.37/mcf)
respectively and three additional natural gas fixed price swaps
totaling 15,000 GJ/d for the period July 1, 2014 to December 31, 2014
at prices of CDN$3.71/GJ (CDN$4.26/mcf).
As at January 6, 2014, Bellatrix has entered into commodity price risk
management arrangements for 2014 as follows:
|
|
|
|
|
|
|
|
Type
|
Period
|
Volume
|
Price Floor
|
Price Ceiling
|
Index
|
Crude oil fixed
|
Jan. 1, 2014 to Dec. 31, 2014
|
500 bbl/d
|
$
|
93.30 US
|
$
|
93.30 US
|
WTI
|
Crude oil fixed
|
Jan. 1, 2014 to Dec. 31, 2014
|
1,500 bbl/d
|
$
|
94.00 CDN
|
$
|
94.00 CDN
|
WTI
|
Crude oil fixed
|
Jan. 1, 2014 to Dec. 31, 2014
|
500 bbl/d
|
$
|
95.00 US
|
$
|
95.00 US
|
WTI
|
Crude oil fixed
|
Jan. 1, 2014 to Dec. 31, 2014
|
1,500 bbl/d
|
$
|
95.22 CDN
|
$
|
95.22 CDN
|
WTI
|
Crude oil fixed
|
Jan. 1, 2014 to Dec. 31, 2014
|
500 bbl/d
|
$
|
98.30 CDN
|
$
|
98.30 CDN
|
WTI
|
Crude oil fixed
|
Jan. 1, 2014 to Dec. 31, 2014
|
1,000 bbl/d
|
$
|
99.50 CDN
|
$
|
99.50 CDN
|
WTI
|
Crude oil fixed
|
Jan. 1, 2014 to Dec. 31, 2014
|
500 bbl/d
|
$
|
99.60 CDN
|
$
|
99.60 CDN
|
WTI
|
Crude oil call options
|
Jan. 1, 2014 to Dec. 31, 2014
|
1,500 bbl/d
|
|
-
|
$
|
105.00 US
|
WTI
|
Natural gas fixed
|
Jan. 1, 2014 to Jun. 30, 2014
|
15,000 GJ/d
|
$
|
3.05 CDN
|
$
|
3.05 CDN
|
AECO
|
Natural gas fixed
|
Jan. 1, 2014 to Dec. 31, 2014
|
20,000 GJ/d
|
$
|
3.30 CDN
|
$
|
3.30 CDN
|
AECO
|
Natural gas fixed
|
Jan. 1, 2014 to Dec. 31, 2014
|
20,000 GJ/d
|
$
|
3.60 CDN
|
$
|
3.60 CDN
|
AECO
|
Natural gas fixed
|
Jul. 1, 2014 to Dec. 31, 2014
|
15,000 GJ/d
|
$
|
3.71 CDN
|
$
|
3.71 CDN
|
AECO
|
Natural gas fixed
|
Feb. 1, 2014 to Dec. 31, 2014
|
10,000 GJ/d
|
$
|
3.79 CDN
|
$
|
3.79 CDN
|
AECO
|
Natural gas fixed
|
Feb. 1, 2014 to Dec. 31, 2014
|
10,000 GJ/d
|
$
|
3.80 CDN
|
$
|
3.80 CDN
|
AECO
|
Bellatrix continues to focus on growth by development of its core
Cardium and Notikewin/Falher assets utilizing its large inventory of
geological prospects. The Company has developed an inventory of 742 net
remaining Cardium locations, 381 net Notikewin/Falher and 128 Mannville
locations representing a net remaining investment of $4.97 billion
(based on current costs). Bellatrix has approximately 424,452 net
undeveloped acres and including all opportunities of approximately
2,000 net exploitation drilling opportunities identified, with capital
requirements of $10.1 billion representing over 30 years of drilling
inventory based on current annual cash flow and costs. The Company
continues to focus on adding Cardium and Notikewin prospective lands.
The Company's current corporate presentation is available at www.bellatrixexploration.com.
Bellatrix Exploration Ltd. is a Western Canadian based growth oriented
oil and gas company engaged in the exploration for, and the
acquisition, development and production of oil and natural gas reserves
in the provinces of Alberta, British Columbia and Saskatchewan. Common
shares and convertible debentures of Bellatrix trade on the Toronto
Stock Exchange ("TSX") under the symbols BXE and BXE.DB.A, respectively
and the common shares of Bellatrix trade on the NYSE MKT under the
symbol BXE.
All amounts in this press release are in Canadian dollars unless
otherwise identified.
Forward looking statements: Certain information set forth in this news
release, including management's assessments of the future plans and
operations including timing of the removal of infrastructure constraints and
anticipated production thereafter and commodity mix, anticipated first
quarter 2014 average daily production rate and commodity mix, anticipated 2014 average daily production rate, exit rate and
commodity mix, 2014 capital expenditure budget and nature of
expenditures and drilling inventory and costs and time to develop and
estimated 2014 funds from operation and funds from operation per share,
expectation that funds flow and available credit facilities will
provide ample funds to execute budget and maintain strong balance
sheet, budgeted 2014 commodity prices, royalty rates and operating
costs and resulting 2014 net debt and net debt to trailing estimated
fourth quarter 2014 funds flow from operations may contain
forward-looking statements, and necessarily involve risks and
uncertainties, certain of which are beyond Bellatrix's control,
including risks associated with oil and gas exploration, development,
exploitation, production, marketing and transportation, loss of markets
and other economic and industry conditions, volatility of commodity
prices, currency fluctuations, imprecision of reserve estimates,
environmental risks, competition from other producers, inability to
retain drilling services, incorrect assessment of value of acquisitions
and failure to realize the benefits therefrom, delays resulting from or
inability to obtain required regulatory approvals, the lack of
availability of qualified personnel or management, stock market
volatility and ability to access sufficient capital from internal and
external sources and economic or industry condition changes. Actual
results, performance or achievements could differ materially from those
expressed in, or implied by, these forward-looking statements and,
accordingly, no assurance can be given that any events anticipated by
the forward-looking statements will transpire or occur, or if any of
them do so, what benefits that Bellatrix will derive therefrom.
Additional information on these and other factors that could affect
Bellatrix are included in reports on file with Canadian securities
regulatory authorities and the United States Securities and Exchange
Commission and may be accessed through the SEDAR website (www.sedar.com), the SEC's website (www.sec.gov or at Bellatrix's website www.bellatrixexploration.com. Estimated 2014 funds from operations and funds from operation per
share and 2014 yea-rend debt levels and expected 2014 net debt to
trailing estimated fourth quarter 2014 funds flow from operations may
constitute financial outlooks under applicable securities laws and were
approved by management on January 3, 2014 and such financial outlooks
are contained herein to provide the reader with an understanding of the
funds expected to be generated by the Company's operations and thus the
amount available to meet its required expenditures and payments based
on the various assumptions utilized and readers are cautioned that the
information may not be appropriate for other purposes. Furthermore, the
forward-looking statements contained in this news release are made as
of the date of this news release, and Bellatrix does not undertake any
obligation to update publicly or to revise any of the included forward
looking statements, whether as a result of new information, future
events or otherwise, except as may be expressly required by applicable
securities law.
Conversion: The term barrels of oil equivalent ("boe") may be
misleading, particularly if used in isolation. A boe conversion ratio
of six thousand cubic feet of natural gas to one barrel of oil
equivalent (6 mcf/bbl) is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent a
value equivalency at the wellhead. Given that the value ratio based on
the current price of crude oil as compared to natural gas is
significantly different from the energy equivalency of 6:1, utilizing a
conversion on a 6:1 basis may be misleading as an indication of value.
All boe conversions herein are derived from converting gas to oil in
the ratio of six thousand cubic feet of gas to one barrel of oil.
Non-GAAP Measures: This press release contains the term "funds flow
from operations" which should not be considered an alternative to, or
more meaningful than "cash flow from operating activities" as
determined in accordance with generally accepted accounting principles
("GAAP") as an indicator of the Company's performance. Therefore
reference to funds flow from operations or funds flow from operations
per share may not be comparable with the calculation of similar
measures for other entities. Management uses funds flow from operations
to analyze operating performance and leverage and considers funds flow
from operations to be a key measure as it demonstrates the Company's
ability to generate the cash necessary to fund future capital
investments and to repay debt. Funds flow from operations per share is
calculated using the weighted average number of shares for the period.
This press release also contains the terms total net debt and net debt.
Total net debt is calculated as long-term debt plus the net working
capital deficiency (excess) before short-term commodity contract assets
and liabilities and current finance lease obligations. Net debt is
calculated as long-term debt plus the net working capital deficiency
(excess) before short-term commodity contract assets and liabilities
and current finance lease obligations. Management believes these
measures are useful supplementary measures of the total amount of
current and long-term debt.
SOURCE Bellatrix Exploration Ltd.
Raymond G. Smith, P.Eng., President and CEO (403) 750-2420
or
Edward J. Brown, CA, Executive Vice President, Finance and CFO (403) 750-2655
or
Brent A. Eshleman, P.Eng., Executive Vice President (403) 750-5566
or
Troy Winsor, Investor Relations (800) 663-8072