Increases 2015 Production Guidance
Bellatrix Exploration Ltd. (ticker: BXE) announced this morning that it has completed the acquisition of assets within its core Alder Flats area of west central Alberta (greater Ferrier region) from an unidentified oil and gas producer for approximately $118 million.
According to the company, the acquisition will add approximately 2,200 BOEPD of currently unrestricted production (approximately 80% natural gas and 20% liquids), and largely represents the consolidation of working interest ownership from existing wellbores and Mannville formation rights.
The transaction involves the acquisition of Mannville rights and current production from approximately 10 gross (5.7 net) sections of land at Alder Flats, representing largely joint interest lands where Bellatrix currently maintains existing working interest rights. The acquired acreage includes operatorship over the majority of the acquired sections. The new acreage directly offsets Bellatrix operated lands, which include its most successful Mannville horizontal wells to date. This includes the Bellatrix 13-23 upper Mannville liquids rich natural gas well, which has produced an estimated 5.0 Bcf of natural gas with 166,000 barrels of liquids during its first year on-stream.
The transaction increases Bellatrix’s net working interest within the Mannville formation by 57.3% (to approximately 96.9% from 39.6% previously) over the ten gross sections. This consolidation involves no material incremental operating cost impact to the company given the increased working interest volumes and consolidated formation rights.
Bellatrix’s technical team has identified 19 (9.5 net) low risk development drilling locations on the acquired lands within both the Notikewin and Falher B members of the Spirit River formation. Additionally, the company has identified potential upside of approximately 16 (10.75 net) locations in the highly prospective Falher A and Wilrich members on the acquired lands, also within the Spirit River formation.
Bellatrix forecast net capital spending on the acquired assets through 2015 is $16 million. Based on this level of assumed spending, net production from the assets is expected to average approximately 4,500 BOEPD in 2015, resulting in transaction metrics of $29,800/BOEPD on internal 2015 forecasts.
Increase in the company’s 2015 production guidance
Bellatrix has announced changes to the company’s production guidance alongside news of its Mannville acquisition.
The company’s 2014 exit rate production guidance range has been increased to approximately 47,000 – 49,000 BOEPD, up from 45,000 – 47,000 BOEPD, and an increase to the full year 2015 average production guidance range to approximately 49,000 – 50,000 BOEPD, up from 48,000 – 49,000 BOEPD.
The company has decided to revise its 2015 net capital spending guidance to $400 million, down from $450 million.
Steve G. Toth, CFA, Vice-President, Investor Relations spoke with Oil & Gas 360® about the acquisition in an exclusive interview. “This acquisition was highly strategic, it’s in our best producing area. We are very comfortable with the geology—these are great ‘low hanging’ production additions for Bellatrix,” Toth said. “These are highly productive wells—80% gas weighted,” Toth told Oil & Gas 360®.
Toth said the company’s new gas processing plant is on budget and on track to come online mid-summer 2015.
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