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Bellatrix Revises 2015 CapEx and Production Guidance

Calgary-based Bellatrix Exploration (ticker: BXE) announced the achievement of its 2014 year-end production guidance in a news release on December 22, 2014. The company also  revised its 2015 capital budget to $300 million, down from $400 million, due to the decline in oil prices since June.

According to the company, the focus of the 2015 budget is twofold: to complete construction of Phase 1 of the Bellatrix O’Chiese Nees-Ohpawganu’ck deep-cut gas plant at Alder Flats, and to drill high rate of return Spirit River (Notikewin/Falher) liquids-rich natural gas wells where production can be processed through the new plant. BXE’s Cardium drilling program will be tempered to focus on expiring leases and commitment wells until oil prices recover.

Approximately 35% of the 2015 capital budget (about $105 million) is allocated to facilities which include completing construction of Phase 1 of Bellatrix’s deep-cut gas plant, which the company reports is still on schedule and on budget for a July 2015 start-up. The plant is designed to process approximately 110 MMcf/day, giving Bellatrix the ability to grow net production to approximately 65 MBOEPD.

A total of 61%, or $183 million, of the 2015 capital budget will focus on drilling while the remaining 4% (about $12 million) will be allocated to land and seismic.

The $100 million, or 25%, reduction in the 2015 capital budget from BXE’s previously announced expectation reflects a reduced drilling budget and a deferral of the timing of construction of Phase 2 of the deep-cut gas plant. Based on Bellatrix’s forecast capacity requirements, the on-stream date of Phase 2 can be deferred until Q4’16 from the original on-stream date of Q2’16 with no change in capital cost.

Bellatrix expects that Phase 2 of the deep-cut facility will double the initial processing capacity of Phase one with an additional 110 MMcf/day, giving the company access to approximately 80 MBOEPD of processing capacity once it comes on-stream.

BXE said it will be reducing its previously announced 2015 average production guidance range alongside with its capital budget for next year. In its press release, the company said that it is setting 2015 production guidance to approximately 47 to 48 MBOEPD (70% natural gas, 30% liquids). The midpoint of this 2015 average production guidance range reflects an increase of approximately 23% over the expected 2014 average daily production guidance of approximately 38.5 MBOEPD.

“We have seen these downturns in the past, and have positioned the company accordingly to manage through these times,” said Brent Eshleman, Executive Vice-President and COO of Bellatrix Exploration, in an interview with Oil & Gas 360®.  “Good management teams position their companies in the good times, to handle these volatile times.”

A Record Year for Bellatrix

While reflecting on 2014, Mr. Eshleman said, “Despite the current oil and gas pricing environment, 2014 was a record year for Bellatrix; record production, record reserves, record cash flow. We started construction on Phase 1 of our new Bellatrix Gas Plant, and we will double capacity by adding Phase 2. We also completed our gas plant infrastructure initiatives by selling a 40% working interest in the plants to strategic partners.”

Bellatrix achieved 2014 exit guidance production rates by completing and placing on stream the first segment of the Twin Rivers pipeline. In addition to the pipeline, the company’s ‘booster compressor’ required to flow more gas at a higher pressure into its north lateral is on schedule to start-up on December 22, 2014. These initiatives, along with the company’s Q4 drilling program, allowed BXE to achieve its 2014 exit rate production guidance of 47 to 49 MBOEPD.

Based on EnerCom’s International E&P Weekly database of 26 international companies, for the week ended December 19, 2014, Bellatrix has an enterprise value of $1.269 billion and a trailing twelve month (TTM) production of 27.4 MBOEPD – indicative of the company’s growth within the last fiscal year. The company’s production is 64% gas weighted. Bellatrix’s asset intensity is 23%, far below the average of 91% in its peer group.

Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.


Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.