Bellatrix Exploration Ltd. Announces Third Quarter 2013 Financial Results
TSX, NYSE MKT: BXE
CALGARY, Nov. 7, 2013 /CNW/ - Bellatrix Exploration Ltd. ("Bellatrix" or
the "Company") (TSX, NYSE MKT: BXE) announces its financial and
operating results for the three and nine months ended September 30,
2013.
Forward-Looking Statements
This press release, including the report to shareholders, contains
forward-looking statements. Please refer to our cautionary language on
forward-looking statements and the other matters set forth at the
beginning of the management's discussion and analysis (the "MD&A")
attached to this press release.
HIGHLIGHTS
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Three months ended
September 30,
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Nine months ended
September 30,
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2013
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2012
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2013
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2012
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FINANCIAL (unaudited)
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(CDN$000s except share and per share amounts)
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Revenue (before royalties and risk management (1))
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68,329
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48,126
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208,436
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157,031
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Funds flow from operations (2)
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30,002
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26,613
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104,110
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81,173
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Per basic share (5)
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$0.28
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$0.25
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$0.96
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$0.76
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Per diluted share (5)
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$0.25
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$0.23
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$0.89
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$0.70
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Cash flow from operating activities
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25,069
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24,807
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90,207
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77,321
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Per basic share (5)
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$0.23
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$0.23
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$0.84
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$0.72
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Per diluted share (5)
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$0.21
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$0.22
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$0.77
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$0.67
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Net profit (loss)
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29,453
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(615)
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49,480
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18,520
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Per basic share (5)
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$0.27
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($0.01)
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$0.46
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$0.17
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Per diluted share (5)
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$0.25
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($0.01)
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$0.43
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$0.17
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Exploration and development
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42,146
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39,818
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179,778
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132,104
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Corporate
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4,306
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22
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4,988
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166
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Property acquisitions
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3,000
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-
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2,994
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30
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Capital expenditures - cash
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49,452
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39,840
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187,760
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132,300
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Property dispositions - cash
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(54,242)
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(4,325)
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(54,236)
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(6,670)
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Non-cash items
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845
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(1,756)
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324
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(1,612)
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Total capital expenditures - net
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(3,945)
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33,759
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133,848
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124,018
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Long-term debt
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139,295
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104,642
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139,295
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104,642
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Convertible debentures (3)
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47,335
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50,269
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47,335
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50,269
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Adjusted working capital (excess) deficiency (3)
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31,577
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11,308
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31,577
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11,308
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Total net debt (3)
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218,207
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166,219
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218,207
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166,219
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Total assets
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789,827
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627,835
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789,827
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627,835
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Total shareholders' equity
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439,570
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370,235
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439,570
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370,235
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OPERATING
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Three months ended
September 30,
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Nine months ended
September 30,
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2013
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2012
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2013
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2012
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Average daily sales volumes
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Crude oil, condensate and NGLs
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(bbls/d)
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6,188
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5,204
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6,126
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5,713
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Natural gas
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(mcf/d)
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93,982
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61,796
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89,891
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61,654
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Total oil equivalent
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(boe/d)
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21,852
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15,503
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21,108
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15,989
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Average prices
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Light crude oil and condensate
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($/bbl)
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102.71
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84.98
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96.33
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87.74
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NGLs (excluding condensate)
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($/bbl)
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48.65
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28.62
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42.76
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38.90
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Heavy oil
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($/bbl)
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86.25
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63.95
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69.81
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69.17
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Crude oil, condensate and NGLs
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($/bbl)
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78.27
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70.37
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74.60
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74.96
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Crude oil, condensate and NGLs (including risk management (1))
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($/bbl)
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69.86
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70.72
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72.11
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72.83
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Natural gas
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($/mcf)
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2.68
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2.45
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3.34
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2.26
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Natural gas (including risk management (1))
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($/mcf)
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2.90
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3.38
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3.62
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2.96
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Total oil equivalent
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($/boe)
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33.68
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33.38
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35.85
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35.51
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Total oil equivalent (including risk management (1))
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($/boe)
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32.27
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37.22
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36.35
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37.44
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Statistics
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Operating netback (4)
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($/boe)
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19.85
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18.29
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20.64
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19.85
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Operating netback (4) (including risk management (1))
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($/boe)
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18.43
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22.13
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21.13
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21.78
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Transportation
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($/boe)
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0.81
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0.90
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0.82
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0.86
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Production expenses
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($/boe)
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8.98
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7.96
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8.76
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8.66
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General & administrative
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($/boe)
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2.26
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2.38
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1.85
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2.26
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Royalties as a % of sales after transportation
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12%
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19%
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16%
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18%
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COMMON SHARES
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Common shares outstanding
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109,524,598
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107,606,884
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109,524,598
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107,606,884
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Share options outstanding
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9,211,229
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9,499,007
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9,211,229
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9,499,007
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Shares issuable on conversion of convertible debentures (6)
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8,924,824
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9,821,429
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8,924,824
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9,821,429
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Fully diluted common shares outstanding
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127,660,651
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126,927,320
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127,660,651
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126,927,320
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Diluted weighted average shares - net profit (5)
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121,156,386
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107,527,718
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120,230,351
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109,111,492
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Diluted weighted average shares - funds flow from
operations and cash flow from operating activities (2) (5)
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121,156,386
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117,927,891
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120,230,351
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118,932,921
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SHARE TRADING STATISTICS
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TSX and Other (7)
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(CDN$, except volumes) based on intra-day trading
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High
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8.02
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4.26
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8.02
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5.67
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Low
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6.32
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2.95
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4.03
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2.45
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Close
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7.84
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3.99
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7.84
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3.99
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Average daily volume
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972,170
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533,567
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887,172
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723,105
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NYSE MKT (8)
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(US$, except volumes) based on intra-day trading
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High
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7.77
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4.36
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6.60
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4.36
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Low
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6.00
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3.75
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4.10
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3.75
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Close
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7.61
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4.07
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7.61
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4.07
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Average daily volume
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90,869
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23,601
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75,288
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23,601
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(1)
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The Company has entered into various commodity price risk management
contracts which are considered to be economic hedges. Per unit metrics
after risk management include only the realized portion of gains or
losses on commodity contracts.
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The Company does not apply hedge accounting to these contracts. As
such, these contracts are revalued to fair value at the end of each
reporting date. This results in recognition of unrealized gains or
losses over the term of these contracts which is reflected each
reporting period until these contracts are settled, at which time
realized gains or losses are recorded. These unrealized gains or
losses on commodity contracts are not included for purposes of per unit
metrics calculations disclosed.
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(2)
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The highlights section 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 the additional
GAAP measures of 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. The reconciliation between cash flow
from operating activities and funds flow from operations can be found
in the MD&A. Funds flow from operations per share is calculated using
the weighted average number of common shares for the period.
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(3)
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Net debt and total net debt are considered additional GAAP measures.
The Company's calculation of total net debt includes the liability
component of convertible debentures and excludes deferred liabilities,
long-term commodity contract liabilities, decommissioning liabilities,
long-term finance lease obligations and the deferred tax liability.
Net debt and total net debt include the net working capital deficiency
(excess) before short-term commodity contract assets and liabilities
and current finance lease obligations. Net debt also excludes the
liability component of convertible debentures. A reconciliation between
total liabilities under GAAP and total net debt and net debt as
calculated by the Company is found in the MD&A.
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(4)
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Operating netbacks is considered a non-GAAP term. Operating netbacks
are calculated by subtracting royalties, transportation, and operating
costs from revenues before other income.
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(5)
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Basic weighted average shares for the three and nine months ended
September 30, 2013 were 108,252,748 (2012: 107,527,718), and
108,019,795 (2012: 107,479,907), respectively.
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In computing weighted average diluted earnings per share for the three
and nine months ended September 30, 2013, a total of 3,978,815 and
3,285,731 common shares were added to the denominator as a consequence
of applying the treasury stock method to the Company's outstanding
share options and a total of 8,924,824 and 8,924,824 common shares
issuable on conversion of convertible debentures were also added to the
denominator as they were dilutive, resulting in diluted weighted
average common shares of 121,156,387 and 120,230,350, respectively. As
a consequence, a total of $0.8 million and $2.4 million for interest
and accretion expense (net of income tax effect) was added to the
numerator for the three and nine month calculations, respectively.
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In computing weighted average diluted earnings per share for the three
and nine months ended September 30, 2012, a total of nil and 1,631,585
common shares were added to the denominator as a consequence of
applying the treasury stock method to the Company's outstanding share
options and a total of 9,821,429 and 9,821,429 common shares issuable
on conversion of convertible debentures were excluded from the
denominator as they were not dilutive, resulting in diluted weighted
average common shares of 107,527,718 and 109,111,492, respectively.
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In computing weighted average diluted cash flow from operating
activities and funds flow from operations per share for the three and
nine months ended September 30, 2013, a total of 3,978,815 (2012:
578,774) and 3,285,731 (2012: 1,631,585) common shares were added to
the denominator as a consequence of applying the treasury stock method
to the Company's outstanding share options and a total of 8,924,824
(2012: 9,821,429) and 8,924,824 (2012: 9,821,429) common shares
issuable on conversion of convertible debentures were also added to the
denominator as they were dilutive, resulting in diluted weighted
average common shares of 121,156,387 (2012: 117,927,891) and
120,230,350 (2012: 118,932,921), respectively. As a consequence, a
total of $0.8 million (2012: $0.8 million) and $2.4 million (2012: $2.3
million) for interest and accretion expense (net of income tax effect)
was added to the numerator for the three and nine month calculations,
respectively.
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(6)
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Shares issuable on conversion of convertible debentures are calculated
by dividing the remaining $49.979 million principal amount of the
convertible debentures by the conversion price of $5.60 per share.
During the third quarter of 2013, the Company announced a notice of
redemption of its then outstanding $55.0 million 4.75% convertible
debentures, with a redemption date of October 21, 2013. During
September 2013, $5.021 million principal amount of convertible
debentures were converted into an aggregate of 895,605 common shares of
the Company. Subsequent to September 30, 2013, the $49.979 million
principal amount of remaining convertible debentures were converted or
redeemed in exchange for an aggregate of 8,898,243 common shares of the
Company.
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(7)
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TSX and Other includes the trading statistics for the Toronto Stock
Exchange and other Canadian trading markets.
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(8)
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The Company's common shares commenced trading on the NYSE MKT on
September 24, 2012.
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REPORT TO SHAREHOLDERS
Bellatrix posted record earnings of $29.5 million ($0.27 per basic
share) with revenues of $68.3 million and funds flow from operations
of $30 million ($0.28 per basic share) in the third quarter of 2013.
As was the case in 2012, the third quarter of 2013 was also
meaningfully affected by both the protracted spring breakup wet weather
conditions in West Central Alberta and weakness in gas pricing created
by a short term widening of the TransCanada pipeline tariffs. Natural
gas pricing had a significantly negative impact on revenues and cash
flow which the Company was able to partially counterbalance with
commodity hedges. As it concerns the weather, the Company was forced
to acquiesce to the unpredictable wet weather conditions which resulted
in considerable delays in the third quarter drilling program. As a
result, third quarter 2013 sales volumes were relatively flat with the
second quarter averaging 21,852 boe/d (weighted 28% to oil, condensate
and NGLs and 72% to natural gas).
During the third quarter of 2013 and subsequent thereto, the Company has
announced several significant transactions which we believe will grow
shareholder value.
Acquisition of Angle Energy Inc.
On October 15, 2013, the Company announced that it has entered into an
agreement (the "Arrangement Agreement") with Angle Energy Inc.
("Angle") providing for the acquisition by Bellatrix of all the issued
and outstanding Angle common shares pursuant to a plan of arrangement
(the "Transaction") under the Business Corporations Act (Alberta) (the "Arrangement").
Under the terms of the Transaction, Angle shareholders will receive, for
each Angle Share held, at the election of the Angle shareholders: (i)
$3.85 cash; or (ii) 0.4734 of a Bellatrix common share (a "Bellatrix
Share"), subject to the cash amount payable to Angle shareholders
equaling $69.7 million and thus subject to prorating. The aggregate
Transaction value is approximately $576 million based on the volume
weighted average trading price of the Bellatrix Shares for the 10
trading days ending October 11, 2013 of $8.1324 per Bellatrix Share and
the assumption of net debt of Angle of $261.0 million (after taking
into account $16.0 million of Transaction costs and costs related to
termination of outstanding Angle options and vested restricted share
units ("RSUs"), severance costs and premium that may be paid on the
Angle Debentures).
Assuming that no Angle options (of which as of October 18, 2013,
1,857,612 are in-the-money based on the cash offer of $3.85) are
exercised for Angle Shares and 902,179 restricted share units are
exercised for Angle Shares, Bellatrix will issue an aggregate
30,226,413 Bellatrix Shares pursuant to the Arrangement.
Pursuant to the Arrangement, if approved by holders of the outstanding
5.75% convertible unsecured subordinated debentures of Angle with a
maturity date of January 31, 2016 (the "Angle Debentures"), holders of
the Angle Debentures will receive, for each $1,000 principal amount of
the Angle Debentures, an amount equal to $1,040 per Angle Debenture,
plus accrued and unpaid interest to the day immediately prior to the
effective date of the Arrangement.
A joint management information circular and proxy statement outlining
the details of the Arrangement and the Transaction will be mailed to
the holders of Angle Shares, Angle Debentures and Bellatrix Shares in
mid-November for meetings to be held on December 10, 2013 where holders
of Angle Shares, Angle Debentures and Bellatrix Shareholders will vote
on the Arrangement and related matters. Closing of the Transaction is
expected to occur in mid-December, 2013.
Bought Deal Financing
On November 5, 2013, Bellatrix closed a bought deal financing of
21,875,000 Bellatrix Shares at a price of $8.00 per Bellatrix Share for
aggregate gross proceeds of $175.0 million through a syndicate of
underwriters (the "Offering"). Bellatrix has granted to the
underwriters an option (the "Over-Allotment Option"), exercisable in
whole or in part at any time until 30 days following the closing of the
Offering, to purchase up to an additional 3,281,250 Bellatrix Shares at
a price of $8.00 per Bellatrix Share for additional gross proceeds of
up to $26.25 million on the same terms and conditions of the Offering.
Proceeds of the Offering were initially to be used to temporarily repay
a portion of the indebtedness of Bellatrix under its credit facilities
and are now available to be redrawn to fund the cash portion of the
purchase price for the acquisition of the Angle Shares and the
acquisition of the Angle Debentures pursuant to the Transaction, and a
portion of Bellatrix's obligations under the Troika Joint Venture.
After the Angle Acquisition and after giving effect to the Offering
(prior to exercise of the Over-Allotment Option) and the issuance of
Bellatrix Shares upon the redemption or conversion of Bellatrix's 4.75%
Convertible Unsecured Subordinated Debentures due April 30, 2015 to
fully satisfy the principal amount and interest on such debentures,
Bellatrix will have 170,534,257 Bellatrix Shares outstanding.
Troika Joint Venture
On October 15, 2013, the Company announced it has entered into a $240
million joint venture partnership (the "Troika Joint Venture") with TCA
Energy Ltd. ("TCA"). TCA is a Canadian incorporated special purpose
vehicle for Troika Resources Private Equity Fund which is based in
Seoul Korea and managed by KDB Bank, SK Energy and Samchully AMC.
Pursuant to the agreement forming the Troika Joint Venture, Bellatrix
and TCA will drill and develop lands in the Ferrier Cardium area of
West Central Alberta, with the program to be completed by December 31,
2014. TCA will contribute $120 million, representing a 50% share,
towards the capital program for the drilling of an expected 63 gross
wells, and in exchange, will receive 35% of Bellatrix's working
interest until payout (being recovery of TCA's capital investment plus
a 15% internal rate of return) on the total program, and thereafter
reverting to 25% of Bellatrix's working interest. As part of this
agreement, TCA will be participating in 14 gross wells (as included in
the total expected 63 gross well program) for wells that have been
drilled since January 1, 2013, resulting in estimated net proceeds of
$16.7 million to be received by Bellatrix upon closing.
Certain conditions precedent to closing, including Korean governmental
regulatory approvals, are expected to be satisfied or waived to enable
closing to occur on or before November 15, 2013.
Grafton Joint Venture
On September 10, 2013, the Company announced that Grafton Energy Co I
Ltd. ("Grafton"), has elected to exercise an option to increase its
committed capital investment by an additional $100 million on the same
terms and conditions as the previously announced Joint Venture on June
27, 2013 (the "Grafton Joint Venture") to accelerate development on a
portion of Bellatrix's extensive undeveloped land holdings.
The Grafton Joint Venture is in Willesden Green and Brazeau areas of
West-Central Alberta. Under the terms of the amended agreement, Grafton
will contribute 82%, or $200 million, to the $244 million Grafton Joint
Venture to participate in an expected 58 Notikewin/Falher and Cardium
well program. Under the agreement, Grafton will earn 54% of Bellatrix's
working interest in each well drilled in the well program until payout
(being recovery of Grafton's capital investment plus an 8% internal
rate of return) on the total program, reverting to 33% of Bellatrix's
working interest ("WI") after payout. At any time after payout of the
entire program, Grafton shall have the option to elect to convert all
wells from the 33% WI to a 17.5% Gross Overriding Royalty ("GORR") on
Bellatrix's pre-Grafton Joint Venture working interest. Grafton also
has an additional one-time option within 12 months of the effective
date to increase its exposure by an additional $50 million on the same
terms and conditions. The effective date of the agreement is July 1,
2013 and has a term of 2 years. If the $50 million option is
exercised, Bellatrix shall have until the end of the third anniversary
of the effective date to spend the additional capital.
Baptiste Asset Sale and Joint Venture
On September 3, 2013 the Company announced the closing of the previously
announced asset sale (the "Asset Sale") and joint venture (the "Daewoo
and Devonian Joint Venture") with two Korean entities, Daewoo
International Corporation ("Daewoo") and Devonian Natural Resources
Private Equity Fund ("Devonian"). Under the terms of the associated
agreements, Bellatrix sold, effective July 1, 2013, to Daewoo and
Devonian an aggregate 50% of the Company's working interest share of
its producing assets, an operated compressor station and gathering
system and related land acreage in the Baptiste area of West Central
Alberta (the "Sold Assets") for gross consideration of $52.5 million,
subject to closing adjustments. The Sold Assets were producing
approximately 268 boe/d (67% gas and 33% oil and liquids) net to the
Sold Assets and included 3,858 net acres of Cardium rights and 1,119
net acres of Mannville rights.
The Daewoo and Devonian Joint Venture which was effective as of July 1,
2013 encompasses a multiyear commitment to jointly develop the
aforementioned acreage in Ferrier and Willesden Green of West Central
Alberta encompassing 70 gross wells with anticipated total capital
expenditures to the Daewoo and Devonian Joint Venture of approximately
$200 million.
Redemption of Convertible Debenture
During Q3 2013, the Company announced a notice of redemption of its then
outstanding $55.0 million 4.75% convertible debentures, with a
redemption date of October 21, 2013. During September 2013, $5.021
million principal amount of convertible debentures were converted into
an aggregate of 895,605 common shares of the Company. Subsequent to
September 30, 2013, the $49.979 million principal amount of remaining
convertible debentures were converted or redeemed in exchange for an
aggregate of 8,898,243 common shares of the Company.
Operational highlights for the three and nine months ended September 30,
2013 include:
-
During the first nine months of 2013, Bellatrix posted a 100% success
rate drilling and/or participating in 45 gross (30.66 net) wells,
resulting in 33 gross (24.98 net) Cardium oil wells, and 12 gross (5.68
net) Notikewin/Falher liquids-rich gas wells. During the third quarter
of 2013, Bellatrix drilled or participated in 10 gross (5.01 net)
Cardium oil wells and 9 gross (3.58 net) Notikewin/Falher liquids-rich
gas wells for a total of 19 gross (8.59 net) wells.
-
Sales volumes in Q3 2013 averaged 21,852 boe/d (weighted 28% to oil,
condensate and NGLs and 72% to natural gas). This represents a 41%
increase from sales volumes of 15,503 boe/d realized in the third
quarter of 2012, and a 1% decrease from second quarter 2013 average
sales volumes of 22,102 boe/d.
-
During the third quarter Bellatrix drilled its second 2 mile horizontal
well in the Spirit River interval, in the Alder Flats area of West
Central Alberta. Field estimates of production during the first 25
days averaged 15.9 mmcf/d of natural gas with 571 bbl/d of natural gas
liquids.
-
As at September 30, 2013, Bellatrix had approximately 202,536 net
undeveloped acres of land in Alberta, British Columbia and
Saskatchewan.
-
In early July, the Company commissioned a 3,400 HP compressor expansion
at Bellatrix's 2-10-45-11W5M compressor station. During the third
quarter the Company initiated construction of a new 7,000 HP Compressor
Station at 13-5-45-9W5M to feedstock local third party operated Gas
Processing Plants. system startup is scheduled for early December
2013. Bellatrix has placed orders for 14 new compressors totaling
23,520 HP to facilitate delivery of our forecasted gas production with
deliveries anticipated in Q4 2013 and Q1 2014. Additionally, the
Company installed approximately 2,500 m of 6" and 8" gathering lines.
Financial highlights for the three and nine months ended September 30,
2013 include:
-
The net profit for Q3 2013 was $29.5 million after unrealized gains
(losses) on commodity contracts, gains (losses) on property
dispositions and swaps, and the gain on settlement of convertible
debentures, net of associated deferred tax impacts, compared to a net
loss of $0.6 million in Q3 2012. The net profit for the first nine
months of 2013 was $49.5 million after unrealized gains (losses) on
commodity contracts, gains (losses) on property dispositions and swaps,
and the gain on settlement of convertible debentures, net of associated
deferred tax impacts, compared to $18.5 million in the 2012 period.
-
Q3 2013 revenue before royalties and risk management contracts was $68.3
million, 42% higher than the $48.1 million recorded in Q3 2012. The
increase in revenues between the periods was primarily due to increased
natural gas and NGL sales volumes, and higher realized prices for all
commodities between the periods, partially offset by reduced crude oil
and condensate sales volumes experienced in the third quarter of 2013.
Revenue for the first nine months of 2013 was $208.4 million, up 33%
from $157.0 million in the same period in 2012.
-
Funds flow from operations for Q3 2013 was $30.0 million ($0.28 per
basic share), down 18% from $36.6 million in Q2 2013, and up 13% from
$26.6 million ($0.25 per basic share) in Q3 2012. The decrease in
funds flow from operations between the second and third quarters of
2013 was due primarily to reduced natural gas prices impacting revenues
and netbacks, a higher net realized loss on commodity contracts,
increased general and administrative expenses, and increased
transportation costs for natural gas, partially offset by the impact of
higher crude oil and NGL commodity prices. The increase in funds flow
from operations between the three months ended September 30, 2013 and
the same period in 2012 was principally due higher overall funds from
operating netbacks, partially offset by a net loss on realized
commodity contracts in the 2013 three month period compared a gain
realized in the same period in 2012, higher general and administrative
expenses, and increased financing expenses. Funds flow from operations
for the first nine months of 2013 was $104.1 million ($0.96 per basic
share), up 28% from $81.2 million ($0.76 per basic share) in the same period in 2012.
-
Crude oil, condensate and NGLs produced 66% and 60% of petroleum and natural gas sales revenue for the three and
nine month periods ended September 30, 2013, respectively.
-
Production expenses for Q3 2013 were $8.98/boe ($18.1 million), compared
to $7.96/boe ($11.4 million) for Q3 2012 and $8.64/boe ($17.4 million)
for Q2 2013. The quarter over quarter increases in production expenses
per boe were primarily due to additional fuel and power costs for
compression, increases in gathering and processing fees in certain
areas as well as increased property taxes due to new infrastructure.
Production expenses for the nine months ended September 30, 2013 were
$8.76/boe ($50.5 million), compared to $8.66/boe ($37.9 million) for
the same period in 2012.
-
Operating netbacks after including risk management for the nine months
ended September 30, 2013 were $21.13/boe, down from $21.78/boe in the
same period in 2012. Operating netbacks before risk management for the
nine months ended September 30, 2013 were $20.64/boe, compared with
$19.85/boe in the same period in 2012. The netback remained consistent
between the periods as a result of higher commodity prices and reduced
royalties and transportation expenses, which were partially offset by
increased production expenses.
-
Operating netbacks after including risk management for Q3 2013 were
$18.43/boe, down from $22.13/boe in Q3 2012. Operating netbacks before
risk management for Q3 2013 were $19.85/boe, up from $18.29/boe in Q3
2012. The reduced netback including risk management was primarily the
result of lower natural gas prices, higher production expenses and
slightly increased royalty expenses, offset partially by higher liquids
prices and lower transportation expenses.
-
Bellatrix spent $49.5 million and $187.8 million on capital projects
during the three and nine months ended September 30, 2013, compared to
$39.8 million and $132.3 million during the same periods in 2012,
respectively.
-
G&A expenses for Q3 2013 decreased on a per boe basis to $2.26/boe ($4.6
million), compared to $2.38/boe ($3.4 million) for Q3 2012. G&A
expenses for the nine months ended September 30, 2013 were $1.85/boe
($10.6 million), compared to $2.26/boe ($9.9 million) in the same
period in 2012.
-
As at September 30, 2013, Bellatrix had $115.7 million undrawn on its
total $255 million credit facility.
-
Total net debt as of September 30, 2013 was $218.2 million, including
the liability component of convertible debentures.
COMMODITY PRICE RISK MANAGEMENT
As of November 6, 2013, the Company has entered into the following
commodity price risk management arrangements:
|
|
|
|
|
|
Type
|
Period
|
Volume
|
Price Floor
|
Price Ceiling
|
Index
|
Crude oil fixed
|
January 1, 2013 to Dec. 31, 2013
|
1,500 bbl/d
|
$ 94.50 CDN
|
$ 94.50 CDN
|
WTI
|
Crude oil fixed
|
July 1, 2013 to Dec. 31, 2013
|
1,500 bbl/d
|
$ 96.87 CDN
|
$ 96.87 CDN
|
WTI
|
Crude oil fixed
|
August 1, 2013 to Dec. 31, 2013
|
1,000 bbl/d
|
$ 106.02 CDN
|
$ 106.02 CDN
|
WTI
|
Crude oil fixed
|
January 1, 2014 to Dec. 31, 2014
|
1,500 bbl/d
|
$ 94.00 CDN
|
$ 94.00 CDN
|
WTI
|
Crude oil fixed
|
January 1, 2014 to Dec. 31, 2014
|
1,500 bbl/d
|
$ 95.22 CDN
|
$ 95.22 CDN
|
WTI
|
Crude oil call option
|
January 1, 2014 to Dec. 31, 2014
|
3,000 bbl/d
|
-
|
$ 105.00 US
|
WTI
|
Natural gas fixed
|
April 1, 2013 to Oct. 31, 2013
|
20,000 GJ/d
|
$ 3.05 CDN
|
$ 3.05 CDN
|
AECO
|
Natural gas fixed
|
April 1, 2013 to Oct. 31, 2013
|
10,000 GJ/d
|
$ 3.095 CDN
|
$ 3.095 CDN
|
AECO
|
Natural gas fixed
|
Feb. 1, 2013 to Dec. 31, 2013
|
10,000 GJ/d
|
$ 3.05 CDN
|
$ 3.05 CDN
|
AECO
|
Natural gas fixed
|
April 1, 2013 to June 30, 2014
|
15,000 GJ/d
|
$ 3.05 CDN
|
$ 3.05 CDN
|
AECO
|
CORPORATE EVENTS
On October 3, 2013, Raymond Smith, President and CEO, rang the closing
bell at the New York Stock Exchange, which marked the first year
anniversary of Bellatrix's listing on the NYSE MKT exchange.
On September 3, 2013, Bellatrix completed the move to its new corporate
offices located at Suite 1920, 800 - 5th Avenue SW, Calgary, Alberta, T2P 3T6.
OUTLOOK
To date, 2013 has been an extraordinary year earmarked by significant
production growth, announcing three separate joint ventures designed to
accelerate our program on a promoted basis, an equity financing and a
potential impactful corporate acquisition expected to close (subject to
obtaining shareholder approval) prior to mid-December. These strategic
transactions strengthen the Company by accelerating our ability to
provide shareholder value accretion.
For the remainder of 2013 and all of 2014, Bellatrix will continue to be
active in drilling with 10 rigs operating in its two core resource
plays, the Cardium oil and Mannville condensate rich gas, utilizing
horizontal drilling multi-fracturing technology. Assuming closing of
the Angle acquisition in December 2013, an initial 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
to 45,000 boe/d and an exit rate of approximately 47,000 boe/d to
48,000 boe/d.
Raymond G. Smith, P. Eng.
President and CEO
November 6, 2013
MANAGEMENT'S DISCUSSION AND ANALYSIS
November 6, 2013 - The following Management's Discussion and Analysis of
financial results ("MD&A") as provided by the management of Bellatrix
Exploration Ltd. ("Bellatrix" or the "Company") should be read in
conjunction with the unaudited interim consolidated financial
statements of the Company for the three and nine months ended September
30, 2013, and the audited consolidated financial statements of the
Company for the years ended December 31, 2012 and 2011, and the related
Management's Discussion and Analysis of financial results as disclosure
which is unchanged from such Management's Discussion and Analysis may
not be repeated herein. This commentary is based on information
available to, and is dated as of, November 6, 2013. The financial data
presented is in Canadian dollars, except where indicated otherwise.
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 in this report are derived from converting gas to
oil in the ratio of six thousand cubic feet of gas to one barrel of
oil.
INITIAL PRODUCTION RATES: Initial production rates disclosed herein may
not necessarily be indicative of long-term performance or ultimate
recovery.
ADDITIONAL GAAP MEASURES: This Management's Discussion and Analysis and
the accompanying report to shareholders and financial statements
contain 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.
The reconciliation between cash flow from operating activities and
funds flow from operations can be found in this Management's Discussion
and Analysis. Funds flow from operations per share is calculated using
the weighted average number of shares for the period.
This Management's Discussion and Analysis and the accompanying report to
shareholders and financial statements also contain the terms total net
debt and net debt. Total net debt is calculated as long-term debt plus
the liability component of the convertible debentures and 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.
NON-GAAP MEASURES: This Management's Discussion and Analysis and the
accompanying report to shareholders also contains the term of operating
netbacks, which is not a recognized measure under GAAP. Operating
netbacks are calculated by subtracting royalties, transportation, and
operating expenses from revenues before other income. Management
believes this measure is a useful supplemental measure of the amount of
revenues received after transportation, royalties and operating
expenses. Readers are cautioned, however, that this measure should not
be construed as an alternative to net income determined in accordance
with GAAP as a measure of performance. Bellatrix's method of
calculating this measure may differ from other entities, and
accordingly, may not be comparable to measures used by other companies.
Additional information relating to the Company, including the
Bellatrix's Annual Information Form, is available on SEDAR at www.sedar.com.
FORWARD LOOKING STATEMENTS: Certain information contained herein and in
the accompanying report to shareholders may contain forward looking
statements including management's assessment of future plans and
operations, drilling plans and the timing thereof, commodity price risk
management strategies, 2013 capital expenditure budget, the nature of
expenditures and the method of financing thereof, anticipated liquidity
of the Company and various matters that may impact such liquidity,
expected 2013 operating expenses and general and administrative
expenses, expected costs to satisfy drilling commitments and method of
funding drilling commitments, commodity prices and expected volatility
thereof, estimated amount and timing of incurring decommissioning
liabilities, the Company's drilling inventory and capital required
therefor, timing of closing of a joint venture agreement and the
expected number of wells to be drilled under joint venture agreements
and the timing and effects thereof, use of proceeds to be received on
closing of joint venture, timing of closing of equity offering and use
of proceeds therefrom, timing and anticipated closing of the
arrangement to acquire the issued and outstanding common shares of
Angle Energy Inc. and related matters, estimated capital expenditures
under a joint venture agreement, 2013 capital expenditures, the method
of funding thereof and the nature of the expenditures, the ability to
fund the 2013 capital expenditure program utilizing various available
sources of capital, expected 2013 average daily production and exit
rate, plans to continue commodity risk management strategies and timing
of redetermination of borrowing base, timing of delivery of new
equipment, 2014 capital expenditure budget and the nature of capital
expenditures and the timing and method of financing thereof, and
expected 2014 average production and exit rates may constitute
forward-looking statements under applicable securities laws.
Forward-looking statements necessarily involve risks. Closing of the
equity offering could be delayed if Bellatrix is unable to obtain
necessary regulatory and stock exchange approvals on the timeline
planned and, the offering will not be completed if all of the approvals
are not completed within the anticipated time or at all. The planned
use of the net proceeds from the offering might change if determined by
the board of directors to be in the best interest of Bellatrix to
deploy the proceeds for some other use. Closing of the joint venture
agreement could be delayed if the joint venture partner is not able to
obtain the necessary governmental approvals for closing thereof and may
not be completed at all if these approvals are not obtained. Closing
of the arrangement to acquire Angle Energy Inc. could be delayed if the
parties are not able to obtain the necessary shareholder and regulatory
approvals required for completion thereof or some other condition of
closing is not satisfied. Other risks related to the forward-looking
statements include, without limitation, risks associated with oil and
gas exploration, development, exploitation, production, marketing and
transportation, loss of markets, volatility of commodity prices,
currency fluctuations, risks related to satisfaction of conditions
precedent to closing of pending asset sale and joint venture agreement,
imprecision of reserve estimates, environmental risks, competition from
other producers, inability to retain drilling rigs and other services,
incorrect assessment of the value of acquisitions, failure to realize
the anticipated benefits of acquisitions, delays resulting from or
inability to obtain required regulatory approvals and ability to access
sufficient capital from internal and external sources. Events or
circumstances may cause actual results to differ materially from those
predicted, as a result of the risk factors set out and other known and
unknown risks, uncertainties, and other factors, many of which are
beyond the control of Bellatrix. In addition, forward-looking
statements or information are based on a number of factors and
assumptions which have been used to develop such statements and
information but which may prove to be incorrect and which have been
used to develop such statements and information in order to provide
shareholders with a more complete perspective on Bellatrix's future
operations. Such information may prove to be incorrect and readers are
cautioned that the information may not be appropriate for other
purposes. Although the Company believes that the expectations
reflected in such forward-looking statements or information are
reasonable, undue reliance should not be placed on forward-looking
statements because the Company can give no assurance that such
expectations will prove to be correct. In addition to other factors
and assumptions which may be identified herein, assumptions have been
made regarding, among other things: the impact of increasing
competition; the general stability of the economic and political
environment in which the Company operates; the timely receipt of any
required regulatory approvals; the ability of the Company to obtain
qualified staff, equipment and services in a timely and cost efficient
manner; drilling results; the ability of the operator of the projects
which the Company has an interest in to operate the field in a safe,
efficient and effective manner; the ability of the Company to obtain
financing on acceptable terms; field production rates and decline
rates; the ability to replace and expand oil and natural gas reserves
through acquisition, development of exploration; the timing and costs
of pipeline, storage and facility construction and expansion and the
ability of the Company to secure adequate product transportation;
future commodity prices; currency, exchange and interest rates; the
regulatory framework regarding royalties, taxes and environmental
matters in the jurisdictions in which the Company operates; and the
ability of the Company to successfully market its oil and natural gas
products. Readers are cautioned that the foregoing list is not
exhaustive of all factors and assumptions which have been used. As a
consequence, actual results may differ materially from those
anticipated in the forward-looking statements. Additional information
on these and other factors that could effect Bellatrix's operations and
financial results are included in reports on file with Canadian and US
securities regulatory authorities and may be accessed through the SEDAR
website (www.sedar.com), through the SEC website (www.sec.gov, and at Bellatrix's website www.bellatrixexploration.com). Furthermore, the forward-looking statements contained herein are
made as at the date hereof 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 required by applicable
securities laws.
The reader is further cautioned that the preparation of financial
statements in accordance with GAAP requires management to make certain
judgments and estimates that affect the reported amounts of assets,
liabilities, revenues and expenses. Estimating reserves is also
critical to several accounting estimates and requires judgments and
decisions based upon available geological, geophysical, engineering and
economic data. These estimates may change, having either a negative or
positive effect on net earnings as further information becomes
available, and as the economic environment changes.
Overview and Description of the Business
Bellatrix Exploration Ltd. ("Bellatrix" or the "Company") 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.
Bellatrix's common shares and convertible debentures are listed on the
Toronto Stock Exchange under the symbols BXE and BXE.DB.A,
respectively, and the common shares of Bellatrix trade on the NYSE MKT
under the symbol BXE.
Recent Transactions
Acquisition of Angle Energy Inc.
On October 15, 2013, the Company announced that it has entered into an
agreement (the "Arrangement Agreement") with Angle Energy Inc.
("Angle") providing for the acquisition by Bellatrix of all the issued
and outstanding Angle common shares pursuant to a plan of arrangement
(the "Transaction") under the Business Corporations Act (Alberta) (the "Arrangement").
Under the terms of the Transaction, Angle shareholders will receive, for
each Angle Share held, at the election of the Angle shareholders: (i)
$3.85 cash; or (ii) 0.4734 of a Bellatrix common share (a "Bellatrix
Share"), subject to the cash amount payable to Angle shareholders
equaling $69.7 million and thus subject to prorating. The aggregate
Transaction value is approximately $576 million based on the volume
weighted average trading price of the Bellatrix Shares for the 10
trading days ending October 11, 2013 of $8.1324 per Bellatrix Share and
the assumption of net debt of Angle of $261.0 million (after taking
into account $16.0 million of Transaction costs and costs related to
termination of outstanding Angle options and vested restricted share
units ("RSUs"), severance costs and premium that may be paid on the
Angle Debentures).
Assuming that no Angle options (of which as of October 18, 2013,
1,857,612 are in-the-money based on the cash offer of $3.85) are
exercised for Angle Shares and 902,179 restricted share units are
exercised for Angle Shares, Bellatrix will issue an aggregate
30,226,413 Bellatrix Shares pursuant to the Arrangement.
Pursuant to the Arrangement, if approved by holders of the outstanding
5.75% convertible unsecured subordinated debentures of Angle with a
maturity date of January 31, 2016 (the "Angle Debentures"), holders of
the Angle Debentures will receive, for each $1,000 principal amount of
the Angle Debentures, an amount equal to $1,040 per Angle Debenture,
plus accrued and unpaid interest to the day immediately prior to the
effective date of the Arrangement.
All directors and officers of Angle, representing 8.3% of the issued and
outstanding Angle Shares, have entered into support agreements with
Bellatrix pursuant to which they have agreed to vote their Angle Shares
and Angle Debentures, as applicable, in favour of the Transaction.
The board of directors of Bellatrix has approved the Transaction and
recommended that shareholders of Bellatrix vote in favour of the
issuance of the Bellatrix Shares pursuant to the Transaction. All of
the directors and officers of Bellatrix, representing 2.2% of the
issued and outstanding Bellatrix Shares have entered into agreements
with Angle pursuant to which they have agreed to vote their Bellatrix
Shares in favour of the Transaction.
The Arrangement Agreement provides that the completion of the
Transaction is subject to certain conditions, including the receipt of
all required regulatory approvals, including the approval of the TSX
and the NYSE MKT stock exchange, the approval of the shareholders of
Bellatrix, the approval of holders of Angle Shares including, if
applicable, the approval of disinterested shareholders, and the
approval of the Court of Queen's Bench of Alberta.
A joint management information circular and proxy statement outlining
the details of the Arrangement and the Transaction will be mailed to
the holders of Angle Shares, Angle Debentures and Bellatrix Shares in
mid-November for meetings to be held in mid-December, 2013 where
holders of Angle Shares, Angle Debentures and Bellatrix Shareholders
will vote on the Arrangement and related matters. Closing of the
Transaction is expected to occur in mid-December, 2013.
Bought Deal Financing
On November 5, 2013, Bellatrix closed a bought deal financing of
21,875,000 Bellatrix Shares at a price of $8.00 per Bellatrix Share for
aggregate gross proceeds of $175.0 million through a syndicate of
underwriters (the "Offering"). Bellatrix has granted to the
underwriters an option (the "Over-Allotment Option"), exercisable in
whole or in part at any time until 30 days following the closing of the
Offering, to purchase up to an additional 3,281,250 Bellatrix Shares at
a price of $8.00 per Bellatrix Share for additional gross proceeds of
up to $26.25 million on the same terms and conditions of the Offering.
Proceeds of the Offering were initially to be used to temporarily repay
a portion of the indebtedness of Bellatrix under its credit facilities
and are now available to be redrawn to fund the cash portion of the
purchase price for the acquisition of the Angle Shares and the
acquisition of the Angle Debentures pursuant to the Transaction, and a
portion of Bellatrix's obligations under the Troika Joint Venture
described below.
After the Angle Acquisition and after giving effect to the Offering
(prior to exercise of the Over-Allotment Option) and the issuance of
Bellatrix Shares upon the redemption or conversion of Bellatrix's 4.75%
Convertible Unsecured Subordinated Debentures due April 30, 2015 to
fully satisfy the principal amount and interest on such debentures,
Bellatrix will have 170,534,257 Bellatrix Shares outstanding.
Troika Joint Venture
On October 15, 2013, the Company announced it has entered into a $240
million joint venture partnership (the "Troika Joint Venture") with TCA
Energy Ltd. ("TCA"). TCA is a Canadian incorporated special purpose
vehicle for Troika Resources Private Equity Fund which is based in
Seoul Korea and managed by KDB Bank, SK Energy and Samchully AMC.
Pursuant to the agreement forming the Troika Joint Venture, Bellatrix
and TCA will drill and develop lands in the Ferrier Cardium area of
West Central Alberta, with the program to be completed by December 31,
2014. TCA will contribute $120 million, representing a 50% share,
towards the capital program for the drilling of an expected 63 gross
wells, and in exchange, will receive 35% of Bellatrix's working
interest until payout (being recovery of TCA's capital investment plus
a 15% internal rate of return) on the total program, and thereafter
reverting to 25% of Bellatrix's working interest. As part of this
agreement, TCA will be participating in 14 gross wells (as included in
the total expected 63 gross well program) for wells that have been
drilled since January 1, 2013, resulting in estimated net proceeds of
$16.7 million to be received by Bellatrix upon closing.
Certain conditions precedent to closing, including Korean governmental
regulatory approvals, are expected to be satisfied or waived to enable
closing to occur on or before November 15, 2013.
Grafton Joint Venture
On September 10, 2013, the Company announced that Grafton Energy Co I
Ltd. ("Grafton"), has elected to exercise an option to increase its
committed capital investment by an additional $100 million on the same
terms and conditions as the previously announced Joint Venture on June
27, 2013 (the "Grafton Joint Venture") to accelerate development on a
portion of Bellatrix's extensive undeveloped land holdings.
The Grafton Joint Venture is in Willesden Green and Brazeau areas of
West-Central Alberta. Under the terms of the amended agreement, Grafton
will contribute 82%, or $200 million, to the $244 million Grafton Joint
Venture to participate in an expected 58 Notikewin/Falher and Cardium
well program. Under the agreement, Grafton will earn 54% of Bellatrix's
working interest in each well drilled in the well program until payout
(being recovery of Grafton's capital investment plus an 8% return) on
the total program, reverting to 33% of Bellatrix's working interest
("WI") after payout. At any time after payout of the entire program,
Grafton shall have the option to elect to convert all wells from the
33% WI to a 17.5% Gross Overriding Royalty ("GORR") on Bellatrix's
pre-Grafton Joint Venture working interest. Grafton also has an
additional one-time option within 12 months of the effective date to
increase its exposure by an additional $50 million on the same terms
and conditions. The effective date of the agreement is July 1, 2013 and
has a term of 2 years. If the $50 million option is exercised,
Bellatrix shall have until the end of the third anniversary of the
effective date to spend the additional capital.
Baptiste Asset Sale and Joint Venture
On September 3, 2013 the Company announced the closing of the previously
announced asset sale (the "Asset Sale") and joint venture (the "Daewoo
and Devonian Joint Venture") with two Korean entities, Daewoo
International Corporation ("Daewoo") and Devonian Natural Resources
Private Equity Fund ("Devonian"). Under the terms of the associated
agreements, Bellatrix sold, effective July 1, 2013, to Daewoo and
Devonian an aggregate 50% of the Company's working interest share of
its producing assets, an operated compressor station and gathering
system and related land acreage in the Baptiste area of West Central
Alberta (the "Sold Assets") for gross consideration of $52.5 million,
subject to closing adjustments. The Sold Assets were producing
approximately 268 boe/d (67% gas and 33% oil and liquids) net to the
Sold Assets and included 3,858 net acres of Cardium rights and 1,119
net acres of Mannville rights.
The Daewoo and Devonian Joint Venture which was effective as of July 1,
2013 encompasses a multiyear commitment to jointly develop the
aforementioned acreage in Ferrier and Willesden Green of West Central
Alberta encompassing 70 gross wells with anticipated total capital
expenditures to the Daewoo and Devonian Joint Venture of approximately
$200 million.
Redemption of Convertible Debenture
During the third quarter of 2013, the Company announced a notice of
redemption of its then outstanding $55.0 million 4.75% convertible
debentures, with a redemption date of October 21, 2013. During
September 2013, $5.021 million principal amount of convertible
debentures were converted into an aggregate of 895,605 common shares of
the Company. Subsequent to September 30, 2013, the $49.979 million
principal amount of remaining convertible debentures were converted or
redeemed in exchange for an aggregate of 8,898,243 common shares of the
Company.
Third Quarter 2013 Financial and Operational Results
Sales Volumes
Sales volumes for the three months ended September 30, 2013 averaged
21,852 boe/d compared to 15,503 boe/d for the same period in 2012,
representing a 41% increase. Total crude oil, condensate and NGLs
averaged approximately 28% of sales volumes for the three months ended
September 30, 2013, compared to 34% of sales volumes in the same period
in 2012. Sales volumes for the nine months ended September 30, 2013
averaged 21,108 boe/d, compared to 15,989 boe/d for the same period in
2012, representing a 32% increase. The increase in sales was primarily
a result of a year over year increased capital program and the
associated drilling success achieved in the Cardium and Notikewin
resource plays. Capital expenditures for the nine months ended
September 30, 2013 were $187.8 million, compared to $132.3 million for
the same period in 2012.
Sales Volumes
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|
|
2013
|
2012
|
2013
|
2012
|
Light oil and condensate
|
(bbls/d)
|
3,254
|
3,672
|
3,540
|
4,025
|
NGLs (excluding condensate)
|
(bbls/d)
|
2,739
|
1,240
|
2,387
|
1,377
|
Heavy oil
|
(bbls/d)
|
195
|
292
|
199
|
311
|
Total crude oil, condensate and NGLs
|
(bbls/d)
|
6,188
|
5,204
|
6,126
|
5,713
|
|
|
|
|
|
|
Natural gas
|
(mcf/d)
|
93,982
|
61,796
|
89,891
|
61,654
|
|
|
|
|
|
|
Total boe/d
|
(6:1)
|
21,852
|
15,503
|
21,108
|
15,989
|
In the first nine months of 2013, Bellatrix posted a 100% success rate
drilling and/or participating in 45 gross (30.66 net) wells, resulting
in 33 gross (24.98 net) Cardium oil wells, and 12 gross (5.68 net)
Notikewin/Falher liquids-rich gas wells. During the third quarter of
2013, Bellatrix drilled or participated in 10 gross (5.01 net) Cardium
oil wells and 9 gross (3.58 net) Notikewin/Falher liquids-rich gas
wells for a total of 19 gross (8.59 net) wells.
By comparison, Bellatrix drilled or participated in 24 gross (20.15 net)
wells during the first nine months of 2012, which included 18 gross
(15.15 net) Cardium light oil horizontal wells, 2 gross (2.0 net)
Cardium condensate-rich natural gas wells, 1 gross (1.0 net) Duvernay
natural gas horizontal well, and 3 gross (2.0 net) Notikewin/Falher
natural gas horizontal wells.
For the three months ended September 30, 2013, crude oil, condensate and
NGL sales volumes increased by approximately 19%, averaging 6,188 bbl/d
compared to 5,204 bbl/d in the third quarter of 2012. For the nine
months ended September 30, 2013, crude oil, condensate and NGL sales
volumes increased by approximately 7%, averaging 6,126 bbl/d compared
to 5,713 bbl/d in the same period in 2012.
Sales of natural gas averaged 94.0 Mmcf/d for the three months ended
September 30, 2013, compared to 61.8 Mmcf/d in the same period in 2012,
an increase of approximately 52%. For the nine months ended September
30, 2013, sales of natural gas averaged 89.9 Mmcf/d, an increase of
approximately 46% from average sales volumes of 61.7 Mmcf/d realized in
the comparative 2012 period. The weighting towards crude oil,
condensate and NGLs for the three and nine months ended September 30,
2013 was 28% and 29%, compared to 34% and 36% for the same periods in
2012, respectively. The reduction in liquids weighting between the
periods was a result of bringing on several other high-productivity
natural gas wells throughout the 2012 year and first nine months of
2013.
For the remainder of 2013 and all of 2014, Bellatrix will continue to be
active in drilling with 10 rigs operating in its two core resource
plays, the Cardium oil and Mannville condensate rich gas, utilizing
horizontal drilling multi-fracturing technology. Assuming closing of
the Angle acquisition in December 2013, an initial net capital budget
of $370 million has been set for fiscal 2014. Based on the timing of
proposed expenditures, downtime for anticipated plant turnarounds and
normal production declines, execution of the 2014 budget is anticipated
to provide 2014 average daily production of approximately 44,000 boe/d
to 45,000 boe/d and an exit rate of approximately 47,000 boe/d to
48,000 boe/d.
Commodity Prices
Average Commodity Prices
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|
2013
|
2012
|
% Change
|
2013
|
2012
|
% Change
|
|
|
|
|
|
|
|
Exchange rate (US$/CDN$)
|
0.9629
|
1.0053
|
(4)
|
0.9773
|
0.9981
|
(2)
|
|
|
|
|
|
|
|
Crude oil:
|
|
|
|
|
|
|
WTI (US$/bbl)
|
105.81
|
92.20
|
15
|
98.20
|
96.16
|
2
|
Edmonton par - light oil ($/bbl)
|
105.17
|
84.79
|
24
|
95.57
|
87.29
|
9
|
Bow River - medium/heavy oil ($/bbl)
|
92.92
|
72.51
|
28
|
78.38
|
76.50
|
2
|
Hardisty Heavy - heavy oil ($/bbl)
|
79.38
|
58.08
|
37
|
66.06
|
64.69
|
2
|
Bellatrix's average prices ($/bbl)
|
|
|
|
|
|
|
|
Light crude oil and condensate
|
102.71
|
84.98
|
21
|
96.33
|
87.74
|
10
|
|
NGLs (excluding condensate)
|
48.65
|
28.62
|
70
|
42.76
|
38.90
|
10
|
|
Heavy crude oil
|
86.25
|
63.95
|
35
|
69.81
|
69.17
|
1
|
|
Total crude oil and NGLs
|
78.27
|
70.37
|
11
|
74.60
|
74.96
|
-
|
|
Total crude oil and NGLs (including risk management (1))
|
69.86
|
70.72
|
(1)
|
72.11
|
72.83
|
(1)
|
|
|
|
|
|
|
|
Natural gas:
|
|
|
|
|
|
|
NYMEX (US$/mmbtu)
|
3.56
|
2.89
|
23
|
3.69
|
2.58
|
43
|
AECO daily index (CDN$/mcf)
|
2.43
|
2.28
|
7
|
3.05
|
2.11
|
45
|
AECO monthly index (CDN$/mcf)
|
2.82
|
2.19
|
29
|
3.16
|
2.18
|
45
|
Bellatrix's average price ($/mcf)
|
2.68
|
2.45
|
9
|
3.34
|
2.26
|
48
|
Bellatrix's average price (including risk management(1)) ($/mcf)
|
2.90
|
3.38
|
(14)
|
3.62
|
2.96
|
22
|
(1) Per unit metrics including risk management include realized gains or
losses on commodity contracts and exclude unrealized gains or losses on
commodity contracts.
|
For light oil and condensate, Bellatrix recorded an average price of
$102.71/bbl before commodity price risk management contracts during the
third quarter of 2013, 21% higher than the average price received in
the comparative 2012 period. In comparison, the Edmonton par price
increased by 24% over the same period. The average WTI crude oil
benchmark price increased by 15% in the three months ended September
30, 2013 compared to the third quarter of 2012. During the nine months
ended September 30, 2013, Bellatrix recorded an average $96.33/bbl
before commodity price risk management contracts, an increase of 10%
from the average price received in the comparative 2012 period. In
comparison, the Edmonton par price increased by 9% over the same
period. The average WTI crude oil benchmark price increased by 2% in
the first nine months of 2013 compared to the same period in 2012. The
average US$/CDN$ foreign exchange rate was 0.9773 for the nine months
ended September 30, 2013, a decrease of 2% compared to an average rate
of 0.9981 in the same period in 2012.
For NGLs (excluding condensate), Bellatrix recorded an average
$48.65/bbl during the third quarter of 2013, an increase of 70% from
the $28.62/bbl received in the comparative 2012 period. For the nine
months ended September 30, 2013, Bellatrix received an average NGL
price of $42.76/bbl, a 10% increase from the $38.90/bbl received in the
comparative 2012 period. The overall increase in NGL pricing between
the 2013 and 2012 nine-month periods is largely attributable to changes
in NGL market supply conditions between the periods.
For heavy crude oil, Bellatrix received an average price before
commodity risk management contracts of $86.25/bbl in the 2013 third
quarter, an increase of 35% from the $63.95/bbl realized in the third
quarter of 2012. For the nine months ended September 30, 2013,
Bellatrix received an average price of $69.81/bbl for heavy crude oil,
an increase of 1% from the $69.17/bbl realized in the same period in
2012. In comparison, the Bow River reference price increased by 28%,
and the Hardisty Heavy reference price increased by 37% between the
third quarter of 2012 and the third quarter of 2013. Between the
first nine months of 2012 and the first nine months of 2013, the Bow
River and the Hardisty Heavy reference prices both increased by 2%. The
majority of Bellatrix's heavy crude oil density ranges between 11 and
16 degrees API, consistent with the Hardisty Heavy reference price.
Bellatrix's natural gas sales are priced with reference to the daily or
monthly AECO indices. Bellatrix's natural gas sold has a higher heat
content than the industry average, which results in slightly higher
prices per mcf than the daily AECO index. During the 2013 third
quarter, the AECO daily reference price increased by 7%, and the AECO
monthly reference price increased by approximately 29% compared to the
third quarter of 2012. Bellatrix's natural gas average sales price
before commodity price risk management contracts for the three months
ended September 30, 2013 increased by 9% to $2.68/mcf compared to
$2.45/mcf in the third quarter of 2012. Bellatrix's natural gas average
sales price of $2.68/mcf for the third quarter of 2013 reflects a 30%
decrease from the second quarter of 2013 average price of $3.85/mcf.
During the nine months ended September 30, 2013, the AECO daily and the
AECO monthly reference prices both increased by 45% compared to the
same period in 2012. Bellatrix's natural gas average sales price
before commodity price risk management contracts for the nine months
ended September 30, 2013 increased by 48% to $3.34/mcf compared to
$2.26mcf in the first nine months of 2012. Bellatrix's natural gas
average price after including commodity price risk management contracts
for the three and nine months ended September 30, 2013 was $2.90/mcf
and $3.62/mcf, compared to $3.38/mcf and $2.96/mcf in the same periods
in 2012, respectively.
Revenue
Revenue before other income, royalties and commodity price risk
management contracts for the three months ended September 30, 2013 was
$67.7 million, 42% higher than the $47.6 million realized in the second
quarter of 2012. The increase in revenues between the periods was
primarily due to increased natural gas and NGL sales volumes, and
higher realized prices for all commodities between the periods,
partially offset by reduced crude oil and condensate sales volumes
experienced in the third quarter of 2013. Revenue before other income,
royalties and commodity price risk management contracts for the nine
month period ended September 30, 2013 was $206.6 million, 33% higher
than the $155.6 million realized in the first nine months of 2012.
Revenue before other income, royalties and commodity price risk
management contracts for crude oil and NGLs for the three months ended
September 30, 2013 increased from the comparative 2012 period by
approximately 32%, resulting from higher NGL sales volumes in
conjunction with increased crude oil, condensate, and NGL prices,
partially offset by lower crude oil and condensate sales volumes when
compared to the same period in 2012. Revenue before other income,
royalties and commodity price risk management contracts for crude oil
and NGLs for the nine months ended September 30, 2013 increased from
the comparative 2012 period by approximately 6%, resulting from
increased condensate and NGL sales volumes and higher crude oil, NGL,
and condensate prices, partially offset by lower light and heavy oil
sales volumes when compared to the first nine months of 2012. In the
third quarter of 2013, total crude oil, condensate and NGL revenues
contributed 66% of total revenue (before other) compared to 71% in the
same period in 2012. For the nine months ended September 30, 2013,
total crude oil, condensate and NGL revenues contributed 60% of total
revenue (before other), compared to 75% in the same period in 2012.
Light crude oil, condensate and NGL revenues in the three and nine
month periods ended September 30, 2013 comprised 97% of total crude
oil, condensate and NGL revenues (before other) for both periods,
compared to a 95% composition realized in both the three month and nine
month periods ended September 30, 2012.
Natural gas revenue before other income, royalties and commodity price
risk management contracts for the third quarter of 2013 increased by
approximately 66% compared to the third quarter of 2012 as a result of
a 9% increase in realized gas prices before risk management in
conjunction with an approximate 52% increase in sales volumes between
the periods. Natural gas revenue before other income, royalties and
commodity price risk management contracts for the first nine months of
2013 increased by approximately 114% compared to the nine months ended
September 30, 2012 as a result of a 48% increase in realized gas prices
before risk management and an approximate 46% increase in sales volumes
between the periods.
|
|
|
|
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($000s)
|
2013
|
2012
|
2013
|
2012
|
Light crude oil and condensate
|
30,751
|
28,706
|
93,097
|
96,766
|
NGLs (excluding condensate)
|
12,257
|
3,264
|
27,870
|
14,676
|
Heavy oil
|
1,549
|
1,724
|
3,793
|
5,886
|
Crude oil and NGLs
|
44,557
|
33,694
|
124,760
|
117,328
|
Natural gas
|
23,160
|
13,914
|
81,842
|
38,239
|
Total revenue before other
|
67,717
|
47,608
|
206,602
|
155,567
|
Other income (1)
|
612
|
518
|
1,834
|
1,464
|
Total revenue before royalties and risk management
|
68,329
|
48,126
|
208,436
|
157,031
|
(1) Other income primarily consists of processing and other third party
income.
|
Commodity Price Risk Management
The Company has a formal commodity price risk management policy which
permits management to use specified price risk management strategies
including fixed price contracts, collars and the purchase of floor
price options and other derivative financial instruments and physical
delivery sales contracts to reduce the impact of price volatility for a
maximum of eighteen months beyond the transaction date. The program is
designed to provide price protection on a portion of the Company's
future production in the event of adverse commodity price movement,
while retaining significant exposure to upside price movements. By
doing this, the Company seeks to provide a measure of stability to
funds flow from operations, as well as to ensure Bellatrix realizes
positive economic returns from its capital development and acquisition
activities. The Company plans to continue its commodity price risk
management strategies focusing on maintaining sufficient cash flow to
fund Bellatrix's capital expenditure program. Any remaining production
is realized at market prices.
A summary of the financial commodity price risk management volumes and
average prices by quarter currently outstanding as of November 6, 2013
is shown in the following tables:
Natural gas
Average Volumes (GJ/d)
|
|
|
|
|
|
|
|
|
Q4 2013
|
Fixed
|
|
|
|
35,109
|
|
|
|
|
|
|
Q1 2014
|
Q2 2014
|
Q3 2014
|
Q4 2014
|
Fixed
|
15,000
|
15,000
|
-
|
-
|
|
|
|
|
|
Average Price ($/GJ AECO C)
|
|
|
|
|
|
|
|
|
Q4 2013
|
Fixed
|
|
|
|
3.05
|
|
|
|
|
|
|
Q1 2014
|
Q2 2014
|
Q3 2014
|
Q4 2014
|
Fixed
|
3.05
|
3.05
|
-
|
-
|
Crude oil and liquids
Average Volumes (bbls/d)
|
|
|
|
|
|
|
|
|
Q4 2013
|
Fixed
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
Q2 2014
|
Q3 2014
|
Q4 2014
|
Fixed
|
3,000
|
3,000
|
3,000
|
3,000
|
|
|
|
|
|
|
Q1 2014
|
Q2 2014
|
Q3 2014
|
Q4 2014
|
Call option
|
3,000
|
3,000
|
3,000
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Price ($/bbl WTI)
|
|
|
|
|
|
|
|
|
Q4 2013
|
Fixed price (CDN$/bbl)
|
|
|
|
98.27
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2014
|
Q2 2014
|
Q3 2014
|
Q4 2014
|
Fixed price (CDN$/bbl)
|
94.61
|
94.61
|
94.61
|
94.61
|
|
|
|
|
|
|
Q1 2014
|
Q2 2014
|
Q3 2014
|
Q4 2014
|
Call option (ceiling price) (US$/bbl)
|
105.00
|
105.00
|
105.00
|
105.00
|
As of September 30, 2013, the fair value of Bellatrix's outstanding
commodity contracts is a net unrealized liability of $10.5 million as
reflected in the financial statements. The fair value or
mark-to-market value of these contracts is based on the estimated
amount that would have been received or paid to settle the contracts as
at September 30, 2013 and will be different from what will eventually
be realized. Changes in the fair value of the commodity contracts are
recognized in the Consolidated Statements of Comprehensive Income
within the financial statements.
The following is a summary of the gain (loss) on commodity contracts for
the three and nine months ended September 30, 2013 and 2012 as
reflected in the Condensed Consolidated Statements of Comprehensive
Income in the financial statements:
Commodity contracts
|
|
|
|
|
|
|
Three months ended
September 30,
|
($000s)
|
Crude Oil & Liquids
|
Natural Gas
|
2013 Total
|
2012 Total
|
Realized cash gain (loss) on contracts
|
(4,783)
|
1,939
|
(2,844)
|
5,472
|
Unrealized (loss) on contracts (3)
|
(3,720)
|
(624)
|
(4,344)
|
(6,763)
|
Total gain (loss) on commodity contracts
|
(8,503)
|
1,315
|
(7,188)
|
(1,291)
|
Commodity contracts
|
|
|
|
|
|
|
Nine months ended
September 30,
|
($000s)
|
Crude Oil & Liquids
|
Natural Gas
|
2013 Total
|
2012 Total
|
Realized cash gain (loss) on contracts (1) (2)
|
(4,162)
|
7,035
|
2,873
|
8,453
|
Unrealized gain (loss) on contracts (3)
|
(2,202)
|
(8,449)
|
(10,651)
|
9,493
|
Total gain (loss) on commodity contracts
|
(6,364)
|
(1,414)
|
(7,778)
|
17,946
|
(1)
|
In January 2013, the Company crystalized and realized $6.5 million in
cash proceeds by resetting the fixed prices on natural gas commodity
price risk management contracts for the period from April 1, 2013
through to October 31, 2013.
|
(2)
|
In September 2013, the Company incurred $0.6 million of costs for the
settlement of an oil call commodity price risk management contract for
the period from November 1, 2013 through to December 31, 2013.
|
(3)
|
Unrealized gain (loss) on commodity contracts represents non-cash
adjustments for changes in the fair value of these contracts during
the period.
|
Royalties
For the three months ended September 30, 2013, total royalties were $8.1
million compared to $8.9 million incurred in the third quarter of
2012. Overall royalties as a percentage of revenue (after
transportation costs) in the third quarter of 2013 were 12% compared
with 19% in the same period in 2012. For the nine months ended
September 30, 2013, total royalties were $32.5 million compared to
$26.9 million incurred in the first nine months of 2012. Overall
royalties as a percentage of revenue (after transportation costs) in
the first nine months of 2013 were 16%, compared with 18% in the same
period in 2012.
Light crude oil, condensate and NGL royalties, and total royalties
recognized in the third quarter of 2013 were reduced by $3.7 million in
adjustments relating to prior period 2012 and 2013 estimates of
condensate and NGL royalties for Ferrier area wells paying IOGC
royalties with royalty incentive programs. These adjustments arose as
a result of clarification of the interpretation of the royalty
incentive rates in certain contracts. Excluding these adjustments, the
average light oil, condensate and NGL royalty and corporate royalty
rate percentages were 22% and 18%, respectively.
The Company's minor heavy oil properties, principally consisting of the
Frog Lake Alberta assets, are also subject to high crown royalty rates.
The Company's light crude oil, condensate and NGLs, and natural gas
royalties are impacted by lower royalties on more recent wells in their
early years of production under the Alberta royalty incentive program,
offset by increased royalty rates on other wells now coming off initial
royalty incentive rates and as other wells are drilled on Ferrier lands
with higher combined Indian Oil and Gas Canada ("IOGC") and GORR
royalty rates.
|
|
Royalties by Commodity Type
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($000s, except where noted)
|
2013
|
2012
|
2013
|
2012
|
Light crude oil, condensate and NGLs
|
5,719
|
7,378
|
24,495
|
24,510
|
|
$/bbl
|
10.37
|
16.33
|
15.14
|
16.56
|
|
Average light crude oil, condensate and NGLs royalty rate (%)
|
13
|
24
|
20
|
22
|
|
|
|
|
|
Heavy Oil
|
630
|
837
|
1,427
|
2,775
|
|
$/bbl
|
35.12
|
31.16
|
26.27
|
32.57
|
|
Average heavy oil royalty rate (%)
|
41
|
51
|
38
|
49
|
|
|
|
|
|
Natural Gas
|
1,767
|
664
|
6,540
|
(367)
|
|
$/mcf
|
0.20
|
0.12
|
0.27
|
(0.02)
|
|
Average natural gas royalty rate (%)
|
8
|
5
|
8
|
(1)
|
|
|
|
|
|
Total
|
8,116
|
8,879
|
32,462
|
26,918
|
$/boe
|
4.04
|
6.23
|
5.63
|
6.14
|
Average total royalty rate (%)
|
12
|
19
|
16
|
18
|
Royalties by Type
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($000s)
|
2013
|
2012
|
2013
|
2012
|
Crown royalties
|
5,127
|
2,744
|
10,836
|
8,663
|
Indian Oil and Gas Canada royalties
|
(1,475)
|
1,907
|
6,652
|
4,802
|
Freehold & GORR
|
4,464
|
4,228
|
14,974
|
13,453
|
Total
|
8,116
|
8,879
|
32,462
|
26,918
|
Expenses
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($000s)
|
2013
|
2012
|
2013
|
2012
|
Production
|
18,054
|
11,360
|
50,495
|
37,938
|
Transportation
|
1,651
|
1,282
|
4,758
|
3,760
|
General and administrative
|
4,548
|
3,397
|
10,633
|
9,882
|
Interest and financing charges (1)
|
3,560
|
2,476
|
10,146
|
7,006
|
Share-based compensation
|
2,314
|
945
|
4,005
|
2,505
|
(1) Does not include financing charges in relation to the Company's
accretion of decommissioning liabilities.
|
Expenses per boe
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($ per boe)
|
2013
|
2012
|
2013
|
2012
|
Production
|
8.98
|
7.96
|
8.76
|
8.66
|
Transportation
|
0.81
|
0.90
|
0.82
|
0.86
|
General and administrative
|
2.26
|
2.38
|
1.85
|
2.26
|
Interest and financing charges
|
1.77
|
1.74
|
1.76
|
1.60
|
Share-based compensation
|
1.15
|
0.66
|
0.70
|
0.57
|
Production Expenses
For the three and nine months ended September 30, 2013, production
expenses totaled $18.1 million ($8.98/boe) and $50.5 million
($8.76/boe), compared to $11.4 million ($7.96/boe) and $37.9 million
($8.66/boe) in the three and nine months ended September 30, 2012,
respectively. For the three and nine months ended September 30, 2013,
production expenses increased overall and on a per boe basis when
compared to the same periods in 2012. The increase in production
expenses per boe were primarily due to additional fuel and power costs
for compression, increases in gathering and processing fees in certain
areas as well as increased property taxes due to new infrastructure.
Bellatrix is targeting operating costs of approximately $70.0 million
($8.35/boe) in the 2013 year, which is a reduction from the $8.73/boe
operating costs incurred for the 2012 year. This is based upon
assumptions of estimated 2013 average production of approximately
23,000 boe/d to 24,000 boe/d, continued field optimization work and
planned capital expenditures in producing areas which are anticipated
to have lower operating costs.
Production Expenses by Commodity Type
|
|
|
|
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($000s, except where noted)
|
2013
|
2012
|
2013
|
2012
|
Light crude oil, condensate and NGLs
|
5,031
|
4,745
|
19,168
|
15,375
|
|
$/bbl
|
9.12
|
10.50
|
11.85
|
10.39
|
|
|
|
|
|
Heavy oil
|
233
|
373
|
844
|
1,268
|
|
$/bbl
|
12.99
|
13.88
|
15.54
|
14.88
|
|
|
|
|
|
Natural gas
|
12,790
|
6,242
|
30,483
|
21,295
|
|
$/mcf
|
1.48
|
1.10
|
1.24
|
1.26
|
|
|
|
|
|
Total
|
18,054
|
11,360
|
50,495
|
37,938
|
|
$/boe
|
8.98
|
7.96
|
8.76
|
8.66
|
|
|
|
|
|
Total
|
18,054
|
11,360
|
50,495
|
37,938
|
Processing and other third party income (1)
|
(612)
|
(518)
|
(1,834)
|
(1,464)
|
Total after deducting processing and other third party income
|
17,442
|
10,842
|
48,661
|
36,474
|
$/boe
|
8.68
|
7.60
|
8.44
|
8.33
|
(1) Processing and other third party income is included within petroleum and
natural gas sales on the Consolidated Statements of Comprehensive
Income.
|
Transportation
Transportation expenses for the three and nine months ended September
30, 2013 were $1.7 million ($0.81/boe) and $4.8 million ($0.82/boe),
respectively, compared to $1.3 million ($0.90/boe) and $3.8 million
($0.86/boe) in the same periods in 2012. Transportation costs increased
overall between the periods, but decreased on a per boe basis. The
decrease on a per boe basis is reflective of reduced transportation
costs incurred for crude oil and condensate during the third quarter of
2013.
Operating Netback
Operating Netback - Corporate (before risk management)
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($/boe)
|
|
2013
|
2012
|
2013
|
2012
|
Sales
|
33.68
|
33.38
|
35.85
|
35.51
|
Transportation
|
(0.81)
|
(0.90)
|
(0.82)
|
(0.86)
|
Royalties
|
(4.04)
|
(6.23)
|
(5.63)
|
(6.14)
|
Production expense
|
(8.98)
|
(7.96)
|
(8.76)
|
(8.66)
|
Operating netback
|
19.85
|
18.29
|
20.64
|
19.85
|
For the third quarter of 2013, the corporate operating netback (before
commodity price risk management contracts) was $19.85/boe compared to
$18.29/boe in the third quarter of 2012. The increased netback was
primarily the result of higher commodity prices and lower royalties and
transportation expenses, partially offset by higher production
expenses. After including commodity price risk management contracts,
the corporate operating netback for the three months ended September
30, 2013 was $18.43/boe compared to $22.13/boe in the 2012 third
quarter. Per unit metrics including risk management include realized
gains or losses on commodity contracts and exclude unrealized gains or
losses on commodity contracts.
For the nine months ended September 30, 2013, the corporate operating
netback (before commodity price risk management contracts) was
$20.64/boe compared to $19.85/boe in the same period in 2012. The
netback increased between the periods as a result of higher commodity
prices and reduced royalties and transportation expenses, which were
partially offset by increased production expenses. After including
commodity price risk management contracts, the corporate operating
netback for the nine months ended September 30, 2013 was $21.13/boe
compared to $21.78/boe in the first nine months of 2012.
Operating Netback - Crude Oil, Condensate and NGLs (before risk
management)
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($/bbl)
|
|
2013
|
2012
|
2013
|
2012
|
Sales
|
78.27
|
70.37
|
74.60
|
74.96
|
Transportation
|
(0.82)
|
(1.40)
|
(0.86)
|
(1.13)
|
Royalties
|
(11.15)
|
(17.16)
|
(15.50)
|
(17.43)
|
Production expense
|
(9.25)
|
(10.69)
|
(11.97)
|
(10.63)
|
Operating netback
|
57.05
|
41.12
|
46.27
|
45.77
|
Operating netback for crude oil, condensate and NGLs averaged $57.05/bbl
for the three months ended September 30, 2013, a 39% increase from
$41.12/bbl realized in the third quarter of 2012. In the third quarter
of 2013, Bellatrix's combined crude oil and NGLs average price (before
risk management) increased by approximately 11% compared to the same
period in 2012. The commodity price increase in conjunction with
reduced production, royalties, and transportation expenses resulted in
the overall increase to the operating netback for crude oil, condensate
and NGLs. After including commodity price risk management contracts,
operating netback for crude oil and NGLs for the three months ended
September 30, 2013 decreased to $48.65/boe compared to $41.48/boe in
the third quarter of 2012.
For the nine months ended September 30, 2013, operating netback for
crude oil, condensate and NGLs averaged $46.27/bbl, an increase of 1%
from $45.77/bbl realized in the same period in 2012. In the first nine
months of 2013, Bellatrix's combined crude oil and NGLs average price
(before risk management) decreased slightly compared to the same period
in 2012 due to an increased proportion of NGL sales volumes included in
total crude oil, condensate, and NGL sales volumes during the 2013
period compared to the 2012 period. NGL prices were lower than crude
oil and condensate prices, resulting in a lower overall combined
realized price for crude oil, condensate and NGLs between the periods.
Decreased royalties and transportation expenses were partially offset
by the commodity price decrease in conjunction with increased
production expenses, resulting in the overall increase to the operating
netback for crude oil, condensate and NGLs. After including commodity
price risk management contracts, operating netback for crude oil and
NGLs for the nine months ended September 30, 2013 decreased to
$43.78/boe compared to $43.64/boe in the first nine months of 2012.
Operating Netback - Natural Gas (before risk management)
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($/mcf)
|
|
2013
|
2012
|
2013
|
2012
|
Sales
|
2.68
|
2.45
|
3.34
|
2.26
|
Transportation
|
(0.14)
|
(0.11)
|
(0.13)
|
(0.12)
|
Royalties
|
(0.20)
|
(0.12)
|
(0.27)
|
0.02
|
Production expense
|
(1.48)
|
(1.10)
|
(1.24)
|
(1.26)
|
Operating netback
|
0.86
|
1.12
|
1.70
|
0.90
|
Operating netback for natural gas in the three months ended September
30, 2013 decreased by 23% to $0.86/mcf, compared to $1.12/mcf realized
in the third quarter of 2012, reflecting increased production,
transportation, and royalty expenses, partially offset by increased
natural gas prices. After including commodity price risk management
contracts, operating netback for natural gas for the three months ended
September 30, 2013 increased to $1.08/mcf, which compared to $2.06/mcf
in the 2012 third quarter.
For the nine months ended September 30, 2013, operating netback for
natural gas increased by 89% to $1.70/mcf, compared to $0.90/mcf
realized in the first nine months of 2012, reflecting increased natural
gas prices and reduced production expenses, offset somewhat by an
overall royalty expense compared to an overall recovery in the 2012
period resulting from IOGC natural gas royalty adjustments realized
during the 2012 period, and slightly higher transportation costs.
After including commodity price risk management contracts, operating
netback for natural gas for the nine months ended September 30, 2013
increased to $1.98/mcf, which compared to $1.60/mcf in the same period
in 2012.
General and Administrative
General and administrative ("G&A") expenses (after capitalized G&A and
recoveries) for the three and nine months ended September 30, 2013 were
$4.5 million ($2.26/boe) and $10.6 million ($1.85/boe), respectively,
compared to $3.4 million ($2.38/boe) and $9.9 million ($2.26/boe), for
the same periods in 2012. G&A expenses in the third quarter of 2013
were higher in comparison to the same period in 2012, which is
reflective of higher compensation costs and additional office rent,
partially offset by increased recoveries and capitalization. G&A
expenses in the first nine months of 2013 were higher in comparison to
the same period in 2012, which is primarily reflective of higher
compensation costs, partially offset by higher capitalized G&A and
recoveries. On a boe basis, G&A for the three months ended September
30, 2013 increased by approximately 1% when compared to the third
quarter of 2012. The increase was primarily as a result of higher
overall costs not fully offset by higher average sales volumes realized
in the third quarter of 2013 compared to the same period in 2012.
G&A expenses of $4.5 million ($2.26/boe) for the third quarter of 2013
were 80% higher than second quarter 2013 expenses of $2.5 million
($1.24/boe) due primarily to higher G&A recoveries of $2.9 million
realized in the second quarter compared to recoveries of $1.0 million
in the third quarter of 2013. Capital recoveries are normally earned
and recognized in the period following the related capital activity.
The lower recoveries in the 2013 third quarter were primarily the
result of the recognition of capital recoveries related to reduced
capital activity in the second quarter of 2013 compared to the first
quarter of 2013.
For 2013, the Company is anticipating G&A expenses after capitalization
to be approximately $18.0 million ($2.14/boe) based on estimated 2013
average production volumes of approximately 23,000 boe/d to 24,000
boe/d.
General and Administrative Expenses
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($000s, except where noted)
|
2013
|
2012
|
2013
|
2012
|
Gross expenses
|
7,006
|
5,111
|
19,926
|
15,104
|
Capitalized
|
(1,415)
|
(1,045)
|
(3,874)
|
(3,206)
|
Recoveries
|
(1,043)
|
(669)
|
(5,419)
|
(2,016)
|
G&A expenses
|
4,548
|
3,397
|
10,633
|
9,882
|
G&A expenses, per unit ($/boe)
|
2.26
|
2.38
|
1.85
|
2.26
|
Interest and Financing Charges
For the three and nine months ended September 30, 2013, Bellatrix
recorded $3.6 million ($1.77/boe) and $10.1 million ($1.76/boe),
respectively, of interest and financing charges related to bank debt
and its 4.75% convertible unsecured subordinated debentures (the "4.75%
Debentures"), compared to $2.5 million ($1.74/boe) and $7.0 million
($1.60/boe) for the same periods in 2012. The overall increase in
interest and financing charges between the periods was primarily due to
greater interest and accretion charges in relation to the Company's
outstanding 4.75% Debentures in conjunction with higher interest
charges related to the Company's long-term debt as the Company carried
a higher average debt balance in the third quarter of 2013 compared to
the 2012 third quarter. Bellatrix's total net debt at September 30,
2013 of $223.0 million includes the $47.3 million liability portion of
its $50 million principal amount of remaining 4.75% Debentures, $139.3
million of bank debt and the net balance of the working capital
deficiency.
Interest and Financing Charges (1)
|
|
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($000s, except where noted)
|
2013
|
2012
|
2013
|
2012
|
Interest and financing charges
|
3,560
|
2,476
|
10,146
|
7,006
|
Interest and financing charges ($/boe)
|
1.77
|
1.74
|
1.76
|
1.60
|
(1) Does not include financing charges in relation to the Company's
accretion of decommissioning liabilities
|
|
|
Debt to Funds Flow from Operations Ratio
|
|
|
|
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($000s, except where noted)
|
2013
|
2012
|
2013
|
2012
|
|
|
|
|
|
Shareholders' equity
|
439,570
|
370,235
|
439,570
|
370,235
|
|
|
|
|
|
Long-term debt
|
139,295
|
104,642
|
139,295
|
104,642
|
Convertible debentures (liability component)
|
47,335
|
50,269
|
47,335
|
50,269
|
Working capital (excess) deficiency (2)
|
31,577
|
11,308
|
31,577
|
11,308
|
Total net debt (2) at period end
|
218,207
|
166,219
|
218,207
|
166,219
|
|
|
|
|
|
Debt to funds flow from operations (1) ratio (annualized) (3)
|
|
|
|
|
Funds flow from operations (1) (annualized)
|
120,008
|
106,452
|
138,813
|
108,231
|
Total net debt (2) at period end
|
218,207
|
166,219
|
218,207
|
166,219
|
Total net debt to periods funds flow from operations ratio (annualized) (3)
|
1.8x
|
1.6x
|
1.6x
|
1.5x
|
|
|
|
|
|
Net debt (2) (excluding convertible debentures) at period end
|
170,872
|
115,950
|
170,872
|
115,950
|
Net debt to periods funds flow from operations ratio (annualized) (3)
|
1.4x
|
1.1x
|
1.2x
|
1.1x
|
|
|
|
|
|
Debt to funds flow from operations (1) ratio (trailing) (4)
|
|
|
|
|
Funds flow from operations (1) (trailing)
|
133,975
|
112,643
|
133,975
|
112,643
|
Total net debt (2) to funds flow from operations (trailing)
|
1.6x
|
1.5x
|
1.6x
|
1.5x
|
|
|
|
|
|
Net debt (2) (excluding convertible debentures) to funds flow from operations for the
period
|
1.3x
|
1.0x
|
1.3x
|
1.0x
|
|
|
|
|
|
|
|
(1)
|
As detailed previously in this MD&A, funds flow from operations is a
term that does not have any standardized meaning under GAAP. Funds
flow from operations is calculated as cash flow from operating
activities, less decommissioning costs incurred and changes in non-cash
working capital incurred. Refer to the reconciliation of cash flow
from operating activities to funds flow from operations appearing
elsewhere herein.
|
|
|
(2)
|
Net debt and total net debt are considered additional GAAP measures.
The Company's calculation of total net debt includes the liability
component of convertible debentures and excludes deferred liabilities,
long-term commodity contract liabilities, decommissioning liabilities,
long-term finance lease obligation and the deferred tax liability. Net
debt and total net debt include the net working capital deficiency
(excess) before short-term commodity contract assets and liabilities
and current finance lease obligation. Net debt also excludes the
liability component of convertible debentures. Refer to the following
reconciliation of total liabilities to total net debt and net debt.
The remaining convertible debentures were converted or redeemed in
October, 2013.
|
|
|
(3)
|
Total net debt and net debt to periods funds flow from operations ratio
(annualized) is calculated based upon third quarter funds flow from
operations annualized.
|
|
|
(4)
|
Trailing periods funds flow from operations ratio annualized is based on
the twelve-month periods ended September 30, 2013 and September 30,
2012.
|
Reconciliation of Total Liabilities to Total Net Debt and Net Debt
|
|
|
As at September 30,
|
($000s)
|
|
|
2013
|
2012
|
Total liabilities per financial statements
|
|
|
350,257
|
257,600
|
|
Current liabilities included within working capital calculation
|
|
|
(90,125)
|
(54,967)
|
|
Commodity contract liability - long term
|
|
|
(1,813)
|
(692)
|
|
Decommissioning liabilities
|
|
|
(43,784)
|
(42,784)
|
|
Finance lease obligation
|
|
|
(12,022)
|
(4,246)
|
|
Deferred Taxes
|
|
|
(15,883)
|
-
|
|
|
|
|
|
Working Capital
|
|
|
|
|
|
Current assets
|
|
|
(48,408)
|
(42,705)
|
|
Current liabilities
|
|
|
90,125
|
54,967
|
|
Current portion of finance lease
|
|
|
(1,476)
|
(507)
|
|
Net commodity contract asset (liability)
|
|
|
(8,664)
|
(447)
|
|
|
|
31,577
|
11,308
|
Total net debt
|
|
|
218,207
|
166,219
|
|
Convertible debentures
|
|
|
(47,335)
|
(50,269)
|
Net debt
|
|
|
170,872
|
115,950
|
Share-Based Compensation
Non-cash share-based compensation expense for the three months ended
September 30, 2013 was $2.3 million compared to $0.9 million in the
same period in 2012. The overall increase in non-cash share-based
compensation expense between the periods is primarily a result of a
Deferred Share Unit Plan expense of $1.7 million (2012: $0.4 million)
which resulted from the issuance of new grants during the quarters, and
the revaluation of outstanding grants to a higher share trading price
at September 30, 2013 than at June 30, 2013, an expense of $0.3 million
for Restricted Share Units issued during the quarter, and an expense of
$0.1 million for Performance Share Units issued during the quarter,
partially offset by higher capitalized share-based compensation of $0.4
million (2012: $0.3 million), and a lower expense net of forfeitures
for the Company's outstanding share options of $0.6 million (2012: $0.8
million).
For the nine months ended September 30, 2013, non-cash share-based
compensation expense was $4.0 million compared to $2.5 million in the
first nine months of 2012. The overall increase in non-cash share-based
compensation expense between the periods is primarily a result of
greater Deferred Share Unit Plan expenses of $2.5 million (2012: $0.8
million) which reflected increases to the Company's share trading price
during the nine month period, an expense of $0.3 million for Restricted
Share Units issued during the quarter, an expense of $0.1 million for
Performance Share Units issued during the quarter, and lower
capitalized share-based compensation of $1.1 million (2012: $1.2
million), partially offset by a lower expense net of forfeitures for
the Company's outstanding share options of $2.2 million (2012: $2.9
million).
Depletion and Depreciation
Depletion and depreciation expense for the three and nine month periods
ended September 30, 2013 was $20.6 million ($10.23/boe) and $58.5
million ($10.16/boe), compared to $18.0 million ($12.59/boe) and $57.1
million ($13.04/boe), recognized in the same periods in 2012,
respectively. For both the three and nine month periods, the decrease
in depletion and depreciation expense between the periods, on a per boe
basis, was primarily a result of an increase in the reserve base used
for the depletion calculation, partially offset by a higher cost base
and increased future development costs.
For the three months ended September 30, 2013 Bellatrix has included a
total of $462.6 million (2012: $371.9 million) for future development
costs in the depletion calculation and excluded from the depletion
calculation a total of $41.8 million (2012: $34.8 million) for
estimated salvage.
Depletion and Depreciation
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($000s, except where noted)
|
2013
|
2012
|
2013
|
2012
|
Depletion and Depreciation
|
20,564
|
17,953
|
58,531
|
57,125
|
Per unit ($/boe)
|
10.23
|
12.59
|
10.16
|
13.04
|
Impairment of Assets
In accordance with IFRS, the Company calculates an impairment test when
there are indicators of impairment. The impairment test is performed
at the asset or cash generating unit ("CGU") level. IAS 36 -
"Impairment of Assets" ("IAS 36") is a one-step process for testing and
measuring impairment of assets. Under IAS 36, the asset or CGU's
carrying value is compared to the higher of: value-in-use and fair
value less costs to sell. Value-in-use is defined as the present value
of the future cash flows expected to be derived from the asset or CGU.
As at September 30, 2013, Bellatrix reviewed and determined there were
no impairment indicators requiring an impairment test to be performed.
When performed, the impairment test is based upon the higher of
value-in-use and estimated fair market values for the Company's
properties, including but not limited to an updated external reserve
engineering report. This report incorporates a full evaluation of
reserves on an annual basis or internal reserve updates at quarterly
periods, and the latest commodity pricing deck. Estimating reserves is
very complex, requiring many judgments based on available geological,
geophysical, engineering and economic data. Changes in these judgments
could have a material impact on the estimated reserves. These
estimates may change, having either a negative or positive effect on
net earnings as further information becomes available and as the
economic environment changes.
Income Taxes
Deferred income taxes arise from differences between the accounting and
tax basis of the Company's assets and liabilities. For the three and
nine month periods ended September 30, 2013, the Company recognized a
deferred income tax expense of $9.8 million and $16.9 million,
respectively, compared to a $32 thousand recovery in the third quarter
of 2012, and a $6.8 million expense in the first nine months of 2012.
At September 30, 2013, the Company had a total deferred tax liability
balance of $15.9 million.
At September 30, 2013, Bellatrix had approximately $615 million in tax
pools available for deduction against future income as follows:
|
|
|
|
($000s)
|
Rate %
|
2013
|
2012
|
Intangible resource pools:
|
|
|
|
|
Canadian exploration expenses
|
100
|
39,400
|
45,900
|
|
Canadian development expenses
|
30
|
441,900
|
375,200
|
|
Canadian oil and gas property expenses
|
10
|
6,900
|
22,300
|
|
Foreign resource expenses
|
10
|
700
|
800
|
Attributed Canadian Royalty Income
|
(Alberta) 100
|
16,100
|
16,100
|
Undepreciated capital cost (1)
|
6 - 55
|
98,100
|
86,300
|
Non-capital losses (expire through 2027)
|
100
|
10,000
|
10,000
|
Financing costs
|
20 S.L.
|
2,000
|
3,300
|
|
|
615,100
|
559,900
|
(1) Approximately $84 million of undepreciated capital cost pools are class
41, which is claimed at a 25% rate.
|
Cash Flow from Operating Activities, Funds Flow from Operations and Net
Profit
As detailed previously in this MD&A, funds flow from operations is a
term that does not have any standardized meaning under GAAP. Funds
flow from operations is calculated as cash flow from operating
activities before decommissioning costs incurred and changes in
non-cash working capital incurred.
Reconciliation of Cash Flow from Operating Activities and Funds Flow
from Operations
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($000s)
|
2013
|
2012
|
2013
|
2012
|
Cash flow from operating activities
|
25,069
|
24,807
|
90,207
|
77,321
|
Decommissioning costs incurred
|
287
|
196
|
834
|
559
|
Realization of imputed interest costs for settlement of convertible
debentures
|
226
|
-
|
226
|
-
|
Change in non-cash working capital
|
4,420
|
1,610
|
12,843
|
3,293
|
Funds flow from operations
|
30,002
|
26,613
|
104,110
|
81,173
|
Bellatrix's cash flow from operating activities of $25.1 million ($0.23
per basic share and $0.21 per diluted share) for the three months ended
September 30, 2013 decreased approximately 1% from the $24.8 million
($0.23 per basic share and $0.22 per diluted share) generated in the
third quarter of 2012. Bellatrix generated funds flow from operations
of $30.0 million ($0.28 per basic share and $0.25 per diluted share)
for the three months ended September 30, 2013, an increase of 14% from
$26.6 million ($0.25 per basic share and $0.23 per diluted share) for
the 2012 third quarter, and a decrease of 18% from $36.6 million ($0.34
per basic share and $0.31 per diluted share) for the 2013 second
quarter. The decrease in funds flow from operations between the second
and third quarters of 2013 was due primarily to reduced natural gas
prices impacting revenues and netbacks, a higher net realized loss on
commodity contracts, increased general and administrative expenses, and
increased transportation costs for natural gas, partially offset by the
impact of higher crude oil and NGL commodity prices and reduced
royalties expense.
Bellatrix's cash flow from operating activities of $90.2 million ($0.84
per basic share and $0.77 per diluted share) for the nine months ended
September 30, 2013 increased approximately 17% from the $77.3 million
($0.72 per basic share and $0.67 per diluted share) generated in the
first nine months of 2012. Bellatrix generated funds flow from
operations of $104.1 million ($0.96 per basic share and $0.89 per
diluted share) for the nine months ended September 30, 2013, an
increase of 28% from $81.2 million ($0.76 per basic share and $0.70 per
diluted share) for the first nine months of 2012.
The increase in funds flow from operations between the three months
ended September 30, 2013 and the same period in 2012 was principally
due higher overall funds from operating netbacks, partially offset by a
net loss on realized commodity contracts in the 2013 three month period
compared a gain realized in the same period in 2012, higher general and
administrative expenses, and increased financing expenses. The
increase in funds flow from operations between the nine months ended
September 30, 2013 and the nine months ended September 30, 2012 was
principally due to higher overall funds from operating netbacks,
partially offset by a lower net realized gain on commodity contracts,
increased general and administrative expenses, and higher financing
expenses in the 2013 nine month period compared to the same period in
2012.
Bellatrix maintains a commodity price risk management program to provide
a measure of stability to funds flow from operations. Unrealized
mark-to-market gains or losses are non-cash adjustments to the current
fair market value of the contract over its entire term and are included
in the calculation of net profit (loss).
A net profit of $29.5 million ($0.27 per basic share and $0.25 per
diluted share) was recognized for the three months ended September 30,
2013, compared to a net loss of $0.6 million ($0.01 per basic share and
$0.01 per diluted share) in the third quarter of 2012. The net profit
recorded in the three months ended September 30, 2013 compared to the
net loss recognized in the 2012 third quarter was primarily the result
of higher funds from operating activities as noted above, a gain on
property dispositions compared to a loss recognized in the 2012 period,
and a lower unrealized loss on commodity contracts, partially offset by
increased depletion and depreciation expense, higher stock-based
compensation expense, and higher future income tax expense.
A net profit of $49.5 million ($0.46 per basic share and $0.43 per
diluted share) was recognized for the nine months ended September 30,
2013, compared to a net profit of $18.5 million ($0.17 per basic share
and $0.17 per diluted share) in the first nine months of 2012. The
higher net profit recorded in the nine months ended September 30, 2013
compared to the same period in 2012 was primarily the result of higher
funds from operating activities as noted above and a total gain on
property dispositions compared to a loss recognized in the 2012 period,
partially offset by increased depletion and depreciation expense,
higher stock-based compensation expense, and higher future income tax
expense.
Cash Flow from Operating Activities, Funds Flow from Operations and Net
Profit (Loss)
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($000s, except per share amounts)
|
2013
|
2012
|
2013
|
2012
|
Cash flow from operating activities
|
25,069
|
24,807
|
90,207
|
77,321
|
|
Basic ($/share)
|
0.23
|
0.23
|
0.84
|
0.72
|
|
Diluted ($/share)
|
0.21
|
0.22
|
0.77
|
0.67
|
Funds flow from operations
|
30,002
|
26,613
|
104,110
|
81,173
|
|
Basic ($/share)
|
0.28
|
0.25
|
0.96
|
0.76
|
|
Diluted ($/share)
|
0.25
|
0.23
|
0.89
|
0.70
|
Net profit (loss)
|
29,453
|
(615)
|
49,480
|
18,520
|
|
Basic ($/share)
|
0.27
|
(0.01)
|
0.46
|
0.17
|
|
Diluted ($/share)
|
0.25
|
(0.01)
|
0.43
|
0.17
|
Capital Expenditures
Bellatrix invested $49.5 million and $187.8 million in capital
expenditures during the three and nine months ended September 30, 2013,
compared to $39.8 million and $132.3 million in the three and nine
months ended September 30, 2012, respectively.
Capital Expenditures
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($000s)
|
2013
|
2012
|
2013
|
2012
|
Lease acquisitions and retention
|
1,124
|
1,757
|
7,965
|
4,951
|
Geological and geophysical
|
35
|
254
|
93
|
296
|
Drilling and completion costs
|
30,233
|
28,286
|
130,157
|
98,424
|
Facilities and equipment
|
10,754
|
9,521
|
41,563
|
28,433
|
|
Exploration and development (1)
|
42,146
|
39,818
|
179,778
|
132,104
|
Corporate (2)
|
4,306
|
22
|
4,988
|
166
|
Property acquisitions
|
3,000
|
-
|
2,994
|
30
|
|
Total capital expenditures - cash
|
49,452
|
39,840
|
187,760
|
132,300
|
Property dispositions - cash
|
(54,242)
|
(4,325)
|
(54,236)
|
(6,670)
|
|
Total net capital expenditures - cash
|
(4,790)
|
35,515
|
133,524
|
125,630
|
Other - non-cash (3)
|
845
|
(1,756)
|
324
|
(1,612)
|
Total net capital expenditures
|
(3,945)
|
33,759
|
133,848
|
124,018
|
|
|
(1)
|
Excludes capitalized costs related to decommissioning liabilities
expenditures incurred during the period.
|
|
|
(2)
|
Corporate includes office leasehold improvements, furniture, fixtures
and equipment.
|
|
|
(3)
|
Other includes non-cash adjustments for the current period's
decommissioning liabilities and share based compensation.
|
In the first nine months of 2013, Bellatrix posted a 100% success rate
drilling and/or participating in 45 gross (30.66 net) wells, resulting
in 33 gross (24.98 net) Cardium oil wells, and 12 gross (5.68 net)
Notikewin/Falher liquids-rich gas wells. During the third quarter of
2013, Bellatrix drilled or participated in 10 gross (5.01 net) Cardium
oil wells and 9 gross (3.58 net) Notikewin/Falher liquids-rich gas
wells for a total of 19 gross (8.59 net) wells.
By comparison, Bellatrix drilled or participated in 24 gross (20.15 net)
wells during the first nine months of 2012, which included 18 gross
(15.15 net) Cardium light oil horizontal wells, 1 gross (1.0 net)
Duvernay natural gas horizontal well, 3 gross (2.0 net)
Notikewin/Falher natural gas horizontal wells, and 2 gross (2.0 net)
Cardium natural gas horizontal wells.
In early July, the Company commissioned a 3,400 HP compressor expansion
at Bellatrix's 2-10-45-11W5M compressor station. During the third
quarter the Company initiated construction of a new 7,000 HP Compressor
Station at 13-5-45-9W5M to feedstock local third party operated Gas
Processing Plants. system startup is scheduled for early December
2013. Bellatrix has placed orders for 14 new compressors totaling
23,520 HP to facilitate delivery of our forecasted gas production with
deliveries anticipated in Q4 2013 and Q1 2014. Additionally, the
Company installed approximately 2,500 m of 6" and 8" gathering lines.
During the third quarter of 2013, Bellatrix relocated to a new corporate
office location. Leasehold improvements and furniture and fixture
additions related to the move resulted in approximately $4.3 million of
corporate capital additions (before landlord inducements) for the 2013
third quarter.
The $49.5 million capital program for the three months ended September
30, 2013 was financed from funds flow from operations, bank debt, and
proceeds from dispositions of $54 million.
Based on the current economic conditions and Bellatrix's operating
forecast for 2013, the Company budgets a capital program of $240
million (before the impact of the Angle acquisition) funded from the
Company's cash flows and to the extent necessary, bank indebtedness.
The 2013 capital budget is expected to be directed primarily towards
horizontal drilling and completions activities in the Cardium and
Notikewin formations.
During the nine months ended September 30, 2013, Bellatrix realized cash
proceeds on dispositions during the period of $54.2 million. Of these
proceeds, $51.2 million were related to the disposition of properties
in the Baptiste area of West Central Alberta to Daewoo and Devonian. A
total net gain on dispositions of $37.4 million was recognized for the
nine months ended September 30, 2013, of which $31.3 million was
related to the Daewoo and Devonian disposition. The remainder of the
net gain on dispositions was related to a gain on Grafton Joint Venture
wells completed during the nine months ended September 30, 2013, as
well as other minor dispositions and swaps which occurred during the
period.
Decommissioning Liabilities
At September 30, 2013, Bellatrix has recorded decommissioning
liabilities of $43.8 million, compared to $43.9 million at December 31,
2012, for future abandonment and reclamation of the Company's
properties. For the nine months ended September 30, 2013,
decommissioning liabilities decreased by a net $0.1 million as a result
of a $1.0 million decrease for changes in estimates, a $0.6 million
decrease related to dispositions, and a decrease of $1.3 million for
liabilities settled during the period, partially offset by $2.2 million
incurred on property acquisitions and development activities and $0.6
million as a result of charges for the unwinding of the discount rates
used for assessing liability fair values. The $1.0 million decrease as
a result of changes in estimates was primarily due to a discount rate
variation at September 30, 2013 compared to December 31, 2012, in
addition to other abandonment liability revisions.
Liquidity and Capital Resources
As an oil and gas business, Bellatrix has a declining asset base and
therefore relies on ongoing development and acquisitions to replace
production and add additional reserves. Future oil and natural gas
production and reserves are highly dependent upon the success of
exploiting the Company's existing asset base and in acquiring
additional reserves. To the extent Bellatrix is successful or
unsuccessful in these activities, cash flow could be increased or
decreased.
Bellatrix is focused on growing oil and natural gas production from its
diversified portfolio of existing and emerging resource plays in
Western Canada. Bellatrix remains highly focused on key business
objectives of maintaining financial strength and optimizing capital
investments - which it seeks to attain through a disciplined approach
to capital spending, a flexible investment program and financial
stewardship. Natural gas prices are primarily driven by North American
supply and demand, with weather being the key factor in the short
term. Bellatrix believes that natural gas represents an abundant,
secure, long-term supply of energy to meet North American needs.
Bellatrix's results are affected by external market and risk factors,
such as fluctuations in the prices of crude oil and natural gas,
movements in foreign currency exchange rates and inflationary pressures
on service costs. Market conditions have resulted in Bellatrix
experiencing recent upward trends in crude oil pricing. Natural gas
pricing is up slightly on the quarterly and year-to-date 2013 periods
compared to the 2012 periods, however, natural gas prices have softened
from the second quarter of 2013 to the 2013 third quarter.
Liquidity risk is the risk that Bellatrix will not be able to meet its
financial obligations as they become due. Bellatrix actively manages
its liquidity through daily and longer-term cash, debt and equity
management strategies. Such strategies encompass, among other factors:
having adequate sources of financing available through its bank credit
facilities, estimating future cash generated from operations based on
reasonable production and pricing assumptions, analysis of economic
risk management opportunities, and maintaining sufficient cash flows
for compliance with operating debt covenants. Bellatrix is fully
compliant with all of its operating debt covenants.
Bellatrix generally relies upon its operating cash flows and its credit
facilities to fund capital requirements and provide liquidity. Future
liquidity depends primarily on cash flow generated from operations,
existing credit facilities and the ability to access debt and equity
markets. From time to time, the Company accesses capital markets to
meet its additional financing needs and to maintain flexibility in
funding its capital programs. There can be no assurance that future
debt or equity financing, or cash generated by operations will be
available or sufficient to meet these requirements or for other
corporate purposes or, if debt or equity financing is available, that
it will be on terms acceptable to Bellatrix.
Credit risk is the risk of financial loss to Bellatrix if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from Bellatrix's trade receivables
from joint venture partners, petroleum and natural gas marketers, and
financial derivative counterparties.
A substantial portion of Bellatrix's accounts receivable are with
customers and joint interest partners in the petroleum and natural gas
industry and are subject to normal industry credit risks. Bellatrix
currently sells substantially all of its production to seven primary
purchasers under standard industry sale and payment terms. The most
significant 60 day exposure to a single counterparty is currently
approximately $8.4 million. Purchasers of Bellatrix's natural gas,
crude oil and natural gas liquids are subject to a periodic internal
credit review to minimize the risk of non-payment. Bellatrix has
continued to closely monitor and reassess the creditworthiness of its
counterparties, including financial institutions. This has resulted in
Bellatrix reducing or mitigating its exposures to certain
counterparties where it is deemed warranted and permitted under
contractual terms.
Bellatrix may be exposed to third party credit risk through its
contractual arrangements with its current or future joint venture
partners, marketers of its petroleum and natural gas production,
derivative counterparties and other parties. In the event such
entities fail to meet their contractual obligations to Bellatrix, such
failures may have a material adverse effect on the Company's business,
financial condition, results of operations and prospects. In addition,
poor credit conditions in the industry and of joint venture partners
may impact a joint venture partner's willingness to participate in
Bellatrix's ongoing capital program, potentially delaying the program
and the results of such program until Bellatrix finds a suitable
alternative partner.
Total net debt levels of $218.2 million at September 30, 2013 have
increased by $28.6 million from $189.6 million at December 31, 2012,
primarily as a consequence of an increase in a working capital
deficiency and bank debt as the Company executed its capital program
for the first nine months of 2013. Total net debt includes the
liability component of the 4.75% Debentures and excludes unrealized
commodity contract assets and liabilities, deferred taxes, finance
lease obligations, deferred liabilities and decommissioning
liabilities.
Funds flow from operations represents 55% of the funding requirements
for Bellatrix's capital expenditures for the nine months ended
September 30, 2013.
As of September 30, 2013, the Company's credit facilities consisted of a
$45 million demand operating facility provided by a Canadian bank and a
$210 million extendible revolving term credit facility provided by two
Canadian banks and a Canadian financial institution. Amounts borrowed
under the credit facility bear interest at a floating rate based on the
applicable Canadian prime rate, U.S. base rate, the LIBOR margin rate,
or the bankers' acceptance stamping fee, plus between 1.00% and 3.50%,
depending on the type of borrowing and the Company's debt to cash flow
ratio. The credit facilities are secured by a $400 million debenture
containing a first ranking charge and security interest. Bellatrix has
provided a negative pledge and undertaking to provide fixed charges
over its properties in certain circumstances. A standby fee is charged
of between 0.50% and 0.875% on the undrawn portion of the credit
facilities, depending upon the Company's debt to cash flow ratio.
The revolving period for the revolving term credit facility will end on
June 24, 2014, unless extended for a further 364 day period. Should
the facility not be extended it will convert to a non-revolving term
facility with the full amount outstanding due 366 days after the last
day of the revolving period of June 24, 2014. The borrowing base will
be subject to re-determination on May 31 and November 30 in each year
prior to maturity, with the next semi-annual redetermination occurring
on November 30, 2013.
As at September 30, 2013, approximately $115.7 million or 45% of unused
and available bank credit under its credit facilities was available to
fund Bellatrix's ongoing capital spending and operational requirements.
On September 4, 2013, the Company announced the issuance of a notice of
redemption to holders of its then outstanding $55.0 million 4.75%
Debentures, with the redemption date set as October 21, 2013. During
September 2013, the $5.021 million principal amount of 4.75% Debentures
was converted into an aggregate of 896,605 common shares of the
Company. A reduction to the deficit of $0.1 million was recognized in
connection with the settlement of the 4.75% Debentures during the third
quarter of 2013. Subsequent to September 30, 2013, the remaining
$49.979 million principal amount of the 4.75% Debentures was converted
or redeemed in exchange for an aggregate of 8,898,243 common shares of
the Company.
Bellatrix currently has commitments associated with its credit
facilities outlined above and the commitments outlined under the
"Commitments" section. Bellatrix continually monitors its capital
spending program in light of the recent volatility with respect to
commodity prices and Canadian dollar exchange rates with the aim of
ensuring the Company will be able to meet future anticipated
obligations incurred from normal ongoing operations with funds flow
from operations and draws on Bellatrix's credit facility, as
necessary. Bellatrix has the ability to fund its 2013 capital program
of $235 million by utilizing cash flow, proceeds from asset
dispositions, and to the extent necessary, bank indebtedness.
As at October 31, 2013, Bellatrix had outstanding a total of 9,201,229
options exercisable at an average exercise price of $3.79 per share and
118,432,841 common shares.
Commitments
As at September 30, 2013, Bellatrix committed to drill 3 gross (1.75
net) wells pursuant to farm-in agreements. Bellatrix expects to
satisfy these drilling commitments at an estimated cost of
approximately $6.3 million.
In addition, Bellatrix entered into two joint operating agreements
during the 2011 year and an additional joint operation agreement during
2012. The agreements include a minimum commitment for the Company to
drill a specified number of wells each year over the term of the
individual agreements. The details of these agreements are provided in
the table below:
|
|
|
|
Joint Operating Agreement
|
Feb. 1, 2011
|
Aug. 4, 2011
|
Dec. 14, 2012
|
Commitment Term
|
2011 to 2015
|
2011 to 2016
|
2014 to 2018
|
Minimum wells per year (gross and net)
|
3
|
5 to 10
|
2
|
Minimum total wells (gross and net)
|
15
|
40
|
10
|
Estimated total cost ($000s)
|
$ 52.5
|
$ 140.0
|
$ 35.0
|
Remaining wells to drill at September 30, 2013
|
-
|
26
|
9
|
Remaining estimated total cost ($000s)
|
$ -
|
$ 91.0
|
$ 31.5
|
Bellatrix also has certain drilling commitments relating to the Grafton
Joint Venture and the Daewoo and Devonian Joint Venture previously
discussed. In meeting the drilling commitments under these agreements,
Bellatrix will also satisfy some of the drilling commitments under the
joint operating agreements described above.
|
|
|
Joint Venture Agreement
|
Grafton
|
Daewoo and
Devonian
|
Commitment Term
|
2013 to 2015
|
2013 to 2016
|
Minimum total wells (gross)
|
58
|
70
|
Minimum total wells (net)
|
10.44
|
23.4
|
Estimated total cost ($000s) (gross)
|
$ 244.0
|
$ 200.0
|
Estimated total cost ($000s) (net)
|
$ 44.0
|
$ 86.7
|
Remaining wells to drill at September 30, 2013 (gross)
|
52
|
65
|
Remaining wells to drill at September 30, 2013 (net)
|
9.36
|
22.00
|
Remaining estimated total cost ($000s) (gross)
|
$ 218.8
|
$ 186.2
|
Remaining estimated total cost ($000s) (net)
|
$ 39.4
|
$ 81.0
|
Bellatrix will also have drilling commitments related to the recently
announced Troika joint venture as previously disclosed. Some of these
drilling commitments are expected to be satisfied in conjunction with
drilling commitments relating to the Joint Operation Agreements noted
above. Bellatrix's net capital commitment to the $240 million Troika
joint venture is $120.0 million.
The Company had the following liabilities as at September 30, 2013:
|
|
|
|
|
|
Liabilities ($000s)
|
Total
|
<1 Year
|
1-3 Years
|
4-5 Years
|
More than
5 years
|
Accounts payable and accrued liabilities (1)
|
$ 79,985
|
$ 79,985
|
$ -
|
$ -
|
$ -
|
Long-term debt - principal (2)
|
139,295
|
-
|
139,295
|
-
|
-
|
Convertible debentures - principal
|
47,335
|
47,335
|
-
|
-
|
-
|
Convertible debentures - interest (3)
|
137
|
137
|
-
|
-
|
-
|
Commodity contract liability
|
10,477
|
8,664
|
1,813
|
-
|
-
|
Decommissioning liabilities (4)
|
43,784
|
-
|
9,130
|
4,657
|
29,997
|
Finance lease obligation
|
13,498
|
1,476
|
3,181
|
2,866
|
5,975
|
Total
|
$ 334,511
|
$ 137,597
|
$ 153,419
|
$ 7,523
|
$ 35,972
|
|
|
(1)
|
Includes $1.1 million of accrued coupon interest payable in relation to
the 4.75% Debentures and $0.2 million of accrued interest payable in
relation to the credit facilities is included in Accounts Payable and
Accrued Liabilities.
|
|
|
(2)
|
Bank debt is based on a revolving term which is reviewed annually and
converts to a 366 day non-revolving facility if not renewed. Interest
due on the bank credit facility is calculated based upon floating
rates.
|
|
|
(3)
|
The 4.75% Debentures outstanding at September 30, 2013 bear interest at
a coupon rate of 4.75%. The remaining outstanding 4.75% Debentures were
converted or redeemed by October 21, 2013.
|
|
|
(4)
|
Amounts represent the inflated, discounted future abandonment and
reclamation expenditures anticipated to be incurred over the life of
the Company's properties (between 2014 and 2053).
|
Off-Balance Sheet Arrangements
The Company has certain fixed-term lease agreements, including primarily
office space leases, which were entered into in the normal course of
operations. All leases have been treated as operating leases whereby
the lease payments are included in operating expenses or G&A expenses
depending on the nature of the lease. The lease agreements do not
currently provide for early termination. No asset or liability value
has been assigned to these leases in the balance sheet as of September
30, 2013.
Business Prospects and Outlook
Bellatrix continues to develop its core assets and conduct exploration
programs utilizing its large inventory of geological prospects.
For the remainder of 2013 and all of 2014, Bellatrix will continue to be
active in drilling with 10 rigs operating in its two core resource
plays, the Cardium oil and Mannville condensate rich gas, utilizing
horizontal drilling multi-fracturing technology. Assuming closing of
the Angle acquisition in December 2013, an initial 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
to 45,000 boe/d and an exit rate of approximately 47,000 boe/d to
48,000 boe/d.
Business Risks and Uncertainties
The reader is advised that Bellatrix continues to be subject to various
types of business risks and uncertainties as described in the Company's
Management Discussion and Analysis for the year ended December 31,
2012, and the Company's Annual Information Form for the year ended
December 31, 2012, and the Company's Annual Report on Form 40-F for the
year ended December 31, 2012, which has been filed with the United
States Securities and Exchange Commission and may be accessed at www.sec.gov.
Critical Accounting Estimates and Accounting Policies
The reader is advised that the critical accounting estimates, policies,
and practices described in the Company's Management Discussion and
Analysis for the year ended December 31, 2012 continue to be critical
in determining Bellatrix's unaudited financial results as of September
30, 2013. There were no changes in accounting policies during the nine
months ended September 30, 2013, except as noted below:
On January 1, 2013, the Company adopted new standards with respect to
consolidations (IFRS 10), joint arrangements (IFRS 11), disclosure of
interests in other entities (IFRS 12), fair value measurements (IFRS
13), and amendments to financial instrument disclosures (IFRS 7). The
adoption of these standards had no impact on the amounts recorded in
the consolidated financial statements as at January 1, 2013 or on the
comparative periods.
A summary of future accounting pronouncements is found in the Company's
Management Discussion and Analysis for the year ended December 31,
2012, available at www.sedar.com or as part of the Company's annual report on Form 40-F for the year
ended December 31, 2012, which may be found at www.sec.gov.
Legal, Environmental Remediation and Other Contingent Matters
The Company is involved in various claims and litigation arising in the
normal course of business. While the outcome of these matters is
uncertain and there can be no assurance that such matters will be
resolved in the Company's favor, the Company does not currently believe
that the outcome of adverse decisions in any pending or threatened
proceeding related to these and other matters or any amount which it
may be required to pay by reason thereof would have a material adverse
impact on its financial position or results of operations.
The Company reviews legal, environmental remediation and other
contingent matters to both determine whether a loss is probable based
on judgment and interpretation of laws and regulations and determine
that the loss can reasonably be estimated. When the loss is
determined, it is charged to earnings. The Company's management
monitor known and potential contingent matters and makes appropriate
provisions by charges to earnings when warranted by the circumstances.
With the above risks and uncertainties the reader is cautioned that
future events and results may vary substantially from that which
Bellatrix currently foresees.
Controls and Procedures
Disclosure Controls and Procedures
The Company's Chief Executive Officer and Chief Financial Officer have
designed, or caused to be designed under their supervision, disclosure
controls and procedures to provide reasonable assurance that: (i)
material information relating to the Company is made known to the
Company's Chief Executive Officer and Chief Financial Officer by
others, particularly during the period in which the annual and interim
filings are being prepared; and (ii) information required to be
disclosed by the Company in its annual filings, interim filings or
other reports filed or submitted by it under securities legislation is
recorded, processed, summarized and reported within the time period
specified in securities legislation.
Internal Control over Financial Reporting
The Company's Chief Executive Officer and Chief Financial Officer have
designed, or caused to be designed under their supervision, internal
control over financial reporting to provide reasonable assurance
regarding the reliability of the Company's financial reporting and the
preparation of financial statements for external purposes in accordance
with GAAP.
The Company is required to disclose herein any change in the Company's
internal control over financial reporting that occurred during the
period beginning on July 1, 2013 and ended on September 30, 2013 that
has materially affected, or is reasonably likely to materially affect,
the Company's internal control over financial reporting. No material
changes in the Company's internal control over financial reporting were
identified during such period that has materially affected, or are
reasonably likely to materially affect, the Company's internal control
over financial reporting.
It should be noted that a control system, including the Company's
disclosure and internal controls and procedures, no matter how well
conceived, can provide only reasonable, but not absolute, assurance
that the objectives of the control system will be met and it should not
be expected that the disclosure and internal controls and procedures
will prevent all errors or fraud.
Sensitivity Analysis
The table below shows sensitivities to funds flow from operations as a
result of product price, exchange rate, and interest rate changes.
This is based on actual average prices received for the third quarter
of 2013 and average production volumes of 21,852 boe/d during that
period, as well as the same level of debt outstanding as at September
30, 2013. Diluted weighted average shares are based upon the third
quarter of 2013. These sensitivities are approximations only, and not
necessarily valid under other significantly different production levels
or product mixes. Commodity price risk management activities can
significantly affect these sensitivities. Changes in any of these
parameters will affect funds flow as shown in the table below:
|
|
|
|
|
|
Funds Flow from Operations (1)
|
Funds Flow from Operations (1)
|
|
(annualized)
|
Per Diluted Share
|
Sensitivity Analysis
|
($000s)
|
($)
|
Change of US $1/bbl WTI
|
2,000
|
0.02
|
Change of $0.10/ mcf
|
3,200
|
0.03
|
Change of US $0.01 CDN/ US exchange rate
|
1,400
|
0.01
|
Change in prime of 1%
|
1,500
|
0.01
|
(1)
|
The term "funds flow from operations" should not be considered an
alternative to, or more meaningful than cash flow from operating
activities as determined in accordance with GAAP as an indicator of the
Company's performance. Therefore reference to additional GAAP measures
of diluted 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. The reconciliation between cash flow
from operating activities and funds flow from operations can be found
elsewhere herein. Funds flow from operations per share is calculated
using the weighted average number of common shares for the period.
|
Selected Quarterly Consolidated Information
The following table sets forth selected consolidated financial
information of the Company for the quarters in 2013, 2012, and 2011.
|
|
|
|
|
2013 - Quarter ended (unaudited)
($000s, except per share amounts)
|
March 31
|
June 30
|
Sept. 30
|
|
Revenues before royalties and risk management
|
65,543
|
74,564
|
68,329
|
|
Cash flow from operating activities
|
35,527
|
29,611
|
25,069
|
|
Cash flow from operating activities per share
|
|
|
|
|
Basic
|
$0.33
|
$0.27
|
$0.23
|
|
Diluted
|
$0.30
|
$0.25
|
$0.21
|
|
Funds flow from operations (1)
|
37,545
|
36,563
|
30,002
|
|
Funds flow from operations per share (1)
|
|
|
|
|
Basic
|
$0.35
|
$0.34
|
$0.28
|
|
Diluted
|
$0.32
|
$0.31
|
$0.25
|
|
Net profit
|
4,561
|
15,466
|
29,453
|
|
Net profit per share
|
|
|
|
|
Basic
|
$0.04
|
$0.14
|
$0.27
|
|
Diluted
|
$0.04
|
$0.13
|
$0.25
|
|
Net capital expenditures (cash)
|
91,614
|
46,700
|
49,452
|
|
2012 - Quarter ended (unaudited)
($000s, except per share amounts)
|
March 31
|
June 30
|
Sept. 30
|
Dec. 31
|
Revenues before royalties and risk management
|
58,191
|
50,714
|
48,126
|
62,283
|
Cash flow from operating activities
|
24,056
|
28,458
|
24,807
|
32,007
|
Cash flow from operating activities per share
|
|
|
|
|
Basic
|
$0.22
|
$0.24
|
$0.23
|
$0.30
|
Diluted
|
$0.21
|
$0.22
|
$0.22
|
$0.28
|
Funds flow from operations (1)
|
29,194
|
25,366
|
26,613
|
29,865
|
Funds flow from operations per share (1)
|
|
|
|
|
Basic
|
$0.27
|
$0.24
|
$0.25
|
$0.28
|
Diluted
|
$0.25
|
$0.22
|
$0.23
|
$0.26
|
Net profit (loss)
|
9,172
|
9,963
|
(615)
|
9,251
|
Net profit (loss) per share
|
|
|
|
|
Basic
|
$0.09
|
$0.09
|
($0.01)
|
$0.09
|
Diluted
|
$0.08
|
$0.09
|
($0.01)
|
$0.08
|
Net capital expenditures (cash)
|
73,831
|
16,284
|
35,515
|
64,383
|
2011 - Quarter ended (unaudited)
($000s, except per share amounts)
|
March 31
|
June 30
|
Sept. 30
|
Dec. 31
|
Revenues before royalties and risk management
|
40,535
|
53,444
|
49,145
|
59,194
|
Cash flow from operating activities
|
15,718
|
23,825
|
28,023
|
30,626
|
Cash flow from operating activities per share
|
|
|
|
|
Basic
|
$0.16
|
$0.23
|
$0.26
|
$0.28
|
Diluted
|
$0.15
|
$0.22
|
$0.24
|
$0.26
|
Funds flow from operations (1)
|
17,027
|
23,126
|
23,964
|
30,120
|
Funds flow from operations per share (1)
|
|
|
|
|
Basic
|
$0.17
|
$0.22
|
$0.22
|
$0.28
|
Diluted
|
$0.16
|
$0.21
|
$0.21
|
$0.26
|
Net profit (loss)
|
(5,487)
|
12,315
|
820
|
(13,597)
|
Net profit (loss) per share
|
|
|
|
|
Basic
|
($0.06)
|
$0.12
|
$0.01
|
($0.13)
|
Diluted
|
($0.06)
|
$0.11
|
$0.01
|
($0.13)
|
Net capital expenditures (cash)
|
59,247
|
28,784
|
40,087
|
47,240
|
(1) Refer to "Additional GAAP Measures" in respect of the term
"funds flow from operations" and "funds flow from operations per
share".
BELLATRIX EXPLORATION LTD.
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
As at September 30, 2013 and December 31, 2012
|
|
|
|
(unaudited, expressed in Canadian dollars)
|
|
|
|
|
|
|
|
($000s)
|
|
2013
|
2012
|
|
|
|
|
ASSETS
|
|
|
|
Current assets
|
|
|
|
Restricted cash (note 3)
|
|
$ 2,945
|
$ -
|
Accounts receivable (note 14)
|
|
40,036
|
40,792
|
Deposits and prepaid expenses
|
|
5,427
|
4,136
|
Commodity contract asset (notes 14 and 15)
|
|
-
|
7,519
|
|
|
48,408
|
52,447
|
Exploration and evaluation assets (note 4)
|
|
37,457
|
38,177
|
Property, plant and equipment (note 5)
|
|
703,962
|
589,759
|
Deferred taxes (note 10)
|
|
-
|
1,038
|
Total assets
|
|
$ 789,827
|
$ 681,421
|
|
|
|
|
LIABILITIES
|
|
|
|
Current liabilities
|
|
|
|
Accounts payable and accrued liabilities
|
|
$ 79,985
|
$ 50,771
|
Current portion of finance lease obligation
|
|
1,476
|
1,425
|
Commodity contract liability (notes 14 and 15)
|
|
8,664
|
1,131
|
|
|
90,125
|
53,327
|
|
|
|
|
Commodity contract liability (notes 14 and 15)
|
|
1,813
|
6,214
|
Long-term debt (note 6)
|
|
139,295
|
133,047
|
Convertible debentures (note 7)
|
|
47,335
|
50,687
|
Finance lease obligation
|
|
12,022
|
13,131
|
Decommissioning liabilities
|
|
43,784
|
43,909
|
Deferred taxes (note 10)
|
|
15,883
|
-
|
Total liabilities
|
|
350,257
|
300,315
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
|
Shareholders' capital
|
|
379,694
|
371,576
|
Equity component of convertible debentures
|
|
3,815
|
4,378
|
Contributed surplus
|
|
38,576
|
37,284
|
Retained earnings (deficit)
|
|
17,485
|
(32,132)
|
Total shareholders' equity
|
|
439,570
|
381,106
|
Total liabilities and shareholders' equity
|
|
$ 789,827
|
$ 681,421
|
|
|
|
|
COMMITMENTS (note 13)
|
|
|
|
|
|
|
|
SUBSEQUENT EVENTS (notes 7 and 16)
|
|
|
|
See accompanying notes to the condensed consolidated financial
statements.
|
BELLATRIX EXPLORATION LTD.
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
For the three months and nine months ended September 30,
|
(unaudited, expressed in Canadian dollars)
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($000s)
|
2013
|
2012
|
2013
|
2012
|
|
|
|
|
|
|
REVENUES
|
|
|
|
|
|
Petroleum and natural gas sales
|
$ 67,717
|
$ 47,608
|
$ 206,602
|
$ 155,567
|
|
Other income
|
612
|
518
|
1,834
|
1,464
|
|
Royalties
|
(8,116)
|
(8,879)
|
(32,462)
|
(26,918)
|
|
Total revenues
|
60,213
|
39,247
|
175,974
|
130,113
|
|
|
|
|
|
|
|
Realized gain (loss) on commodity contracts
|
(2,844)
|
5,472
|
2,873
|
8,453
|
|
Unrealized gain (loss) on commodity contracts
|
(4,344)
|
(6,763)
|
(10,651)
|
9,493
|
|
|
53,025
|
37,956
|
168,196
|
148,059
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
Production
|
18,054
|
11,360
|
50,495
|
37,938
|
|
Transportation
|
1,651
|
1,282
|
4,758
|
3,760
|
|
General and administrative
|
4,548
|
3,397
|
10,633
|
9,882
|
|
Share-based compensation (note 8)
|
2,314
|
945
|
4,005
|
2,505
|
|
Depletion and depreciation (note 5)
|
20,564
|
17,953
|
58,531
|
57,125
|
|
Loss (gain) on property dispositions and swaps
|
(37,135)
|
1,035
|
(37,385)
|
4,063
|
|
|
9,996
|
35,972
|
91,037
|
115,273
|
|
|
|
|
|
|
|
|
|
|
|
|
NET PROFIT BEFORE FINANCE AND TAXES
|
43,029
|
1,984
|
77,159
|
32,786
|
|
|
|
|
|
|
Finance expenses (note 11)
|
3,783
|
2,631
|
10,758
|
7,513
|
|
|
|
|
|
NET PROFIT (LOSS) BEFORE TAXES
|
39,246
|
(647)
|
66,401
|
25,273
|
|
|
|
|
|
|
TAXES
|
|
|
|
|
|
Deferred tax expense (recovery) (note 10)
|
9,793
|
(32)
|
16,921
|
6,753
|
|
|
|
|
|
|
NET PROFIT (LOSS) AND COMPREHENSIVE INCOME
|
29,453
|
(615)
|
49,480
|
18,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit (loss) per share (note 12)
|
|
|
|
|
|
Basic
|
$0.27
|
($0.01)
|
$0.46
|
$0.17
|
|
Diluted
|
$0.25
|
($0.01)
|
$0.43
|
$0.17
|
|
See accompanying notes to the condensed consolidated financial
statements.
|
BELLATRIX EXPLORATION LTD.
|
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
|
For the nine months ended September 30,
|
(unaudited, expressed in Canadian dollars)
|
|
($000s)
|
|
2013
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' CAPITAL
|
|
|
|
|
Common shares
|
|
|
|
|
|
Balance, beginning of period
|
|
$ 371,576
|
$ 370,048
|
|
|
Issued on exercise of share options
|
|
2,254
|
429
|
|
|
Issued on settlement of convertible debentures (note 7)
|
|
5,021
|
-
|
|
|
Contributed surplus transferred on exercised options
|
|
843
|
187
|
|
|
Balance, end of period
|
|
379,694
|
370,664
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY COMPONENT OF CONVERTIBLE DEBENTURES
|
|
|
|
|
|
Balance, beginning of period
|
|
4,378
|
4,378
|
|
|
Adjustment for settlement of convertible debentures (note 7)
|
|
(563)
|
-
|
|
|
Balance, end of period
|
|
3,815
|
4,378
|
|
|
|
|
|
|
CONTRIBUTED SURPLUS (note 8)
|
|
|
|
|
|
Balance, beginning of period
|
|
37,284
|
33,882
|
|
|
Share-based compensation expense
|
|
2,296
|
3,053
|
|
|
Adjustment of share-based compensation expense
|
|
|
|
|
|
for forfeitures of unvested share options
|
|
(161)
|
(172)
|
|
|
Transfer to share capital for exercised options
|
|
(843)
|
(187)
|
|
|
Balance, end of period
|
|
38,576
|
36,576
|
|
|
|
|
|
|
|
|
|
|
|
|
RETAINED EARNINGS (DEFICIT)
|
|
|
|
|
|
Balance, beginning of period
|
|
(32,132)
|
(59,903)
|
|
|
Adjustment for settlement of convertible debentures (note 7)
|
|
137
|
-
|
|
|
Net profit
|
|
49,480
|
18,520
|
|
|
Balance, end of period
|
|
17,485
|
(41,383)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL SHAREHOLDERS' EQUITY
|
|
$ 439,570
|
$ 370,235
|
|
|
|
|
|
|
See accompanying notes to the condensed consolidated financial
statements.
|
BELLATRIX EXPLORATION LTD.
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
|
For the three and nine months ended September 30,
|
(unaudited, expressed in Canadian dollars)
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($000s)
|
2013
|
2012
|
2013
|
2012
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOW FROM (USED IN) OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net profit (loss)
|
$
|
29,453
|
$
|
(615)
|
$
|
49,480
|
$
|
18,520
|
Adjustments for:
|
|
|
|
|
Depletion and depreciation
|
20,564
|
17,953
|
58,531
|
57,125
|
Finance expenses (note 11)
|
669
|
564
|
1,907
|
1,700
|
Share-based compensation (note 8)
|
2,314
|
945
|
4,005
|
2,505
|
Unrealized (gain) loss on commodity contracts
|
4,344
|
6,763
|
10,651
|
(9,493)
|
Loss (gain) on property dispositions and swaps (note 5)
|
(37,135)
|
1,035
|
(37,385)
|
4,063
|
Deferred tax expense (recovery) (note 10)
|
9,793
|
(32)
|
16,921
|
6,753
|
Funds flow from operations
|
30,002
|
26,613
|
104,110
|
81,173
|
Decommissioning costs incurred
|
(287)
|
(196)
|
(834)
|
(559)
|
Realization of imputed interest costs for settlement of convertible
debentures (note 7)
|
(226)
|
-
|
(226)
|
-
|
Change in non-cash working capital (note 9)
|
(4,420)
|
(1,610)
|
(12,843)
|
(3,293)
|
|
|
25,069
|
24,807
|
90,207
|
77,321
|
|
|
|
|
|
|
|
|
|
CASH FLOW FROM (USED IN) FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Issuance of share capital
|
2,063
|
193
|
2,254
|
429
|
Advances from loans and borrowings
|
192,810
|
96,074
|
664,840
|
360,849
|
Repayment of loans and borrowings
|
(247,517)
|
(105,707)
|
(658,592)
|
(312,908)
|
Obligations under finance lease
|
(366)
|
(126)
|
(1,058)
|
(364)
|
Realization of imputed interest costs for settlement of convertible
debentures (note 7)
|
226
|
-
|
226
|
-
|
Change in non-cash working capital (note 9)
|
2,674
|
(1,086)
|
2,911
|
(1,965)
|
|
(50,110)
|
(10,652)
|
10,581
|
46,041
|
|
|
|
|
|
CASH FLOW FROM (USED IN) INVESTING ACTIVITIES
|
|
|
|
|
Expenditure on exploration and evaluation assets
|
(912)
|
(2,012)
|
(7,873)
|
(5,248)
|
Additions to property, plant and equipment
|
(48,540)
|
(37,828)
|
(179,887)
|
(127,052)
|
Proceeds on sale of property, plant and equipment
|
54,242
|
4,325
|
54,236
|
6,670
|
Change in non-cash working capital (note 9)
|
20,251
|
21,360
|
32,736
|
2,268
|
|
25,041
|
(14,155)
|
(100,788)
|
(123,362)
|
|
|
|
|
|
Change in cash
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Cash, beginning of period
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Cash, end of period
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Cash paid:
|
|
|
|
|
|
|
|
|
Interest
|
$
|
2,042
|
$
|
1,576
|
$
|
4,212
|
$
|
4,751
|
Taxes
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the condensed consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, expressed in Canadian dollars)
1. CORPORATE INFORMATION
Bellatrix Exploration Ltd. (the "Company" or "Bellatrix") is a growth
oriented, public exploration and production company.
2. BASIS OF PREPARATION
a. Statement of compliance
These condensed consolidated financial statements ("interim financial
statements") were authorized by the Board of Directors on November 6,
2013. The Company prepared these interim financial statements in
accordance with IAS 34 Interim Financial Reporting under IFRS. The
interim financial statements do not include all information and
disclosures normally provided in annual financial statements and should
be read in conjunction with the Company's 2012 audited annual financial
statements, available at www.sedar.com. The Company has prepared these interim financial statements using the
same significant accounting policies, critical judgments, accounting
estimates and methods of computation applied in the 2012 audited annual
financial statements, except as noted below.
b. Change in accounting policies
On January 1, 2013, the Company adopted new standards with respect to
consolidations (IFRS 10), joint arrangements (IFRS 11), disclosure of
interests in other entities (IFRS 12), fair value measurements (IFRS
13), and amendments to financial instrument disclosures (IFRS 7). The
adoption of these standards had no impact on the amounts recorded in
the consolidated financial statements as at January 1, 2013 or on the
comparative periods.
c. Basis of measurement
The condensed consolidated financial statements are presented in
Canadian dollars, the Company's functional currency, and have been
prepared on the historical cost basis except for derivative financial
instruments and liabilities for cash-settled share-based payment
arrangements measured at fair value. The condensed consolidated
financial statements have, in management's opinion, been properly
prepared using careful judgment and reasonable limits of materiality.
3. RESTRICTED CASH
Restricted cash represents funds advanced by a certain joint venture
partner for specific future drilling projects. These funds are
released for general purposes as each project reaches a predetermined
progress point.
4. EXPLORATION AND EVALUATION ASSETS
($000s)
|
|
|
|
Cost
|
|
Balance, December 31, 2011
|
$ 33,089
|
Additions
|
17,118
|
Transfer to oil and natural gas properties
|
(10,301)
|
Disposals (1)
|
(1,729)
|
Balance, December 31, 2012
|
38,177
|
Additions
|
7,873
|
Transfer to oil and natural gas properties
|
(3,760)
|
Disposals (1)
|
(4,833)
|
Balance, September 30, 2013
|
$ 37,457
|
(1) Disposals include swaps.
5. PROPERTY, PLANT AND EQUIPMENT
($000s)
|
|
|
|
|
|
|
|
|
Oil and
natural gas
properties
|
Office
furniture and
equipment
|
Total
|
Cost
|
|
|
|
|
|
|
Balance, December 31, 2011
|
$
|
657,315
|
$
|
2,503
|
$
|
659,818
|
Additions
|
|
194,442
|
|
299
|
|
194,741
|
Transfer from exploration and evaluation assets
|
|
10,301
|
|
-
|
|
10,301
|
Disposals (1)
|
|
(10,950)
|
|
-
|
|
(10,950)
|
Balance, December 31, 2012
|
|
851,108
|
|
2,802
|
|
853,910
|
Additions
|
|
176,056
|
|
4,988
|
|
181,044
|
Transfer from exploration and evaluation assets
|
|
3,760
|
|
-
|
|
3,760
|
Farmout wells
|
|
3,895
|
|
-
|
|
3,895
|
Disposals (1)
|
|
(16,579)
|
|
(487)
|
|
(17,066)
|
Balance, September 30, 2013
|
$
|
1,018,240
|
$
|
7,303
|
$
|
1,025,543
|
|
|
|
|
|
|
|
Accumulated Depletion, Depreciation and Impairment losses
|
|
|
|
|
|
|
Balance, December 31, 2011
|
$
|
174,250
|
$
|
1,267
|
$
|
175,517
|
Charge for time period
|
|
75,466
|
|
254
|
|
75,720
|
Impairment loss
|
|
14,760
|
|
60
|
|
14,820
|
Disposals (1)
|
|
(1,906)
|
|
-
|
|
(1,906)
|
Balance, December 31, 2012
|
$
|
262,570
|
$
|
1,581
|
$
|
264,151
|
Charge for time period
|
|
58,094
|
|
437
|
|
58,531
|
Disposals (1)
|
|
(834)
|
|
(267)
|
|
(1,101)
|
Balance, September 30, 2013
|
$
|
319,830
|
$
|
1,751
|
$
|
321,581
|
(1) Disposals include swaps.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts
|
|
|
|
|
|
|
At December 31, 2012
|
$
|
588,538
|
$
|
1,221
|
$
|
589,759
|
At September 30, 2013
|
$
|
698,410
|
$
|
5,552
|
$
|
703,962
|
Bellatrix has included $462.6 million (2012: $371.9 million) for future
development costs and excluded $41.8 million (2012: $34.8 million) for
estimated salvage from the depletion calculation for the three months
ended September 30, 2013.
For the nine month period ended September 30, 2013, the Company
capitalized $3.9 million (2012: $3.2 million) of general and
administrative expenses, and $1.1 million (2012: $1.2 million) of
share-based compensation expense directly related to exploration and
development activities.
Bellatrix's credit facilities are secured against all of the assets of
the Corporation by a $400 million debenture containing a first ranking
floating charge and security interest. The Corporation has provided a
negative pledge and undertaking to provide fixed charges over major
petroleum and natural gas reserves in certain circumstances.
6. LONG-TERM DEBT
($000s)
|
September 30, 2013
|
December 31, 2012
|
Operating facility
|
$ 14,295
|
$ 4,047
|
Revolving term facility
|
125,000
|
129,000
|
Balance, end of period
|
$ 139,295
|
$ 133,047
|
As of September 30, 2013, the Company's credit facilities consist of a
$45 million demand operating facility provided by a Canadian bank and a
$210 million extendible revolving term credit facility provided by two
Canadian banks and a Canadian financial institution.
The revolving period for the revolving term credit facility will end on
June 24, 2014, unless extended for a further 364 day period. Should
the facility not be extended it will convert to a non-revolving term
facility with the full amount outstanding due 366 days after the last
day of the revolving period of June 24, 2014. The borrowing base will
be subject to re-determination on May 31 and November 30 in each year
prior to maturity, with the next semi-annual redetermination occurring
on November 30, 2013.
As at September 30, 2013, the Company had outstanding letters of credit
totaling $0.5 million that reduce the amount otherwise available to be
drawn on the syndicated facility.
As at September 30, 2013, the Company had approximately $115.7 million,
or 45% of unused and available bank credit under its credit facilities.
Bellatrix was fully compliant with all of its operating debt covenants.
7. CONVERTIBLE DEBENTURES
The following table sets forth a reconciliation of the convertible
debentures:
Convertible debentures
($000s except number of debentures)
|
|
4.75%
|
Number of Debentures
|
|
|
Balance, December 31, 2012
|
|
55,000
|
Debentures converted
|
|
(5,021)
|
Balance, September 30, 2013
|
|
49,979
|
Debt Component
|
|
|
Balance, December 31, 2012
|
$
|
50,687
|
Debentures converted
|
|
(4,647)
|
Accretion
|
|
1,295
|
Balance, September 30, 2013
|
$
|
47,335
|
Equity Component
|
|
|
Balance, December 31, 2012
|
$
|
4,378
|
Debentures converted
|
|
(563)
|
Balance, September 30, 2013
|
$
|
3,815
|
On September 4, 2013, the Company announced the issuance of a notice of
redemption to holders of its then outstanding $55.0 million 4.75%
convertible debentures, with the redemption date set as October 21,
2013. During September 2013, $5.021 million principal amount of
convertible debentures was converted into an aggregate of 896,605
common shares of the Company. An increase to the retained earnings of
$0.1 million was recognized in connection with the settlement of the
convertible debentures during the third quarter of 2013. Subsequent to
September 30, 2013, the remaining $49.979 million principal amount of
convertible debentures was converted or redeemed in exchange for an
aggregate of 8,898,243 common shares of the Company.
8. SHARE-BASED COMPENSATION PLANS
The following table provides a summary of the Company's share-based
compensation plans for the nine months ended September 30, 2013:
($000s)
|
|
|
|
|
|
|
|
|
|
|
|
Share
Options
|
Deferred
Share Units
|
Restricted
Share Units
|
Performance
Share Units
|
Total
|
Expense for the three months ended September 30, 2013 (1)
|
$
|
330
|
$
|
1,668
|
$
|
220
|
$
|
96
|
$
|
2,314
|
Expense for the nine months ended September 30, 2013 (2)
|
$
|
1,236
|
$
|
2,453
|
$
|
220
|
$
|
96
|
$
|
4,005
|
Liability balance, September 30, 2013
|
$
|
-
|
$
|
4,181
|
$
|
328
|
$
|
149
|
$
|
4,658
|
(1) The expense for share options is net of adjustments for forfeitures of
$16 thousand, and capitalization of $0.2 million. The expense for
restricted share units is net of capitalization of $0.1 million. The
expense for performance share units is net of capitalization of $53
thousand.
(2) The expense for share options is net of forfeitures of $0.2 million,
and capitalization of $0.9 million. The expense for restricted share
units is net of capitalization of $0.1 million. The expense for
performance share units is net of capitalization of $53 thousand.
The following table provides a summary of the Company's share-based
compensation plans for the nine months ended September 30, 2012:
($000s)
|
|
|
|
|
|
|
|
|
|
|
|
Share
Options
|
Deferred
Share Units
|
Restricted
Share Units
|
Performance
Share Units
|
Total
|
Expense for the three months ended September 30, 2012 (1)
|
$
|
507
|
$
|
438
|
$
|
-
|
$
|
-
|
$
|
945
|
Expense for the nine months ended September 30, 2012 (2)
|
$
|
1,680
|
$
|
825
|
$
|
-
|
$
|
-
|
$
|
2,505
|
Liability balance, September 30, 2012
|
$
|
-
|
$
|
1,589
|
$
|
-
|
$
|
-
|
$
|
1,589
|
(1) The expense for share options is net of adjustments for forfeitures of
$55 thousand, and capitalization of $0.3 million.
(2) The expense for share options is net of adjustments for forfeitures of
$0.2 million, and capitalization of $1.2 million.
a. Share Option Plan
During the nine months ended September 30, 2013, Bellatrix granted
778,000 (2012: 2,363,000) share options. The fair values of all share
options granted are estimated on the date of grant using the
Black-Scholes option-pricing model. The weighted average fair market
value of share options granted during the three month periods ended
September 31, 2013 and 2012, and the weighted average assumptions used
in their determination are as noted below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
Inputs:
|
|
|
|
|
|
|
|
Share price
|
|
|
7.16
|
|
3.40
|
|
|
Exercise price
|
|
|
7.16
|
|
3.40
|
|
|
Risk free interest rate (%)
|
|
|
1.4
|
|
1.1
|
|
|
Option life (years)
|
|
|
2.8
|
|
2.8
|
|
|
Option volatility (%)
|
|
|
47
|
|
54
|
|
|
Results:
|
|
|
|
|
|
|
|
Weighted average fair value of each share option granted
|
|
2.28
|
|
1.23
|
Bellatrix calculates volatility based on historical share price.
Bellatrix incorporates an estimated forfeiture rate between 3% and 10%
(2012: 3% to 10%) for stock options that will not vest, and adjusts for
actual forfeitures as they occur.
The weighted average trading price of the Company's common shares on the
TSX for the three and nine months ended September 30, 2013 was $7.19
(2012: $3.54), and $6.25 (2012: $4.35), respectively.
The following tables summarize information regarding Bellatrix's Share
Option Plan:
Share Options Continuity
|
Weighted Average
Exercise Price
|
|
Number
|
Balance, December 31, 2012
|
$
|
3.46
|
|
9,420,451
|
Granted
|
$
|
7.16
|
|
778,000
|
Exercised
|
$
|
2.97
|
|
(759,219)
|
Forfeited and cancelled
|
$
|
4.45
|
|
(228,003)
|
Balance, September 30, 2013
|
$
|
3.79
|
|
9,211,229
|
As of September 30, 2013, a total of 10,952,460 share options were
reserved, leaving an additional 1,741,231 available for future grants.
Share Options Outstanding, September 30, 2013
|
|
|
|
|
|
|
Outstanding
|
|
Exercisable
|
Exercise Price
|
At
September 30, 2013
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contractual Life
|
At
September 30, 2013
|
Exercise Price
|
$ 0.65 - $ 1.45
|
572,947
|
$ 1.01
|
0.6
|
572,947
|
$ 1.01
|
$ 1.46 - $ 1.99
|
1,074,004
|
$ 1.63
|
0.5
|
1,074,004
|
$ 1.63
|
$ 2.00 - $ 3.36
|
1,202,775
|
$ 2.41
|
1.7
|
916,107
|
$ 2.18
|
$ 3.37 - $ 3.84
|
1,484,000
|
$ 3.42
|
3.6
|
502,992
|
$ 3.44
|
$ 3.85 - $ 4.72
|
1,944,001
|
$ 3.93
|
2.0
|
1,635,333
|
$ 3.89
|
$ 4.73 - $ 5.50
|
2,170,502
|
$ 5.28
|
2.8
|
1,310,481
|
$ 5.28
|
$ 5.51 - $ 7.74
|
763,000
|
$ 7.17
|
4.9
|
-
|
-
|
$ 0.65 - $ 7.74
|
9,211,229
|
$ 3.79
|
2.4
|
6,011,864
|
$ 3.22
|
b. Deferred Share Unit Plan
During the nine months ended September 30, 2013, the Company granted
122,076 (2012: 246,225) DSUs, and had 530,600 DSUs outstanding as at
September 30, 2013 (2012: 405,451).
c. Restricted and Performance Share Unit Plan
On August 7, 2013, the Directors of Bellatrix approved a Restricted and
Performance Share Unit Plan ("the Plan") where the Company may grant
Restricted Share Units ("RSUs") and Performance Share Units ("PSUs") to
officers, employees, and service providers. RSUs granted to employees
vest in equal annual amounts over the course of three years. Each RSU
entitles its holder to receive a cash payment or common shares equal to
the weighted average trading price of the Company's shares trading on
the TSX for the five trading days preceding its vesting date or, if and
once approved by the TSX and shareholders of the Company, at the
Company's discretion, common shares of the Company equal to the nominal
number of Common Shares represented by the RSUs. It is the Company's
intention that the RSUs will be settled in cash. Unvested RSUs are
forfeited at the time the holder's employment with the Company ends,
except on death in which case they vest. Outstanding RSUs are revalued
at each financial reporting date to their fair market value at that
time, determined by the weighted average trading price of the Company's
shares on the TSX for the five trading days preceding period end. The
revaluation is captured as part of share-based compensation expense
included in the Company's Statements of Comprehensive Income. The fair
value of the outstanding RSUs is recognized as a liability included as
part of accounts payable on the Company's Balance Sheet.
During the nine months ended September 30, 2013, the Company granted
508,300 (2012: nil) RSUs, and had 508,300 RSUs outstanding as at
September 30, 2013 (2012: nil). PSUs vest on the third anniversary
date. Each PSU entitles its holder to receive a cash payment or
common shares equal to the weighted average trading price of the
Company's shares trading on the TSX for the five trading days preceding
its vesting date or, if and once approved by the TSX and shareholders
of the Company, at the Company's discretion, common shares of the
Company equal to the nominal number of Common Shares represented by the
PSUs, in each case multiplied by a payout multiplier determined by the
Company's Board of Directors based on determined corporate performance
measures. It is the Company's intention that the PSUs will be settled
in cash. Unvested PSUs are forfeited at the time the holder's
employment with the Company ends. Outstanding PSUs are revalued at
each financial reporting date to their fair market value at that time,
determined by the weighted average trading price of the Company's
shares on the TSX for the five trading days preceding period end. The
revaluation is captured as part of share-based compensation expense
included in the Company's Statements of Comprehensive Income. The fair
value of the outstanding PSUs is recognized as a liability included in
accounts payable on the Company's Balance Sheet.
During the nine months ended September 30, 2013, the Company granted
470,700 (2012: nil) PSUs, and had 470,700 PSUs outstanding as at
September 30, 2013 (2012: nil).
9. SUPPLEMENTAL CASH FLOW INFORMATION
Change in Non-cash Working Capital
|
|
|
|
|
|
|
|
|
|
|
|
($000s)
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|
2013
|
2012
|
2013
|
2012
|
Changes in non-cash working capital items:
|
|
|
|
|
|
|
|
|
|
|
Restricted cash
|
$
|
(2,945)
|
$
|
-
|
$
|
(2,945)
|
$
|
-
|
|
Accounts receivable
|
3,983
|
787
|
756
|
9,110
|
|
Deposits and prepaid expenses
|
1,643
|
677
|
(1,291)
|
(1,447)
|
|
Accounts payable and accrued liabilities
|
15,824
|
17,200
|
26,284
|
(10,653)
|
|
18,505
|
$
|
18,664
|
$ 22,804
|
$
|
(2,990)
|
Changes related to:
|
|
|
|
|
|
|
|
|
|
Operating activities
|
$
|
(4,420)
|
$
|
(1,610)
|
$
|
(12,843)
|
$
|
(3,293)
|
|
Financing activities
|
2,674
|
(1,086)
|
2,911
|
(1,965)
|
|
Investing activities
|
20,251
|
21,360
|
32,736
|
2,268
|
|
$
|
18,505
|
$
|
18,664
|
$
|
22,804
|
$
|
(2,990)
|
10. INCOME TAXES
Bellatrix is a corporation as defined under the Income Tax Act (Canada)
and is subject to Canadian federal and provincial taxes. Bellatrix is
subject to provincial taxes in Alberta, British Columbia and
Saskatchewan as the Company operates in those jurisdictions.
Deferred taxes reflect the tax effects of differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts reported for tax purposes. As at September
30, 2013, Bellatrix had approximately $615 million in tax pools
available for deduction against future income. Included in this tax
basis are estimated non-capital loss carry forwards of approximately
$10 million that expire in years through 2027.
11. FINANCE INCOME AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
($000s)
|
2013
|
2012
|
2013
|
2012
|
Finance expense
|
|
|
|
|
|
|
|
|
|
Interest on long-term debt
|
$
|
2,455
|
$
|
1,408
|
$
|
6,897
|
$
|
3,852
|
|
Interest on convertible debentures
|
659
|
659
|
1,954
|
1,961
|
|
|
|
|
|
|
|
|
|
|
Accretion on convertible debentures
|
446
|
409
|
1,295
|
1,193
|
|
Accretion on decommissioning liabilities
|
223
|
155
|
612
|
507
|
|
669
|
564
|
1,907
|
1,700
|
Finance expense
|
$
|
3,783
|
$
|
2,631
|
$
|
10,758
|
$
|
7,513
|
12. PER SHARE AMOUNTS
The calculation of basic earnings per share for the three and nine
months ended September 30, 2013 was based on a net profit of $29.5
million (2012: net loss of $0.6 million) and a net profit of $49.5
million (2012: net profit of $18.5 million), respectively.
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|
2013
|
2012
|
2013
|
2012
|
Basic common shares outstanding
|
109,524,598
|
107,606,884
|
109,524,598
|
107,606,884
|
Fully dilutive effect of:
|
|
|
|
|
|
Share options outstanding
|
9,211,229
|
9,499,007
|
9,211,229
|
9,499,007
|
|
Shares issuable for convertible debentures
|
8,924,824
|
9,821,429
|
8,924,824
|
9,821,429
|
Fully diluted common shares outstanding
|
127,660,651
|
126,927,320
|
127,660,651
|
126,927,320
|
Weighted average shares outstanding
|
108,252,748
|
107,527,718
|
108,019,795
|
107,479,907
|
Dilutive effect of share options and convertible debentures (1)
|
12,903,639
|
-
|
12,210,555
|
1,631,585
|
Diluted weighted average shares outstanding
|
121,156,387
|
107,527,718
|
120,230,350
|
109,111,492
|
(1) For the three month period ending September 30, 2013, a total of
3,978,815 (2012: nil) share options were included in the calculation as
they were dilutive, and 8,924,824 (2012: nil) common shares issuable
pursuant to the conversion of the convertible debentures were also
included in the calculation as they were dilutive. As a consequence, a
total of $0.8 million (2012: nil) for interest and accretion expense
(net of income tax effect) was added to the numerator for the
calculation.
For the nine month period ending September 30, 2013, a total of
3,285,731 (2012: 1,631,585) share options were included in the
calculation as they were dilutive, and 8,924,824 (2012: nil) common
shares issuable pursuant to the conversion of the convertible
debentures were also included in the calculation as they were dilutive.
As a consequence, a total of $2.4 million (2012: nil) for interest and
accretion expense (net of income tax effect) was added to the numerator
for the calculation.
13. COMMITMENTS
As at September 30, 2013, Bellatrix committed to drill 3 gross (1.75
net) wells pursuant to farm-in agreements. Bellatrix expects to
satisfy these drilling commitments at an estimated cost of
approximately $6.3 million.
In addition, Bellatrix entered into two joint operating agreements
during the 2011 year and an additional joint operation agreement during
2012. The agreements include a minimum commitment for the Company to
drill a specified number of wells each year over the term of the
individual agreements. The details of these agreements are provided in
the table below:
|
|
|
|
Joint Operating Agreement
|
Feb. 1, 2011
|
Aug. 4, 2011
|
Dec. 14, 2012
|
Commitment Term
|
2011 to 2015
|
2011 to 2016
|
2014 to 2018
|
Minimum wells per year (gross and net)
|
3
|
5 to 10
|
2
|
Minimum total wells (gross and net)
|
15
|
40
|
10
|
Estimated total cost ($000s)
|
$
|
52.5
|
$
|
140.0
|
$
|
35.0
|
Remaining wells to drill at September 30, 2013
|
-
|
26
|
9
|
Remaining estimated total cost ($000s)
|
$
|
-
|
$
|
91.0
|
$
|
31.5
|
Bellatrix also has certain drilling commitments relating to the Grafton
Joint Venture and the Daewoo and Devonian Joint Venture. In meeting
the drilling commitments under these agreements, Bellatrix will also
satisfy some of the drilling commitments under the joint operating
agreements described above.
|
|
|
Joint Venture Agreement
|
Grafton
|
Daewoo and
Devonian
|
Commitment Term
|
2013 to 2015
|
2013 to 2016
|
Minimum total wells (gross)
|
58
|
70
|
Minimum total wells (net)
|
10.44
|
23.4
|
Estimated total cost ($000s) (gross)
|
$ 244.0
|
$ 200.0
|
Estimated total cost ($000s) (net)
|
$ 44.0
|
$ 86.7
|
Remaining wells to drill at September 30, 2013 (gross)
|
52
|
65
|
Remaining wells to drill at September 30, 2013 (net)
|
9.36
|
22.00
|
Remaining estimated total cost ($000s) (gross)
|
$ 218.8
|
$ 186.2
|
Remaining estimated total cost ($000s) (net)
|
$ 39.4
|
$ 81.0
|
Bellatrix will also have drilling commitments related to the recently
announced Troika joint venture as disclosed in note 16(c). Some of
these drilling commitments are expected to be satisfied in conjunction
with drilling commitments relating to the Joint Operation Agreements
noted above. Bellatrix's net capital commitment to the $240 million
Troika joint venture is $120.0 million.
14. FINANCIAL RISK MANAGEMENT
a. Credit risk
As at September 30, 2013, accounts receivable was comprised of the
following:
|
|
|
|
|
Aging ($000s)
|
Not past due
(less than 90
days)
|
|
Past due (90
days or more)
|
Total
|
Joint venture and other trade accounts receivable
|
7,242
|
|
2,359
|
9,601
|
Amounts due from government agencies
|
3,312
|
|
659
|
3,971
|
Revenue and other accruals
|
22,262
|
|
4,421
|
26,683
|
Cash call receivables
|
-
|
|
21
|
21
|
Less: Allowance for doubtful accounts
|
-
|
|
(240)
|
(240)
|
Total accounts receivable
|
32,816
|
|
7,220
|
40,036
|
Less:
|
|
|
|
|
Accounts payable due to same partners
|
-
|
|
(87)
|
(87)
|
Subsequent receipts to October 31, 2013
|
(19,920)
|
|
(475)
|
(20,395)
|
|
12,896
|
|
6,658
|
19,554
|
Amounts due from government agencies include GST and royalty
adjustments. Accounts payable due to same partners includes amounts
which may be available for offset against certain receivables.
Cash calls receivables consist of advances paid to joint interest
partners for capital projects.
The carrying amount of accounts receivable and derivative assets
represents the maximum credit exposure.
b. Liquidity risk
The following are the contractual maturities of liabilities as at
September 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
Liabilities ($000s)
|
|
Total
|
|
< 1 Year
|
|
1-3 Years
|
|
4-5 Years
|
|
More than
5 years
|
Accounts payable and accrued liabilities (1)
|
$
|
79,985
|
$
|
79,985
|
$
|
-
|
$
|
-
|
$
|
-
|
Long-term debt - principal (2)
|
|
139,295
|
|
-
|
|
139,295
|
|
-
|
|
-
|
Convertible debentures - principal
|
|
47,335
|
|
47,335
|
|
-
|
|
-
|
|
-
|
Convertible debentures - interest (3)
|
|
137
|
|
137
|
|
-
|
|
-
|
|
-
|
Commodity contract liability
|
|
10,477
|
|
8,664
|
|
1,813
|
|
-
|
|
-
|
Decommissioning liabilities (4)
|
|
43,784
|
|
-
|
|
9,130
|
|
4,657
|
|
29,997
|
Finance lease obligation
|
|
13,498
|
|
1,476
|
|
3,181
|
|
2,866
|
|
5,975
|
Total
|
$
|
334,511
|
$
|
137,597
|
$
|
153,419
|
$
|
7,523
|
$
|
35,972
|
(1)
|
Includes $1.1 million of accrued coupon interest payable in relation to
the 4.75% Debentures and $0.2 million of accrued interest payable in
relation to the credit facilities is included in Accounts Payable and
Accrued Liabilities.
|
(2)
|
Bank debt is based on a revolving term which is reviewed annually and
converts to a 366 day non-revolving facility if not renewed. Interest
due on the bank credit facility is calculated based upon floating
rates.
|
(3)
|
The 4.75% Debentures outstanding at September 30, 2013 bear interest at
a coupon rate of 4.75%. The remaining outstanding convertible
debentures were converted or redeemed by October 21, 2013. .
|
(4)
|
Amounts represent the inflated, discounted future abandonment and
reclamation expenditures anticipated to be incurred over the life of
the Company's properties (between 2014 and 2053).
|
c. Commodity Price Risk
The Company utilizes both financial derivatives and physical delivery
sales contracts to manage commodity price risks. All such transactions
are conducted in accordance with the commodity price risk management
policy that has been approved by the Board of Directors.
As at September 30, 2013, the Company has entered into commodity price
risk management arrangements as follows:
|
|
|
|
|
|
|
|
Type
|
Period
|
Volume
|
Price Floor
|
Price Ceiling
|
Index
|
Crude oil fixed
|
January 1, 2013 to Dec. 31, 2013
|
1,500 bbl/d
|
$
|
94.50 CDN
|
$
|
94.50 CDN
|
WTI
|
Crude oil fixed
|
July 1, 2013 to Dec. 31, 2013
|
1,500 bbl/d
|
$
|
96.87 CDN
|
$
|
96.87 CDN
|
WTI
|
Crude oil fixed
|
August 1, 2013 to Dec. 31, 2013
|
1,000 bbl/d
|
$
|
106.02 CDN
|
$
|
106.02 CDN
|
WTI
|
Crude oil fixed
|
January 1, 2014 to Dec. 31, 2014
|
1,500 bbl/d
|
$
|
94.00 CDN
|
$
|
94.00 CDN
|
WTI
|
Crude oil fixed
|
January 1, 2014 to Dec. 31, 2014
|
1,500 bbl/d
|
$
|
95.22 CDN
|
$
|
95.22 CDN
|
WTI
|
Crude oil call option
|
January 1, 2014 to Dec. 31, 2014
|
3,000 bbl/d
|
|
-
|
$
|
105.00 US
|
WTI
|
Natural gas fixed
|
April 1, 2013 to Oct. 31, 2013
|
20,000 GJ/d
|
$
|
3.05 CDN
|
$
|
3.05 CDN
|
AECO
|
Natural gas fixed
|
April 1, 2013 to Oct. 31, 2013
|
10,000 GJ/d
|
$
|
3.095 CDN
|
$
|
3.095 CDN
|
AECO
|
Natural gas fixed
|
Feb. 1, 2013 to Dec. 31, 2013
|
10,000 GJ/d
|
$
|
3.05 CDN
|
$
|
3.05 CDN
|
AECO
|
Natural gas fixed
|
April 1, 2013 to June 30, 2014
|
15,000 GJ/d
|
$
|
3.05 CDN
|
$
|
3.05 CDN
|
AECO
|
15. FAIR VALUE
The Company's financial instruments as at September 30, 2013 include
accounts receivable, deposits, commodity contract asset, accounts
payable and accrued liabilities, long-term debt and convertible
debentures. The fair value of accounts receivable, deposits, accounts
payable and accrued liabilities approximate their carrying amounts due
to their short-terms to maturity.
The fair value of commodity contracts is determined by discounting the
difference between the contracted price and published forward price
curves as at the balance sheet date, using the remaining contracted
petroleum and natural gas volumes. The fair value of commodity
contracts as at September 30, 2013 was a net liability of $10.5 million
(2012: $1.1 million net liability). The commodity contracts are
classified as level 2 within the fair value hierarchy.
($000s)
|
September 30, 2013
|
September 30, 2012
|
Commodity contract asset
|
$
|
-
|
$
|
1,420
|
Commodity contract liability
|
|
(10,477)
|
|
(2,559)
|
Net commodity contract asset (liability)
|
$
|
(10,477)
|
$
|
(1,139)
|
Long-term bank debt bears interest at a floating market rate and the
credit and market premiums therein are indicative of current rates;
accordingly the fair market value approximates the carrying value.
The fair value of the 4.75% Debentures of $66.9 million is based on
exchange traded values. The 4.75% Debentures are classified as level 1
within the fair value hierarchy.
16. SUBSEQUENT EVENTS
a. Acquisition of Angle Energy Inc.
On October 15, 2013, the Company announced that it has entered into an
agreement (the "Arrangement Agreement") with Angle Energy Inc.
("Angle") providing for the acquisition by Bellatrix of all the issued
and outstanding Angle common shares pursuant to a plan of arrangement
(the "Transaction") under the Business Corporations Act (Alberta) (the "Arrangement").
Under the terms of the Transaction, Angle shareholders will receive, for
each Angle Share held, at the election of the Angle shareholders: (i)
$3.85 cash; or (ii) 0.4734 of a Bellatrix common share (a "Bellatrix
Share"), subject to the cash amount payable to Angle shareholders
equaling $69.7 million and thus subject to prorating. The aggregate
Transaction value is approximately $576 million based on the volume
weighted average trading price of the Bellatrix Shares for the 10
trading days ending October 11, 2013 of $8.1324 per Bellatrix Share and
the assumption of net debt of Angle of $261.0 million (after taking
into account $16.0 million of Transaction costs and costs related to
termination of outstanding Angle options and vested restricted share
units ("RSUs"), severance costs and premium that may be paid on the
Angle Debentures).
Assuming that no Angle options (of which as of October 18, 2013,
1,857,612 are in-the-money based on the cash offer of $3.85) are
exercised for Angle Shares and 902,179 restricted share units are
exercised for Angle Shares, Bellatrix will issue an aggregate
30,226,413 Bellatrix Shares pursuant to the Arrangement.
Pursuant to the Arrangement, if approved by holders of the outstanding
5.75% convertible unsecured subordinated debentures of Angle with a
maturity date of January 31, 2016 (the "Angle Debentures"), holders of
the Angle Debentures will receive, for each $1,000 principal amount of
the Angle Debentures, an amount equal to $1,040 per Angle Debenture,
plus accrued and unpaid interest to the day immediately prior to the
effective date of the Arrangement.
All directors and officers of Angle, representing 8.3% of the issued and
outstanding Angle Shares, have entered into support agreements with
Bellatrix pursuant to which they have agreed to vote their Angle Shares
and Angle Debentures, as applicable, in favour of the Transaction.
The board of directors of Bellatrix has approved the Transaction and
recommended that shareholders of Bellatrix vote in favour of the
issuance of the Bellatrix Shares pursuant to the Transaction. All of
the directors and officers of Bellatrix, representing 2.2% of the
issued and outstanding Bellatrix Shares have entered into agreements
with Angle pursuant to which they have agreed to vote their Bellatrix
Shares in favour of the Transaction.
A joint management information circular and proxy statement outlining
the details of the Arrangement and the Transaction will be mailed to
the holders of Angle Shares, Angle Debentures and Bellatrix Shares in
mid-November for meetings to be held on December 10, 2013 where holders
of Angle Shares, Angle Debentures and Bellatrix Shareholders will vote
on the Arrangement and related matters. Closing of the Transaction is
expected to occur in mid-December, 2013.
The Arrangement Agreement provides that the completion of the
Transaction is subject to certain conditions, including the receipt of
all required regulatory approvals, including the approval of the TSX
and the NYSE MKT stock exchange, the approval of the shareholders of
Bellatrix, the approval of holders of Angle Shares including, if
applicable, the approval of disinterested shareholders, and the
approval of the Court of Queen's Bench of Alberta.
A joint management information circular and proxy statement outlining
the details of the Arrangement and the Transaction will be mailed to
the holders of Angle Shares, Angle Debentures and Bellatrix Shares in
mid-November for meetings to be held in mid-December, 2013 where
holders of Angle Shares, Angle Debentures and Bellatrix Shareholders
will vote on the Arrangement and related matters. Closing of the
Transaction is expected to occur in mid-December, 2013.
b. Bought Deal Financing
On November 5, 2013, Bellatrix closed a bought deal financing of
21,875,000 Bellatrix Shares at a price of $8.00 per Bellatrix Share for
aggregate gross proceeds of $175.0 million through a syndicate of
underwriters (the "Offering"). Bellatrix has granted to the
underwriters an option (the "Over-Allotment Option"), exercisable in
whole or in part at any time until 30 days following the closing of the
Offering, to purchase up to an additional 3,281,250 Bellatrix Shares at
a price of $8.00 per Bellatrix Share for additional gross proceeds of
up to $26.25 million on the same terms and conditions of the Offering.
Proceeds of the Offering were initially to be used to temporarily repay
a portion of the indebtedness of Bellatrix under its credit facilities
and are now available to be redrawn to fund the cash portion of the
purchase price for the acquisition of the Angle Shares and the
acquisition of the Angle Debentures pursuant to the Transaction, and a
portion of Bellatrix's obligations under the Troika Joint Venture
described below.
After the Angle Acquisition and after giving effect to the Offering
(prior to exercise of the Over-Allotment Option) and the issuance of
Bellatrix Shares upon the redemption or conversion of Bellatrix's 4.75%
Convertible Unsecured Subordinated Debentures due April 30, 2015 to
fully satisfy the principal amount and interest on such debentures,
Bellatrix will have 170,534,257 Bellatrix Shares outstanding.
c. Troika Joint Venture
On October 15, 2013, the Company announced it has entered into a $240
million joint venture partnership (the "Troika Joint Venture") with TCA
Energy Ltd. ("TCA"). TCA is a Canadian incorporated special purpose
vehicle for Troika Resources Private Equity Fund which is based in
Seoul Korea and managed by KDB Bank, SK Energy and Samchully AMC.
Pursuant to the agreement forming the Troika Joint Venture, Bellatrix
and TCA will drill and develop lands in the Ferrier Cardium area of
West Central Alberta, with the program to be completed by December 31,
2014. TCA will contribute $120 million, representing a 50% share,
towards the capital program for the drilling of an expected 63 gross
wells, and in exchange, will receive 35% of Bellatrix's working
interest until payout (being recovery of TCA's capital investment plus
a 15% internal rate of return) on the total program, and thereafter
reverting to 25% of Bellatrix's working interest. As part of this
agreement, TCA will be participating in 14 gross wells (as included in
the total expected 63 gross well program) for wells that have been
drilled since January 1, 2013, resulting in estimated net proceeds of
$16.7 million to be received by Bellatrix upon closing.
Certain conditions precedent to closing, including Korean governmental
regulatory approvals, are expected to be satisfied or waived to enable
closing to occur on or before November 15, 2013.
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.
SOURCE Bellatrix Exploration Ltd.
Raymond G. Smith, P.Eng., President and CEO (403) 750-2420 or Edward J. Brown, CA, Executive Vice President 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 Bellatrix Exploration Ltd. 1920, 800 - 5th Avenue SW Calgary, Alberta, Canada T2P 3T6 Phone: (403) 266-8670 Fax: (403) 264-8163 www.bellatrixexploration.com Copyright CNW Group 2013
Source: Canada Newswire
(November 7, 2013 - 2:05 AM EST)
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