TSX, NYSE MKT: BXE
CALGARY, May 16, 2014 /PRNewswire/ - Bellatrix Exploration Ltd. ("Bellatrix" or
the "Company") (TSX, NYSE MKT: BXE) is pleased to provide an
operational update and updated 2014 guidance.
Unscheduled Temporary Downtime in West Central Alberta
The successful application of horizontal drilling and slick water
fracturing technology in West Central Alberta has resulted in producers
overwhelming the existing processing and gathering infrastructure.
This has resulted in area producers experiencing gas processing
constraints since mid-December 2013. Bellatrix has built an
infrastructure that facilitates delivery of the Company's gas
production to 10 third party operated gas processing plants in the
area. In an effort to alleviate these processing constraints the area
plant operators are building out additional infrastructure and
upgrading the various plants to optimize throughput. To accomplish this
goal many of the existing facilities are extending their previously
scheduled plant turnarounds while others are invoking unscheduled
outages to facilitate maximizing throughput capability for the
remainder of 2014.
Bellatrix has experienced significant unscheduled temporary plant turnarounds at the some of the third party operated gas processing plants during
the month of May. The following is a summary of plant turnaround
The Sand Creek Plant, sour plant was down prior to the main turnaround
with the entire sweet plant being down for maintenance for the period
from May 4, 2014 through to May 15, 2014.
The Strachan Plant experienced an extended downtime on all sour trains
with volumes being shut in starting on May 8, 2014. The deep cut
facility was taken offline on May 15, 2014 to enable the system to be
depressurized. The remainder of the sweet gas will be shut in May 23,
2014 with the entire plant being down until June 07, 2014.
The MBL Gas Plant was shut in on May 12, 2014 through to May14, 2014 to
replace cold boxes on the deep cut facilities.
The Harmattan Plant commenced turnaround on April 28, 2014 with one of
the medium pressure inlet compressors being shut down for a compressor
overhaul. This unit was offline for 10 to 12 days and resumed operation
on May 9, 2014. This outage caused an increased inlet pressure and
affected all medium pressure inlets. Throughput was maximized through
the facility as much as possible but there was some reduction in flow
rates during this time.
Bellatrix took advantage of the unanticipated turnarounds and used the
opportunity to perform pressure surveys and/or build up analysis during
these turnarounds, as well as, performing any necessary maintenance and
inspections of the related facilities.
Every effort was made to redirect and offload gas to alternative plants
during these outages, however the cumulative impact is currently
estimated at a reduction of 4,064 boe/d in volumes being produced for the month of May. The production constraints are further exacerbated by continued drilling
success. To date, Bellatrix's 2014 drilling program in the Cardium
and Spirit River intervals has achieved a 100% success rate with the
wells productivity meeting internal type curves. Once the constraints
are removed in early June Bellatrix expects to start bringing onto
production behind pipe deliverability.
The combined effect of these restrictions has resulted in Bellatrix
reducing its second quarter 2014 and annual 2014 average production
guidance to +/- 38,000 boe/d and to +/- 41,000 boe/d respectively. 2014 cash flow forecasts, however, for the quarter and year remain
unchanged as higher commodity prices are expected to offset the aforementioned
restricted production. 2014 funds flow from operations are expected to remain unchanged at $360
million or $2.09 per basic share.
Based on an assumed 2014 average Edmonton Light oil price of $95.85/bbl
and AECO $4.50/GJ, average 2014 royalty rates of 17.5% and estimated
2014 operating costs of $116.5 million or $7.75 boe/d, the Company
expects to exit 2014 with total net debt of approximately $470 million
or 1.12 times total net debt to annualized estimated fourth quarter
2014 funds flow from operations.
In an effort to alleviate the impacted midstream gas processing issues,
Bellatrix has been very proactive.
The Company negotiated a firm service agreement to process 100 mmcf/d at
a gas plant located in West Pembina (4-31-48-12W5M) owned by Blaze
Energy Ltd. ("Blaze") yielding a significant reduction in processing
fees. The reduced operating costs coupled with increased liquid
recoveries provided by the Blaze facility is expected to further
insulate the Company against commodity price fluctuations while
improving long term profitability.
As announced in early April 2014, Bellatrix has completed a 1.6 km
river bore and a 7 km pipeline in conjunction with Blaze completing a
55 km pipeline to tie-in Bellatrix natural gas production for
processing in the Blaze gas plant located at 04-31-048-12W5. The
pipeline was commissioned on April 1, 2014 reaching 35 MMcf/d in the
first day of operation and, the pipeline is now handling 70 mmcf/d.
Over the next two weeks the Company expects to be increasing
deliveries to 90 mmcf/d as Blaze brings the plant up to full capacity.
In the fourth quarter of 2013 and in the first quarter of 2014,
Bellatrix installed a total of 8 field booster compressors located at
13-5-45-9W5 (tie-in point to the Blaze pipeline) with capacity of 97
MMcf/d. As the pipeline is ramped up to full capacity and current
constraints are removed Bellatrix expects that the current production
restrictions in west central Alberta will be alleviated.
Bellatrix Deep Cut Gas Plant
Early in 2013, the Company completed a front end engineering design, an
environmental assessment and obtained the necessary regulatory
approvals to construct a new Bellatrix deep cut gas plant in the Alder
Flats area of West Central Alberta. Phase One of the facility will
process 110 mmcf/d of raw gas and is designed to extract 99% of the
propane, and 100% of the butane and condensate from the inlet raw gas
stream. Construction is underway with an anticipated commissioning
date of July 1, 2015. Phase Two is expected to be commissioned by
April 1, 2016 doubling the inlet raw gas processing capacity to 220
mmcf/d. The facility is expected to significantly reduce operating
costs while doubling current liquid recovery from the gas stream. An
additional $70 million of capital, relating to the deep cut plants,
will be spent in the second half of 2014 for a previously announced
revised net capital budget of $440 million for fiscal 2014.
Updated 2014 Guidance
On March 6, 2014, a revised 2014 net capital budget of $440 million
was announced which is comprised of drilling and completion costs of
$250 million; facility and infrastructure costs of $170 million and
land, geological and other related costs of $20 million. Bellatrix
plans to utilize funds from operations and existing credit facilities
to fund ongoing capital spending and operating requirements.
The Company plans to drill/participate in 128 gross (73.38 net) wells in
2014 resulting in 90 gross (55.43 net) Cardium oil wells and 38 gross
(17.94 net) Mannville condensate rich gas wells.
Based on the timing of proposed expenditures, downtime for anticipated
and unanticipated plant turnarounds and normal production declines,
execution of the revised $440 million 2014 capital budget is
anticipated to provide 2014 average daily production of approximately
to +/- 41,000 boe/d and an unchanged exit rate of approximately 47,000
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 of Bellatrix trade on the Toronto Stock Exchange ("TSX") and on
the NYSE MKT under the symbol BXE.
All amounts in this press release are in Canadian dollars unless
A conference call to discuss Bellatrix's current operations will be held
on May 20, 2014 at 10:00 am MST/12:00 pm EST. To participate, please
call toll-free 1-888-231-8191 or 647-427-7450. The conference call will
also be recorded and available by calling 1-855-859-2056 or
403-451-9481 and entering passcode 48413082 followed by the pound sign.
Bellatrix's Annual and Special of the Shareholders is scheduled for 3:00
pm on May 21, 2014 in the Devonian Room at the Calgary Petroleum Club.
Forward looking statements: Certain information set forth in this news
release, including management's assessments of the future plans and
operations, 2014 Q2, annual and exit production expectations, timing
for commissioning certain facilities, expectations of commodity prices,
royalty rates, cash flows, debt to cash flow ratios, funds from
operations and 2014 exit debt, expectations of costs of commissioning
certain facilities, expectations of reduced operating costs coupled
with increased liquid recoveries provided by the Blaze facility will
further insulate the Company against commodity price fluctuations while
improving long term profitability, drilling and completions plans,
expected capabilities of new facilities and operating efficiencies
expected, expected capital expenditures for 2014 and details of such
expenditures, expected sources of funds for Bellatrix's expected
capital expenditure program, expectations that production restrictions
will be alleviated, drilling inventory and capital costs and time to
develop, may contain forward-looking statements, and necessarily
involve risks and uncertainties, certain of which are beyond
Bellatrix's control, including risks associated with oil and gas
exploration, development, exploitation, production, marketing and
transportation, loss of markets and other economic and industry
conditions, volatility of commodity prices, currency fluctuations,
imprecision of reserve estimates, environmental risks, competition from
other producers, inability to retain drilling services, incorrect
assessment of value of acquisitions and failure to realize the benefits
therefrom, delays resulting from or inability to obtain required
regulatory approvals, the lack of availability of qualified personnel
or management, stock market volatility and ability to access sufficient
capital from internal and external sources and economic or industry
condition changes. Actual results, performance or achievements could
differ materially from those expressed in, or implied by, these
forward-looking statements and, accordingly, no assurance can be given
that any events anticipated by the forward-looking statements will
transpire or occur, or if any of them do so, what benefits that
Bellatrix will derive therefrom. Additional information on these and
other factors that could affect Bellatrix are included in reports on
file with Canadian securities regulatory authorities and the United
States Securities and Exchange Commission and may be accessed through
the SEDAR website (www.sedar.com), the SEC's website (www.sec.gov) or at Bellatrix's website www.bellatrixexploration.com. The forward looking statements contained in this press release are
made as of the date hereof and Bellatrix undertakes no obligations to
update publicly or revise any forward looking statements or
information, whether as a result of new information, future events or
otherwise, unless so required by applicable securities laws.
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 six to one,
utilizing a conversion on a six to one basis may be misleading as an
indication of value. All boe conversions herein are derived from
converting gas to oil in the ratio of six thousand cubic feet of gas to
one barrel of oil.
Non-GAAP Measures: This press release contains the term "funds flow
from operations" which should not be considered an alternative to, or
more meaningful than "cash flow from operating activities" as
determined in accordance with generally accepted accounting principles
("GAAP") as an indicator of the Company's performance. Therefore
reference to funds flow from operations or funds flow from operations
per share may not be comparable with the calculation of similar
measures for other entities. Management uses funds flow from operations
to analyze operating performance and leverage and considers funds flow
from operations to be a key measure as it demonstrates the Company's
ability to generate the cash necessary to fund future capital
investments and to repay debt. Funds flow from operations per share is
calculated using the weighted average number of shares for the period.
This press release also contains the term total net debt. Total net debt
is calculated as long-term debt plus the net working capital deficiency
(excess) before short-term commodity contract assets and liabilities
and current finance lease obligations. Management believes this measure
is an useful supplementary measure of the total amount of current and
SOURCE Bellatrix Exploration Ltd.