Bonterra Energy Corp. Announces 2016 Capital Budget, Operations Update and Dividend Adjustment
CALGARY, ALBERTA--(Marketwired - Dec. 17, 2015) - Bonterra Energy Corp. (www.bonterraenergy.com) (TSX:BNE) ("Bonterra" or "the Company") today announces its 2016 capital budget, an operations update, and an adjustment to its dividend level to $0.10 per share commencing with the December 2015 dividend payable January 29, 2016. With the recent further deterioration in commodity prices, Bonterra is proactively making capital allocation decisions to ensure the Company is able to maintain its financial strength and long-term strategic objectives.
Based on current commodity prices, Bonterra will take the following steps to position the Company to withstand lower prices for a longer period:
- Set its capital expenditures budget for 2016 at approximately $40 million compared to the 2015 capital budget of $58 million and the 2014 budget of $140 million. Given Bonterra's low corporate production decline rate of approximately 18 percent, the 2016 level of capital is anticipated to hold production roughly flat year over year;
- Reduce the monthly dividend to $0.10 per share ($1.20 per share annually) from the current dividend level of $0.15 per share ($1.80 per share annually) commencing with the December dividend payable January 29, 2016; and
- Continue to thoroughly review all expenditure areas, including capital expenditures, operating costs and general and administration costs with the view to implement further cost reductions where possible.
During the fourth quarter of 2015, Bonterra was subject to production curtailments of approximately 1,100 BOE per day primarily related to a corporate strategy to restrict volumes because of low commodity prices, third party pipeline outages and a less intensive well servicing program. As such, average production volumes for full year 2015 are expected to be at the low end of guidance of 12,600 to 12,900 BOE per day.
By the end of 2015, Bonterra will have an inventory of six gross (4.5 net) drilled and completed wells, which can be tied-in and brought on production through 2016 as commodity prices and project economics warrant. Capital expenditures for the first quarter of 2016 are estimated at $1.0 million related to tie-in costs for wells drilled in 2015. Assuming current commodity price levels of US$35 WTI oil and C$2.20 AECO natural gas, the Company's first quarter 2016 funds flow is expected to exceed the funds needed for the revised $0.10 per share dividend level plus the $1.0 million capital expenditures budget, with all excess funds being used to reduce debt.
In the interests of ensuring financial sustainability, the Company plans to assess its results on a monthly basis and set the monthly dividend level based on the prior month's actual funds flow. Adjustments to funds flow allocated to capital, dividends and debt reduction will be made in accordance with commodity prices. Consistent with its underlying corporate strategy, the Company's priorities remain focused on maintaining financial flexibility while positioning Bonterra to achieve long-term growth in production, reserves and cash flow per share and overall returns to shareholders.
Forward Looking Information
Certain statements contained in this release include statements which contain words such as "anticipate", "could", "should", "expect", "seek", "may", "intend", "likely", "will", "believe" and similar expressions, relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about development, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis made by us derived from our experience and perceptions. Forward-looking information in this release includes, but is not limited to: expected cash provided by continuing operations; cash dividends; future capital expenditures, including the amount and nature thereof; oil and natural gas prices and demand; expansion and other development trends of the oil and gas industry; business strategy and outlook; expansion and growth of our business and operations; and maintenance of existing customer, supplier and partner relationships; supply channels; accounting policies; credit risks; and other such matters.
All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties, and assumptions are difficult to predict and may affect operations, and may include, without limitation: foreign exchange fluctuations; equipment and labour shortages and inflationary costs; general economic conditions; industry conditions; changes in applicable environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced; the ability of oil and natural gas companies to raise capital; the effect of weather conditions on operations and facilities; the existence of operating risks; volatility of oil and natural gas prices; oil and gas product supply and demand; risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by us; and other factors, many of which are beyond our control.
Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do, what benefits will be derived there from. Except as required by law, Bonterra disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
The forward-looking information contained herein is expressly qualified by this cautionary statement.
The TSX does not accept responsibility for the accuracy of this release.
(December 17, 2015 - 5:40 PM EST)
News by QuoteMedia