Current BXE Stock Info

More than doubling throughput capacity, Bellatrix Exploration Ltd.’s (ticker: BXE) O’Chiese Nees-Ohpawganu’ck deep-cut gas plant at Alder Flats can now process 230 MMcf/d. The Adler Flats Plant was fully commissioned in mid-March and began selling volumes on March 19, 2018. Bellatrix said that the plant was brought on-stream ahead of schedule and was delivered ~5% under budget. Previously, the plant had a throughput capacity of 110 MMcf/d.

The turbo expander is now operational in Phase 2 and the design allows a colder process, thereby enhancing NGL extraction capabilities. Combined NGL recovery at the plant increased to approximately 55-60 bbl/MMcf – this is in addition to an expected condensate yield of an additional 10 bbl/MMcf. Phase 1 recovery rates were 45 bbl/MMcf.

Significant cost benefits

Completion of Phase 2 adds an incremental 30 MMcf/d ownership capacity net to Bellatrix’s 25% working interest. Bellatrix said it has redirected approximately 65 MMcf/d of gross natural gas volumes from third-party processing plants to the Alder Flats Plant to process under its ownership and processing volume commitments.

Operating costs for natural gas processed through Bellatrix’s ownership interest in the Alder Flats Plant are approximately $0.16/Mcf, and according to Bellatrix, this provides significant cost benefits for the company.

The redirection of natural gas volumes from more expensive third-party plants are anticipated to deliver reductions in production expenditures in 2018 to a range of $7.65/BOE to $8.00/BOE, based-on the company’s updated production volume guidance below.

The completion of Phase 2 is anticipated to drive improved revenue generation through additional higher margin NGL extraction of approximately 10-35 bbl/MMcf over third-party plants, resulting in an average corporate liquid weighting of approximately 26% in 2018, which Bellatrix expects to, in turn, drive enhanced corporate profit margins and cash flow.

More drilling now that infrastructure is built

The Phase 2 expansion project represents the last stage of a multi-year infrastructure build out. With long-term infrastructure build out complete, Bellatrix expects the majority of capital investment to be utilized directly in drilling, completion and production addition activities, with minimal capital required for facilities and infrastructure projects over the near term. With infrastructure built, the company is now in position to grow production beyond 60 MBOEPD.

2018 and capital discipline

Bellatrix’s management believes that preserving balance sheet strength and liquidity, while optimizing production levels is a “prudent” strategy, given current commodity prices. Bellatrix is therefore reducing its expected capital expenditure budget to a range of $55 to $60 million – reducing annual average production guidance by 1,000 to 1,500 BOEPD. The previously planned CapEx was $65 to $80 million.

Bellatrix plans to fund the reduced capital budget through adjusted funds flow while reducing the potential for additional debt or bank line utilization through the end of 2018.

Revised 2018
Annual Guidance
(April 3, 2018)
Previously Set 2018
Annual Guidance
(December 14, 2017)
Production (BOEPD)
2018 Average daily production 34,000 – 35,500 35,000 – 37,000
Production Mix (%)
Natural gas 74 74
Crude oil, condensate and NGLs 26 26
Net Capital Expenditures ($000)(1)
Total net capital expenditures 55,000 – 65,000 65,000 – 80,000
Production expense ($/BOE)(2) 7.65 – 8.00 7.50 – 7.90
(1) Net capital spending includes exploration and development capital projects and corporate assets, and excludes property acquisitions and dispositions. Net capital spending also excludes the previously received prepayment portion of Bellatrix’s partner’s 35% share of the cost of construction of Phase 2 of the Alder Flats Plant during calendar 2018
 (2) Production expenses before net processing revenue/fees


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