TSX, NYSE: BXE
CALGARY, March 7, 2017 /CNW/ - Bellatrix Exploration
Ltd. ("Bellatrix" or the "Company") (TSX, NYSE: BXE) is pleased to
announce its 2016 year end reserves, an operational update, and an
update of commodity risk management contracts. Reserves at
December 31, 2016 were independently
evaluated by InSite Petroleum Consultants Ltd. ("InSite").
The evaluation encompasses 100% of Bellatrix's oil and gas
properties and was prepared in accordance with National Instrument
51-101 Standards of Disclosure for Oil and Gas Activities
("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook
("COGE Handbook"). Financial information presented herein is based
on management prepared financial statements for the year ended
December 31, 2016, which are in the
process of being audited by Bellatrix's independent auditors and,
accordingly, such financial information is subject to change based
on the results of the audit. See "Reader Advisory - Unaudited
Financial Information" below.
2016 YEAR END RESERVE HIGHLIGHTS
Bellatrix delivered significant reserve and net asset value
growth in 2016. The Company achieved a 100% success rate
through the drill bit, focused on the low cost Spirit River natural gas play. In 2016,
Bellatrix completed a number of strategic dispositions, materially
improving the Company's balance sheet and liquidity position and
repositioning Bellatrix for enhanced long term shareholder value
while maintaining the Company's core asset base and growth
engine.
Record low finding, development, and acquisition ("FD&A")
costs were achieved in 2016, providing growth in both Proved
("1P"), and Proved plus Probable ("2P") reserve categories,
notwithstanding the sale of non-core assets in 2016.
Bellatrix demonstrated strong results within its core areas in 2016
highlighted by the following achievements:
- Bellatrix established a December 31,
2016 2P net asset value (2P NPV10 before tax) of
$1.24 billion ($5.02/share) which incorporates future net
revenue adjusted for year end total net debt, seismic, and land
value. This represents an increase of 18% compared with the 2P net
asset value calculated at year end December
31, 2015 of $4.27/share.
- Total 1P and 2P reserves at year end 2016 increased by 10% and
3% respectively despite non-core asset sales and curtailed drilling
activity. Strong positive technical reserve revisions and infill
drilling additions achieved in 2016 more than offset the impact of
net dispositions and reserves produced during the year.
- The 2016 year end Proved Developed Producing ("PDP") NPV10
before tax value of $498.9 million
remained relatively unchanged from the 2015 year end PDP NPV10
value of $517.6 million despite the
aforementioned non-core asset sales completed throughout 2016. PDP
value preservation was achieved while delivering a material
reduction in total net debt down to $396.2
million at December 31, 2016
(from $717.6 million at December 31, 2015).
- Bellatrix maintained a focused capital program in 2016 adding
PDP reserves at an FD&A cost of $5.30/boe excluding capital invested in the
Bellatrix O'Chiese Nees-Ohpawganu'ck deep-cut gas plant at
Alder Flats (the "Alder Flats
Plant"), and $5.90/boe including
total capital investment. The PDP recycle ratio excluding Alder
Flats Plant capital was 1.5 times.
- Bellatrix's 2P and 1P FD&A costs including changes in
future development capital ("FDC") in 2016 averaged $4.03/boe and $4.20/boe respectively. The Company's calculated
1P and 2P reserve life indices improved by 40% and 31% to 14.1
years and 18.8 years, respectively.
- The Company booked two net Spirit
River well locations for each net Spirit River well drilled in 2016 reflecting
the Company's 100% success rate on development drilling,
demonstrating the high quality nature of the play and increased
confidence in offset development drilling locations.
Bellatrix plans to release its fourth quarter and year end 2016
financial and operational results on March
15, 2017 before market open. The Company plans to host
a conference call to discuss both year end reserves and financial
results on March 15, 2017 at
9:00 am MT / 11:00 am ET. To participate, call toll-free
1-800-319-4610 or 403-351-0324 or 416-915-3239. The call can
also be heard live through an internet webcast accessible via the
investors section of Bellatrix's website at
http://investors.bellatrixexploration.com/webcasts and will be
archived on the website for approximately 60 days following the
call. Additional reserve information as required under NI 51-101
will be included in the Company's Annual Information Form which
management anticipates will be filed on SEDAR on March 17, 2017.
OPERATIONAL UPDATE
Improved commodity prices in 2017, supplemented by the Company's
risk management activities, underpin the resumption of profitable
growth, which is focused on development of the low cost
Spirit River liquids-rich natural
gas play, and maximizing netbacks, margins and operating cash
flow.
Bellatrix launched its 2017 drilling program in January
operating two drilling rigs, and proactively added a third rig in
early February to ensure completion of the first half drilling
program before the seasonal spring break up period.
Completion operations have progressed according to plan, and
operational activity and corporate production volumes remain
consistent with the Company's previously announced 2017 guidance
targets.
Bellatrix's focus is on organic, high working interest
development drilling opportunities in 2017. The Company plans
to drill approximately nine net wells including two high impact
Cardium well locations in the first half of the year. With
the conclusion of all joint venture drilling in 2016, Bellatrix
retains flexibility in 2017 to balance infill development drilling
and expanded core area development focused on adding production,
increasing reserves, and enhancing our inventory of development
drilling locations. Bellatrix is pleased to announce
preliminary 2017 development program results including the
following:
- 100/1-30-44-09W5 one mile Spirit
River (100% working interest) well IP30: 18.1 MMcf/d
- 102/1-6-45-09W5 one mile Spirit
River (100% working interest) well IP15: 11.9 MMcf/d
- 102/1-19-44-09W5 one mile Spirit
River (67% working interest) well IP15: 14.6 MMcf/d
- 102/16-30-44-09W5 one mile Spirit
River (100% working interest) IP5: 13.5 MMcf/d
Additionally, Bellatrix recently drilled the 100/1-30-45-09W5
one mile Cardium well (100% working interest) in the Alder Flats area. The well was drilled
within the bioturbated reservoir sandstones of the Cardium
formation to optimize potential well deliverability. A 25
stage cemented liner system was utilized, and the well was
completed using a 625 tonne slickwater fracture stimulation (25
tonnes per stage). Completion operations were conducted in
early March and the well was subsequently turned over to production
with initial production rates in line with management
expectations.
COMMODITY RISK MANAGEMENT CONTRACT UPDATE
Bellatrix continues to protect its long term strategic plan
through an active hedging program, with approximately 66% of
forecast gross natural gas volumes in 2017 hedged at an average
fixed price of approximately $3.36/mcf (based on the mid-point of 2017 average
gross production guidance of 33,500 boe/d; 76% natural gas
weighted). In addition, Bellatrix added to its 2018 risk
management protection with a total of 65.6 MMcf/d of 2018 natural
gas volumes hedged at an average fixed price of approximately
$3.08/mcf, representing approximately
43% of volumes compared to the mid-point of 2017 full year average
guidance.
Strong propane prices in early 2017 provided an attractive
opportunity for Bellatrix to hedge 1,500 bbl/d of propane volumes
at an average price of 51% of WTI light oil prices from February
through December of 2017, and 1,000 bbl/d of propane volumes at an
average price of 47% of WTI light oil prices in 2018, both
meaningfully above long term historical averages. As at
March 6, 2017, Bellatrix was party to
a series of commodity price risk management contracts for 2017 and
2018 as summarized below:
|
|
|
|
|
Product
|
Financial
Contract
|
Period
|
Volume
|
Average Price
(1,2)
|
Natural
gas
|
Fixed price
swap
|
January 1, 2017 to
December 31, 2017
|
101.4
MMcf/d
|
$3.36/mcf
|
Natural
gas
|
Fixed price
swap
|
January 1, 2018 to
December 31, 2018
|
65.6
MMcf/d
|
$3.08/mcf
|
Propane
|
Swap
|
February 1, 2017 to
December 31, 2017
|
1,500
bbl/d
|
50.7% of
WTI
|
Propane
|
Swap
|
January 1, 2018 to
December 31, 2018
|
1,000
bbl/d
|
47.0% of
WTI
|
(1)
The conversion of $/GJ to $/mcf is based on an average corporate
heat content rate of 40.6Mj/m3.
|
(2)
Conway propane price as a percentage of WTI in U.S.
dollars.
|
Bellatrix's hedging program is part of its overall risk
management strategy focused on providing reduced commodity price
volatility and greater assurance over future revenue and cash flows
which help drive the capital and reinvestment decisions within our
business.
2016 HIGHLIGHTS
|
|
Twelve months ended
December,
|
|
2016
|
2015
|
Reserves (Working
Interest (1), mboe)
|
|
|
|
Proved Developed
Producing
|
60,322
|
63,401
|
|
Total
Proved
|
158,400
|
143,496
|
|
|
Proved
Undrilled/Total Proved
|
62%
|
56%
|
|
Total Proved and
Probable
|
228,540
|
222,629
|
|
|
Probable/Total Proved
and Probable
|
31%
|
36%
|
|
|
|
Net Present Value
of Reserves (Before Tax, 10% Discount Rate)
(2)
|
|
|
|
Total Proved
($MM)
|
$1,030
|
$820
|
|
Proved and Probable
($MM)
|
$1,556
|
$1,336
|
|
|
|
Net Asset
Value
|
|
|
|
Proved and Probable
($MM) (3)
|
$1,238
|
$820
|
|
Proved and Probable
Net Asset Value, per basic share
|
$5.02
|
$4.27
|
|
|
|
FD&A
costs
|
|
|
|
PDP, excluding Alder
Flats Plant capital ($/boe)
|
$5.30
|
$9.54
|
|
1P, excluding Alder
Flats Plant capital ($/boe) (5)
|
$3.98
|
n/a
|
|
2P, excluding Alder
Flats Plant capital ($/boe) (5)
|
$3.83
|
n.m.f.
|
|
3 year average 1P,
including changes in FDC ($/boe)
|
$8.78
|
$13.19
|
|
3 year average 2P,
including changes in FDC ($/boe)
|
$7.59
|
$10.11
|
|
|
|
Selected Key
Operating Statistics
|
|
|
|
Annual average sales
volumes (boe/d)
|
35,677
|
41,441
|
|
Q4 average sales
volumes (boe/d)
|
31,888
|
40,705
|
|
Annual operating
netback ($/boe) (4)
|
$7.91
|
$11.30
|
|
Total net debt ($MM)
(4)
|
$396.2
|
$717.6
|
|
|
|
Reserve Life
Index
|
|
|
|
Proved
|
14.1
yrs.
|
10.1
yrs.
|
|
Proved and
Probable
|
18.8
yrs.
|
14.3
yrs.
|
Recycle Ratio
(4)
|
|
|
|
PDP, excluding change
in FDC and Alder Flats Plant capital
|
1.5
x
|
1.3
x
|
|
1P, excluding change
in FDC and Alder Flats Plant capital
|
4.0
x
|
0.6
x
|
|
2P, excluding change
in FDC and Alder Flats Plant capital (5)
|
4.3
x
|
n/a
|
|
|
|
Evaluated Future
Horizontal Drilling Locations (6)
|
|
|
|
Gross Spirit
River
|
187
|
157
|
|
Net Spirit
River
|
116.0
|
89.6
|
|
Gross
Cardium
|
182
|
248
|
|
Net
Cardium
|
143.8
|
182.9
|
(1) "Working
Interest" means Bellatrix's working interest (operated or
non-operated) share excluding any royalty interest and before
deduction of royalties and is also referred to as "Gross" reserves
under NI 51-101. May not add due to rounding.
|
(2)
It should not be assumed that the present worth of estimated
future net revenue presented in the tables above or elsewhere in
this press release represents the fair market value of the
reserves. There is no assurance that the forecast prices and costs
assumptions will be attained and variances could be material. The
recovery and reserves estimates of Bellatrix's crude oil and
natural gas reserves provided herein are estimates only and there
is no guarantee that the estimated reserves will be recovered.
Actual crude oil, natural gas and natural gas liquids reserves may
be greater than or less than the estimates provided
herein.
|
(3)
Proved plus Probable net asset value incorporates 2P NPV10
(before tax) value and adjusts for year end total net debt,
seismic, and land value.
|
(4) The terms "operating
netback" and "total net debt" do not have standard meanings under
Canadian generally accepted accounting principles ("GAAP").
Operating netback is calculated by deducting transportation,
royalties and operating costs from revenue. Operating netback
includes the impact of commodity price risk management
contracts. The Company's calculation of total net debt
excludes other deferred liabilities, deferred capital obligations,
long-term risk management contract liabilities, decommissioning
liabilities, and deferred tax liabilities. Total net debt
includes the adjusted working capital deficiency, long term loans
receivable, the liability component of the Company's outstanding
convertible debentures, current bank debt and long term bank
debt. The adjusted working capital deficiency is a non-GAAP
measure calculated as net working capital deficiency excluding
current risk management contract assets and liabilities, current
portion of other deferred liabilities, current portion of deferred
capital obligation and the current bank debt. See "Non-GAAP
measures" in the Reader Advisories at the end of this Press
Release.
|
(5)
2015 1P FD&A costs excluding Alder Flats Plant capital were
negative (incalculable) given material negative changes in
FDC. 2015 2P FD&A excluding Alder Flats Plant capital
costs were non-meaningful ("n.m.f.") given both negative numerator
and denominators in the calculation resulting in a $98.13/boe
calculated metric. 2015 2P recycle ratio excluding change in
FDC and Alder Flats Plant capital is negative (incalculable) given
negative FD&A costs within the calculated
metric.
|
(5)
Represents proved plus probable undeveloped locations included
in the InSite Report.
|
2016 RESERVES
Bellatrix engaged InSite to complete a reserve report in
accordance with NI 51-101, on 100% of Bellatrix's oil and
gas properties effective December 31,
2016 (the "InSite Report"). Highlights include:
- 229 million boe total working interest 2P reserves and 158
million boe 1P reserves.
- $1.6 billion net present value of
future net revenue of 2P reserves before tax at a 10% discount
rate.
- A net asset value of $5.02 per
basic share outstanding based on the InSite evaluation of 2P
reserves at a 10% discount rate.
- Bellatrix's corporate decline rate forecast by InSite for PDP
reserves in 2017 is 24% (down compared with an estimated first year
PDP decline rate at December 31, 2015
of 27%) demonstrating the company's shallowing base production
profile which provides a strong foundation to support future
growth.
|
|
|
|
|
Working
interest
|
2016
Reserves
|
|
2015 Reserves
(2)
|
|
|
Oil &
Liquids
|
Natural
Gas
|
Total
|
|
Total
|
Variance
|
|
(mbbl)
|
(mmcf)
|
(mboe)
|
|
(mboe)
|
%
|
Proved
|
40,460
|
707,641
|
158,400
|
|
143,496
|
+10%
|
Probable
|
18,336
|
310,819
|
70,139
|
|
79,133
|
-11%
|
Proved Plus Probable
(1)
|
58,796
|
1,018,460
|
228,540
|
|
222,629
|
+3%
|
(1) Totals may not add due to
rounding.
|
(2)
Reserves for all years prior to 2016 disclosed in this
press release were independently evaluated by Sproule Associates
Limited ("Sproule"). See "Information Regarding Oil and Gas
Reserves" in the Reader Advisories at the end of this Press Release
for additional information.
|
NET ASSET VALUE – PROVED PLUS PROBABLE
The following table of net asset value, as at December 31, 2016, is based on the InSite
evaluation of future net revenue of the Company's 2P reserves
before tax, which does not represent fair market value.
|
($000s
except acre, unit and per unit amounts)
|
|
PV 0%
|
PV 5%
|
PV 8%
|
PV 10%
|
PV 15%
|
Proved plus Probable
Reserves (1)
|
3,678,950
|
2,269,141
|
1,790,914
|
1,555,554
|
1,145,479
|
Undeveloped Lands
(2)
|
52,170
|
52,170
|
52,170
|
52,170
|
52,170
|
Value of Seismic
(3)
|
26,169
|
26,169
|
26,169
|
26,169
|
26,169
|
Total Net Debt
(4)
|
(396,197)
|
(396,197)
|
(396,197)
|
(396,197)
|
(396,197)
|
Net Asset
Value
|
3,361,092
|
1,951,283
|
1,473,056
|
1,237,696
|
827,621
|
|
|
|
|
|
|
Per Basic Common
Share (5)
|
$13.63
|
$7.91
|
$5.97
|
$5.02
|
$3.36
|
(1)
As evaluated by InSite as at December 31, 2016 based on forecast
prices and costs before income tax.
|
(2)
As estimated by Bellatrix as at December 31, 2016 based on
180,203 net acres of undeveloped land at an average price of
$289.50
per
acre.
|
(3)
Based on 26% of $100.3 million replacement value based on
seismic costs to buy data at an average of $1,500/km for 2D
and
$14,500/km2 for
3D.
|
(4)
The Company's calculation of total net debt excludes other
deferred liabilities, deferred capital obligations, long-term risk
management contract liabilities, decommissioning liabilities, and
deferred tax liabilities. Total net debt includes the
adjusted working capital deficiency, long term loans receivable,
the liability component of the Company's outstanding convertible
debentures, current bank debt and long term bank debt. The
adjusted working capital deficiency is a non-GAAP measure
calculated as net working capital deficiency excluding current risk
management contract assets and liabilities, current portion of
other deferred liabilities, current portion of deferred capital
obligation and the current bank debt. See non-GAAP
Measures.
|
(5)
Based on 246.59 million common shares outstanding as at December
31, 2016 (excluding common shares issuable pursuant to securities
that are convertible, exercisable or exchangeable into common
shares).
|
NET PRESENT VALUE ("NPV") OF FUTURE NET REVENUE
The forecast prices used in the InSite Report incorporate
InSite's commodity price forecasts as at January 1, 2016 ("InSite Forecast Prices") which
are noted below under the heading "Reserve Report Commodity
Prices". It should not be assumed that the NPV
estimated by InSite represents the fair market value of Bellatrix's
reserves. Estimated future net revenues are reduced for
estimated future abandonment and reclamation costs, estimated
royalties payable, estimated operating costs, and estimated capital
for future development associated with the reserves.
In the InSite Report, the net total future capital over the life
of the reserves associated with 1P reserves is $685 million ($523
million discounted at 10%) and $945 million ($713
million discounted at 10%) for 2P reserves. The change in
2016 net total FDC over the life of the reserves associated with 1P
reserves is negative $82 million
(negative $67 million discounted at
10%) and negative $180
million (negative $138 million
discounted at 10%) for 2P reserves. Calculated changes in net
FDC exclude future capital from acquired properties. Negative
changes to FDC incorporate the positive capital cost reductions
achieved throughout 2016 across drilling, completion, equipping and
tie-in activities. Significant reductions in drill times,
revised well configurations where practical, minimized lease sizes
and other initiatives have all contributed to overall cost
reductions.
SUMMARY OF NPV BEFORE INCOME TAXES (1),
(2)
|
|
|
|
|
|
As at December 31,
2016
|
0%
|
5%
|
8%
|
10%
|
15%
|
Proved
|
|
|
|
|
|
|
Developed
producing
|
849,040
|
628,251
|
543,317
|
498,861
|
415,913
|
|
Developed
non-producing
|
12,396
|
9,069
|
7,720
|
6,998
|
5,616
|
|
Undeveloped
|
1,382,559
|
818,585
|
621,928
|
524,513
|
354,819
|
Total
proved
|
2,243,995
|
1,455,905
|
1,172,965
|
1,030,372
|
776,348
|
Probable
|
1,434,955
|
813,236
|
617,949
|
525,182
|
369,131
|
Total proved plus
probable
|
3,678,950
|
2,269,141
|
1,790,914
|
1,555,554
|
1,145,479
|
(1
)Forecast Prices and Costs ($000s). Discounted at
(%/year).
|
(2)
May not add due to rounding.
|
SUMMARY OF NPV AFTER INCOME TAXES (1), (2),
(3)
|
|
|
|
|
|
As at December
31, 2016
|
0%
|
5%
|
8%
|
10%
|
15%
|
Proved
|
|
|
|
|
|
|
Developed
producing
|
849,040
|
628,251
|
543,317
|
498,861
|
415,913
|
|
Developed
non-producing
|
12,396
|
9,069
|
7,721
|
6,998
|
5,616
|
|
Undeveloped
|
1,167,808
|
718,637
|
556,177
|
474,073
|
327,704
|
Total
proved
|
2,029,244
|
1,355,957
|
1,107,214
|
979,932
|
749,233
|
Probable
|
1,050,605
|
603,882
|
463,920
|
397,441
|
285,361
|
Total proved plus
probable
|
3,079,849
|
1,959,839
|
1,571,134
|
1,377,373
|
1,034,594
|
(1)
Forecast Prices and Costs ($000s), Discounted at
(%/year).
|
(2)
May not add due to rounding.
|
(3) The
after-tax NPV of Bellatrix's oil and gas properties reflects the
tax burden on the properties on a stand-alone basis and utilizes
corporate tax pools. It does not consider the
business-entity–level tax situation, or tax planning. It does
not provide an estimate of the value at the level of the business
entity, which may be significantly different. Bellatrix's
consolidated financial statements and management's discussion and
analysis should be consulted for information at the business entity
level.
|
FD&A COSTS (1), (2)
The Company achieved another year of capital cost reductions in
2016 resulting in average drill, complete, equip and tie-in costs
for its Spirit River program in
2016 averaging approximately $3.8
million per well. Reduced capital activity levels,
decreased capital costs, and lower probable undeveloped reserves
have resulted in lower 2P FDC forecast at year end 2016 compared
with 2015 levels.
Total cash capital expenditures in 2016 were $78.9 million. Total net capital
expenditures were negative $246.2
million in 2016 as gross proceeds received from the
monetization of certain production facilities ("Facilities
Monetization"), the sale of a 35% minority interest of the Alder
Flats Plant, and the Harmattan and Pembina property dispositions
more than offset cash capital investments made during the year.
|
|
|
|
|
|
2016
|
2015
|
2014
|
2014 – 2016
Avg.
|
PROVED PLUS
PROBABLE FD&A COSTS
|
|
|
|
|
Excluding
FDC
|
|
|
|
|
FD&A Costs, 2P
($/boe)
|
|
|
|
|
|
Exploration and
development (3)
|
1.77
|
n/a
|
21.21
|
11.20
|
|
Acquisitions
(excluding dispositions) (4)
|
3.26
|
2.43
|
5.45
|
4.95
|
|
Total (including
acquisitions)
|
2.02
|
n/a
|
12.13
|
8.78
|
|
Total excluding Alder
Flats Plant capital (5)
|
1.82
|
n/a
|
11.48
|
8.01
|
Including FDC
(3)
|
|
|
|
|
FD&A Costs, 2P
($/boe)
|
|
|
|
|
|
Exploration and
development
|
3.68
|
63.71
|
23.80
|
8.91
|
|
Acquisitions
(excluding dispositions) (4)
|
5.80
|
2.43
|
5.45
|
5.49
|
|
Total (including
acquisitions)
|
4.03
|
78.27
|
13.22
|
7.59
|
|
Total excluding Alder
Flats Plant capital (5)
|
3.83
|
98.13
|
12.58
|
6.82
|
|
|
|
|
|
PROVED FD&A
COSTS
|
|
|
|
|
Excluding
FDC
|
|
|
|
|
FD&A Costs, 1P
($/boe)
|
|
|
|
|
|
Exploration and
development (3)
|
1.88
|
26.63
|
16.32
|
9.39
|
|
Acquisitions
(excluding dispositions) (4)
|
4.34
|
2.87
|
7.53
|
6.77
|
|
Total (including
acquisitions)
|
2.22
|
25.24
|
12.53
|
8.65
|
|
Total excluding Alder
Flats Plant capital (5)
|
1.99
|
19.48
|
11.86
|
7.90
|
Including FDC
(3)
|
|
|
|
|
FD&A Costs, 1P
($/boe)
|
|
|
|
|
|
Exploration and
development
|
3.75
|
0.55
|
18.56
|
9.34
|
|
Acquisitions
(excluding dispositions) (4)
|
6.99
|
2.87
|
7.53
|
7.36
|
|
Total (including
acquisitions)
|
4.20
|
0.69
|
13.80
|
8.78
|
|
Total excluding Alder
Flats Plant capital (5)
|
3.98
|
n/a
|
13.14
|
8.02
|
|
|
|
|
|
PROVED DEVELOPED
PRODUCING FD&A COSTS
|
|
|
|
|
FD&A Costs, PDP
($/boe)
|
|
|
|
|
|
Exploration and
development (3)
|
5.02
|
12.65
|
17.06
|
12.84
|
|
Acquisitions
(excluding dispositions) (4)
|
11.14
|
2.87
|
23.81
|
19.89
|
|
Total (including
acquisitions)
|
5.90
|
12.37
|
18.42
|
13.92
|
|
Total excluding Alder
Flats Plant capital (5)
|
5.30
|
9.54
|
17.43
|
12.70
|
(1)
Bellatrix provides FD&A costs that incorporate all
acquisitions and exclude the impact of dispositions during the
year. The foregoing calculation is based on working interest
reserves.
|
(2)
Certain of the information used in the foregoing calculation,
including exploration and development expenditures and acquisition
expenditures is based on unaudited financial information and is
subject to audit and may be subject to change as a
result.
|
(3)
The aggregate of exploration and development costs incurred in
the most recent year and the change during that year in estimated
future development costs generally will not reflect total finding
and development costs related to reserve additions for that
year.
(4)
FD&A is calculated using the announced purchase price for
corporate acquisitions rather than the actual amount allocated to
property, plant and equipment for accounting
purposes.
(5) In 2016,
the Company completed facilities and equipment investments
totalling $12.7 million including approximately $10.9 million
directly on the Alder Flats Plant. For this reason, total FD&A
costs are shown excluding capital spent directly on the Alder Flats
Plant.
|
RESERVE LIFE INDEX
Bellatrix's reserve life index has been determined for 1P and 2P
working interest reserves using forecast prices and costs.
The reserve life index for 2016 is calculated by dividing reserves
as at December 31, 2016 by 2017
forecasted average production of 33,384 boe/d for 2P reserves and
30,816 boe/d for 1P reserves, as set forth in the InSite Report,
representing a measure of the amount of time production could be
sustained at the production rates based on the reserves at the
applicable point in time.
|
|
|
|
|
|
|
2016
|
2015
|
2014
|
2013
|
2012
|
Proved
|
14.1
|
10.1
|
10.6
|
9.1
|
8.6
|
Proved and
Probable
|
18.8
|
14.3
|
13.3
|
13.7
|
12.4
|
RECYCLE RATIO (OPERATING NETBACK
(1)/FD&A COST)
Recycle ratio is a measure for evaluating the effectiveness of a
company's reinvestment program and the efficiency of capital
investment. It accomplishes this by comparing the operating netback
per boe to that year's reserve FD&A cost per boe. In 2016, the
Company completed facilities and equipment investments totalling
$12.7 million including approximately
$10.9 million directly on the Alder
Flats Plant. For this reason, recycle ratio information is
included for the exploration and development program excluding
capital spent directly on the Alder Flats Plant.
|
|
|
|
As at December 31,
2016
|
Proved
Developed
Producing
|
Proved
|
Proved
and
Probable
|
Operating netback
after commodity price risk management contracts ($/boe)
(1) (unaudited)
|
$7.91
|
$7.91
|
$7.91
|
Recycle ratio
(excluding change in FDC)
|
1.3 x
|
3.6 x
|
3.9 x
|
Recycle ratio
(excluding change in FDC and Alder Flats Plant capital)
|
1.5 x
|
4.0 x
|
4.3 x
|
(1)
Operating netback is calculated by deducting transportation,
royalties and operating costs from revenue and includes the impact
of commodity price risk management contracts. (See Non-GAAP
Measures)
|
|
|
|
|
FUTURE DEVELOPMENT COSTS USING FORECAST PRICES AND
COSTS
At year end, 2016, InSite had evaluated certain future
development opportunities on Company lands including 187 gross
(116.0 net) evaluated future Spirit
River horizontal locations and 182 gross (143.8 net) future
undrilled Cardium horizontal locations representing proved plus
probable undeveloped locations.
For purposes of assigning net present value of future revenue,
future development locations were committed as detailed in the
following table.
|
|
|
($000s)
|
Proved Future
Development Costs
|
Proved plus
Probable
Future Development
Costs
|
2017
|
60,700
|
68,020
|
2018
|
128,790
|
164,817
|
2019
|
168,950
|
219,877
|
2020 and
subsequent
|
326,235
|
492,338
|
Undiscounted
total
|
684,675
|
945,052
|
Discounted @
10%/yr.
|
522,622
|
712,864
|
RESERVES SUMMARY
The InSite Report is based on forecast prices and costs, and
applies InSite's forecast escalated commodity price deck, foreign
exchange rate, and inflation rate assumptions as at December 31, 2016 as outlined in the table below
entitled "Reserve Report Commodity Pricing". At December 31, 2016 the Company's 2P gross reserves
as evaluated by InSite, using forecast prices and costs, were
228,540 mboe, an increase of 3% compared to 222,629 mboe at
December 31, 2015; total 1P gross
reserves were 158,400 mboe, an increase of 10% compared to 143,496
mboe at December 31, 2015. By
commodity type, natural gas made up 74% and oil and natural gas
liquids 26% of total 2P reserves. In addition to the
information disclosed herein, more detailed information on the
Company's reserves will be included in the Company's Annual
Information Form which management anticipates will be filed on
March 17, 2017.
Reserves, at December 31, 2016, as
evaluated by InSite, are summarized below and in the following
tables.
Summary of Oil and
Gas Working Interest Reserves (1) (Gross)
|
Forecast Prices
and Costs
|
|
|
As at Dec. 31,
2016
|
As at Dec. 31,
2015
|
|
|
Natural Gas
(2)
|
Heavy Oil
|
Light and
|
Natural
Gas
|
Total
|
Total
|
|
|
|
|
Medium Oil
|
Liquids
|
|
|
|
|
(mmcf)
|
(mbbl)
|
(mbbl)
|
(mbbl)
|
(mboe, 6:1)
|
(mboe,
6:1)
|
Proved
|
|
|
|
|
|
|
|
Developed
producing
|
271,384
|
25
|
1,473
|
13,593
|
60,322
|
63,401
|
|
Developed
non-producing
|
4,817
|
0
|
20
|
193
|
1,015
|
1,234
|
|
Undeveloped
|
431,440
|
109
|
2,651
|
22,397
|
97,064
|
78,861
|
Total
proved
|
707,641
|
134
|
4,143
|
36,183
|
158,400
|
143,496
|
Probable
|
310,819
|
208
|
2,190
|
15,938
|
70,139
|
79,133
|
Total proved plus
probable
|
1,018,460
|
342
|
6,333
|
52,121
|
228,540
|
222,629
|
(1)
"Working Interest" means Bellatrix's working interest (operated
or non-operated) share excluding any royalty interest and before
deduction of royalties. Also referred to as "Gross" reserves
under NI 51-101. May not add due to rounding.
|
|
(2)
Includes natural gas from coal bed methane and shale gas
reserves. Coal bed methane and shale gas reserves represent an
immaterial portion of the Company's natural gas
reserves.
|
|
Summary of Oil and
Gas Net Reserves (1) (Net)
|
Forecast Prices
and Costs
|
|
|
As at Dec. 31,
2016
|
As at Dec. 31,
2015
|
|
|
Natural Gas
(2)
|
Heavy Oil
|
Light and
|
Natural
Gas
|
Total
|
Total
|
|
|
|
|
Medium Oil
|
Liquids
|
|
|
|
|
(mmcf)
|
(mbbl)
|
(mbbl)
|
(mbbl)
|
(mboe, 6:1)
|
(mboe,
6:1)
|
Proved
|
|
|
|
|
|
|
|
Developed
producing
|
239,688
|
24
|
1,317
|
10,055
|
51,343
|
51,696
|
|
Developed
non-producing
|
4,157
|
0
|
16
|
137
|
846
|
1,022
|
|
Undeveloped
|
374,654
|
95
|
2,154
|
18,135
|
82,826
|
67,930
|
Total
proved
|
618,499
|
119
|
3,486
|
28,326
|
135,015
|
120,648
|
Probable
|
264,770
|
177
|
1,739
|
12,282
|
58,326
|
65,565
|
Total proved plus
probable
|
883,269
|
296
|
5,225
|
40,609
|
193,340
|
186,214
|
(1)
"Net" means Bellatrix's working interest (operated or
non-operated) share after deduction of royalty obligations, plus
Bellatrix's royalty interests in reserves. May not add due to
rounding.
|
(2)
Includes natural gas from coal bed methane and shale gas
reserves. Coal bed methane and shale gas reserves represent an
immaterial portion of the Company's natural gas
reserves.
|
RESERVE REPORT COMMODITY PRICING
The following is a summary of InSite's forecast commodity prices
as at December 31, 2016:
|
OIL
|
|
|
|
|
|
Year
Forecast
|
WTI
Cushing
Oklahoma
($US/bbl)
|
Edmonton
Crude Ref
Price ($/bbl)
|
AECO
Natural
Gas
($/MMBtu)
|
Butane
($/bbl)
|
Propane
($/bbl)
|
Condensate
($/bbl)
|
Exchange
Rate (1)
($US/$Cdn)
|
|
|
|
|
|
|
|
|
2017
|
55.00
|
68.33
|
3.47
|
47.83
|
23.92
|
75.17
|
0.750
|
2018
|
60.00
|
72.32
|
3.42
|
42.07
|
25.31
|
79.55
|
0.775
|
2019
|
65.00
|
76.05
|
3.59
|
54.75
|
26.62
|
83.65
|
0.800
|
2020
|
70.00
|
79.54
|
3.93
|
57.27
|
27.84
|
87.50
|
0.825
|
2021
|
75.00
|
82.82
|
4.01
|
59.63
|
28.99
|
91.11
|
0.850
|
2022
|
80.00
|
88.60
|
4.17
|
63.79
|
31.01
|
97.46
|
0.850
|
2023
|
81.60
|
90.37
|
4.27
|
65.07
|
31.63
|
99.41
|
0.850
|
2024
|
83.23
|
92.18
|
4.43
|
66.37
|
32.26
|
101.39
|
0.850
|
2025
|
84.90
|
94.02
|
4.52
|
67.69
|
32.91
|
103.42
|
0.850
|
2026
|
86.59
|
95.90
|
4.61
|
69.05
|
33.57
|
105.49
|
0.850
|
Thereafter
|
+2.0%/yr.
|
+2.0%/yr.
|
+2.0%/yr.
|
+2.0%/yr.
|
+2.0%/yr.
|
+2.0%/yr.
|
|
(1)
Exchange rates used to generate the benchmark reference prices
in this table
|
Weighted average historical prices realized by Bellatrix (before
commodity price risk management contracts) for the year ended
December 31, 2016, were $2.27/mcf for natural gas, $48.41/bbl for crude oil and condensate, and
$13.14/bbl for natural gas liquids
(excluding condensate).
LAND
As at December 31, 2016, Bellatrix
had approximately 180,203 net undeveloped acres in Alberta, British
Columbia, and Saskatchewan.
Land Holdings
(1)
|
|
|
|
2016
|
2015
|
|
Gross
|
Net
|
Gross
|
Net
|
Developed
|
|
|
|
British
Columbia
|
8,132
|
2,108
|
8,612
|
2,428
|
|
Alberta
|
402,145
|
244,828
|
457,300
|
284,002
|
|
Saskatchewan
|
13,327
|
12,719
|
13,327
|
12,720
|
|
Total
|
423,604
|
259,656
|
479,239
|
299,150
|
Undeveloped
|
|
|
|
British
Columbia
|
85,992
|
33,863
|
98,850
|
40,212
|
|
Alberta
|
189,004
|
138,608
|
347,482
|
278,291
|
|
Saskatchewan
|
8,005
|
7,732
|
8,005
|
7,732
|
|
Total
|
283,001
|
180,203
|
454,337
|
326,235
|
Developed and
Undeveloped
|
|
|
|
British
Columbia
|
94,124
|
35,971
|
107,462
|
42,640
|
|
Alberta
|
591,149
|
383,436
|
804,782
|
562,292
|
|
Saskatchewan
|
21,332
|
20,452
|
21,332
|
20,452
|
Total
|
706,605
|
439,859
|
933,576
|
625,385
|
(1)
May not add due to rounding
|
|
|
|
|
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 and on the New York Stock
Exchange under the symbol "BXE".
All amounts in this press release are in Canadian dollars unless
otherwise identified.
READER ADVISORIES:
Forward-Looking Statements. Certain statements contained in
this news release may constitute forward-looking statements or
forward-looking information. These statements relate to future
events or the Bellatrix's future performance. All statements other
than statements of historical fact may be forward-looking
statements. Forward-looking statements or information are often,
but not always, identified by the use of words such as "seek",
"anticipate", "plan", "continue", "estimate", "expect", "may",
"will", "project", "predict", "potential", "targeting", "intend",
"could", "might", "should", "believe" and similar expressions.
Statements relating to "reserves" are also deemed to be
forward-looking statements, as they involve the implied assessment,
based on certain estimates and assumptions, that the reserves
described exist in the quantities predicted or estimated and that
the reserves can be profitably produced in the future. These
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements. Bellatrix believes that the expectations reflected in
those forward-looking statements are reasonable, but no assurance
can be given that these expectations will prove to be correct and
such forward-looking statements included in this news release
should not be unduly relied upon by investors. These statements
speak only as of the date of this news release and are expressly
qualified, in their entirety, by this cautionary statement.
In particular, this news release contains forward-looking
statements, pertaining to the following: projections of market
prices and costs, supply and demand for oil and natural gas, the
quantity of reserves, oil and natural gas production levels, plans
for growth and the development of the Company's Spirit River natural gas play, and
expectations of the low cost, liquids-rich nature of that play,
plans to grow the Company's netbacks, margins and operating cash
flow, 2017 drilling plans, estimated future drilling locations,
capital expenditure programs, treatment under governmental
regulatory and taxation regimes, expectations regarding Bellatrix's
ability to raise capital and to continually add to reserves through
acquisitions and development, timing of filing of Bellatrix's
annual information form an annual financial results for the
year ended December 31,
2016.
With respect to forward-looking statements contained in this
news release, Bellatrix has made assumptions regarding, among other
things: prevailing commodity prices, exchange rates, interest
rates, applicable royalty rates and tax laws; the legislative and
regulatory environments of the jurisdictions where Bellatrix
carries on business or has operations; future production rates and
estimates of operating costs; performance of existing and future
wells; reserve and resource volumes; anticipated timing and results
of capital expenditures; the success obtained in drilling new
wells; the sufficiency of budgeted capital expenditures in carrying
out planned activities; the timing, location and extent of future
drilling operations; the state of the economy and the exploration
and production business; results of operations; performance;
business prospects and opportunities; the availability and cost of
financing, labour and services; the impact of increasing
competition; ability to market oil and natural gas successfully and
Bellatrix's ability to obtain additional financing on satisfactory
terms.
Although Bellatrix believes that the assumptions on which
such forward-looking information is based are reasonable, undue
reliance should not be placed on the forward-looking information
because no assurance can be given that they will prove to be
correct. Bellatrix's actual results could differ materially from
those anticipated in these forward-looking statements as a result
of risk factors that may include, but are not limited to:
volatility in the market prices for oil and natural gas;
uncertainties associated with estimating reserves; uncertainties
associated with Bellatrix's ability to obtain additional financing
on satisfactory terms; geological, technical, drilling and
processing problems; liabilities and risks, including environmental
liabilities and risks, inherent in oil and natural gas operations;
incorrect assessments of the value of acquisitions; competition
for, among other things, capital, acquisitions of reserves,
undeveloped lands and skilled personnel. Readers are cautioned that
the foregoing list of factors is not exhaustive. Management has
included the above summary of assumptions and risks related to
forward-looking information provided in this news release in order
to provide security holders with a more complete perspective on
Bellatrix's future operations and such information may not be
appropriate for other purposes. Additional information on these and
other factors that could affect Bellatrix's operations and
financial results are included in reports on file with Canadian
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com).
This forward-looking information represents Bellatrix's views
as of the date of this document and such information should not be
relied upon as representing its views as of any date subsequent to
the date of this document. Bellatrix has attempted to identify
important factors that could cause actual results, performance or
achievements to vary from those current expectations or estimates
expressed or implied by the forward-looking information. However,
there may be other factors that cause results, performance or
achievements not to be as expected or estimated and that could
cause actual results, performance or achievements to differ
materially from current expectations. There can be no assurance
that forward-looking information will prove to be accurate, as
results and future events could differ materially from those
expected or estimated in such statements. Accordingly, readers
should not place undue reliance on forward-looking information.
Except as required by law, the Company undertakes no obligation to
publicly update or revise any forward-looking statements.
Unaudited Financial Information: Certain financial and
operating information included in this news release are based on
estimated unaudited financial results for the year ended
December 31, 2016 and are subject to
the same limitations as discussed under "Forward- Looking
Statements" set out above. These estimated amounts are subject to
change upon the completion of the audited financial statements for
the year ended December 31, 2016 and
changes could be material. Bellatrix anticipates filings its
audited financial statements and related management's discussion
and analysis for the year ended December 31,
2016 on SEDAR on March 15, 2017.
Information Regarding Disclosure on Oil and Gas Reserves: The
reserves data set forth above is based upon an independent reserves
assessment and evaluation prepared by InSite with an effective date
of December 31, 2016 (the "InSite
Report"). The presentation summarizes the Company's crude oil,
natural gas liquids and natural gas reserves and the net present
values before income tax of future net revenue for the Company's
reserves using forecast prices and costs based on the InSite
Report. All reserve references in this news release are "Working
interest reserves" unless otherwise indicated. Working interest
reserves are Bellatrix's working interest (operated and
non-operated) share before deduction of royalties, and is also
referred to as "Gross" reserves under NI 51-101. The InSite
Report has been prepared in accordance with the standards contained
in the COGE handbook and the reserve definitions contained in NI
51-101. All evaluations and reviews of future net cash flows are
stated prior to any provisions for interest costs or general and
administrative costs and after the deduction of estimated future
capital expenditures for wells to which reserves have been
assigned. It should not be assumed that the estimates of future net
revenues presented in the tables above represent the fair market
value of the reserves. There is no assurance that the forecast
prices and cost assumptions will be attained and variances could be
material. The recovery and reserve estimates of the Company's crude
oil, natural gas liquids and natural gas reserves provided herein
are estimates only and there is no guarantee that the estimated
reserves will be recovered. Actual crude oil, natural gas and
natural gas liquids reserves may be greater than or less than the
estimates provided herein. All future net revenues are estimated
using forecast prices, arising from the anticipated development and
production of the Company's reserves, net of the associated
royalties, operating costs, development costs, and abandonment and
reclamation costs and are stated prior to provision for interest
and general and administrative expenses. Future net revenues have
been presented on a before tax basis. Estimated values of future
net revenue disclosed herein do not represent fair market value.
The reserve data provided in this news release only represents a
summary of the disclosure required under NI 51-101. Additional
disclosure will be provided in the Company's Annual Information
Form which management anticipates will be filed
on www.sedar.com on March 17,
2017. Reserves at December 31,
2015, 2014, 2013 and 2012 were independently evaluated by
Sproule Associates Limited ("Sproule"). Bellatrix changed
independent reserves evaluators from Sproule to InSite for the 2016
evaluation. The change was not the result of any disputes between
Sproule and management of Bellatrix.
Non-GAAP Measures: The term "total net debt" does not have a
standard meaning under Canadian general accepted accounting
principles ("GAAP"). Therefore reference to the non-GAAP measures
of net debt may not be comparable with the calculation of similar
measures for other entities. The Company's calculation of total net
debt excludes other deferred liabilities, deferred capital
obligations, long-term risk management contract liabilities,
decommissioning liabilities, and deferred tax liabilities.
Total net debt includes the adjusted working capital deficiency,
long term loans receivable, the liability component of the
Convertible Debentures, current bank debt and long term bank
debt. Adjusted working capital deficiency is a non-GAAP
measure calculated as net working capital deficiency excluding
current risk management contract assets and liabilities, current
portion of other deferred liabilities, current portion of deferred
capital obligation and the current bank debt. Management believes
these measures are useful supplementary measures of the total
amount of current and long-term debt. A reconciliation between
total liabilities under GAAP and total net debt as calculated by
the Company will be available in the Company's Management
Discussion and Analysis for the year ended December 31, 2016 and 2015, to be filed on SEDAR
on or about March 15, 2017.
Oil and Gas Metrics: This news release contains metrics
commonly used in the oil and natural gas industry, such as "recycle
ratio", "operating netback", "finding, development and acquisition
("FD&A") costs", and "reserve life index ("RLI")". These terms
do not have a standardized meaning and may not be comparable to
similar measures presented by other companies, and therefore should
not be used to make such comparisons. Details of how these measures
have been calculated are included in the body of this press
release.
BOE Presentation: References herein to "boe" mean barrels of
oil equivalent derived by converting gas to oil in the ratio of six
thousand cubic feet (Mcf) of gas to one barrel (bbl) of oil. Boe
may be misleading, particularly if used in isolation. A boe
conversion ratio of 6 Mcf: 1 bbl is based on an energy conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. In addition, 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.
Drilling Locations: This press release discloses future
drilling locations, which can be categorized as follows: (i) proved
locations; and (ii) probable locations. Proved
locations and probable locations are sometimes collectively
referred to as "booked locations", are derived from Bellatrix's
most recent independent reserves evaluation and account for
drilling locations that have associated proved plus probable
reserves or probable-only reserves, as applicable.
Initial Production Rates: Initial production rates disclosed
herein may not be indicative of long-term performance or ultimate
recovery. Such rates are not determinative of the future production
rates of such wells and do not reflect how the production from such
wells will decline thereafter. While encouraging, readers are
cautioned not to place reliance on such rates in calculating the
aggregate production for Bellatrix. A pressure transient analysis
or well test interpretation has not been carried out in respect of
all wells. Accordingly, Bellatrix cautions that the test results
should be considered to be preliminary.
SOURCE Bellatrix Exploration Ltd.