TSX, NYSE: BXE
CALGARY, May 10, 2017 /CNW/ - Bellatrix
Exploration Ltd. ("Bellatrix" or the "Company") (TSX, NYSE: BXE)
announces its financial and operating results for the first quarter
ended March 31, 2017. This
press release contains forward-looking statements. Please
refer to our cautionary language on forward-looking statements and
the other matters set forth at the end of this press release and
the beginning of the Management's Discussion and Analysis (the
"MD&A") for the three months ended March
31, 2017 and 2016. Bellatrix's unaudited
condensed consolidated financial statements and notes, and the
MD&A are available on Bellatrix's website at
www.bellatrixexploration.com, and are filed on SEDAR
at www.sedar.com and on EDGAR at
www.sec.gov/edgar.
FIRST QUARTER 2017
HIGHLIGHTS
|
|
|
Three months ended
March 31,
|
|
2017
|
2016
|
SELECTED FINANCIAL
RESULTS
|
|
|
(CDN$000s except
share and per share amounts)
|
|
|
Cash flow from
operating activities
|
8,258
|
10,333
|
|
Per basic share
(1)
|
$0.03
|
$0.05
|
|
Per diluted share
(1)
|
$0.03
|
$0.05
|
Funds flow from
operations (2)
|
14,891
|
12,876
|
|
Per basic share
(1)
|
$0.06
|
$0.07
|
|
Per diluted share
(1)
|
$0.05
|
$0.07
|
Net profit
|
13,049
|
19,347
|
|
Per basic share
(1)
|
$0.05
|
$0.10
|
|
Per diluted share
(1)
|
$0.05
|
$0.10
|
Capital – exploration
and development
|
43,978
|
29,018
|
Facilities to be
transferred
|
5,611
|
-
|
Capital – corporate
assets
|
216
|
31
|
Property
acquisitions
|
-
|
3
|
Capital expenditures
– cash
|
49,805
|
29,052
|
Property dispositions
– cash (3)
|
-
|
(125)
|
Total net capital
expenditures – cash
|
49,805
|
28,927
|
Other non-cash
capital items
|
1,414
|
1,944
|
Total capital
expenditures – net (4)
|
51,219
|
30,871
|
Bank debt
|
41,466
|
358,671
|
Senior
Notes
|
322,845
|
311,736
|
Convertible
Debentures (liability component)
|
37,889
|
-
|
Adjusted working
capital deficiency (2)
|
33,177
|
43,356
|
Total net debt
(2)
|
435,377
|
713,763
|
Total
assets
|
1,486,133
|
1,707,882
|
Total shareholders'
equity
|
877,502
|
830,662
|
|
|
|
SELECTED OPERATING
RESULTS
|
|
Three months ended
March 31,
|
|
|
2017
|
2016
|
Total revenue
(4)
|
|
66,024
|
55,158
|
Average daily sales
volumes
|
|
|
|
|
Crude oil, condensate
and NGLs
|
(bbl/d)
|
8,631
|
10,558
|
|
Natural
gas
|
(mcf/d)
|
156,715
|
167,455
|
|
Total oil
equivalent
|
(boe/d)
(5)
|
34,750
|
38,467
|
Average realized
prices
|
|
|
|
Crude oil and
condensate
|
($/bbl)
|
67.30
|
39.33
|
|
Crude oil and
condensate (including risk management (6))
|
($/bbl)
|
67.30
|
39.07
|
|
NGLs (excluding
condensate)
|
($/bbl)
|
18.18
|
10.35
|
|
Crude oil, condensate
and NGLs
|
($/bbl)
|
31.71
|
21.28
|
|
Natural
gas
|
($/mcf)
|
2.87
|
1.99
|
|
Natural gas
(including risk management (6))
|
($/mcf)
|
3.09
|
2.41
|
|
Total oil
equivalent
|
($/boe)
(5)
|
20.83
|
14.52
|
|
Total oil equivalent
(including risk management (6))
|
($/boe)
(5)
|
21.81
|
16.30
|
|
|
|
|
|
Net wells
drilled
|
|
10.6
|
5.7
|
|
|
|
|
Selected Key
Operating Statistics
|
|
|
|
|
Operating netback
(4)
|
($/boe)
(5)
|
8.35
|
6.50
|
|
Operating netback
(4) (including risk management
(6))
|
($/boe)
(5)
|
9.34
|
8.28
|
|
Transportation
expense
|
($/boe)
(5)
|
1.03
|
0.92
|
|
Production
expense
|
($/boe)
(5)
|
9.37
|
7.37
|
|
General &
administrative expense
|
($/boe)
(5)
|
1.93
|
1.29
|
|
Royalties as a % of
sales (after transportation)
|
|
12%
|
7%
|
COMMON
SHARES
|
|
|
Common shares
outstanding (7)
|
246,585,828
|
191,963,910
|
Weighted average
shares (1)
|
246,585,828
|
191,960,910
|
SHARE TRADING
STATISTICS
|
|
|
TSX and Other
(8)
|
|
|
(CDN$, except
volumes) based on intra-day trading
|
|
|
High
|
1.37
|
1.99
|
Low
|
0.97
|
1.11
|
Close
|
1.05
|
1.32
|
Average daily
volume
|
963,930
|
2,043,542
|
NYSE
|
|
|
(US$, except
volumes) based on intra-day trading
|
|
|
High
|
1.03
|
1.48
|
Low
|
0.73
|
0.75
|
Close
|
0.79
|
1.01
|
Average daily
volume
|
505,010
|
2,013,177
|
(1) Basic weighted average shares
for the three months ended March 31, 2017 were 246,585,828 (2016:
191,963,910). In computing
weighted average diluted profit per share, weighted average
diluted cash flow from operating activities per share, and weighted
average diluted funds flow from operations per share for the three
months ended March 31, 2017, a total of nil (2016: nil) 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 30,864,200 (2016: nil) common shares
issuable on conversion of the Convertible Debentures (as defined
below) were added to the denominator for the three month periods
resulting in diluted weighted average common shares of 277,450,028
(2016: 191,963,910).
|
|
(2) The terms "funds flow from
operations", "funds flow from operations per share", "total net
debt", and "adjusted working capital deficiency", do
not have standard meanings under generally accepted accounting
principles ("GAAP"). Refer to "Capital performance measures"
disclosed at the end of this Press Release.
|
|
(3) Property dispositions – cash
does not include transaction costs.
|
|
(4) The terms "operating
netbacks", "total capital expenditures – net", and "total revenue"
do not have standard meanings under generally accepted accounting
principles ("GAAP"). Refer to "Non-GAAP measures" disclosed at the
end of this Press Release.
|
|
(5)
A boe conversion ratio of 6 mcf:1 bbl has been used, which is
based on an energy equivalency conversion method primarily
applicable at the burner tip. Given that the value ratio based on
the current price of crude oil as compared to natural gas is
significantly different than the energy equivalency of the
conversion ratio, utilizing the 6:1 conversion ratio may be
misleading as an indication of value.
|
|
(6)
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. 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.
|
|
(7) Fully diluted common
shares outstanding for the three months ended March 31, 2017 were
287,760,127 (2016: 203,515,245). This includes 10,310,099 (2016:
11,551,335) of share options outstanding and 30,864,200 (2016: nil)
of shares issuable on conversion of the Convertible Debentures.
Shares issuable on conversion of the Convertible Debentures are
calculated by dividing the $50 million principal amount of the
Convertible Debentures by the conversion price of $1.62 per
share.
|
|
(8) TSX and Other includes the
trading statistics for the Toronto Stock Exchange ("TSX") and other
Canadian trading markets.
|
PRESIDENT'S MESSAGE
Execution of our strategic three year development plan
previously announced in January 2017
began in earnest during the first quarter of 2017, marking the
resumption of Bellatrix's long term profitable growth. The
Company delivered on its objectives, exceeding the previously set
full year 2017 production guidance target and providing clear line
of sight to deliver +/-15% compound annual growth in production
volumes over the next three years. First quarter 2017
performance included the following operational and financial
achievements:
- Production volumes of 34,750 boe/d represented average volume
growth of 9% compared with the previous quarter
- Funds flow from operations of $14.9
million grew 77% compared with the previous quarter
- Production expenditures of $9.37/boe were reduced by $1.20/boe or 11% from the previous quarter
Bellatrix has built a strong and sustainable business anchored
by three pillars that provide the foundation for long term
profitable growth: 1) high quality assets and acreage, 2)
infrastructure ownership and control and 3) takeaway capacity and
market egress.
High quality assets & acreage
Bellatrix is positioned to accelerate profitable growth of our
large asset base as evidenced by our first quarter 2017 operational
performance. The core foundational assets for the Company
reside in a proven area of the Deep Basin in west central
Alberta, known for its exceptional
geologic and hydrocarbon bearing characteristics. Bellatrix
maintains a dominant core acreage position along the Deep Basin
fairway with decades of development ready opportunities anchored by
our large inventory of net identified Spirit River and Cardium well locations and
the Company retains significant torque to a higher crude oil price
environment through its Cardium position.
The Spirit River liquids rich natural gas play represents one of
North America's lowest supply cost
natural gas plays and delivers strong rates of return at current
natural gas prices. Rate of return expectations for the
Spirit River continue to rank among the highest within our
portfolio of investment opportunities thereby attracting the
majority of anticipated capital investment in 2017. Bellatrix
has proven itself as a premier operator within the Spirit River
play, consistently delivering industry leading well productivity
results which drive strong rates of return for every capital dollar
invested. To that end, the first two wells completed in early
February of Bellatrix's 2017 Spirit River program ranked as two of
the best wells in Alberta during
the month, followed by the remaining first quarter program wells
being completed and placed on stream at or above internal
expectations. Our top tier acreage position and material
running room provide a key long term competitive advantage for the
Company.
Infrastructure ownership and control
Infrastructure ownership, operatorship and control creates
significant barriers to competition within our core area thus
ensuring operational flexibility and reliability to profitably
process our production volumes and extract maximum value from each
product stream. Since 2013, Bellatrix has invested approximately
$350 million in strategic
infrastructure assets within its core west central Alberta area providing above ground control of
the region and creating significant barriers to industry
competition. The capital build out for our long term growth
strategy is nearly complete with investment in the Bellatrix
O'Chiese Nees-Ohpawganu'ck deep-cut gas plant at Alder Flats (the "Alder Flats Plant"),
ownership in two other major natural gas processing plants,
operatorship and control of nine major compressor stations, and
direct operatorship in over 1,000 kilometres of strategic gathering
systems and pipelines. Bellatrix's historic investment in key
strategic infrastructure and facilities provide the processing
capacity and capability to grow net Company production volumes
beyond 60,000 boe/d, with minimal future facility related
capital. With the proportion of capital to facilities
projects expected to materially reduce in 2018 and beyond,
Bellatrix anticipates directing incremental capital directly to the
drill bit, thereby enhancing already industry leading corporate
capital efficiency metrics.
Takeaway capacity and market egress
The third pillar that provides a key competitive advantage and
underpins the Company's long term profitable growth profile is
ensuring ample takeaway capacity and market egress for our
production volumes. Bellatrix maintains several long term
firm transportation ("FT") agreements, ensuring market egress for
current and forecast production, currently representing
approximately 120% of current gross operated natural gas volumes at
multiple receipt points on the Nova Gas Transmission Ltd. (the
"NGTL") system. The NGTL system has experienced, and is
expected to experience further curtailments of both interruptible
and firm service capacity as the operator continues work through
2017 to expand capacity along the system. With excess FT
relative to current production levels, Bellatrix is well positioned
to deliver volumes with minimal impacts during periods of system
curtailments. Bellatrix previously negotiated additional FT
capacity to facilitate increased growth volumes from Phase 2 of its
Alder Flats Plant which provides additional strategic long term
value for the Company. Bellatrix also maintains firm service
contracts through a number of third party processing plants in its
greater core Ferrier region to ensure unfettered delivery
capability for current and planned production growth, with
staggered contract maturity dates to align with the in-service date
of Phase 2 of the Alder Flats Plant. Finally, Bellatrix has
secured fractionation capacity for its natural gas liquids ("NGL")
volumes by way of long term agreements providing 100% coverage for
current and forecast NGL volumes from both Phase 1 and Phase 2 of
its Alder Flats Plant. The foresight to obtain and control
firm transportation along the main transmission system for not only
current but also forecast growth volumes provides a key competitive
long term advantage for the Company.
ENHANCED OUR ALREADY STRONG RISK MANAGEMENT POSITION
Bellatrix continued to protect its long term strategic plan by
adding to its already strong risk management position during the
first quarter of 2017. Bellatrix maintains approximately 64%
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 the updated
2017 average gross production guidance of 34,500 boe/d; 76% natural
gas weighted). In addition, the Company has in place material
risk management protection in 2018 with a total of 65.6 MMcf/d of
2018 natural gas volumes hedged at an average fixed price of
approximately $3.08/mcf; this
represents approximately 42% of volumes compared to the mid-point
of the updated 2017 full year average guidance. Strong propane
prices in the first quarter of 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. 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.
STRONG OPERATIONAL PERFORMANCE ACHIEVED IN THE FIRST QUARTER
OF 2017
Bellatrix delivered strong operational performance through the
first quarter of 2017. First quarter average production of 34,750
boe/d (75% natural gas weighted) surpassed the Company's 2017 prior
average annual guidance (mid-point) estimate of 33,500 boe/d.
With first quarter objectives solidly met, Bellatrix remains
favourably positioned to deliver strong results through 2017 with
second quarter production levels currently exceeding management
expectations. With strong operational performance and
momentum, Bellatrix is increasing its 2017 production guidance
target as discussed in the Outlook section of this release.
Our focus on operational execution and delivery of our three
year growth strategy was evident by the strong results achieved
during the first quarter of 2017. Bellatrix participated in
13 gross (10.6 net) wells in the first quarter which included 8
gross (7.6 net) operated Spirit
River wells, 2 gross (2.0 net) operated Cardium wells and
also 3 gross (1.0 net) non-operated wells in the Spirit River and
Ellerslie formations. Of the
ten gross operated wells drilled during the first quarter, eight
were brought on-stream during the first three months of the year,
with the remaining operated Spirit
River well subsequently brought on-stream in early April,
and the one remaining Cardium operated well drilled and planned for
completion and on-stream delivery in the third quarter of
2017.
Bellatrix completed its planned first quarter capital program
with exploration and development expenditures of $44.0 million and an unchanged expectation to
spend approximately half of the full year's net capital expenditure
budget of $105 million within the
first six months of the year.
First quarter production expenses averaged $9.37/boe, representing a marked reduction of
$1.20/boe from the $10.57/boe production expenditure level in the
fourth quarter of 2016. First quarter production expenditure
levels and anticipated production and expense levels position
Bellatrix to maintain its full year average production expenditure
guidance of approximately $9.00/boe.
Previously set year 2017 guidance expectations refer to Bellatrix's
guidance as announced on January 5,
2017; updated guidance metrics are included in the forward
guidance section of this press release.
First Quarter 2017
Actual Performance versus Previously Set 2017 Annual
Guidance
|
|
First
Quarter
2017
Results
|
Previously
Set
2017 Annual
Guidance
|
Actual Versus
Guidance
|
Average daily
production (boe/d)
|
34,750
|
33,500
|
+4%
|
Average product
mix
|
|
|
|
|
Crude oil, condensate
and NGLs
(%)
|
25
|
24
|
+1%
|
|
Natural gas
(%)
|
75
|
76
|
-1%
|
Net capital spending
($ millions) (1)
|
44
|
105
|
n/a
|
Expenses
($/boe)
|
|
|
|
|
Production
|
9.37
|
9.00
|
+4%
|
|
(1)
Capital spending includes exploration and development capital
projects and corporate assets, and excludes property acquisitions,
property dispositions, and facilities to be
transferred.
|
|
(2)
Production expenses before net processing
revenue/fees.
|
OPERATIONAL UPDATE
With the conclusion of all joint venture drilling in 2016,
Bellatrix has demonstrated the flexibility in 2017 to balance
infill development drilling and expanded core area
development. The Company remains focused on growing
production, adding reserves, and increasing our inventory of
development drilling locations. Bellatrix's working interest
in operated wells drilled in the first quarter of 2017 averaged
96%. Well results from the first quarter program continue to
meet and exceed management expectations. To that end, Bellatrix is
pleased to provide enhanced transparency for its operated 2017
development program results including the:
- 100/1-30-44-09W5 Spirit River
(100% working interest) well IP85: 14.5 MMcf/d
- 102/1-6-45-09W5 Spirit River
(100% working interest) well IP50: 10.6 MMcf/d
- 102/1-19-44-09W5 Spirit River
(67% working interest) well IP70: 12.1 MMcf/d
- 102/16-30-44-09W5 Spirit River
(100% working interest) well IP50: 11.3 MMcf/d
- 100/4-06-45-09W5 Spirit River
(100% working interest) well IP35: 10.0 MMcf/d
- 102/16-11-45-07W5 Spirit River
(100% working interest) well IP20: 8.6 MMcf/d
- 100/3-6-45-09W5 Spirit River
(100% working interest) well IP30: 9.9 MMcf/d
- 100/5-19-43-09W5 Spirit River
(92% working interest) well IP20: 5.9 MMcf/d
- 100/1-30-45-08W5 Cardium (100% working interest) well IP55: 550
boe/d
Bellatrix completed the majority of its first half program in
the first three months of the year (in advance of the seasonal
spring break-up period) with exploration and development capital
expenditures invested during the first quarter of $44.0 million. The Company's capital
expenditure plans remain on target and in line with previously
stated guidance levels for $105
million in 2017 with approximately 50% of capital
expenditures to be invested within the first half of the year.
ALDER FLATS PHASE 2
EXPANSION NEARING COMPLETION WHICH REPRESENTS THE FINAL STAGE OF
THE COMPANY'S LONG TERM STRATEGIC INFRASTRUCTURE BUILD-OUT
The Alder Flats Plant represents a highly strategic asset for
the Company as we continue to execute on our three year development
plan to profitably grow production, expand netbacks and grow cash
flow. Phase 1 of the Alder Flats Plant has been on-stream for
21 continuous months delivering an average 96% capacity utilization
rate over that period and firmly establishing the Bellatrix Alder
Flats Plant as the most efficient plant in our greater west central
Alberta core area.
The Phase 2 expansion project, which will more than double gross
throughput capacity at the plant to 230 MMcf/d (from 110 MMcf/d
currently) remains on time and on budget for completion in the
second quarter of 2018. The Plant expansion is anticipated to
drive improved revenue generation through additional higher margin
NGL extraction, and provide further reductions to corporate
operating costs, driving expanded corporate profit margins and cash
flow. Fabrication of all major equipment for Phase 2 is
complete including compressors and propane bullets.
Fabrication and packaging of other material equipment including the
condensate stabilizer, production tanks, heat medium package, and
electrical equipment continues to progress according to plan and is
expected to arrive on site for installation over the next several
quarters. Site construction activity will recommence late in
the second quarter with scheduled pile driving activity anticipated
to begin in June. Major equipment will begin being delivered
to site, with installation activities and mechanical work planned
to begin in the third quarter of 2017.
Bellatrix's investment in strategic infrastructure assets within
the greater Ferrier and Willesden Green areas of west central
Alberta provide the above ground
control of the region and create significant barriers to industry
competition. The capital build out for our long term growth
strategy is nearly complete given prior period investment in the
Alder Flats Plant, major compressor stations, and strategic
gathering systems and pipelines. Bellatrix forecasts net
capital expenditures of approximately $13
million in 2017 and $3 million
in 2018 (excluding received partner prepayment) required to
complete Phase 2 of the Alder Flats Plant which will solidify our
infrastructure control, and provide the facilities and processing
capacity to grow net production volumes beyond 60,000 boe/d, with
minimal future facility related capital.
Completion of Phase 2 of the Alder Flats Plant, which will add
an incremental 30 MMcf/d ownership capacity net to Bellatrix's 25%
working interest, is expected to deliver a favourable step change
reduction in operating costs down by approximately $1.00/boe relative to current full year 2017
average production expense guidance.
INDUSTRY LEADING WELL RESULTS AND CONTINUED CAPITAL COST
SUPPRESSION EFFORTS
Bellatrix has established itself as a premier operator in west
central Alberta, continuously
delivering top tier well results from its Spirit River development program through the
first quarter of 2017, coupled with continued capital cost
reductions which in combination delivered another extremely capital
efficient quarter. All-in (drill, complete, equip and tie-in)
estimated well costs in the first quarter of 2017 averaged
$3.8 million, unchanged from average
costs of $3.8 million achieved in
2016 despite modest upward pressure on select completion service
costs in 2017. Bellatrix continues to supress costs and
mitigate inflationary pressure on capital costs, given structural
and sustainable improvements achieved within both drilling and
completion practices.
ENHANCED LIQUIDITY POSITION WITH BORROWING BASE INCREASED
20%
Subsequent to the end of the first quarter, Bellatrix amended
and restated the terms of its syndicated revolving credit
facilities (the "Credit Facilities"). Effective May 9, 2017, the total commitments under the
Credit Facilities were set at $120
million, comprised of a $25
million operating facility provided by a Canadian bank and a
$95 million syndicated facility
provided by four financial institutions. Total commitments
under the Credit Facilities were increased 20% relative to total
commitments at year end 2016. The borrowing base increase
provides enhanced liquidity relative to prior levels, while
maintaining Bellatrix's financial resources at a level that
minimizes standby fees. The Company remains committed to
continued fiscal prudence, and achieving near term growth
objectives within current capital spending guidance levels.
Other than the $41.5 million
outstanding as at March 31, 2017 on
the Credit Facilities, the Company has no debt maturities until
2020 and 2021.
Subsequent to the end of the first quarter 2017, Bellatrix
completed two separate transactions whereby it monetized its
$15 million vendor take back loan
receivable and divested its marketable securities for combined net
proceeds of approximately $20
million. Bellatrix utilized proceeds from these two
transactions to reduce the amount outstanding on its bank credit
facilities to approximately $21
million as at April 30,
2017.
OPERATIONAL AND FINANCIAL HIGHLIGHTS
- Production volumes in the first quarter of 2017 averaged 34,750
boe/d (75% natural gas weighted), ahead of the Company's previously
set full year 2017 guidance. Production levels in the first quarter
2017 increased 9% relative to fourth quarter 2016 levels,
reflecting strong results achieved from the first quarter capital
program. The Company was able to proactively manage system wide
interruptible and firm takeaway constraints through the utilization
of its strategic infrastructure including the Alder Flats
Plant.
- Exploration and development capital expenditures were
$44.0 million in the first quarter of
2017. Capital expenditures in the quarter were focused on drilling
and completion activity with 13 gross (10.6 net) wells drilled
and/or participated in during the quarter. Facilities related
investment net of transfers was focused primarily on the Phase 2
expansion project of the Alder Flats Plant.
- In the first quarter of 2017, Bellatrix drilled and/or
participated in nine gross (7.8 net) Spirit River liquids rich natural gas wells,
two gross (0.8 net) Ellerslie gas
wells, and two gross (2.0 net) Cardium wells.
- Compared to first quarter 2016 levels, Bellatrix reduced bank
debt by $317.2 million. At
March 31, 2017, Bellatrix reduced
outstanding bank debt to $41.5
million and total net debt to $435.4
million representing year over year reductions of 88% and
39%, respectively. The total net debt was reduced as proceeds from
several non-core asset dispositions, facilities monetization
transactions and capital financings completed in 2016 was used to
reduce outstanding bank indebtedness.
- At March 31, 2017, Bellatrix had
$58.5 million of undrawn capacity
(approximately 59% undrawn) on its $100
million Credit Facilities excluding outstanding letters of
credit of $12.9 million that reduce
the amount otherwise available to be drawn on the facilities.
Subsequent to quarter end, the Company entered into an amended and
restated syndicated revolving credit facility agreement increasing
the borrowing base of the Credit Facilities to $120 million providing enhanced liquidity
compared with March 31, 2017
levels.
- For the year ended March 31,
2017, Bellatrix's Senior Debt to EBITDA (as defined below)
ratio was 1.81 times, well below the financial covenant of 3.5
times as permitted by the agreement governing the credit
facilities.
- Total revenue increased by 20% to $66.0
million for the first quarter 2017, compared to $55.2 million realized in the first quarter 2016
mainly attributable to an increase in commodity prices for oil,
NGLs and natural gas from the comparative periods.
- The corporate royalty rate in the three months ended
March 31, 2017 averaged 12% of sales
(after transportation), compared to 7% in the first quarter of
2016. Higher average royalty rates over the comparative periods
reflect higher commodity prices, and decreased gas cost allowance
("GCA") credits associated with prior period facilities
monetization transactions completed in 2016.
- Production expenses in the first quarter 2017 averaged
$9.37/boe. Production expenditures
are expected to decline during 2017 and average approximately
$9.00/boe during the year, as a
result of cost suppression initiatives and increased production
volumes which will reduce overall production expenditures on a per
unit of production basis.
- The corporate operating netback (including risk management)
realized for the three months ended March
31, 2017 was $9.34/boe. Before
risk management, the first quarter 2017 operating netback was
$8.35/boe, an increase of 28%
compared to the $6.50/boe netback
realized in the first quarter 2016 reflecting improved realized
commodity prices over the comparable periods.
- Net general and administrative ("G&A") expenses (after
capitalized costs and recoveries) for the three months ended
March 31, 2017 were $6.0 million ($1.93/boe), compared to $4.5 million ($1.29/boe) in the comparative 2016 period. Net
G&A costs increased in the current period due to an increase in
gross expenses related to workforce restructuring costs and a
decrease in capital recoveries from partners as a result of an
increase in Bellatrix's average working interest in the operated
wells drilled in the first quarter of 2017 compared with the prior
period.
- Funds flow from operations generated in the three months ended
March 31, 2017 was $14.9 million ($0.06 per basic and $0.05 per diluted share), an increase of 16% from
$12.9 million ($0.07 per basic and diluted share) in the first
quarter of 2016. Cash flow from operating activities was
$8.3 million in the first quarter
2017 ($0.03 per basic and diluted
share) a decrease of 19% from $10.3
million ($0.05 per basic and
diluted share) in the first quarter of 2016.
- The net profit for the three months ended March 31, 2017 was $13.0
million compared to a net profit of $19.3 million for the three months ended
March 31, 2016. The decrease in net
profit period over period is due to a decrease in the unrealized
foreign exchange gain, offset by an increase in the operating
netbacks realized.
- As at March 31, 2017, Bellatrix
had approximately 173,595 net undeveloped acres of land in
Alberta, British Columbia, and Saskatchewan.
- At March 31, 2017, Bellatrix had
approximately $1.49 billion in tax
pools available for deduction against future income.
OUTLOOK
Management's acute focus on operational execution during the
first quarter of 2017 resulted in production volume outperformance
relative to previously set full year 2017 average guidance levels,
enabling management to increase our full year guidance expectations
as described below. The majority of our first half capital
investment program was completed during the first three months of
the year, as capital investment activities are customarily
curtailed during the second quarter, given the seasonal spring
break-up period. Average second quarter 2017 production
levels are anticipated to commensurately meet the revised full year
average guidance of 34,500 boe/d given strong well results and
strong operational momentum achieved during the first quarter of
2017.
Our capital investment plans for 2017 remain unchanged;
Bellatrix plans to expand its drilling efforts across our core west
central Alberta acreage including
expanded development of the Spirit River formation in the Willesden
Green area, following on our success in the Ferrier area. With the
completion of joint venture programs in 2016, Bellatrix has
strategically reviewed its drilling program to optimize capital
investment, forecast rates of return, and long term net asset value
and reserve growth potential. Our current 2017 capital
expenditure guidance anticipates drilling approximately 19 net
wells during the year, of which approximately 10.6 wells were
drilled during the first quarter of the year with one operated
Cardium well currently uncompleted. Our focused capital
investment program is supported by an active risk management
program, and will continue to target the low cost and high return
Spirit River liquids rich natural
gas play which delivers strong rates of return.
INCREASED 2017 PRODUCTION GUIDANCE WITH NO CHANGE TO CAPITAL
EXPENDITURES GIVEN STRONG OPERATIONAL PERFORMANCE
Strong first quarter operational results and positive momentum
into the second quarter provide visibility to meaningfully
outperform prior forecast guidance expectation levels. To
that end, Bellatrix is increasing its full year 2017 average
production guidance expectation to 34,500 boe/d, an increase of
1,000 boe/d from prior guidance announced on January 5, 2017. Bellatrix has maintained
its full year capital expenditure guidance at $105 million despite the increase in average
production levels. Bellatrix remains committed to providing
sustainable long term growth for shareholders including delivery of
our 2017 capital program providing +/-15% forecast production
growth.
|
|
|
|
|
|
Revised 2017
Annual Guidance
(May 10,
2017)
|
Previously Set
2017 Annual
Guidance (January 5, 2017)
|
Production
(boe/d)
|
|
|
|
2017 Average daily
production
|
34,500
|
33,500
|
|
2017 Exit
production
|
35,500
|
35,000
|
Average product
mix
|
|
|
|
Natural gas
(%)
|
76
|
76
|
|
Crude oil, condensate
and NGLs (%)
|
24
|
24
|
Net capital
expenditures ($ millions) (1)
|
$105
|
$105
|
Production expense
($/boe) (2)
|
$9.00
|
$9.00
|
|
(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 partners
35% share of the cost of construction of Phase 2 of the Alder Flats
Plant during calendar 2017.
|
|
(2)
Production expenses before net processing
revenue/fees
|
As the Company embarks on its three year strategic plan outlined
in January of 2017, we remain committed to maximizing capital
resources, maintaining a laser sharp focus on operational
execution, and most importantly delivering on our promises.
Bellatrix's three foundational pillars provide the long term
competitive advantages required to thrive in the current commodity
price environment and deliver profitable growth in production, cash
flow, and net asset value. I want to personally thank our
employees for their unwavering efforts as we continue to deliver
and achieve our business objectives. To our shareholders and
stakeholders, we thank you for your long term support and look
forward to providing continued updates throughout the year,
including enhanced transparency of our operational and financial
performance, and delivery of our long term strategy delivering
enhanced shareholder value.
("Brent A. Eshleman")
Brent A. Eshleman, P.Eng.
President and CEO
May 9, 2017
OPERATIONAL REVIEW
Sales
Volumes
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
2017
|
2016
|
|
Crude oil and
condensate
|
(bbl/d)
|
|
2,378
|
3,981
|
|
NGLs (excluding
condensate)
|
(bbl/d)
|
|
6,253
|
6,577
|
Total crude oil,
condensate, and NGLs
|
(bbl/d)
|
|
8,631
|
10,558
|
|
Natural
gas
|
(mcf/d)
|
|
156,715
|
167,455
|
Total sales volumes
(6:1 conversion)
|
(boe/d)
|
|
34,750
|
38,467
|
Sales volumes for the three months ended March 31, 2017 averaged 34,750 boe/d, a decrease
of 10% from an average of 38,467 boe/d realized in the first
quarter of 2016. The weighting towards crude oil, condensate
and NGLs for the three months ended March
31, 2017 was 25%, compared to 27% in the first quarter of
2016. Total sales volumes between the three month periods
ended March 31, 2016 and March 31, 2017 declined due to non-core
dispositions completed in the fourth quarter of 2016 in the Pembina
and Harmattan areas.
First quarter 2017 average production levels exceeded prior 2017
annual guidance (mid-point) of 33,500 boe/d and increased from the
fourth quarter of 2016 by 9%. Utilization remained strong at
the Bellatrix Alder Flats Plant in the first quarter of 2017,
contributing to an average capacity utilization rate of 97%
achieved in the first quarter 2017 and 96% over the trailing 21
month period.
DRILLING
ACTIVITY
|
|
|
Three months
ended
March 31,
2017
|
Three months
ended
March 31,
2016
|
|
Gross
|
Net
|
Success
Rate
|
Gross
|
Net
|
Success
Rate
|
Spirit
River
|
9
|
7.8
|
100%
|
10
|
5.7
|
100%
|
Ellerslie
|
2
|
0.8
|
100%
|
-
|
-
|
-
|
Cardium
|
2
|
2.0
|
100%
|
-
|
-
|
-
|
Total
|
13
|
10.6
|
100%
|
10
|
5.7
|
100%
|
During the first quarter of 2017, Bellatrix drilled and/or
participated in 9 gross (7.8 net) Spirit
River liquids rich gas wells, two gross (2.0 net) Cardium
wells and two gross (0.8 net) non-operated Ellerslie liquids rich natural gas wells.
The Company continues to focus capital investment in its
low-cost Spirit River natural gas
play, which continues to deliver strong returns at current natural
gas and liquids prices.
Capital Expenditures
During the three months ended March 31,
2017, Bellatrix invested $44.0
million in exploration and development capital projects,
excluding property acquisitions and dispositions, compared to
$29.0 million in the same period in
2016.
Capital
Expenditures
|
|
|
Three months ended
March 31,
|
($000s)
|
|
2017
|
2016
|
Lease acquisitions
and retention
|
|
2,473
|
953
|
Geological and
geophysical
|
|
359
|
128
|
Drilling and
completion costs
|
|
40,151
|
24,912
|
Facilities and
equipment
|
|
995
|
3,025
|
|
Capital – exploration
and development (1)
|
|
43,978
|
29,018
|
Facility to be
transferred – cash
|
|
5,611
|
-
|
Capital – corporate
assets (2)
|
|
216
|
31
|
Property
acquisitions
|
|
-
|
3
|
|
Total capital
expenditures – cash
|
|
49,805
|
29,052
|
Property dispositions
– cash (3)
|
|
-
|
(125)
|
|
Total net capital
expenditures – cash
|
|
49,805
|
28,927
|
Other – non-cash
capital (4)
|
|
1,414
|
1,944
|
Total capital
expenditures – net (5)
|
|
51,219
|
30,871
|
(1)
|
Excludes capitalized
costs related to decommissioning liabilities expenditures incurred
during the period.
|
(2)
|
Capital -
corporate assets includes office leasehold improvements, furniture,
fixtures and equipment before recoveries realized from landlord
lease inducements.
|
(3)
|
Property
dispositions – cash does not include transaction
costs.
|
(4)
|
Other includes
non-cash capital adjustments for the current period's
decommissioning liabilities and share based
compensation.
|
(5)
|
The term "total
capital expenditures – net" does not have standard meaning under
generally accepted accounting principles ("GAAP"). Refer to
"Non-GAAP measures" disclosed at the end of this Press
Release.
|
Bellatrix focused its capital activity in the first quarter of
2017 on drilling and completion activity within the Spirit River
formation, as well as facilities and equipment expenditures related
to the construction of Phase 2 of the Alder Flats Plant.
Bellatrix continues to advance the Phase 2 expansion project
of the Alder Flats Plant which is expected to more than double the
inlet capacity of the Plant from 110 MMcf/d currently to 230
MMcf/d. The project remains on time and budget, and is
scheduled for completion in the second quarter 2018.
Subsequent to the first quarter of 2017, Bellatrix closed an
agreement to complete the construction of, and transfer to a third
party midstream company, certain production facilities and
infrastructure in exchange for proceeds of $20 million. Capital expenditures of
$5.6 million were incurred in the
first quarter 2017 and will be transferred under the agreement to
the third party midstream company in the second quarter of 2017.
Under the terms of the arrangement, Bellatrix will have exclusive
access to, and operatorship of, the infrastructure.
Undeveloped Land
At March 31, 2017, Bellatrix had
approximately 173,595 undeveloped acres of land in Alberta, British
Columbia, and Saskatchewan.
FINANCIAL REVIEW
Cash Flow from
Operating Activities, Funds Flow from Operations, and Net
Profit
|
|
Three months
ended
March 31,
|
($000s, except per
share amounts)
|
2017
|
2016
|
Cash flow from
operating activities
|
8,258
|
10,333
|
|
Basic
($/share)
|
0.03
|
0.05
|
|
Diluted
($/share)
|
0.03
|
0.05
|
Funds flow from
operations
|
14,891
|
12,876
|
|
Basic
($/share)
|
0.06
|
0.07
|
|
Diluted
($/share)
|
0.05
|
0.07
|
Net profit
|
13,049
|
19,347
|
|
Basic
($/share)
|
0.05
|
0.10
|
|
Diluted
($/share)
|
0.05
|
0.10
|
Management believes that, in addition to cash flow from
operating activities, funds flow from operations is a useful
supplemental 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 is calculated as
cash flow from operating activities, excluding decommissioning
costs incurred and changes in non-cash working capital
incurred.
Bellatrix's cash flow from operating activities for the three
months ended March 31, 2017 decreased
by 19% to $8.3 million ($0.03 per basic and diluted share) from
$10.3 million ($0.05 per basic and diluted share) generated in
the first quarter of 2016. Bellatrix generated funds flow
from operations of $14.9 million
($0.06 per basic and $0.05 per diluted share) in the first quarter of
2017, an increase of 16% from $12.9
million ($0.07 per basic and
diluted share) generated in the comparative 2016 period.
Funds flow increased in the first quarter of 2017 compared to the
same period in 2016 primarily from the increased realized commodity
prices over the comparable period.
For the three months ended March 31,
2017, Bellatrix recognized net profit of $13.0 million ($0.05 per basic share and diluted share),
compared to a net profit of $19.3
million ($0.10 per basic and
diluted share) in the first quarter of 2016 due to a decrease in
the unrealized foreign exchange gain in the first quarter of 2017,
offset by an increase in the operating netbacks realized.
Operating Netback
– Corporate
|
|
|
Three months
ended
March
31,
|
($/boe)
|
2017
|
2016
|
Total revenue
(1)
|
21.11
|
15.76
|
Production
|
(9.37)
|
(7.37)
|
Transportation
|
(1.03)
|
(0.92)
|
Royalties
|
(2.36)
|
(0.97)
|
Operating netback
before risk management
|
8.35
|
6.50
|
Risk management gain
(loss)
|
0.99
|
1.78
|
Operating netback
after risk management
|
9.34
|
8.28
|
(1)
Total revenue includes petroleum and natural gas sales and other
income
|
The operating netback before commodity price risk management
contracts for crude oil, condensate, NGLs, and natural gas during
the first quarter of 2017 averaged $8.35/boe, an increase of 28% from the
$6.50/boe realized during the same
period in 2016 reflecting improved realized commodity prices over
the comparable periods.
Total revenue increased by 20% to $66.0
million for the three months ended March 31, 2017, compared to $55.2 million realized in the first quarter of
2016. The increase in total revenue was mainly attributable to an
increase in commodity prices for oil, NGLs and natural gas from the
comparative periods. Total revenue from crude oil, condensate, and
NGLs contributed 38% of total first quarter 2017 revenue before
other income, royalties, and commodity price risk management
contracts, compared to 40% in the three months ended March 31, 2016.
In the three months ended March 31,
2017, production expenses totaled $29.3 million ($9.37/boe), compared to $25.8 million ($7.37/boe) recorded in the same period of
2016. Production expenditures are expected to decline during
2017 and average $9.00/boe during the
year, given cost suppression initiatives and increased production
volumes which reduce overall production expenditures on a per unit
of production basis.
For the three months ended March 31,
2017, Bellatrix incurred royalties of $7.4 million, compared to $3.4 million in the first quarter of 2016.
Overall royalties as a percentage of revenue (after transportation
costs) in the first quarter of 2017 were 12% compared to 7% in the
comparative 2016 period. Higher average corporate royalty
rates period over period include the impact from higher commodity
prices as well as decreased GCA credits in the current period than
in the first quarter of 2016 when the Company had credits
associated with significant infrastructure and facilities
investments.
Commodity Prices
Average Commodity
Prices
|
|
|
|
|
Three months ended
March 31,
|
|
|
2017
|
2016
|
%
Change
|
|
|
|
|
|
Exchange rate
(CDN$/US$1.00)
|
|
1.3233
|
1.3723
|
(4)
|
|
|
|
|
|
Crude oil:
|
|
|
|
|
|
WTI
(US$/bbl)
|
|
51.90
|
33.63
|
54
|
|
Canadian Light crude
blend ($/bbl)
|
|
64.74
|
41.22
|
57
|
Bellatrix's average
realized prices ($/bbl)
|
|
|
|
|
|
|
Crude oil and
condensate
|
|
67.30
|
39.33
|
71
|
|
|
NGLs (excluding
condensate)
|
|
18.18
|
10.35
|
76
|
|
|
Total crude oil and
NGLs
|
|
31.71
|
21.28
|
49
|
|
|
Crude oil and
condensate (including risk management (1))
|
|
31.74
|
39.07
|
(19)
|
|
|
|
|
|
Natural
gas:
|
|
|
|
|
|
NYMEX
(US$/MMBtu)
|
|
3.32
|
1.98
|
68
|
|
AECO daily index
(CDN$/mcf)
|
|
2.69
|
1.83
|
47
|
|
AECO monthly index
(CDN$/mcf)
|
|
2.94
|
2.11
|
39
|
Bellatrix's average
realized prices ($/mcf)
|
|
|
|
|
|
|
Natural
gas
|
|
2.87
|
1.99
|
44
|
|
|
Natural gas
(including risk management (1))
|
|
3.09
|
2.41
|
28
|
(1) Per unit metrics
including risk management include realized gains or losses on
commodity contracts and exclude unrealized gains or losses on
commodity contracts
|
Global crude oil prices fluctuated during the first quarter 2017
as the Organization of the Petroleum Exporting Countries ("OPEC")
members worked to achieve production cuts and add stability to
crude oil prices. Despite the collaborative efforts between
OPEC and non-OPEC producing countries in stabilizing prices, WTI
oil prices exhibited volatility, opening the year at US$53.72/bbl, reaching a low of US$47.00/bbl during the first quarter of 2017,
before recovering to US$50.60/bbl at
March 31, 2017. Robust global crude
inventories and weekly increases in the
United States oil directed drilling rig count are factors
that tempered oil prices strengthening during the first quarter of
2017.
North American natural gas prices declined during February of
2017 as warmer than normal weather kept heating demand at lower
than expected levels. United
States natural gas storage inventories at March 31, 2017 were 427 Bcf below last year's
record high level, while declining United
States production levels have added support to natural gas
prices, rebounding from US$2.44/MMBtu
in late February to close the first quarter at US$3.10/MMBtu. Total United States natural gas production continues
to decline despite increased drilling activity. The combination of
lower production, higher exports of liquefied natural gas ("LNG")
and increased gas supplies to Mexico improved supply/demand dynamics in the
market. Overall, industry activity levels are causing a slower
supply response given backwardation in the forward pricing
market.
In the first quarter of 2017 Bellatrix realized an average price
of $67.30/bbl before commodity price
risk management contracts for crude oil and condensate, an increase
of 71% from the average price of $39.33/bbl received in the first quarter of
2016. By comparison, Canadian Light crude blend price
increased by 57% and the average WTI crude oil benchmark price
increased by 54% between the first quarters of 2017 and 2016.
The WTI/Canadian Light sweet differential has remained in a
historically tight range, averaging -US$3.54/bbl for the quarter.
Bellatrix's average realized price for NGLs (excluding
condensate) increased by 76% to $18.18/bbl during the first quarter of 2017,
compared to $10.35/bbl received in
the comparable 2016 period. NGL pricing in Western Canada improved significantly through
the fourth quarter of 2016 given stronger underlying light oil
prices and improved individual market conditions for propane and
butane products. Normal winter demand through the first
quarter of 2017 kept North American propane demand firm, while
exports materially reduced robust storage levels resulting in much
stronger propane prices through the quarter. Butane prices
closely track the trend in WTI pricing and thus exhibited similar
volatility to oil prices during the first quarter of 2017. Butane
prices improved in the first quarter of 2017 compared to the first
quarter of 2016 and Bellatrix's average realized NGL price
reflected the improvement in butane prices by 75% year over
year.
Natural gas prices increased during the first quarter of 2017
given strong demand and lower United
States production resulting in reduced storage levels.
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 realized prices per mcf than the AECO daily
index. During the first quarter of 2017, the AECO daily
reference price increased by 47% and the AECO monthly reference
price increased by approximately 39% compared to the first quarter
of 2016. Bellatrix's natural gas average sales price before
commodity price risk management contracts for the first quarter of
2017 increased by 44% to $2.87/mcf
compared to $1.99/mcf in the same
period in 2016. Bellatrix's natural gas average price after
including commodity price risk management contracts for the three
months ended March 31, 2017 averaged
$3.09/mcf compared to $2.41/mcf in the comparative 2016 period.
Bellatrix was active in the first quarter of 2017 increasing its
2017 risk management protection, with approximately 64% of 2017
gross natural gas volumes hedged at an average fixed price of
approximately $3.36/mcf.
Debt
Bank Debt
At March 31, 2017, the Company had
$41.5 million outstanding under its
syndicated revolving Credit Facilities at a weighted average
interest rate of 4.45%. As at March 31,
2017, the Company's Credit Facilities were available on an
extendible revolving term basis and consisted of a $100 million facility provided by nine financial
institutions, subject to a borrowing base test. The maturity
date of the Credit Facilities was October 1,
2017 as at March 31, 2017.
Subsequent to March 31, 2017,
Bellatrix entered into an amended and restated syndicated revolving
credit facility agreement provided by four financial institutions
increasing the borrowing base of the Credit Facilities to
$120 million. Under the amended and
restated terms, the Credit Facilities are available on an
extendible revolving term basis and consists of a $25 million operated facility and a $95 million syndicated facility. Under the
amended and restated terms, the Credit Facilities have an initial
term of one year that is extendible annually at the option of the
Company, subject to lender approval, with a 1 year term-out period
if not renewed. Availability under the Credit Facilities is
subject to a borrowing base test, which will be subject to
redetermination in May and November of each year, with the next
regularly scheduled redetermination to occur in November 2017.
At March 31, 2017, Bellatrix had
approximately $58.5 million of
available capacity based on outstanding bank debt as at such date
of approximately $41.5 million
(excluding letters of credit). The Credit Facilities include a
single financial covenant being the Company's Senior Debt to EBITDA
ratio must not exceed 3.5 times for the fiscal quarters ending on
or before March 31, 2017 ("Senior
Debt Covenant"). Under the amended and restated terms of the Credit
Facilities, the maximum Senior Debt to EBITDA ratio has been
reduced to 3.0 times (3.5 times for the two fiscal quarters
immediately following a material acquisition). As at
March 31, 2017, the Senior Debt to
EBITDA ratio was 1.81 times.
Senior Notes
At March 31, 2017, the Company has
outstanding US$250 million of 8.50%
senior unsecured notes maturing on May 15,
2020 (the "Senior Notes"). Interest on the Senior
Notes is payable semi-annually and the Senior Notes are redeemable
at the Company's option, in whole or in part, commencing on
May 15, 2017 at specified redemption
prices.
Convertible Debentures
At March 31, 2017, the Company has
outstanding $50 million principal
amount of 6.75% convertible subordinated debentures (the
"Convertible Debentures") due on September
30, 2021 (the "Maturity Date"). Interest on the Convertible
Debentures is payable semiannually in arrears on September 30 and March
31 of each year.
Notes:
|
|
(1)
"EBITDA" refers to earnings before interest, taxes, depreciation
and amortization. EBITDA is calculated based on terms and
definitions set out in the agreement governing the Credit
Facilities which adjusts net income for financing costs, certain
specific unrealized and non-cash transactions, and acquisition and
disposition activity and is calculated based on a trailing twelve
month basis. EBITDA for the trailing twelve months ended
March 31, 2017 was $67.7 million.
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(2)
"Senior Debt" is defined as Consolidated Total Debt,
excluding any unsecured or subordinated debt (Senior Notes and
Convertible Debentures (liability component)). "Consolidated Total
Debt" is defined as determined on a consolidated basis in
accordance with GAAP and without duplication, all Debt of the
Company. The Company's calculation of Consolidated Total Debt
excludes decommissioning liabilities and deferred tax liability.
The calculation includes outstanding letters of credit, bank debt,
finance lease obligations, deferred lease inducements and net
working capital deficiency (excess), calculated as working capital
deficiency excluding current commodity contract assets and
liabilities. Senior Debt at March 31, 2017 was $122.6
million.
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CONFERENCE CALL INFORMATION
A conference call to discuss Bellatrix's first quarter results
will be held on May 10, 2017 at
9:00 am MT / 11:00 am ET. To participate, please 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 30 days following the
call.
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".
NON-GAAP MEASURES
Throughout this press
release, the Company uses terms that are commonly used in the
oil and natural gas industry, but do not have a standardized
meaning presented by International Financial Reporting Standards
("IFRS") and therefore may not be comparable to the calculations of
similar measures for other entities. Management believes that the
presentation of these non-GAAP measures provide useful information
to investors and shareholders as the measures provide increased
transparency and the ability to better analyze performance against
prior periods on a comparable basis.
Operating netbacks are calculated by subtracting royalties,
transportation, and operating expenses from total revenue.
Management believes this measure is a useful supplemental measure
of the amount of total revenue received after transportation,
royalties and operating expenses. The Company's calculation of
total revenue includes petroleum and natural gas sales and other
income, and excludes commodity price risk management. Total capital
expenditures – net includes the cash impact of capital expenditures
and property dispositions, as well as the non-cash capital impacts
of corporate acquisitions, property acquisitions, adjustments to
the Company's decommissioning liabilities, and share based
compensation. Bellatrix's method of calculating this measure may
differ from other entities, and accordingly, may not be comparable
to measures used by other companies. Total capital
expenditures - net includes the cash impact of capital expenditures
and property dispositions, as well as the non-cash capital impacts
of corporate acquisitions, property acquisitions, adjustments to
the Company's decommissioning liabilities, and share based
compensation.
These measures have been described and presented in this news
release in order to provide shareholders and potential investors
with additional information regarding Bellatrix's liquidity and its
ability to generate funds to finance its operations.
CAPITAL PERFORMANCE MEASURES
In addition to
the non-GAAP measures described above, there are also terms
that have been reconciled in the Company's financial statements to
the most comparable IFRS measures. These terms do not have any
standardized meaning prescribed by IFRS and therefore may not be
comparable with the calculations of similar measures for other
entities. These terms have been referenced in the Company's press
release, MD&A and financial statements. These terms are used by
management to analyze operating performance on a comparable basis
with prior periods and to analyze the liquidity of the
Company.
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 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 is calculated as cash flow
from operating activities, excluding decommissioning costs
incurred, changes in non-cash working capital incurred, and
transaction costs. 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 shares for the
period.
This press release also contains the terms "total net debt"
and "adjusted working capital deficiency", which also are not
recognized measures under GAAP. Therefore reference to total net
debt and adjusted working capital deficiency, 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,
Convertible Debentures (liability component), current bank debt and
long term bank debt. The adjusted working capital deficiency
is 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.
FORWARD LOOKING STATEMENTS
Certain
information contained in this press release may contain forward
looking statements within the meaning of applicable securities
laws. The use of any of the words "position", "continue",
"opportunity", "expect", "plan", "maintain", "estimate", "assume",
"target", "believe" "forecast", "intend", "strategy", "anticipate",
"enhance" and similar expressions are intended to identify
forward-looking statements. More particularly and without
limitation, this document contains forward-looking statements
concerning management's assessment of future plans, Bellatrix's
intention to deliver 10% to 15% compound annual growth in
production volumes over the next three years, the belief that
Bellatrix has built a strong and sustainable business that provide
the foundation for long term profitable growth, future drilling
locations, the belief that the Company can benefit from a higher
crude oil price environment through its Cardium position, the
expectation that the majority of anticipated capital investment in
2017 will be in the Spirit River, the belief that the Company's
acreage position provides a key long term competitive advantage for
the Company, the belief that the Company's infrastructure
ownership, operatorship and control will provide for operational
flexibility and reliability to profitably process our production
volumes and extract maximum value from each product stream, the
expectation that historic investment in key strategic
infrastructure and facilities may provide the processing capacity
and capability to grow net Company production volumes beyond 60,000
boe/d with minimal future facility related capital, the expectation
that Bellatrix will direct incremental capital directly to the
drill bit in 2018 and beyond which may enhance corporate capital
efficiency metrics, the expectation that the NGTL system may
experience further curtailments of both interruptible and firm
service capacity as the operator continues work through 2017 to
expand capacity along the system, the belief that Bellatrix is well
positioned to deliver volumes with minimal impacts during periods
of system curtailments, the belief that previously negotiated
additional FT capacity may facilitate increased growth volumes from
Phase 2 of its Alder Flats Plant and provide additional strategic
long term value for the Company, expectation of percentage of
production hedged in 2017 and 2018, the expectation that
Bellatrix's hedging program will provide reduced commodity price
volatility and greater assurance over future revenue and cash
flows, the expectations for timing for drilling, completing and
bringing on-stream of certain wells, the expectation to spend
approximately half of the full year's 2017 net capital expenditure
budget of $105 million within the
first six months of the year, full year average production
expenditure guidance, the intent of the Company to remains focused
on growing production, adding reserves, and increasing our
inventory of development drilling locations, the expected capacity
of Phase 2 of the Alder Flats Plant, the expectation that
construction of Phase 2 of the Alder Flats Plant will be completed
on time and on budget in the second quarter of 2018, expectation of
timing of specific tasks required for construction and completion
of Phase 2 of the Alder Flats Plant, expected net capital
expenditures in 2017 and 2018 required to complete Phase 2 of the
Alder Flats Plant, the expectation that completion of Phase 2 of
the Alder Flats Plant may deliver a reduction in operating costs,
Bellatrix's plans to expand its drilling efforts across our core
west central Alberta acreage
including expanded development of the Spirit River formation in the
Willesden Green area, details of Bellatrix's current 2017 capital
expenditure budget and the goals of such budget, guidance relating
to 2017 average daily production and exit production (including the
product mix) and the expectation that Bellatrix's business provide
the long term competitive advantages required to thrive in the
current commodity price environment and deliver profitable growth
in production, cash flow, and net asset value, may constitute
forward-looking statements under applicable securities laws. To the
extent that any forward-looking information contained herein
constitute a financial outlook, they were approved by management on
May 9, 2017 and are included herein
to provide readers with an understanding of the anticipated funds
available to Bellatrix to fund its operations and readers are
cautioned that the information may not be appropriate for other
purposes. Forward-looking statements necessarily involve
risks, including, without limitation, risks associated with oil and
gas exploration, development, exploitation, production, marketing
and transportation, loss of markets, volatility of commodity
prices, currency fluctuations, 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, actions taken by the
Company's lenders that reduce the Company's available credit 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 affect
Bellatrix's operations and financial results are included in
reports on file with Canadian and United
States 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.
BARRELS OF OIL EQUIVALENT
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. All boe conversions in this press release are derived
from converting gas to oil in the ratio of six thousand cubic feet
of gas to one barrel of oil. 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.
INITIAL RATES OF PRODUCTION
References in
this press release to initial production rates associated with
certain wells are useful in confirming the presence of
hydrocarbons, however such rates are not determinative of the rates
at which such wells will commence production and decline thereafter
and are not indicative of long term performance or of ultimate
recovery. While encouraging, readers are cautioned not to place
reliance on such rates in calculating the aggregate production for
the Company. The Company cautions that such production rates should
be considered to be preliminary.
SOURCE Bellatrix Exploration Ltd.