TSX, NYSE: BXE
CALGARY, Dec. 14, 2017 /CNW/ - Bellatrix Exploration Ltd.
("Bellatrix", "we", "our" or the "Company") (TSX, NYSE: BXE) is
pleased to announce a fourth quarter 2017 operational update,
including completion of its 2017 capital program with production
volumes exceeding guidance, and reconfirmation of its bank credit
facility borrowing base. In addition, Bellatrix is pleased to
announce that its Board of Directors has approved a 2018 capital
budget designed to deliver sustained total corporate production
volumes supported by strong risk management protection over
approximately 50% of forecast production and market diversification
initiatives.
2017 Production Volumes Exceed Both Full Year Average and
Exit Rate Guidance
Bellatrix completed its drilling program in mid-November with 2
gross (1.5 net) Spirit River
liquids rich natural gas wells spud during the fourth quarter.
Completion and tie-in operations during the fourth quarter included
6 gross (4.3 net) Spirit River
wells and 1 gross (1.0 net) Cardium
well.
Based on field estimates current production is approximately
36,600 boe/d, ahead of the Company's previously announced exit rate
guidance. Fourth quarter production volumes are expected to
average approximately 36,500 boe/d, contributing to anticipated
full year 2017 average production of approximately 36,750
boe/d.
|
Estimated
2017 Results
|
2017 Annual
Guidance
|
Estimated
Results
Versus Guidance
|
Average daily
production (boe/d)
|
36,750
|
36,000
|
2%
|
Average product
mix
|
|
|
|
|
Natural gas
(%)
|
75
|
76
|
(1)%
|
|
Crude oil, condensate
and NGLs (%)
|
25
|
24
|
1%
|
Credit Facilities Reconfirmed at $120
million
Bellatrix recently completed the semi-annual borrowing base
redetermination under the Company's $120
million syndicated revolving credit facilities ("Credit
Facilities"), and is pleased to confirm that the borrowing base has
been reconfirmed at $120 million,
comprised of a $25 million operating
facility and a $95 million syndicated
facility. The next semi-annual redetermination is scheduled
for May 2018, following completion of
the Company's year-end independent reserves evaluation. Other
than approximately $50 million
outstanding under the Credit Facilities as at November 30, 2017, the Company has no debt
maturities until 2020, providing the Company with approximately
$70 million of available liquidity,
before deducting outstanding letters of credit.
2018 Capital Budget Maintains Flexibility While Delivering
Sustained Production Volumes
Bellatrix is also pleased to announce that its Board of
Directors has approved a 2018 capital budget of between
$65 to $80
million, designed to achieve average production volumes of
between 35,000 to 37,000 boe/d. The 2018 capital budget
incorporates forward pricing expectations of approximately
US$56.50/bbl WTI and $1.70/GJ AECO, underpinned by strong commodity
price risk management protection.
The 2018 capital budget will remain flexible throughout the
year, and will concentrate on profitable development of Bellatrix's
high rate of return investment opportunities and achievement of the
following strategic objectives:
- Completing construction of Phase 2 of the Bellatrix Alder Flats
deep cut gas plant with commissioning planned to commence early in
the second quarter of 2018.
- Optimizing forecast return on invested capital through a
flexible drilling program focused on Spirit River liquids rich natural gas
investment opportunities and higher liquids weighted opportunities
in the Cardium play.
- Maintaining a flexible approach to capital investment with the
potential to accelerate or decelerate capital expenditures
throughout the year.
- Enhancing funds flow from operations through optimal delivery
of production volumes during periods of stronger commodity prices
by leveraging Bellatrix's controlled infrastructure and firm
service delivery capacity.
- Preserving liquidity and balance sheet strength.
- Continuing to work on cost suppression activities through
ongoing technological and operationally focused initiatives.
Managing a flexible capital program provides the opportunity to
effectively utilize Bellatrix's infrastructure, takeaway capacity
and market egress. These competitive strengths allow the
Company to proactively manage production volumes during periods of
commodity price volatility in order to optimize funds flow. To that
end, Bellatrix plans to deliver higher production volumes during
the first quarter with lower production volumes anticipated in the
second quarter given a 25% higher first quarter 2018 AECO forward
strip price compared with the second quarter of 2018. With
excess firm transportation capacity and infrastructure control,
Bellatrix remains well positioned to manage volumes proactively
during periods of market volatility.
Bellatrix's management believes that maintaining production at
current throughput levels is appropriate given current forward
strip commodity prices, thereby preserving the significant value of
the Company's undeveloped asset base. Bellatrix plans to fund the
2018 capital budget through a combination of funds flow from
operations, funding transactions including potential non-core asset
dispositions, and bank line utilization if necessary, while
maintaining adequate liquidity and managing total net debt levels
year over year.
|
2018
Guidance
|
Production
(boe/d)
|
|
2018 Average daily
production
|
35,000 –
37,000
|
Production Mix
(%)
|
|
Natural
gas
|
74
|
|
Crude oil, condensate
and NGLs
|
26
|
Net Capital
Expenditures ($000)(1)
|
|
Total net capital
expenditures
|
65,000 –
80,000
|
Expenses
|
|
Production expense
($/boe)(2)
|
7.50 –
7.90
|
(1) Net
capital spending includes exploration and development capital
projects and corporate assets, and excludes property acquisitions
and dispositions. Net capital spending also excludes the previously
received prepayment portion of Bellatrix's partner's 35% share of
the cost of construction of Phase 2 of the Alder Flats Plant during
calendar 2018.
|
(2)
Production expenses before net processing
revenue/fees.
|
2018 Capital Budget Underpinned by Strong Commodity Price
Risk Management Protection and Market Diversification
Initiatives
During the fourth quarter of 2017, Bellatrix added to its
commodity price risk management protection for calendar 2018 in
order to further reduce the impacts of price volatility on our
business. Bellatrix has 66.1 MMcf/d of 2018 natural gas
volumes hedged at an average fixed price of approximately
$3.06/mcf, representing approximately
40% of forecast 2018 natural gas volumes. Bellatrix has also
recently diversified its natural gas price exposure through
physical sales contracts that give the Company access to the Dawn,
Chicago, and Malin natural gas
pricing hubs. The contracts run from February 2018 through October 2020 and cover approximately 45
MMcf/d. This long-term diversification strategy reduces
Bellatrix's exposure to AECO pricing on approximately 26% of the
Company's forecast 2018 natural gas volumes. In combination, the
market diversification sales and fixed price hedges cover
approximately 2/3 of natural gas volumes in 2018.
In aggregate, Bellatrix's hedging program is part of its overall
risk management strategy providing reduced commodity price
volatility and greater assurance over future revenue and operating
funds flow which help drive the capital and reinvestment decisions
within our business. Bellatrix's 2017 and 2018 commodity
price risk management contracts as at December 13, 2017 include:
|
|
|
|
|
Product
|
Financial
Contract
|
Period
|
Volume
|
Average Price
(1)
|
Natural
gas
|
Fixed price
swap
|
October 1, 2017 to
December 31, 2017
|
111.1
MMcf/d
|
$3.13/mcf
|
Natural
gas
|
Fixed price
swap
|
January 1, 2018 to
December 31, 2018
|
66.1
MMcf/d
|
$3.06/mcf
|
Natural
gas
|
AECO basis
swap
|
April 1, 2018 to
October 31, 2018
|
10,000
MMBtu/d
|
US$1.24/MMBtu
|
Crude oil
|
Fixed price
swap
|
January 1, 2018 to
December 31, 2018
|
500 bbl/d
|
$69.28/bbl
|
Propane
|
Fixed price
differential
|
October 1, 2017 to
December 31, 2017
|
2,000
bbl/d
|
51% of NYMEX
WTI
|
Propane
|
Fixed price
differential
|
January 1, 2018 to
December 31, 2018
|
1,000
bbl/d
|
47% of NYMEX
WTI
|
(1)
Prices for natural gas fixed price swap contracts assume a
conversion of $/GJ to $/mcf is based on an average corporate heat
content rate of 40.3Mj/m3.
|
Corporate Responsibility Report Released
Bellatrix is dedicated to achieving industry leading economic
results in an environmentally responsible, compliant and safe
manner. Bellatrix has released its second annual Corporate
Responsibility Report which has been posted to our website at
www.bxe.com. The report content is designed to provide
context around our corporate responsibility initiatives and
represents an extension of our ongoing commitment to providing
enhanced disclosure and stakeholder engagement.
Reader Advisories:
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.
NON-GAAP MEASURES: This press release contains the term
"funds flow from operations" which should not be considered an
alternative to, or more meaningful than "cash flow from operating
activities" as determined in accordance with Canadian generally
accepted accounting principles 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. The reconciliation between cash flow from operating
activities and funds flow from operations can be found in the
Company's most recent management's discussion and analysis, which
may be accessed through the SEDAR website (www.sedar.com).
Funds flow from operations per share is calculated using the
weighted average number of shares for the period.
FORWARD LOOKING STATEMENTS: This press release contains
forward-looking statements within the meaning of applicable
securities laws. More particularly and without limitation, this
press release contains forward-looking statements pertaining to:
the Company's estimated fourth quarter and full year 2017
production volumes; the expectation that the Company will have no
debt maturities (other than bank debt) until 2020; the Company's
anticipated 2018 capital budget, including the strategic objectives
of such budget and the details of the expenditures and expected
timing of such expenditures relating to such budget; 2018 guidance,
including expected future production volumes, production mix, and
production expenses; expectations regarding outstanding bank
debt and available liquidity; expectations regarding future
commodity prices; expectations regarding completion of Phase 2 of
the Bellatrix Alder Flats deep cut gas plant; expectations that
funds flow from operations can be enhanced through optimal delivery
of production volumes during periods of stronger commodity prices;
expectations that the Company will be able to manage its capital
program to effectively utilize the Company's infrastructure,
takeaway capacity and market egress; expectations that Bellatrix is
well positioned to manage volumes proactively during periods of
market volatility; plans to fund the Company's 2018 capital budget;
the expected details and objectives of the Company's hedging
program; plans to diversify the Company's natural gas pricing
exposure away from AECO; and plans to maintain adequate liquidity
and manage total net debt levels year over year.
To the extent that any forward-looking statements contained
herein constitutes a financial outlook, they were approved by
management on the date hereof 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, failure to maintain in good
standing under agreements governing the Company's outstanding
indebtedness, failure to complete funding transactions when
expected or necessary, any actions taken by the Company's lenders
that require the Company to repay indebtedness earlier than
expected, 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; the ability to complete
funding transactions when expected or as necessary, the ability to
maintain in good standing under agreements governing the Company's
outstanding indebtedness, field production rates and decline rates;
the ability to replace and expand oil and natural gas reserves
through acquisition, development or 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 US 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.bxe.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.
Bellatrix Exploration Ltd. is a publicly traded 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, with highly concentrated operations
in west central Alberta,
principally focused on profitable development of the Spirit River
liquids rich natural gas play.
SOURCE Bellatrix Exploration Ltd.