NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED
STATES.
Bonterra Energy Corp. (TSX:BNE) (Bonterra or the Company) is pleased to announce
its operating and financial results for the three months and nine months ended
September 30, 2012. The related unaudited condensed consolidated financial
statements and notes, as well as management's discussion and analysis, are
available on the System for Electronic Document Analysis and Retrieval (SEDAR)
at www.sedar.com and on Bonterra's website at www.bonterraenergy.com
As at and for the
periods ended Three months ended Nine months ended
($ 000s except $ per September September September September
share) 30, 2012 30, 2011 30, 2012 30, 2011
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FINANCIAL
Revenue - oil and gas
sales 35,204 36,535 103,146 119,459
Funds flow (1) 21,705 20,815 60,633 75,987
Per share - basic 1.10 1.08 3.07 3.93
Per share - diluted 1.09 1.06 3.06 3.86
Payout ratio 71% 72% 76% 58%
Cash flow from
operations 16,440 21,730 52,865 71,229
Per share - basic 0.83 1.12 2.68 3.69
Per share - diluted 0.83 1.10 2.67 3.62
Payout ratio 94% 69% 87% 62%
Cash dividends per share
(2) 0.78 0.78 2.34 2.28
Net earnings 7,746 9,384 27,129 37,541
Per share - basic 0.39 0.49 1.37 1.94
Per share - diluted 0.39 0.48 1.37 1.91
Cash netback (3) 32.41 37.35 32.93 42.52
Capital expenditures and
acquisitions, net of
dispositions 27,360 15,941 74,061 (4) 42,157
Total assets 412,812 354,549
Working capital
deficiency 49,808 43,362
Long-term debt 128,779 72,391
Shareholders' equity 169,839 185,908
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OPERATIONS
Oil - barrels per day 4,108 3,789 3,912 4,069
- average price ($ per
barrel) 80.54 88.21 83.34 91.58
NGLs - barrels per day 461 340 436 350
- average price ($ per
barrel) 46.40 63.80 53.00 61.56
Natural gas - MCF per
day 12,583 10,553 12,200 10,698
- average price ($ per
MCF) 2.41 3.91 2.24 4.06
Total BOE per day (5) 6,666 5,887 6,381 6,201
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(1) Funds flow is not a recognized measure under IFRS. For these purposes,
the Company defines funds flow as funds provided by operations including
proceeds from sale of investments and investment income received
excluding the effects of changes in non-cash operating working capital
items and decommissioning expenditures settled.
(2) Cash dividends per share are based on payments made in respect of
production months within the period ended.
(3) Cash netback is not a recognized measure under IFRS. Cash netback is oil
and gas sales less royalties, production costs, general and
administrative costs, interest and other expense on a per BOE basis.
(4) Includes an acquisition that closed on June 7, 2012 for $17,108,000.
(5) Barrels of oil equivalent (BOE) may be misleading, particularly if used
in isolation. A BOE conversion ratio of 6 MCF: 1 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.
Highlights
Operations
-- Bonterra's operational performance during the third quarter led to
improved production levels, however, the Company continued to be
hampered by low commodity prices with an average realized price during
the period of $80.54 per barrel for oil, $46.40 per barrel for liquids
and $2.41 per MCF for natural gas (average realized prices for the first
nine months of 2012 averaged $83.34 per barrel for oil, $53.00 per
barrel for liquids and $2.24 per MCF for natural gas).
-- The Company's average daily production was 6,666 barrels of oil
equivalent (BOE) per day for the third quarter of 2012, an increase of
13.2 percent compared to the third quarter of 2011 and an increase of
10.4 percent quarter over quarter. Production for the first nine months
of 2012 was 6,381 BOE per day, an increase of 2.9 percent over the same
period in 2011. The October 31, 2012 exit production rate exceeded 8,000
BOE per day.
-- The first nine months of 2012 were challenging for Bonterra and
generally for the Canadian energy sector as well. The operating
environment was hindered by a number of significant issues including an
extended spring break-up, tie-in delays and weak commodity prices,
including volatile price differentials between WTI and Bonterra's
average realized prices. The company was also impacted by pipeline
shipping constraints, third party downtime and above average production
shut-ins of approximately 430 BOE per day of production during the first
nine months of 2012.
-- During the latter part of the third quarter, the Company mitigated some
of the tie-in and production issues and will continue with its field
optimization program to redirect its increased natural gas production to
help alleviate existing and future pressure pipeline constraints from
increased drilling activity in the Pembina field. Most of these issues
have now been resolved and the Company is on target to reach its
production guidance of 6,700 to 7,000 BOE per day.
-- During the first nine months of 2012, the Company spent approximately
$57.0 million on its capital development, drilling and facilities
programs. During this period, the company placed two gross (two net)
wells on production which were drilled in 2011 and drilled 18 gross
(15.4 net) operated Pembina and Willesden Green Cardium horizontal wells
of which only three wells were placed on production in the first half of
the year. The majority of the remaining wells were placed on production
in the third quarter of 2012 (produced for approximately 50 percent of
the period) with just two (1.7 net) wells that were drilled prior to
September 30, 2012 remaining to be placed on production in the fourth
quarter of this year. In addition, four gross (1.3 net) non-operated
wells were drilled and all but one (0.5 net) was placed on production
during the first nine months of the year.
-- For the remainder of 2012, the Company will continue with its infill
drilling program in the main Pembina pool and expects to drill an
additional 12 gross (6.24 net) wells and expects that nine gross (3.24
net) of these wells will start producing prior to year end.
-- The company also spent approximately $17.1 million on a tuck-in
acquisition in the Willesden Green Cardium zone which closed on June 7,
2012. The acquisition added approximately 250 BOE per day of production
net to the Company, 52.3 gross (10.5 net) sections of land and 191 gross
(37 net) potential Cardium drilling locations.
-- Bonterra remains highly optimistic with regard to its large inventory of
lower-risk, oil opportunities in the Pembina Cardium zone and
anticipates that production levels will again demonstrate significant
growth in 2013. The Board of Directors and management are currently
assessing the 2013 budget and capital development plans and expect to
release details during the fourth quarter of 2012.
Financial
-- Oil and natural gas prices exhibited continued weakness in the third
quarter of 2012. The Company's average realized price for crude oil
during the first nine months of 2012 was $83.34 per barrel, a decrease
of approximately nine percent when compared to the same period in 2011.
The Company was further impacted by a wide Canadian crude oil
differential between WTI and the price realized by the Company, due in
part to refinery outages, seasonal turnarounds and transportation
capacity issues that created a supply/demand imbalance. The large price
differentials have fluctuated substantially and ranged between $5.00 and
$25.00 per barrel with an average differential of $12.90 per barrel for
the first nine months of 2012 (compared to approximately $4.00 per
barrel for the first nine months of 2011).
-- In addition, the average price of natural gas liquids (NGLs) usually
tracks the price of oil. However, in the latter part of the second
quarter and into the third quarter of 2012, changes in the supply and
demand for NGLs negatively affected the relationship between the price
of NGLs and the price of oil. Natural gas prices continued to remain
extremely weak and decreased 44.8 percent to $2.24 per MCF for the first
nine months of the year when compared to the same period in 2011.
-- Mainly as a result of this lower price environment, revenue and cash
flow from operations decreased 13.7 percent and 20.2 percent,
respectively, on the nine month basis year over year. However, in light
of the improved operations and substantial production volumes being
added in the second half of the year, Bonterra's Board of Directors and
management elected to maintain the monthly dividend level to
shareholders at $0.26 per share including the recently announced October
dividend payable on November 30, 2012.
-- Dividends to shareholders during the first nine months of 2012 totaled
$2.34 per share, a 2.6 percent increase over the 2011 level. This
represents a payout ratio of 76 percent of funds flow which currently
exceeds the Company's guidance of 50 to 65 percent. Higher production
volumes will, subject to commodity prices, assist in reducing this ratio
in the fourth quarter of 2012.
-- Bonterra intends to continue focusing on managing its funds flow,
capital expenditure ranges and dividend payments. At December 31, 2012,
the Company expects it will be in excess of its annual guidance of 1.5
to 1 times net debt to funds flow ratio. The Company expects that this
ratio will be higher due to lower than budgeted commodity prices and the
Willesden Green Asset acquisition of $17.1 million. The Company will
closely monitor this ratio in the future.
Outlook
-- Bonterra remains pleased with its continued controlled growth in
production and reserves on a BOE basis and its sustainability. The
Company will continue to pursue the aggressive development of its
opportunities and is focused on improving production rates, sustaining a
consistent pace of development and increasing project economics in the
future.
-- There continues to be a great deal of instability in the global economy
which has negatively impacted credit and commodity markets. As a result,
this lower price environment may provide opportunities for the Company
to further grow its asset base through land or corporate acquisitions.
Bonterra has historically made acquisitions counter-cyclically and this
remains a strategic approach for the Company.
Cautionary Statement
This summarized news release should not be considered a suitable source of
information for readers who are unfamiliar with Bonterra Energy Corp. and should
not be considered in any way as a substitute for reading the full report. For
the full report, please go to www.bonterraenergy.com
Use of Non-IFRS Financial Measures
Throughout this release the Company uses the terms "payout ratio" and "cash
netback" to analyze operating performance, which are not standardized measures
recognized under IFRS and do not have a standardized meaning prescribed by IFRS.
These measures are commonly utilized in the oil and gas industry and are
considered informative by management, shareholders and analysts. These measures
may differ from those made by other companies and accordingly may not be
comparable to such measures as reported by other companies.
The Company calculates payout ratio by dividing cash dividends paid to
shareholders by cash flow from operating activities, both of which are measures
prescribed by IFRS which appear on our statements of cash flows. We calculate
cash netback by dividing various financial statement items as determined by IFRS
by total production for the period on a barrel of oil equivalent basis.
Forward-Looking Information
Certain statements contained in this release include statements which contain
words such as "anticipate", "could", "should", "expect", "seek", "may",
"intend", "likely", "will", "believe" and similar expressions, relating to
matters that are not historical facts, and such statements of our beliefs,
intentions and expectations about development, results and events which will or
may occur in the future, constitute "forward-looking information" within the
meaning of applicable Canadian securities legislation and are based on certain
assumptions and analysis made by us derived from our experience and perceptions.
Forward-looking information in this RELEASE includes, but is not limited to:
expected cash provided by continuing operations; cash dividends; future capital
expenditures, including the amount and nature thereof; oil and natural gas
prices and demand; expansion and other development trends of the oil and gas
industry; business strategy and outlook; expansion and growth of our business
and operations; and maintenance of existing customer, supplier and partner
relationships; supply channels; accounting policies; credit risks; and other
such matters.
All such forward-looking information is based on certain assumptions and
analyses made by us in light of our experience and perception of historical
trends, current conditions and expected future developments, as well as other
factors we believe are appropriate in the circumstances. The risks,
uncertainties, and assumptions are difficult to predict and may affect
operations, and may include, without limitation: foreign exchange fluctuations;
equipment and labour shortages and inflationary costs; general economic
conditions; industry conditions; changes in applicable environmental, taxation
and other laws and regulations as well as how such laws and regulations are
interpreted and enforced; the ability of oil and natural gas companies to raise
capital; the effect of weather conditions on operations and facilities; the
existence of operating risks; volatility of oil and natural gas prices; oil and
gas product supply and demand; risks inherent in the ability to generate
sufficient cash flow from operations to meet current and future obligations;
increased competition; stock market volatility; opportunities available to or
pursued by us; and other factors, many of which are beyond our control.
Actual results, performance or achievements could differ materially from those
expressed in, or implied by, this forward-looking information and, accordingly,
no assurance can be given that any of the events anticipated by the
forward-looking information will transpire or occur, or if any of them do, what
benefits will be derived there from. Except as required by law, Bonterra
disclaims any intention or obligation to update or revise any forward-looking
information, whether as a result of new information, future events or otherwise.
The forward-looking information contained herein is expressly qualified by this
cautionary statement.
FOR FURTHER INFORMATION PLEASE CONTACT:
Bonterra Energy Corp.
George F. Fink
CEO and Chairman of the Board
(403) 262-5307
Bonterra Energy Corp.
Robb D. Thompson
CFO and Secretary
(403) 262-5307
Bonterra Energy Corp.
Kirsten Lankester
Manager, Investor Relations
(403) 262-5307
(403) 265-7488 (FAX)
info@bonterraenergy.com
www.bonterraenergy.com
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