Bonterra Energy Corp. (Bonterra) (www.bonterraenergy.com) (TSX:BNE) is pleased
to provide an operational update including 2012 highlights, the results of its
independent reserve report prepared by Sproule Associates Limited with an
effective date of December 31, 2012 and its 2013 budget and guidance.
In 2012, Bonterra maintained its focus on providing investors with a sustainable
pace of development, continued growth on a per share basis and stable monthly
income through its dividend policy paying out $3.12 per share during the year.
The company will maintain this corporate strategy in 2013 by continuing to
pursue the development of its lower risk, high return opportunities;
predominantly through its horizontal drilling program on its significant Cardium
light oil play.
In addition, Bonterra recently completed the acquisition of Spartan Oil Corp.
(Spartan), increasing its current production to approximately 13,500 BOE per day
that due to a present flush production will reduce to an average of
approximately 12,000 BOE per day from the January 25, 2013 acquisition date to
December 31, 2013. The company's large, concentrated asset base in the Cardium
now totals 250.3 gross (193.7 net) sections, positioning Bonterra as one of the
most dominant light-oil, dividend paying companies in the Canadian energy
sector. The company currently estimates that it has a greater than 10 year
drilling inventory (using four wells per section) that will allow Bonterra to
sustain its current business model offering both solid growth and yield to its
shareholders.
2012 Operational Highlights
-- Record average daily production for the full year of 6,727 barrels of
oil equivalent (BOE) per day (67 percent oil and liquids), an increase
of 6.0 percent over the same period in 2011.
-- Record average daily production of 7,728 BOE per day in the fourth
quarter, an increase of 14.8 percent when compared to the fourth quarter
of 2011.
-- Production per share increased to 0.124 BOE per share, an increase of
4.2 percent over 2011.
-- Proved plus Probable (P+P) reserves of 45.0 million BOE (approximately
75 percent oil and liquids), a 9.4 percent increase over December 2011
reserves of 41.1 million BOE.
-- Added a total of 6.3 million BOE (P+P) reserves which equates to 2.5
times 2012 production.
-- Reserves per share (P+P) increased 7.0 percent to 2.28 BOE per share
compared to 2.13 BOE per share in the prior year.
-- Reserve life index of 18.0 years on P+P basis and 13.7 years on a proved
basis continues to remain above industry average.
The Company has not released its audited 2012 financial results therefore the
numbers provided above are currently estimates and unaudited.
2013 Corporate Guidance
Bonterra closed the acquisition of Spartan in January, 2013 and the following
guidance is based on the combined entity.
-- The Board of Directors has approved a capital development program of
$90.0 million which mainly targets light oil prospects through its
Cardium horizontal drill program.
-- Currently 29 gross (28.1 net) operated wells are planned. Bonterra will
also participate in drilling 13 gross (4.3 net) non-operated wells
during 2013.
-- Bonterra's full year production levels are expected to average between
12,000 and 12,200 BOE per day.
-- Operating costs are expected to average approximately $15.00 per BOE on
an annualized basis.
-- The dividend payout ratio is estimated to range between 50 and 65
percent of funds flow in 2013. As previously announced, Bonterra will be
increasing the dividend to $0.28 per share beginning with the dividend
that will be paid on March 31, 2013. Bonterra's Board of Directors and
management will continue to take into account production volumes and
commodity prices in determining monthly dividend amounts and will
consider increasing the dividend should crude oil pricing remain
favourable coupled with anticipated production increases.
-- Bonterra's present net debt to cash flow from operations on a pro forma
basis is approximately 1.0:1.0.
-- Bonterra has approximately $570 million in tax pools, extending the
company's estimated tax horizon to 2016.
Bonterra's capital development program may be affected by items such as drilling
results, commodity prices, and industry, regulatory and economic conditions. The
Board of Directors and management will regularly review the capital program
during the year and will make any adjustments to the amount and targets if
required. The corporate guidance for 2013 is based on estimated future crude oil
and natural gas prices and as such, guidance estimates may fluctuate with
changes in commodity prices. Capital expenditure guidance excludes potential
acquisitions which will be separately considered and evaluated.
Well Positioned for Continued Growth in 2013
In 2012, Bonterra's focus to developing its Cardium acreage shifted to main pool
development. The company drilled 32 gross (22.6 net) horizontal wells during the
year. Bonterra has identified 600 gross (464 net) possible horizontal locations
within its acreage. 105 gross (80.8 net) horizontal proved undeveloped locations
are reflected in Bonterra's 2012 reserve report constituting a three-year
drilling program. Bonterra intends to focus the majority of its $90 million 2013
capital program on realizing value from its Cardium assets through a sustainably
paced horizontal drill program.
Bonterra closed the acquisition of Spartan on January 25, 2013. The acquisition
advances Bonterra's strategic objective to maintain and consolidate its position
in the Cardium while continuing to exploit this large resource play. The Spartan
properties are a strong geographical fit to Bonterra's asset base, have
significant operational synergies and provide additional drilling inventory over
the long-term. Bonterra has completed extensive geological mapping of the
Spartan land base and have fully integrated the assets into its capital program.
The Spartan assets are expected to increase the company's liquids weighting and
the corporate production profile in 2013 is anticipated to be approximately 75
percent light oil and natural gas liquids which should result in increased
netbacks for the combined entity.
Bonterra has continued to improve and refine its development of the Cardium to
both increase well performance and reserve recoveries while minimizing costs. In
2012, the company transitioned to water-based fracs which has significantly
reduced overall well costs and increased per well production results. In 2013,
Bonterra is currently targeting drilling, completion, equipping and tie-in costs
to average approximately $2.7 million per well.
Full year production levels in 2013 are expected to average in a range of 12,000
to 12,200 BOE per day. Bonterra intends to manage its corporate decline through
the prudent use of capital and selective timing of its drilling program over the
course of the year to deliver sustainable and consistent growth to its
shareholders while continuing to provide income in the form of its monthly
dividend.
Corporate Reserves Information (Prior to the Acquisition of Spartan Oil Corp.)
Bonterra engaged the services of Sproule Associates Limited to prepare a reserve
evaluation with an effective date of December 31, 2012. The gross reserve
figures from the following tables represent Bonterra's ownership interest before
royalties and before consideration of the Company's royalty interests. Tables
may not add due to rounding.
Summary of Gross Oil and Gas Reserves as of December 31, 2012
Light and Natural
Medium Natural Gas
Oil Gas Liquids BOE(1)
Reserve Category: (Mbbl) (MMcf) (Mbbl) (MBOE)
----------------------------------------------------------------------------
PROVED
Developed Producing 14,415.7 33,037 1,365.7 21,287.6
Developed Non-Producing 366.3 2,629 51.8 856.3
Undeveloped 8,151.6 13,592 573.5 10,990.4
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TOTAL PROVED 22,933.6 49,258 1,991.0 33,134.3
PROBABLE 8,013.1 18,963 724.0 11,897.6
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TOTAL PROVED PLUS PROBABLE 30,946.7 68,221 2,715.0 45,031.9
----------------------------------------------------------------------------
Reconciliation of Company Gross Reserves by Principal Product Type as of
December 31, 2012
Light and Medium Oil and
Natural Gas Liquids Natural Gas
----------------------------------------------------------------------------
Proved plus Proved plus
Proved Probable Proved Probable
(Mbbl) (Mbbl) (Mmcf) (Mmcf)
----------------------------------------------------------------------------
December 31, 2011 21,160.1 30,492.4 41,822 63,941
Extension 1,142.7 1,403.6 1,279 1,624
Improved Recovery 4,482.4 5,792.5 7,769 10,039
Technical Revisions (883.1) (3,470.0) 403 (5,052)
Discoveries - - - -
Acquisitions 770.0 1,200.3 2,685 3,769
Dispositions - - - -
Economic factors (158.7) (168.4) (564) (1,964)
Production (1,588.8) (1,588.8) (4,136) (4,136)
----------------------------------------------------------------------------
December 31, 2012 24,924.6 33,661.7 49,258 68,221
----------------------------------------------------------------------------
BOE(1)
--------------------------------------------------
Proved Plus
Proved Probable
(MBOE) (MBOE)
--------------------------------------------------
December 31, 2011 28,130.4 41,149.2
Extension 1,355.9 1,674.3
Improved Recovery 5,777.2 7,465.7
Technical Revisions (815.9) (4,312.0)
Discoveries - -
Acquisitions 1,217.5 1,828.5
Dispositions - -
Economic factors (252.7) (495.7)
Production (2,278.1) (2,278.1)
--------------------------------------------------
December 31, 2012 33,134.3 45,031.9
--------------------------------------------------
Summary of Net Present Values of Future Net Revenue as of December 31, 2012
Net Present Value Before
Income Taxes
Discounted at (% per Year)
($ Millions) 0% 5% 10%
----------------------------------------------------------------------------
Reserve Category:
----------------------------------------------------------------------------
PROVED
Developed Producing 841,883 542,926 406,536
Developed Non-Producing 26,822 16,496 11,488
Undeveloped 393,061 191,499 96,203
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TOTAL PROVED 1,261,766 750,921 514,227
PROBABLE 614,596 235,981 118,681
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TOTAL PROVED PLUS PROBABLE 1,876,362 986,902 632,909
----------------------------------------------------------------------------
Finding, Development and Acquisition (FD&A) Costs
The Company has historically been active in its capital development program.
Over three years, Bonterra has incurred the following FD&A (3) costs excluding
Future Development Costs:
2012
FD&A 2011 FD&A 2010 FD&A
Costs per Costs per Costs per Three Year
BOE(1)(2)(3) BOE(1)(2)(3) BOE(1)(2)(3) Average(4)
----------------------------------------------------------------------------
Proved Reserve Net
Additions $ 16.05$ 33.22$ 13.89$ 16.22
Proved plus Probable
Reserve Net Additions $ 13.64$ 15.38$ 13.02$ 14.79
----------------------------------------------------------------------------
Over three years, Bonterra has incurred the following FD&A (3) costs including
Future Development Costs:
2012
FD&A 2011 FD&A 2010 FD&A
Costs per Costs per Costs per Three Year
BOE(1)(2)(3) BOE(1)(2)(3) BOE(1)(2)(3) Average(5)
----------------------------------------------------------------------------
Proved Reserve Net
Additions $ 20.91$ 57.53$ 21.98$ 19.47
Proved plus Probable
Reserve Net Additions $ 21.62$ 35.40$ 19.19$ 17.92
----------------------------------------------------------------------------
(1) Barrels of Oil Equivalent 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.
(2) The aggregate of the exploration and development costs incurred in the most
recent financial year and the change during that year in estimated future
development costs generally will not reflect total finding and development costs
related to reserve additions for that year.
(3) FD&A costs are net of proceeds of disposal and the FD&A costs per BOE are
based on reserves acquired net of reserves disposed of.
(4) Three year average is calculated using three year total capital costs and
reserve additions on both a Proved and Proved plus Probable basis.
(5) Three year average is calculated using three year total capital costs and
reserves additions on both a Proved and Proved plus Probable basis plus the
average change in future capital costs over the three year period.
Certain financial and operating information, such as production information,
finding and development costs and net asset values, included in this press
release for the quarter and year ended December 31, 2012 are based on estimated
unaudited financial results for the year and are subject to the same limitations
as discussed under Forward Looking Statements set out below. These estimated
amounts may change upon the completion of audited financial statements for the
year ended December 31, 2012 and changes could be material. All reserve numbers
provided above are Bonterra's interest before royalties.
It should not be assumed that the estimates of future net revenue presented in
the above tables represent the fair market value of the reserves. There is no
assurance that the forecast prices and costs assumptions will be attained and
variances could be material. Estimates of reserves and future net revenues for
individual properties may not reflect the same confidence level as estimates of
reserves and future net revenues for all properties due to the effects of
aggregation.
Caution Regarding Engineering Terms:
Disclosure provided herein in respect of barrels of oil equivalent (BOE) may be
misleading, particularly if used in isolation. In accordance with NI 51-101, a
BOE conversion ratio of 6 MCF to 1 barrel has been used in all cases in this
disclosure. This BOE conversion ratio is based on an energy equivalency
conversion method primarily available at the burner tip and does not represent a
value equivalency at the wellhead.
Caution Regarding Forward Looking Information:
Certain information set forth in this press release, including management's
assessment of Bonterra's future plans and operations, contains forward-looking
statements. By their nature, forward-looking statements are subject to numerous
risks and uncertainties, some of which are beyond Bonterra's control, including
the impact of general economic conditions, industry conditions, volatility of
commodity prices, currency fluctuations, imprecision of reserve estimates,
environmental risks, competition from other industry participants, the lack of
availability of qualified personnel or management, stock market volatility and
ability to access sufficient capital from internal and external sources. Readers
are cautioned that the assumptions used in the preparation of such information,
although considered reasonable at the time of preparation, may prove to be
imprecise and, as such, undue reliance should not be placed on forward-looking
statements. Bonterra's actual results, performance or achievement could differ
materially from those expressed in, or implied by these forward-looking
statements, and, accordingly, no assurance can be given that any of the events
anticipated by the forward-looking statements will transpire or occur, or if any
of them do so, what benefits that Bonterra will derive therefrom. Bonterra
disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
FOR FURTHER INFORMATION PLEASE CONTACT:
Bonterra Energy Corp.
George F. Fink
Chairman and CEO
(403) 262-5307
(403) 265-7488 (FAX)
Bonterra Energy Corp.
Robb M. Thompson
CFO and Secretary
(403) 262-5307
(403) 265-7488 (FAX)
Bonterra Energy Corp.
Kirsten Lankester
Manager, Investor Relations
(403) 262-5307
(403) 265-7488 (FAX)
info@bonterraenergy.com
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