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
----------------------------------------------------------------------------
TOTAL PROVED 22,933.6 49,258 1,991.0 33,134.3
PROBABLE 8,013.1 18,963 724.0 11,897.6
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
TOTAL PROVED 1,261,766 750,921 514,227
PROBABLE 614,596 235,981 118,681
----------------------------------------------------------------------------
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.
Contacts: 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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