Bonterra Energy Corp. (www.bonterraenergy.com) (TSX:BNE)
(“Bonterra” or “the Company”) is pleased to provide the summary
results of its independent reserve report (the “Sproule Report”)
prepared by Sproule Associates Limited (“Sproule”) with an
effective date of December 31, 2017.
Corporate Reserves
Information
The following summarizes certain information
contained in the Sproule Report. The Sproule Report was prepared in
accordance with the definitions, standards and procedures contained
in the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”)
and National Instrument 51-101 - Standards of Disclosure for Oil
and Gas Activities (“NI 51-101”). Additional reserve information as
required under NI 51-101 will be included in the Company’s Annual
Information Form which will be filed on SEDAR on or by March 13,
2018.
Reserve Report Highlights
- Increased proved plus probable (“P+P”) reserves by five percent
to 99.8 million BOE (70 percent oil and liquids) and total proved
reserves by six percent to 78.6 million BOE (70 percent oil and
liquids).
- Increased total proved reserves by 4.3 million BOE which
replaced production by 193 percent.
- Total proved reserves represent 79 percent of total P+P
reserves.
- P+P reserves per fully diluted share increased to 3.00 BOE per
share compared to 2.85 BOE per share from the prior year, an
increase of five percent.
- Reserve life index of approximately 21 years on a P+P basis, 17
years on a total proved basis, and nine years on a proved developed
producing (“PDP”) basis (based on 2017 average production rate of
12,827 BOE per day).
Summary of Gross Oil and Gas Reserves as of December 31,
2017
|
Light and Medium Oil |
Solution Gas |
Natural Gas |
Natural Gas Liquids |
Oil equivalent(4) |
Future Development Capital |
|
(MBbl) |
(MMcf) |
(MMcf) |
(MBbl) |
(MBoe) |
(000s) |
Proved |
|
|
|
|
|
|
Developed
Producing |
25,760 |
66,598 |
7,152 |
3,147 |
41,199 |
- |
Developed
Non-producing |
617 |
1,468 |
244 |
69 |
971 |
1,136 |
Undeveloped |
22,369 |
52,022 |
13,893 |
3,068 |
36,423 |
605,140 |
Total
proved |
48,746 |
120,088 |
21,288 |
6,284 |
78,592 |
606,275 |
Total
Probable |
13,148 |
31,894 |
6,604 |
1,684 |
21,248 |
9,651 |
Total P+P(1) (2) (3) |
61,894 |
151,982 |
27,893 |
7,968 |
99,840 |
615,926 |
Notes:
(1) Reserves
have been presented on gross basis which are the Company’s total
working interest share before the deduction of any royalties and
without including any royalty interests of the
Company.(2) Totals may not add
due to rounding.(3) Based on
Sproule’s December 31, 2017 escalated price
deck.(4) Oil equivalent amounts
have been calculated using a conversion rate of six thousand cubic
feet of natural gas to one barrel of oil.
Reconciliation of Company Gross Reserves
by Principal Product Type as of December 31, 2017
(1)(2)
|
Light & Medium Oil |
Conventional Natural Gas |
Natural Gas Liquids |
Oil Equivalent |
|
Total Proved |
Proved + Probable |
Total Proved |
Proved + Probable |
Total Proved |
Proved + Probable |
Total Proved |
Proved + Probable |
|
(MBbl) |
(MBbl) |
(MMcf) |
(MMcf) |
(MBbl) |
(MBbl) |
(MBoe) |
(MBoe) |
Opening Balance, December 31, 2016 |
47,581 |
|
60,320 |
|
129,108 |
|
167,269 |
|
5,157 |
|
6,707 |
|
74,257 |
|
94,905 |
|
Extensions &
Improved Recovery(2) |
4,086 |
|
5,166 |
|
7,130 |
|
9,009 |
|
427 |
|
540 |
|
5,701 |
|
7,207 |
|
Technical
Revisions |
(882) |
|
(1,785) |
|
11,905 |
|
9,803 |
|
960 |
|
964 |
|
2,062 |
|
814 |
|
Discoveries |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Acquisitions |
697 |
|
868 |
|
1,730 |
|
2,170 |
|
57 |
|
71 |
|
1,043 |
|
1,301 |
|
Dispositions(3) |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Economic Factors |
150 |
|
211 |
|
295 |
|
415 |
|
13 |
|
16 |
|
212 |
|
296 |
|
Production |
(2,886) |
|
(2,886) |
|
(8,792) |
|
(8,792) |
|
(331) |
|
(331) |
|
(4,682) |
|
(4,682) |
|
Closing Balance, December 31, 2017(4) |
48,746 |
|
61,894 |
|
141,376 |
|
179,874 |
|
6,284 |
|
7,968 |
|
78,592 |
|
99,840 |
|
Notes:
(1) Gross
Reserves means the Company’s working interest reserves before
calculation of royalties, and before consideration of the Company’s
royalty interests.(2) Increases
to Extensions & Improved Recovery include infill drilling and
are the result of step-out locations drilled by Bonterra and other
operators on and near Company-owned
lands.(3) Includes volumes
associated with Farm outs.(4)
Totals may not add due to
rounding.
Summary of Net Present Values of Future Net Revenue as
of December 31, 2017
($M) |
Net Present Value Before Income Taxes
Discounted at (% per Year) |
Reserves
Category: |
0% |
|
5% |
|
10% |
|
15% |
|
Proved |
|
|
|
|
Producing |
1,379,164 |
|
935,526 |
|
706,099 |
|
569,452 |
|
Non-producing |
20,761 |
|
18,112 |
|
14,854 |
|
12,272 |
|
Undeveloped |
930,643 |
|
514,685 |
|
306,474 |
|
190,432 |
|
Total proved |
2,330,568 |
|
1,468,324 |
|
1,027,427 |
|
772,156 |
|
Probable |
946,292 |
|
492,725 |
|
317,563 |
|
231,218 |
|
Total
proved plus probable(1)(2)(3) |
3,276,860 |
|
1,961,049 |
|
1,344,990 |
|
1,003,374 |
|
Notes:
(1)
Evaluated by Sproule as at December 31, 2017. Net present value of
future net revenue does not represent fair value of the
reserves.(2) Net present values
equals net present value before income taxes based on Sproule’s
forecast prices and costs as of December 31, 2017. There is no
assurance that the forecast prices and costs assumptions will be
attained and variances could be
material.(3) Includes
abandonment and reclamation costs as defined in NI 51-101.
Finding, Development & Acquisition (“FD&A”) and
Finding & Development (“F&D”) Costs
Over the past three years, Bonterra has incurred
the following FD&A(3) and F&D(3) costs both excluding and
including Future Development Capital (“FDC”):
|
Total Proved Reserves Net
Additions |
|
P+P Reserves Net Additions |
|
2017 |
|
2016 |
|
2015 |
3 Yr Avg(4) |
|
|
2017 |
|
2016 |
|
2015 |
3 Yr Avg(4) |
FD&A Costs per BOE (1)(2)(3) |
Including FDC |
$15.66 |
$10.87 |
$11.52 |
$12.60 |
|
$13.74 |
$9.93 |
$11.60 |
$11.77 |
Excluding
FDC |
$9.06 |
$4.91 |
$15.50 |
$10.62 |
|
$8.57 |
$4.58 |
$15.29 |
$10.51 |
|
F&D Costs per BOE (1)(2)(3) |
Including FDC |
$17.02 |
$10.89 |
$4.76 |
$13.04 |
|
$15.22 |
$9.91 |
$3.12 |
$11.96 |
Excluding
FDC |
$9.55 |
$4.81 |
$33.26 |
$9.73 |
|
$9.25 |
$4.44 |
$56.32 |
$9.64 |
Notes:
(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 capital generally will not reflect total finding and
development costs related to reserve additions for that
year.(3) FD&A and F&D
costs are net of proceeds of disposition 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 total proved and P+P reserves on a weighted
average basis.
FD&A and F&D
Highlights
- The increase in FDC was primarily a result of increased
investment infrastructure capital of $13 million directed to
initiatives designed to reduce future operating costs by enhancing
water and gas handling capabilities, as well as increased drilling
and completion costs due to higher industry demand.
- FD&A for 2017 was positively impacted by reserve additions
from two acquisitions totaling $5.5 million.
- On December 20, 2017, the Company closed the sale of a two
percent non-convertible gross overriding royalty (“GORR”) on its
Pembina Cardium pool for consideration of $56.7 million (comprised
of $52 million cash and incremental Cardium assets). The GORR
transaction has been reflected in the Company’s net reserves.
Operational Highlights
Bonterra realized ongoing success in its core
Pembina Cardium area through 2017 and maintained stable production
volumes as a result of its low corporate decline rate and
successful drilling program. The Company was able to grow
reserves and lower net debt with no shareholder dilution due to the
GORR transaction and its successful 2017 development program.
Bonterra’s realized oil prices are based on Edmonton Par pricing;
accordingly, the Company has not been exposed to the significantly
lower differentials which have negatively impacted the Western
Canadian Select benchmark price.
Bonterra’s 2017 full year and fourth quarter
production summary follows:
- Average daily production for the full year was 12,827 BOE per
day (70 percent oil and liquids), which was in line with the
Company’s 2017 guidance of 12,900 BOE per day, representing a two
percent increase over the 12,650 BOE per day average in 2016;
- Average daily production in the fourth quarter was 12,807 BOE
per day, an increase of six percent compared to the fourth quarter
of 2016; and
- During the fourth quarter of 2017, the Company experienced
pipeline restrictions which resulted in 80 barrels of oil per day
being produced into inventory rather than being sold. In addition,
due to extremely cold weather, numerous pipelines and wellhead
freeze offs resulted in unplanned downtime of 218 BOE per day.
Without these production curtailments, the Company would have
averaged 13,105 BOE per day in Q4 2017. The inventory build will be
included in Q1 2018 production and unplanned downtime is expected
to be resolved early in the first quarter of 2018.
2018 Guidance
Bonterra is maintaining the 2018 capital budget
at $75 million which will be directed largely to new wells and
facility upgrades focused primarily in the Pembina Cardium area.
Bonterra anticipates the 2018 average annual production to range
between 13,200 and 13,500 BOE per day.
Certain financial and operating information,
such as production information, and F&D costs included in this
press release are based on estimated unaudited financial results
for the quarter and year ended December 31, 2017 and are subject to
the same limitations as discussed under Forward Looking Statements
set out below. These estimated amounts may change upon the
completion of audited financial statements for the year ended
December 31, 2017 and changes could be material.
For further information please contact:George
F. Fink, Chairman and CEORobb D. Thompson, CFO
Adrian Neumann, COOTelephone: (403) 262-5307Fax: (403)
265-7488Email: info@bonterraenergy.com
Caution Regarding Engineering Terms
Disclosure provided herein in respect of barrels
of oil equivalent (BOE) may be misleading, particularly if used in
isolation. In accordance with NI 51-101, a BOE conversion ratio of
6 MCF to 1 barrel has been used in all cases in this disclosure.
This BOE conversion ratio is based on an energy equivalency
conversion method primarily available at the burner tip and does
not represent a value equivalency at the wellhead.
Summary of Selected Price Forecasts Sproule (December
31, 2017)
Year |
WTI Cushing Oklahoma 40o API
($US/bbl) |
Canadian Light Sweet Crude 40o API $/bbl |
AECO-C Spot $/Mmbtu |
Exchange Rate $US/$CDN |
2018 |
55.00 |
65.44 |
2.85 |
0.79 |
2019 |
65.00 |
74.51 |
3.11 |
0.82 |
2020 |
70.00 |
78.24 |
3.65 |
0.85 |
2021 |
73.00(1) |
82.45(1) |
3.80 |
0.85 |
- Escalation Rate 2% thereafter
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.
The TSX does not accept responsibility for the
accuracy of this release.
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