Bonterra Energy Corp. (www.bonterraenergy.com) (TSX: BNE)
(“Bonterra” or the “Company”) is pleased to announce its operating
and financial results as at and for the three and six months ended
June 30, 2018. The related unaudited condensed financial
statements and notes, as well as management’s discussion and
analysis (“MD&A”), are available on SEDAR at www.sedar.com and
on Bonterra’s website at www.bonterraenergy.com.
HIGHLIGHTS
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Three months ended |
Six months ended |
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As at and
for the periods ended ($ 000s except for $ per share and $ per
BOE) |
June 30,
2018 |
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June 30, 2017 |
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June 30,
2018 |
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June 30, 2017 |
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FINANCIAL |
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Revenue - realized oil
and gas sales |
67,458 |
|
52,695 |
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124,583 |
|
102,025 |
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Funds flow (1) |
37,642 |
|
28,508 |
|
65,601 |
|
53,751 |
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Per share
- basic and diluted |
1.13 |
|
0.86 |
|
1.97 |
|
1.61 |
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Dividend
payout ratio |
27 |
% |
35 |
% |
30 |
% |
37 |
% |
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Cash flow from
operations |
31,908 |
|
27,370 |
|
61,785 |
|
51,910 |
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Per share
- basic and diluted |
0.96 |
|
0.82 |
|
1.85 |
|
1.56 |
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Dividend
payout ratio |
31 |
% |
37 |
% |
32 |
% |
38 |
% |
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Cash dividends per
share |
0.30 |
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0.30 |
|
0.60 |
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0.60 |
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Net earnings
(loss) |
8,925 |
|
2,978 |
|
12,320 |
|
3,453 |
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Per share
- basic and diluted |
0.27 |
|
0.09 |
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0.37 |
|
0.10 |
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Capital expenditures,
net of dispositions |
18,970 |
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19,416 |
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55,138 |
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49,545 |
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Total assets |
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1,147,501 |
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1,173,936 |
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Working capital
deficiency |
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27,069 |
|
29,759 |
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Long-term debt |
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303,413 |
|
341,070 |
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Shareholders' equity |
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|
503,979 |
|
529,844 |
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OPERATIONS |
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Oil
-barrels per day |
8,743 |
|
8,287 |
|
8,391 |
|
7,912 |
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-average price ($ per barrel) |
76.51 |
|
58.27 |
|
72.35 |
|
59.39 |
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NGLs
-barrels per day |
984 |
|
843 |
|
942 |
|
828 |
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-average price ($ per barrel) |
43.69 |
|
27.48 |
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41.32 |
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29.19 |
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Natural gas - MCF
per day |
25,317 |
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24,138 |
|
25,011 |
|
23,196 |
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- average price ($ per MCF) |
1.16 |
|
3.03 |
|
1.69 |
|
3.00 |
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Total
barrels of oil equivalent per day (BOE) (2) |
13,946 |
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13,153 |
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13,501 |
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12,606 |
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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 working capital items and decommissioning
expenditures settled.
(2) BOE may be misleading, particularly if used in
isolation. A BOE conversion ratio of 6 MCF: 1 bbl is based on an
energy conversion method primarily applicable at the burner tip and
does not represent a value equivalency at the wellhead.
During the second quarter of 2018, Bonterra
continued to focus on the development of its high quality, light
oil weighted assets focused in Alberta’s Pembina Cardium area and
achieved production of 13,946 BOE per day representing one of the
Company’s strongest quarters in over four years. The vastly
improved oil and natural gas liquids (“NGLs”) price environment
that prevailed through the first half of the year, combined with
the higher production volumes, contributed to strong quarterly
funds flow of $37.6 million ($1.13 per share). This enabled
Bonterra to reduce net debt, maintain a dividend and invest capital
into its attractive asset base. During the first six months
of 2018, the Company drilled 20 gross (19.9 net) wells, of which 18
gross (17.9 net) wells were completed, tied-in and placed on
production.
Q2 2018 Highlights
- Generated funds flow of $37.6 million, or $1.13 per share,
compared to $28.5 million in Q2 2017, or $0.86 per share;
- Paid out $0.30 per share in cash dividends to shareholders in
the second quarter, representing a dividend payout ratio of 27
percent of funds flow;
- Averaged 13,946 BOE per day of production, six percent higher
than 13,153 BOE per day in Q2 2017, and seven percent higher than
Q1 2018;
- Achieved a cash netback of $30.06 per BOE compared to $23.84
per BOE in Q2 2017;
- Realized an average crude oil price of $76.51 per barrel and an
average overall product price of $53.15 per BOE in Q2 2018,
representing increases of 31 and 21 percent, respectively, compared
to Q2 2017;
- Invested approximately $19 million in capital expenditures,
representing approximately 25 percent of the Company’s $75 million
capital budget for the year. The majority of Bonterra’s remaining
2018 capital budget is expected to be spent in the third
quarter;
- Drilled 20 gross (19.9 net) wells during the first six months
of 2018, of which 18 gross (17.9 net) wells were completed, tied-in
and placed on production. The remaining two wells were
brought on production in July 2018 and will contribute to Q3
volumes;
- Reduced production costs to $13.01 per BOE, compared to $14.49
per BOE in Q1 2018, a level that is more in line with historical
production costs;
- Reduced net debt, which at the end of Q2 2018 was $330.5
million, $8.1 million lower than Q1 2018 and $40.3 million less
than the end of Q2 2017; and
- Recorded net earnings of $8.9 million compared to net earnings
of $3.0 million for Q2 2017.
The Company posted a strong quarter both
financially and operationally, and generated funds flow that
exceeded capital spending and dividend payments, thereby allowing
the Company to continue to reduce net debt, with capital spending
of approximately $19.0 million compared to funds flow of $37.6
million. Approximately 94 percent of the Company’s revenue in Q2
2018 was weighted towards higher value crude oil and NGLs. As
demonstrated by its Q2 2018 financial results, Bonterra offers
significant torque to the upside in a rising and stable oil price
environment. The Company also recorded positive second
quarter net earnings of $8.9 million compared to $3.0 million in
the same period in 2017. The increase in net earnings was primarily
due to increased commodity prices for oil and NGLs coupled with
stronger production volumes.
For many years, Bonterra has successfully stood
out among peers by remaining a low-cost producer with a low
production decline rate of approximately 22 percent, significant
exposure to the Pembina Cardium pool, and a sizeable inventory of
low-risk, highly economic undrilled locations. During the
second quarter, Bonterra succeeded in bringing all-in cash costs
back to levels that are consistent with prior history, averaging
$23.09 per BOE in Q2 2018 compared to $24.82 per BOE in the prior
quarter. Field netbacks in the second quarter increased
significantly to $34.69 per BOE from $28.70 per BOE in Q2 2017 and
$29.22 per BOE in Q1 2018. Bonterra’s net debt to funds flow
ratio has also declined to approximately 2.2 times based on
annualized Q2 2018, which is in-line with the guided range of 2.1
to 2.5 times by year end 2018, and down from 3.0 times in Q1
2018.
Q3 and 2018 Outlook
Bonterra will continue to pursue a sustainable
growth strategy focused on exercising financial discipline to
reduce debt, delivering on operational efficiencies and managing a
stable dividend to create strong returns for shareholders.
Bonterra’s drilling and completions activities through the first
quarter positioned the Company well in the second quarter to
produce record high volumes and take advantage of strong realized
oil and liquids pricing.
With a continued focus on governance, Bonterra’s
Board of Directors is pleased to announce the addition of Mr. Dan
Reuter, Managing Director of Oberndorf Enterprises, to Bonterra’s
Board. Oberndorf Enterprises is a San Francisco-based private
fund, currently holding a significant 12 percent investment in
Bonterra. As a shareholder representative, Mr. Reuter brings
a wealth of knowledge regarding capital allocation and corporate
governance and will significantly contribute to overall corporate
strategy and direction while offering valuable insights into U.S.
institutional shareholder perspectives. Bonterra is pleased
to welcome Mr. Reuter to the Board.
As a result of the Company’s strong performance
in the second quarter, Bonterra remains on target to meet annual
production guidance of 13,200 to 13,500 BOE per day with a net debt
to funds flow target range between 2.1 to 2.5 times at year end
2018. Production for the third quarter will be impacted by a
major plant turnaround that occurred in July and restricted volumes
for close to seven days. Regardless, given the Company’s
strong first half 2018 results, full year guidance remains intact
with Bonterra tracking to achieve production near the high end of
forecasts. Bonterra’s long-term model of sustainable growth
plus dividend continues to be a focus with a future view towards a
measured approach to dividend increases with a sustained recovery
in the oil price environment.
Bonterra Energy Corp. is a conventional oil and
gas corporation with operations in Alberta, Saskatchewan and
British Columbia. The shares are listed on The Toronto Stock
Exchange under the symbol "BNE".
For further information please contact:George
F. Fink, Chairman and CEO Robb D. Thompson, CFO Adrian Neumann,
COOTelephone: (403) 262-5307Fax: (403) 265-7488Email:
info@bonterraenergy.com
Cautionary Statements
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.
Frequently recurring terms
Bonterra uses the following frequently recurring
terms in this press release: “WTI” refers to West Texas
Intermediate, a grade of light sweet crude oil used as benchmark
pricing in the United States; “MSW Stream Index” or “Edmonton Par”
refers to the mixed sweet blend that is the benchmark price for
conventionally produced light sweet crude oil in Western Canada;
“AECO” refers to Alberta Energy Company, a grade or heating content
of natural gas used as benchmark pricing in Alberta, Canada; “bbl”
refers to barrel; “NGL” refers to Natural gas liquids; “MCF” refers
to thousand cubic feet; “MMBTU” refers to million British Thermal
Units; “GJ” refers to gigajoule; and “BOE” refers to barrels of oil
equivalent. Disclosure provided herein in respect of a BOE
may be misleading, particularly if used in isolation. A BOE
conversion ratio of 6 MCF: 1 bbl is based on an energy conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.
Numerical Amounts
The reporting and the functional currency of the Company is the
Canadian dollar.
The TSX does not accept responsibility for the
accuracy of this release.
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