CALGARY, Feb. 13, 2019 /CNW/ - 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, 2018.
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
12, 2019.
Reserve Report Highlights
- During 2018, Bonterra invested a modest $78.8 million in capital, split between
$75.1 million to drill, complete and
tie-in new wells and $3.7 million
towards land and the purchase of other oil and gas assets and
successfully grew both average daily production by three percent
and total proved reserves by three percent. The Company returned
approximately $37 million to
shareholders in the form of dividends, demonstrating how the
Company's business model is designed to generate consistent returns
for shareholders across a variety of commodity price
environments.
- Increased total proved reserves by three percent to 80.6
million BOE (68 percent oil and liquids), total proved plus
probable ("P+P") reserves by one percent to 101.2 million BOE (68
percent oil and liquids).
- Increased total proved reserves by 2.0 million BOE which
replaced production by 142 percent.
- Total proved reserves represent 80 percent of total P+P
reserves, an indication of the low-risk nature of Bonterra's asset
base.
- P+P reserves per fully diluted share totaled 3.04 BOE compared
to 3.00 BOE per share from the prior year, while total proved
reserves per fully diluted share totaled 2.42 BOE, a three percent
increase over 2.36 BOE in 2017.
- Net present value of future net revenue discounted at 10
percent (before tax) ("NPV10 BT") for P+P reserves totaled
$1.4 billion, while total proved
reserves totaled $1.1 billion and PDP
reserves totaled $716 million. The
Company's PDP NPV10 BT was 32 percent higher than Bonterra's year
end 2018 enterprise value (market capitalization plus net debt) of
$544 million.
- Bonterra's long-term sustainability continues to be enhanced as
the number of 2018 Cardium net drilling locations which have been
assigned reserves totaled 295 (291 proved and four probable),
compared to 279 (275 proved and four probable) and 253 (245 proved
and eight probable) in 2017 and 2016, respectively.
- The Company generated attractive finding and development
("F&D") recycle ratios of 2.1 times on a total proved basis and
1.9 times on a P+P basis, calculated based on the Company's
estimated corporate annual average field netback divided by the
F&D costs (including future development capital ("FDC").
- Reserve life index ("RLI") of approximately 21 years on a P+P
basis, 17 years on a total proved basis, and eight years on a
proved developed producing ("PDP") basis (based on 2018 average
production rate of 13,206 BOE per day), affords Bonterra many years
of future development drilling opportunities.
Summary of Gross Oil and Gas Reserves as of December 31, 2018
|
|
|
|
|
|
|
|
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
|
23,864
|
70,337
|
5,935
|
3,275
|
39,851
|
4
|
Developed
Non-producing
|
684
|
1,516
|
191
|
57
|
1,025
|
996
|
Undeveloped
|
23,338
|
64,444
|
11,550
|
3,755
|
39,758
|
615,035
|
Total
proved
|
47,885
|
136,297
|
17,676
|
7,086
|
80,634
|
616,035
|
Total
Probable
|
12,182
|
34,573
|
4,833
|
1,842
|
20,591
|
10,027
|
Total P+P(1)
(2) (3)
|
60,067
|
170,870
|
22,510
|
8,928
|
101,225
|
626,061
|
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, 2018 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, 2018
(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, 2017
|
48,746
|
61,894
|
141,376
|
179,874
|
6,284
|
7,968
|
78,592
|
99,840
|
Extensions &
Improved Recovery(2)
|
3,488
|
4,321
|
7,404
|
9,271
|
508
|
640
|
5,230
|
6,505
|
Technical
Revisions
|
(2,040)
|
(3,907)
|
14,020
|
12,609
|
555
|
548
|
851
|
(1,257)
|
Discoveries
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Acquisitions
|
443
|
575
|
1,869
|
2,498
|
116
|
155
|
871
|
1,146
|
Dispositions(3)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Economic
Factors
|
212
|
148
|
(1,736)
|
(1,912)
|
(13)
|
(19)
|
(90)
|
(189)
|
Production
|
(2,964)
|
(2,964)
|
(8,960)
|
(8,960)
|
(363)
|
(363)
|
(4,820)
|
(4,820)
|
Closing
Balance,
December 31, 2018(4)
|
47,885
|
60,067
|
153,973
|
193,380
|
7,086
|
8,928
|
80,634
|
101,225
|
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, 2018
|
|
($M)
|
Net Present Value
Before Income Taxes Discounted at (% per Year)
|
Reserves
Category:
|
0%
|
5%
|
10%
|
15%
|
Proved
|
|
|
|
|
Producing
|
1,289,010
|
922,928
|
715,586
|
586,073
|
Non-producing
|
27,205
|
18,002
|
13,070
|
10,095
|
Undeveloped
|
1,024,361
|
601,316
|
379,722
|
251,837
|
Total
proved
|
2,340,576
|
1,542,246
|
1,108,378
|
848,005
|
Probable
|
858,345
|
455,488
|
293,005
|
212,010
|
Total proved plus
probable(1)(2)(3)
|
3,198,921
|
1,997,734
|
1,401,383
|
1,060,014
|
|
|
Notes:
|
|
(1)
|
Evaluated by Sproule
as at December 31, 2018. 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, 2018. 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.
|
F&D Costs, Finding, Development & Acquisition
("FD&A") Costs and Recycle Ratio
Over the past three years, Bonterra has incurred the following
FD&A(3) and F&D(3) costs both
excluding and including FDC:
|
Total Proved
Reserves Net Additions
|
|
P+P Reserves Net
Additions
|
|
2018
|
2017
|
2016
|
3 Yr
Avg(4)
|
|
2018
|
2017
|
2016
|
3 Yr
Avg(4)
|
FD&A Costs per
BOE (1)(2)(3)
|
|
|
|
|
|
|
|
|
|
Including
FDC
|
$12.82
|
$15.66
|
$10.87
|
$13.22
|
|
$14.33
|
$13.74
|
$9.93
|
$12.51
|
Excluding
FDC
|
$11.40
|
$9.06
|
$4.91
|
$8.31
|
|
$12.70
|
$8.57
|
$4.58
|
$8.17
|
|
|
|
|
|
|
|
|
|
|
F&D Costs per
BOE (1)(2)(3)
|
|
|
|
|
|
|
|
|
|
Including
FDC
|
$12.99
|
$17.02
|
$10.89
|
$13.97
|
|
$15.56
|
$15.22
|
$9.91
|
$13.49
|
Excluding
FDC
|
$12.54
|
$9.55
|
$4.81
|
$8.60
|
|
$14.95
|
$9.25
|
$4.44
|
$8.62
|
|
|
|
|
|
|
|
|
|
|
Recycle
Ratio(5)
|
|
|
|
|
|
|
|
|
|
F&D (including
FDC)
|
2.1
|
1.7
|
2.1
|
2.1
|
|
1.9
|
2.0
|
2.3
|
2.2
|
|
|
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.
|
(5)
|
Recycle ratio is
defined as field netback per BOE divided by F&D costs on a per
boe basis. Field netback is calculated as
revenue minus royalties, operating expenses and transportation
expenses. Bonterra's operating netback in 2018, used in
the above calculations, averaged $26.91 per BOE
(unaudited).
|
2018 Operational Highlights
Capital invested during
2018 reflects a capital program that was heavily weighted to the
first five months of 2018, enabling Bonterra to take advantage of
favourable drilling conditions. A total of $78.8 million was invested through the year, with
$75.1 million directed to drill,
complete and tie-in 27 gross operated (26.8 net) wells and seven
gross non-operated (1.0 net) wells. Approximately
$3.7 million was spent on land and
the purchase of other oil and gas assets.
Bonterra's 2018 full year and fourth quarter production summary
follows:
- Average production volumes for full year 2018 were 13,206 BOE
per day (69 percent oil and liquids), representing a three percent
increase over the 12,827 BOE per day average in 2017, and in line
with the Company's 2018 guidance of 13,200 to 13,500 BOE per
day;
- Average daily production in the fourth quarter was 12,789 BOE
per day, relatively stable compared to the fourth quarter of
2017;
- As a result of a significant erosion in Canadian realized oil
pricing in Q4 2018, the Company elected to prudently reduce the
monthly dividend from $0.10 to
$0.01 per common share, which is
expected to contribute to improved financial flexibility and
continued strengthening of the balance sheet as prices and oil
differentials recover into the first quarter of 2019.
2019 Guidance
Bonterra's 2019 capital budget has been
set within a range of $57 to
$77 million, which will ultimately be
dependent on Canadian realized pricing per BOE. Capital
expenditures and operational activities will be directed to a
drilling program and associated facility capital, and is expected
to result in average 2019 production volumes ranging between 12,600
and 13,200 BOE per day with a forecast exit rate range of 13,000
and 14,000 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, 2018 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, 2018 and changes could
be material.
Bonterra Energy Corp. is a conventional oil and gas corporation
with operations in Alberta,
Saskatchewan and British Columbia, focused on its long-term
model of generating sustainable growth plus a dividend. The
Company's shares are listed on The Toronto Stock Exchange under the
symbol "BNE".
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
Unaudited Financial Information and Non-IFRS Financial
Measures
Certain financial and operating information
included in this press release for the year ended December 31, 2018, including finding and
development costs and netbacks are based on estimated unaudited
financial results for the year then ended, and are subject to the
same limitations as discussed under Forward Looking Information set
out below. These estimated amounts may change upon the
completion of audited financial statements for the year
ended December 31, 2018 and changes could be
material.
Information Regarding Disclosure on Oil and Gas Reserves and
Operational Information
This press release contains metrics
commonly used in the oil and natural gas industry, such as "recycle
ratio", "finding and development costs", "finding and development
recycle ratio", "finding, development and acquisition costs" and
"field netbacks". Each of these metrics are determined by Bonterra
as specifically set forth in this news release. These terms
do not have standardized meanings or standardized methods of
calculation and therefore may not be comparable to similar measures
presented by other companies, and therefore should not be used to
make such comparisons.
Both F&D and FD&A costs take into account reserves
revisions during the year on a per boe basis. The aggregate of
the costs incurred in the financial year and changes during that
year in estimated FDC may not reflect total F&D costs related
to reserves additions for that year. Finding and development costs
both including and excluding acquisitions and dispositions have
been presented in this press release because acquisitions and
dispositions can have a significant impact on ongoing reserves
replacement costs and excluding these amounts could result in an
inaccurate portrayal of the Company's cost structure.
Management uses these oil and gas metrics for its own
performance measurements and to provide shareholders with measures
to compare Bonterra's performance over time, however, such measures
are not reliable indicators of the Company's future performance and
future performance may not compare to the performance in previous
periods. Readers are cautioned that the information provided
by these metrics, or that can be derived from the metrics presented
in this press release, should not be relied upon for investment or
other purposes.
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.
Drilling Locations
This press release discloses
drilling locations in three categories: (i) proved locations; (ii)
probable locations; and (iii) unbooked locations. Proved locations
and probable locations, which are sometimes collectively referred
to as "booked locations", are derived from the independent reserves
evaluation prepared by Sproule Associates Ltd. as of December 31, 2018 and account for drilling
locations that have associated proved and/or probable reserves, as
applicable. Unbooked locations are internal estimates based on
Bonterra's prospective acreage and an assumption as to the number
of wells that can be drilled per section based on industry practice
and internal review. Unbooked locations do not have attributed
reserves. Of the 700 net drilling locations identified herein, 294
are proved locations, 4 are probable locations and 402 are unbooked
locations. Unbooked locations have been identified by management as
an estimation based on industry practice and internal review of our
multi-year drilling activities, which include an evaluation of
applicable geologic, seismic, engineering, production and reserves
information. There is no certainty that Bonterra will drill all
unbooked drilling locations and, if drilled, there is no certainty
that such locations will result in additional oil and gas reserves
or production. The drilling locations on which we actually drill
wells will ultimately depend upon the availability of capital,
regulatory approvals, seasonal restrictions, oil and natural gas
prices, costs, actual drilling results, additional reservoir
information that is obtained and other factors. While certain of
the unbooked drilling locations have been derisked by drilling
existing wells in relative close proximity to such unbooked
drilling locations, some of other unbooked drilling locations are
farther away from existing wells where management has less
information about the characteristics of the reservoir and
therefore there is more uncertainty whether wells will be drilled
in such locations and, if drilled, there is more uncertainty that
such wells will result in additional oil and gas reserves or
production. No locations have been assigned resources other
than reserves ("ROTR"). All drilling counts cited herein are
net.
Frequently recurring terms
Bonterra uses the following
frequently recurring terms in this press release: "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.
SOURCE Bonterra Energy Corp.