CALGARY, AB, Nov. 9, 2021 /CNW/ - Bonterra Energy Corp.
(www.bonterraenergy.com) (TSX: BNE) ("Bonterra" or the "Company")
today announces its operating and financial results for the three
and nine month periods ended September
30, 2021. 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
|
Three months
ended
|
Nine months
ended
|
As at and for the
periods ended
($ 000s except for $ per share and $ per BOE)
|
Sept 30,
2021
|
Sept 30,
2020
|
Sept 30,
2021
|
Sept 30,
2020
|
FINANCIAL
|
|
|
|
|
Revenue - realized
oil and gas sales
|
64,457
|
29,155
|
172,414
|
89,881
|
Funds flow
(1)
|
28,658
|
6,266
|
68,355
|
25,121
|
Per share -
basic
|
0.85
|
0.19
|
2.03
|
0.75
|
Per share -
diluted
|
0.83
|
0.19
|
1.98
|
0.75
|
Cash flow from
operations
|
24,616
|
6,370
|
58,235
|
33,272
|
Per share -
basic
|
0.73
|
0.19
|
1.73
|
1.00
|
Per share -
diluted
|
0.71
|
0.19
|
1.69
|
1.00
|
Net earnings
(loss)(2)
|
7,296
|
(5,211)
|
162,966
|
(295,818)
|
Per share -
basic
|
0.22
|
(0.16)
|
4.84
|
(8.86)
|
Per share -
diluted
|
0.21
|
(0.16)
|
4.72
|
(8.87)
|
Capital
expenditures
|
18,578
|
2,819
|
49,646
|
24,664
|
Total
assets
|
|
|
939,835
|
722,910
|
Net
debt(3)
|
|
|
307,729
|
295,168
|
Working capital
deficiency
|
|
|
260,976
|
295,168
|
Long-term
debt
|
|
|
46,753
|
-
|
Shareholders'
equity
|
|
|
361,590
|
207,325
|
OPERATIONS
|
|
|
|
|
Light
oil
|
- barrels (bbl) per
day
|
6,948
|
5,355
|
7,051
|
5,987
|
|
- average price ($
per bbl)
|
78.42
|
45.73
|
70.68
|
43.45
|
NGLs
|
- bbl per
day
|
928
|
1,064
|
983
|
1,056
|
|
- average price ($
per bbl)
|
48.86
|
19.29
|
39.82
|
16.78
|
Conventional natural
gas - MCF per day
|
27,995
|
21,510
|
26,131
|
22,169
|
|
- average price ($
per MCF)
|
3.94
|
2.40
|
3.60
|
2.27
|
Total barrels of oil
equivalent per day (BOE)(4)
|
12,542
|
10,004
|
12,389
|
10,737
|
|
|
(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)
|
In the first quarter
of 2020 the Company recorded a $331,678,000 impairment provision
less a $54,107,000 deferred income tax recovery related to its
Alberta CGU's oil and gas assets due to the impact of COVID-19
effect on the forward benchmark prices for crude oil. With stronger
forward prices in Q2 2021, the Company recorded a $203,197,000
impairment reversal on its Alberta CGU's oil and gas assets less
$47,149,000 deferred income tax expense.
|
(3)
|
Net debt is not a
recognized measure under IFRS. The Company defines net debt as
current liabilities less current assets plus long-term subordinated
debt.
|
(4)
|
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.
|
Q3 2021 FINANCIAL & OPERATING SNAPSHOT
- Averaged 12,542 BOE per day of production in Q3 2021, 25
percent higher than in Q3 2020, and 12,389 BOE per day in the first
nine months of 2021, a 15 percent increase over the comparative
period the prior year.
-
- Volumes in Q3 2021 were impacted third-party midstream issues,
including a fire at an NGL fractionation plant and compression
issues at downstream pipelines and facilities, which led to
approximately 650 BOE per day being shut-in during the period.
- These volumes are expected to be brought back on-stream in Q4
2021, along with approximately 275 BOE per day of production that
had previously been shut-in due to weak prices. Bonterra
anticipates the impact of these incremental volumes will contribute
meaningfully to higher production in the fourth quarter of 2021,
with average volumes in the month of October
2021 averaging approximately 14,000 BOE per
day1.
- Realized oil and gas sales increased 121 percent over Q3 2020
to total $64.5 million in Q3 2021,
and in the first nine months of 2021, increased by 92 percent over
the same period in 2020 with increases primarily driven by higher
realized crude oil prices and growing production volumes.
- Generated funds flow2 of $28.7 million ($0.83 per fully diluted share) in Q3 2021, a 356
percent increase from $6.3 million
($0.19 per fully diluted share) in Q3
2020 while funds flow2 in the first nine months of 2021
totaled $68.4 million ($1.98 per fully diluted share) representing an
increase of 172 percent from the same period of 2020.
- Production costs per unit were reduced to $14.45 per BOE in Q3 2021, four percent lower
than the preceding quarter.
- Drilling, completion and equipping costs in the first nine
months of 2021 decreased by approximately 29 percent year-over-year
to average $1.5 million per well.
- Field netbacks2 averaged $31.03 per BOE in Q3 2021 and $27.80 per BOE in the first nine months of 2021,
representing increases of 107 percent and 92 percent over the
comparative periods of 2020, respectively, with the increases
primarily reflecting significantly higher per unit revenue offset
by realized losses on risk management contracts and increased per
unit royalty expenses.
- Capital expenditures totaled $49.6
million in the first nine months of 2021 including
$18.6 million invested in Q3 2021. Of
the first nine months' capital, $40.5
million was directed to the drilling of 29 gross (27.4 net)
wells along with the completion, equip and tie-in of 29 gross (27.2
net) wells, with four of the completed and equipped wells having
been drilled in 2020. Of the wells drilled in 2021, 25 have been
placed on production as of September 30,
2021. An additional $9.1
million was spent primarily on related infrastructure and
recompletions.
- Net debt2 totaled $307.7
million as at September 30,
2021, a $7.8 million
improvement from year-end 2020, reflecting the effects of improving
commodity prices and the more active capital program which has
restored production levels to pre-COVID-19 levels. Subsequent to
the quarter and in conjunction with the previously announced
brokered private placement debt and warrant financings (as
described more fully herein), the Company successfully restructured
its bank debt to be a fully conforming revolving credit facility of
$220 million, eliminating the
non-revolving term loan of $65
million. The first of these financings closed on
October 20, 2021, with the second
anticipated to close on or about November
10, 2021.
________________________________
|
1
|
October 2021 volumes
comprised of 7,980 bbl/d light and medium crude oil, 1,120bbl/d
NGLs and 29,400 mcf/d of conventional natural gas.
|
2
|
"Funds Flow", "Field
Netback" and "Net Debt" are not recognized measures under IFRS. See
"Cautionary Statements" below.
|
QUARTER IN REVIEW
The Company has continued to benefit from further increases in
crude oil and natural gas prices which have now generated nearly
$19 million of funds flow in excess
of capital expenditures during the first nine months of 2021,
attributable to the Company's low decline rate and disciplined
approach to capital allocation. During the third quarter of 2021,
Bonterra realized average oil prices of $78.42 per bbl, average NGL prices of
$48.86 per bbl, and average natural
gas prices of $3.94 per mcf. These
improved revenues contributed to a 12 percent and 24 percent
improvement of field and cash netbacks to $31.03 and $24.84
per BOE, respectively, compared to the prior quarter.
With spring breakup completed, the Company resumed its capital
program during the quarter designed to target sustainable
production growth, drilling 13 gross (11.5 net) wells and placing
on production nine gross (7.5 net) wells.
Bonterra continued to reduce its decommissioning liabilities
with support of the Alberta Site Rehabilitation Program ("SRP"). By
the end of the third quarter, the Company had abandoned 189.4 net
wells and decommissioned 2.0 net battery sites during the
first nine months of the year, having spent $3.1 million of a $5.1
million commitment for the 2021 fiscal year. As the Company
continues to execute its abandonment program through the remainder
of 2021 and 2022, a further 167.8 net wells that have no deemed
future potential are forecast to be abandoned. Bonterra
continuously reviews its inactive well inventory for future
potential to determine if a well bore should be reactivated,
repurposed, or abandoned.
During the third quarter of 2021, the Company appointed Ms.
Stacey McDonald to its Board of
Directors (the "Board"), effective August
16, 2021. Ms. McDonald will assume the role of Chair of the
Reserves Committee, while serving on the Audit, Compensation, and
Governance and Nominating Committees. Ms. McDonald's 16 years of
energy and finance experience will bring valuable insights and
contributions to the Board.
OUTLOOK
The Company expects that shut-ins related to the third-party
fractionation plant fire and other downtime at downstream
third-party pipelines and facilities will be resolved in the fourth
quarter of 2021, returning 650 BOE per day of production which was
shut-in during the third quarter of 2021. A further 275 BOE per day
of voluntary shut-in production volumes are expected to be
reactivated during the fourth quarter.
In Q4 2021, the Company expects to drill 8 gross (8.0 net)
operated wells, of which 2 gross (2.0 net) wells will be completed
and placed on production to further contribute to quarterly
volumes. The remaining 6 wells are forecast to begin production in
Q1 2022. The Company also plans to place on production an
additional 4 gross (4.0 net) wells in Q4 2021 that were drilled in
Q3 2021.
Even with the shut-ins experienced during the third quarter, the
Company is pleased to reiterate its previous 2021 average annual
production guidance range of 12,800 to 13,200 BOE per day[3],
supported by average production of approximately 14,000 BOE per
day[4] in October 2021. In the
near-term, Bonterra anticipates realizing enhanced benefit from new
volumes being brought on-stream into improved commodity prices.
Bonterra plans to announce the Board approved 2022 guidance
before the end of December 2021. The
2022 preliminary budget estimates production will be in excess of
the Company's 2021 average annual guidance range. Assuming this
level of production and current forward strip pricing, Bonterra
anticipates a meaningful deleveraging of the balance sheet which
would result in an improved debt to cash flow ratio between 1.0x
and 1.5x by the end of 2022.
As part of the Company's ongoing efforts to diversify commodity
prices and protect future cash flows, Bonterra has put in place
physical delivery sales and risk management contracts to the end of
September 30, 2022, details of which
are included in Note 12 to the third quarter 2021 financial
statements. With approximately 30 percent of forecast volumes
hedged, the Company can continue to benefit from potential
commodity price improvements while mitigating market volatility and
locking-in economics.
________________________________
|
3
|
2021 annual forecast
volumes comprised of 7,050 to 7,400 bbl/d light and medium crude
oil, 1,390 to 1,400 bbl/d NGLs and 26,100 to 26,500 mcf/d
conventional natural gas.
|
4
|
October 2021 volumes
comprised of 7,980 bbl/d light and medium crude oil, 1,120bbl/d
NGLs and 29,400 mcf/d of conventional natural gas.
|
FINANCING UPDATE
Subsequent to the quarter end, and as previously announced on
October 20, 2021, Bonterra
successfully closed a brokered private placement debt and warrant
financing (the "Initial Offering"), enhancing its financial
flexibility and achieving its goal of restructuring all bank debt
to a fully conforming revolving credit facility. The combination of
senior unsecured debentures and common share purchase warrants
provided gross proceeds of $32
million. Concurrent with the closing of the Initial
Offering, Bonterra issued a separate offering, which was
subsequently upsized, raising an additional $7.5 million on the same terms and conditions as
the Initial Offering. The follow-on offer is expected to close on
or about November 10, 2021.
In concert with the financings, the Company amended the terms of
its credit facility to a $195 million
syndicated revolving credit facility and a $25 million non-syndicated revolving facility,
representing an elimination of the previous $65 million non-revolving term loan. The amended
facility has $10 million step-downs
at December 31, 2021 and March 31, 2022 prior to the next redetermination
date before May 31, 2022, and has a
maturity date of November 30,
2022.
Bonterra believes the Company is well positioned to continue
reducing bank debt and strengthening the balance sheet, a
commitment that has been bolstered by a strengthening commodity
price environment. The Company plans to generate profitable growth
through this period of improving oil and natural gas markets by
prudently developing its high-quality, light oil weighted asset
base and directing excess funds flow to a combination of debt
repayment plus modest growth. In addition, the Company continues to
prioritize environmental, social and governance ("ESG")
initiatives, and is committed to employing local services, being a
key economic contributor to rural and surrounding communities
located within central Alberta,
upholding a responsible abandonment and reclamation program, and
maintaining rigorous safety measures.
Bonterra Energy Corp. is a conventional oil and gas corporation
with operations in Alberta,
Saskatchewan and British Columbia, focused on its strategy of
long-term, sustainable growth and value creation for shareholders.
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.
Use of Non-IFRS Financial Measures
Throughout this release the Company uses the terms "funds flow",
"free funds flow", "net debt" and "field 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 defines funds flow as funds provided by operations
excluding effects of changes in non-cash working capital items and
commissioning expenditures settled. Free funds flow is defined as
funds flow less dividends paid to shareholders, capital and
decommissioning expenditures settled. Net debt is defined as
current liabilities less current assets plus long-term bank debt
and subordinated debt. Field netback is defined as revenue minus
royalties, operating expenses and transportation expenses.
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; future asset
retirement obligations; 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; the impact of the COVID-19 pandemic; 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 or
maintain its syndicated bank facility; 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.
SOURCE Bonterra Energy Corp.