Bonterra Energy Corp.

TSX : BNE


Bonterra Energy Corp.

May 14, 2014 17:35 ET

Bonterra Energy Corp. Announces First Quarter 2014 Results

CALGARY, ALBERTA--(Marketwired - May 14, 2014) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

Bonterra Energy Corp. (www.bonterraenergy.com) (TSX:BNE) is pleased to announce its operating and financial results for the three months ended March 31, 2014. The related unaudited condensed financial statements and notes, as well as management's discussion and analysis, are available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com and on Bonterra's website at www.bonterraenergy.com.

HIGHLIGHTS
As at and for the three month periods ended
($ 000s except $ per share)
March 31,
2014
December 31,
2013
March 31,
2013
(1)
FINANCIAL
Revenue - realized oil and gas sales 82,521 70,917 66,468
Funds flow (4) 54,414 43,359 40,726
Per share - basic 1.73 1.39 1.47
Per share - diluted 1.72 1.38 1.46
Payout ratio 50% 61% 53%
Cash flow from operations 49,094 47,772 40,726
Per share - basic 1.56 1.53 1.47
Per share - diluted 1.55 1.52 1.46
Payout ratio 56% 56% 53%
Cash dividends per share 0.87 0.85 0.80
Net earnings 23,041 15,254 12,695
Per share - basic 0.73 0.50 0.46
Per share - diluted 0.73 0.49 0.46
Capital expenditures and acquisitions, net of dispositions 54,236 25,965 39,506 (2)
Total assets 1,043,822 1,000,531 1,016,594
Working capital deficiency 62,488 35,895 31,519
Long-term debt 143,103 156,764 189,509
Shareholders' equity 678,224 667,641 658,062
OPERATIONS
Oil - barrels per day 7,567 7,964 7,459
- average price ($ per barrel) 96.53 80.88 84.20
NGLs - barrels per day 721 691 732
- average price ($ per barrel) 67.81 56.48 53.75
Natural gas - MCF per day 22,307 22,802 22,176
- average price ($ per MCF) 6.16 3.85 3.21
Total barrels of oil equivalent per day (BOE) (3) 12,006 12,456 11,887
(1) Quarterly figures for Q1 2013 include the results of Spartan Oil Corp. (Spartan) for the period of January 25, 2013 to March 31, 2013. Production includes 65 days for Spartan and 90 days for Bonterra.
(2) Includes the Spartan acquisition that closed on January 25, 2013 that included $10,000,000 of acquired cash that reduced capital expenditures from $49,506,000.
(3) 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.
(4) 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.

Q1 2014 HIGHLIGHTS

  • Production averaged 12,006 BOE per day for Q1 2014, with an exit rate at March 31, 2014 of 13,100 BOE per day;
  • Generated record funds flow of $54.4 million ($1.73 per share) in Q1 2014 compared to $40.7 million ($1.47 per share) in Q1 2013 and $43.4 million ($1.39 per share) in Q4 2013;
  • Average Canadian dollar realized commodity prices were: crude oil $96.53 per barrel; natural gas liquids $67.81 per barrel and natural gas $6.16 per mcf;
  • Operating costs (excluding a non-recurring item) for Q1 2014 were $12.89 per BOE compared to $12.92 per BOE for Q1 2013 and $12.11 per BOE for Q4 2013;
  • Corporate netback increased to $50.37 per BOE compared to $37.76 per BOE in Q1 2013 and $37.84 per BOE in Q4 2013;
  • Increased funds flow by approximately $10.2 million due to higher realized netback compared to budget;
  • Paid out $0.87 per share in cash dividends in Q1 2014 compared to $0.80 in Q1 2013 and $0.85 in Q4 2013. This represents a payout ratio of 50% in Q1 2014 on a funds flow basis which is the low end of the Company's payout ratio guidance;
  • The Company's net debt to cash flow ratio was 1.05 to 1 times; and
  • Drilled 23 gross (17.2 net) horizontal wells with a 100 percent success rate.

OPERATIONS

Bonterra spent $55,236,000 on its capital program, which is approximately 45 percent of the Company's anticipated capital program for 2014 primarily on 23 gross (17.2 net) wells. Currently, 37 gross (36.3 net) operated wells and 19 gross (4.7 net) non-operated horizontal wells are planned for 2014 in the Pembina Cardium area, of which 26 gross (25.5 net) wells will be drilled in the Carnwood area. Remaining capital will be directed to upgrading facilities, compression and pipelines within Bonterra's Cardium land base.

The Company has scheduled six (5.9 net) drill locations to maintain its capital drilling program through Q2 2014. This activity or other capital activities are not usually possible in the second quarter because of spring break-up road bans that temporarily prevents the Company from continuing its capital development program. The drill locations selected for Q2 2014 are where existing road and facility infrastructure is in place allowing the Company to drill, complete and tie-in wells during this normal period of inactivity.

As the Company's operations continue to grow, Bonterra maintains its focus on ensuring it has the necessary infrastructure in place to accommodate new production. The Company has already increased its battery treating capacity in the Carnwood area to 5,000 barrels of oil per day. In addition in April 2014 the Company reactivated a wholly owned gas plant in the Keystone area. This gas plant is expected to reduce operating costs and increase gas handling capacity as it will allow the Company to redirect gas production from the Carnwood area to this plant.

With the remaining 2014 drilling program and the March 31, 2014 exit rate of 13,100 BOE per day the Company is on track to reach or exceed its annual average production guidance of 12,400 to 12,700 BOE per day.

FINANCIAL

Oil and natural gas prices continued to increase during the first quarter of 2014. The Company's average realized price for crude oil was $96.53 per barrel in Q1 2014, an increase of 19 percent over the fourth quarter of 2013 and an increase of 15 percent over the first quarter of 2013. Natural gas prices averaged $6.16 per mcf for Q1 2014, $3.85 per mcf for Q4 2013 and $3.21 per mcf for Q1 2013. As a result of this improved price environment, revenue and cash flow from operations for the first three months of 2014 increased 24 percent and 21 percent, respectively, over the same period in 2013.

The Company's netback of $50.37 per BOE for Q1 2014 represents an increase of 33 percent over Q1 2013 and a 33 percent increase over Q4 2013.

Bonterra has maintained its focus on balance sheet strength and conservative financial management. The Company believes it is vital to maintain its net debt to cash flow ratio in the 1 to 1 to 1.5 to 1 times range. At March 31, 2014, the Company was well within its guidance at 1.05 to 1 times and the Company will continue to closely monitor this ratio by managing its cash flow, capital expenditure ranges and dividend payment over the year to ensure that it remains within its targeted guidance for the full year 2014.

OUTLOOK

Bonterra is very well-positioned for continued improvements in operational performance and results well into the future. It has one of the largest inventories of drilling locations in the industry. The Company looks forward to maintaining its focus on the long-term development of its extensive and high-quality Cardium assets and in the near-term, will execute on the Company's highest economic return opportunities to maximize returns and enhance shareholder value.

If production volumes and funds flow continue to increase the Board and Management will give consideration to increasing the dividend, increasing capital expenditures or reducing the debt or a combination of these options. The Board and Management will continue to monitor the best combination of options to increase shareholder value over the long term.

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".

Cautionary Statement

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 press release, the Company uses the terms "payout ratio", "cash netback" and "net debt" 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 used 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.

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" refers to the mixed sweet blend that is the benchmark price for conventionally produced light sweet crude oil in Western Canada; "bbl" refers to barrel; "NGL" refers to Natural gas liquids; "MCF" refers to thousand cubic feet; "MMBTU" refers to million British Thermal Units; 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.

Forward-Looking Information

Certain statements contained in this press 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 press 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. The foregoing factors are not exhaustive.

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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