Bonterra Energy Corp.
TSX : BNE

Bonterra Energy Corp.

August 13, 2014 17:07 ET

Bonterra Energy Corp. Announces Second Quarter 2014 Results

CALGARY, ALBERTA--(Marketwired - Aug. 13, 2014) -

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

Bonterra Energy Corp. (Bonterra or the Company) (TSX:BNE) is pleased to announce its operating and financial results for the three months and six months ended June 30, 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.

The second quarter of 2014 has been an exceptional quarter. The Company had record production, revenue, funds flow, net earnings and a debt level that is favorable amongst its peers. Kindly review the following disclosure for additional positive highlights.

HIGHLIGHTS Three months ended Six Months ended
As at and for the periods ended
($ 000s except for $ per share)
June 30,
2014
June 30,
2013
June 30,
2014
June 30,
2013(1
)
FINANCIAL
Revenue - realized oil and gas sales 99,274 79,344 181,795 145,812
Funds flow (1)(4) 65,620 50,566 120,034 91,341
Per share - basic 2.06 1.65 3.77 3.13
Per share - diluted 2.04 1.65 3.74 3.12
Payout ratio 42 % 51 % 46 % 52 %
Cash flow from operations 57,089 41,445 106,183 82,171
Per share - basic 1.79 1.35 3.33 2.81
Per share - diluted 1.78 1.35 3.31 2.81
Payout ratio 49 % 62 % 52 % 58 %
Cash dividends per share 0.87 0.84 1.74 1.64
Net earnings 27,614 15,119 50,655 27,814
Per share - basic 0.87 0.49 1.59 0.95
Per share - diluted 0.86 0.49 1.58 0.95
Capital expenditures and acquisitions, net of dispositions 38,466 9,731 92,702 59,237(2 )
Total assets 1,066,145 987,067
Working capital deficiency 36,399 26,824
Long-term debt 151,145 179,379
Shareholders' equity 699,284 648,574
OPERATIONS
Oil -barrels per day 9,109 8,414 8,342 7,939
-average price ($ per barrel) 102.36 89.38 99.73 86.96
NGLs -barrels per day 775 782 748 757
-average price ($ per barrel) 53.50 44.64 60.36 49.02
Natural gas -MCF per day 24,163 20,554 23,240 21,361
-average price ($ per MCF) 4.85 4.13 5.48 3.66
Total barrels of oil equivalent per day (BOE)(3) 13,911 12,621 12,964 12,256
(1) Six month figures for 2013 include the results of Spartan Oil Corp. (Spartan) for the period of January 25, 2013 to June 30, 2013. Production includes 157 days for Spartan and 181 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 $61,643,000 excluding dispositions.
(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 settled.

Q2 2014 HIGHLIGHTS

  • Production averaged 13,911 BOE per day for Q2 2014 and 12,964 BOE per day for the six months ended June 30, 2014;
  • Generated record funds flow of $65.6 million ($2.06 per share) in Q2 2014 compared to $50.6 million ($1.65 per share) in Q2 2013 and $120.0 million ($3.77 per share) for the six months ended June 30, 2014 compared to $91.3 million ($3.13) for the same period in 2013;
  • Average realized Canadian dollar commodity prices for Q2 2014 were as follows: crude oil $102.36 per barrel, natural gas liquids $53.50 per barrel, and natural gas $4.85 per mcf; and for the six months ended June 30, 2014 were: crude oil $99.73 per barrel, natural gas liquids $60.36 per barrel and natural gas $5.48 per mcf;
  • Operating costs were $13.98 per BOE in Q2 2014 compared to $11.44 per BOE in Q2 2013 and for the six months ended June 30, 2014 were $13.48 per BOE (excluding a non-recurring item) compared to $12.16 per BOE for the same period in 2013;
  • Corporate netback increased to $51.48 per BOE for Q2 2014 compared to $43.52 per BOE in Q2 2013, and $50.97 per BOE for the six months ended June 30, 2014 compared to $40.74 per BOE for the same period in 2013;
  • Paid out $0.87 per share in cash dividends in Q2 2014 compared to $0.84 per share in Q2 2013, and $1.74 per share for the six months ended June 30, 2014 compared to $1.64 per share for the same period in 2013;
  • Net debt to twelve months trailing cash flow for the Company was 0.95 to 1 times; and
  • Drilled 33 gross (26.2 net) horizontal wells for the six months ended June 30, 2014 with a 100 percent success rate.

OPERATIONS

Bonterra spent $94.7 million on its capital program, which represents approximately 68 percent of the Company's revised $140 million capital program for 2014, with spending primarily allocated to drilling 24 gross (23.8 net) wells. Currently, 45 gross (43.9 net) operated wells and 19 gross (4.7 net) non-operated wells are planned for 2014, of which 35 gross (34.6 net) wells will be drilled in the Carnwood area. Remaining capital will be directed to facilities, pipelines, and other areas within Bonterra's Cardium land base.

As announced on June 25, 2014, Bonterra's management and Board elected to increase the capital development budget to $140 million from $120 million for the year. The Company plans to drill an additional 6 gross (5.0 net) operated wells and 4 gross (1.1 net) non-operated wells in 2014, as well as expand oil processing and gas handling capacities in the Carnwood area. The operated wells are anticipated to be completed and on production in January 2015, and as such, Bonterra's 2014 guidance remains unchanged.

Bonterra's land position in the Carnwood area includes 38 gross (35 net) sections representing approximately 152 gross (140 net) locations at four wells per section. As the Company continues to explore increased well density within its land base in order to increase its ultimate oil recovery factor, it estimates that six to eight wells per section will likely become the standard for development of its Cardium assets. This would increase the Carnwood drilling inventory substantially to approximately 305 gross (280 net) locations at eight wells per section for this one area of its Cardium land base.

With the outer edges of the Carnwood area delineated, the Company increased well density throughout the area with a targeted pad drilling program. Pad drilling involves drilling multiple horizontal wells from a single surface location and should result in fewer drilling days, reduced costs, onstream efficiencies and a smaller environmental footprint. Based on the results of the Carnwood program, the Company anticipates that increased well density and pad drilling will be used across its Cardium asset base to lower costs, drive higher recovery rates and ultimately generate higher rates of return.

FINANCIAL

Oil prices continued to increase during the second quarter of 2014 and the Company's average realized price for crude oil was $102.36 per barrel for the quarter, an increase of 6.0 percent over the first quarter of the year and an increase of 14.5 percent over the second quarter of 2013. As a result of this improved price environment and the significant production volume increases, revenue and cash flow from operations for the first six months of 2014 increased 24.6 percent and 29.2 percent, respectively, over the same period in 2013. This higher cash flow from operations supports Bonterra's increase to both the dividend and its capital development program in 2014.

The Company's netback of $50.97 per BOE for the first six months of 2014 represents an increase of 25.1 percent year over year. The cash netback for the second quarter of 2014 was $51.48 per BOE compared to $43.52 per BOE for second quarter of 2013.

Bonterra has maintained its focus on balance sheet strength and conservative financial management. At June 30, 2014, the Company was well within its guidance of 1 to 1 times to 1.5 to 1 times net debt to cash flow with a ratio of 0.95 to 1 times. Bonterra will continue to closely monitor this ratio by managing its cash flow, capital expenditures and dividend payments over the year to ensure that it remains within its targeted annual guidance.

In June the Board of Directors approved an increase to the monthly dividend from $0.29 per share to $0.30 per share ($3.60 per share annually) beginning with the June dividend payable July 31, 2014.

OUTLOOK

Bonterra will continue to execute its capital program with approximately 70 percent of its drilling and completions activities focused in the Carnwood field and the other 30 percent in various operated and non-operated well locations in other areas of the Pembina Cardium field. Results from the wells that have commenced production in 2014 continue to be favorable and the Company is well positioned to carry this momentum into the remainder of 2014.

The Company has also commenced with its Carnwood water flood program. One of its horizontal wells in a four well pad in the Carnwood unit has been converted into a water injection well. Further studies are ongoing with regard to natural gas enhanced recovery whereby another four well pad will have one of its producing wells converted into a natural gas injector in the first quarter of 2015. The Company is optimistic with regard to production from horizontal well water flood pilots and new horizontal wells that have been drilled within existing water flooded areas. Recent production from new wells that have been drilled in these pressured areas has been encouraging.

From a longer term perspective Bonterra still has an inventory of approximately 14 years from its Cardium locations, subject to the length of the horizontal laterals and the average number of wells per section. This inventory of undrilled locations does not include any Belly River or Edmonton sands wells, any wells in deeper zones within the Pembina field, or any potential drilling on the Company's lands in Saskatchewan or British Columbia.

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 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.

The TSX does not accept responsibility for the accuracy of this release.

Contact Information

  • Bonterra Energy Corp.
    George F. Fink
    CEO and Chairman of the Board
    (403) 262-5307
    (403) 265-7488 (FAX)

    Bonterra Energy Corp.
    Robb D. Thompson
    CFO and Secretary
    (403) 262-5307
    (403) 265-7488 (FAX)
    info@bonterraenergy.com
    www.bonterraenergy.com