Bonterra Energy Corp.
TSX : BNE

Bonterra Energy Corp.

February 20, 2015 07:30 ET

Bonterra Energy Corp. Enters into $172 Million Agreement to Acquire Oil and Gas Assets in the Pembina Cardium

CALGARY, ALBERTA--(Marketwired - Feb. 20, 2015) - Bonterra Energy Corp. ("Bonterra" or "the Company") (TSX:BNE) is pleased to announce that it has entered into a purchase and sale agreement dated February 19, 2015 (the "Agreement") to acquire certain oil and gas assets (the "Assets") from a senior oil and gas producer (the "Acquisition"). The Assets are Cardium focused in the Pembina Area of Alberta, including upper zones in the Belly River and Edmonton Sands, with a production base that is complementary to current Bonterra acreage, and which provides additional inventory of long-term drilling locations.

The cash consideration to be paid by Bonterra is to be initially financed by a combination of working capital and debt. The Acquisition will have an effective date of January 1, 2015 and is presently expected to close on or before April 15, 2015. Although the Agreement is binding between the parties, completion of the Acquisition is subject to standard regulatory approvals.

ASSET ACQUISITION HIGHLIGHTS

Key attributes of the Assets are as follows:

Cash Consideration, prior to any adjustments: $172 million
Production (January 2015 average provided by vendor): 1,800 boe per day
Oil and Natural Gas Liquids Weighting: 86%
Proved Reserves (1): 9,861.2 Mboe
Proved and Probable Reserves (1): 13,039.5 Mboe
Decline Rate: 7%
(1) Based on the McDaniel and Associates reserve evaluations with an effective date December 31, 2014. The gross reserve figures represent Bonterra's ownership interest before the deduction of royalties and before consideration of the Company's royalty interests.
(2) 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

ACQUISITION METRICS

Based on the purchase price of the Assets of $172 million, the Acquisition metrics are as follows:

Production: $95,500 per flowing boe
Proved Reserves (1): $17.44 per boe
Proved and Probable Reserves (1): $13.19 per boe
(1) Based on the McDaniel and Associates reserve evaluations with an effective date of December 31, 2014. The gross reserve figures represent Bonterra's ownership interest before the deduction of royalties and before consideration of the Company's royalty interests.
(2) 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.

STRATEGIC RATIONALE

The Acquisition is consistent with Bonterra's strategy to capitalize on opportunities to enhance the quality of its asset base, operations and overall returns to the shareholders.

The Assets to be acquired are ideally situated within Bonterra's existing Pembina Cardium operations, and offer production plus a sizeable and attractive future drilling inventory. With an 86% weighting to light oil and natural gas liquids, the Assets generate a strong corporate netback. A significant portion of the acquired land is under waterflood for pressure maintenance, which contributes to the low production decline rate and is expected to reduce Bonterra's corporate decline rate by approximately 3%. The Assets are directly adjacent to the Company's existing infrastructure, allowing for numerous facility consolidation opportunities which can reduce overall operating costs. Additional efficiencies will also be gained through the elimination of trucking, waterflood support and operating labor utilization.

Proforma the Acquisition, Bonterra's proved plus probable reserves increase 16% from 80.2 MMBOE to 93.3 MMBOE, and the Company anticipates a minimal increase in 2015 capital spending, from approximately $58 million to $70 million. The Company has identified 132 net potential low-risk, high-quality horizontal drilling locations of which only twelve have been assigned reserves in the current reserve report.

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, statements 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. In particular, this press release contains statements regarding the operational, economic and financial impacts of the Transaction to Bonterra, the potential growth opportunities on the Assets, the manner in which the purchase price to the Transaction will be financed by Bonterra, other anticipated benefits to Bonterra of the Transaction and the closing date of the Transaction. The foregoing statements assume all the conditions to completion of the Transaction will be satisfied and that there will be no changes to the assets and liabilities of Bonterra following the Transaction and that the anticipated benefits of and rationale for the Transaction will be achieved. Many factors could cause the performance or achievement of Bonterra to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Because of the risks, uncertainties and assumptions contained herein, readers should not place undue reliance on these forward-looking statements.

In addition, statements relating to "reserves" are by their nature forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions that the reserves described can be profitably produced in the future. The recovery and reserves estimates provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Bonterra cautions that its future oil, natural gas and natural gas liquids production, revenues, cash flows, liquidity, plans for future operations, expenses, outlook for oil and natural gas prices, timing and amount of future capital expenditures, and other forward-looking information is subject to all of the risks and uncertainties normally incident to the exploration for and development and production and sale of oil and gas.

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.

Certain information contained herein is based on information and internal estimates provided to Bonterra by the vendor of the Assets. Although Bonterra believes such information is accurate and reliable, at this time such information has not been verified by any independent sources and Bonterra does not make any representations as to the accuracy of such estimates.

The forward-looking information contained in this release is expressly qualified by this cautionary statement.

This news release contains the term boe which has been calculated on the basis of six thousand cubic feet ("mcf") of gas to one barrel of oil. This conversion ratio is based on energy equivalence primarily at the burner tip and does not represent a value equivalency at the wellhead. The term boe may be misleading, particularly if used in isolation.

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
    Chairman and CEO
    (403) 262-5307

    Bonterra Energy Corp.
    Robb D. Thompson
    CFO and Secretary
    (403) 262-5307

    Bonterra Energy Corp.
    Adrian Neumann
    COO
    (403) 262-5307
    (403) 265-7488 (FAX)
    info@bonterraenergy.com