CALGARY, ALBERTA--(Marketwired - May 13, 2013) -
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.
Bonterra Energy Corp. (TSX:BNE) (Bonterra or the Company) is pleased to announce its operating and financial results for the three months ended March 31, 2013. The related unaudited condensed consolidated 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.
As at and for the periods ended ($ 000s March 31, December 31, March 31,
except for $ per share) 2013 2012 2012
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FINANCIAL
Revenue - realized oil and gas sales 66,468 39,624 36,893
Funds flow (1) 40,775 19,796 22,307
Per share - basic 1.47 1.00 1.13
Per share - diluted 1.47 1.00 1.13
Payout ratio 53% 78% 69%
Funds flow (2) 44,594 19,796 22,307
Per share - basic 1.61 1.00 1.13
Per share - diluted 1.60 1.00 1.13
Payout ratio 49% 78% 69%
Cash flow from operations 40,726 21,460 21,698
Per share - basic 1.47 1.08 1.10
Per share - diluted 1.46 1.08 1.10
Payout ratio 53% 72% 71%
Cash dividends per share 0.80 0.78 0.78
Net earnings 12,695 6,082 10,182
Per share - basic 0.46 0.31 0.52
Per share - diluted 0.46 0.31 0.51
Capital expenditures and acquisitions,
net of dispositions 39,506(3) 24,069 21,413
Total assets 1,016,594 419,933 371,757
Working capital deficiency 31,519 29,876 57,889
Long-term debt 189,509 166,808 75,543
Shareholders' equity 658,062 163,277 181,008
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OPERATIONS
Oil (barrels per day) 7,459 4,400 3,975
NGLs (barrels per day) 732 595 419
Natural gas (MCF per day) 22,176 16,009 12,260
Total barrels of oil equivalent per day
(BOE)(1) 11,887 7,663 6,438
Total barrels of oil equivalent per day
(BOE)(2) 13,122 7,663 6,438
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(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) Quarterly figures for Q1 2013 include the results of Spartan for the
period of January 1, 2013 to March 31, 2013. Production includes 90 days
for Spartan and 90 days for Bonterra.
(3) 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.
HIGHLIGHTS
-- Successfully integrated the Spartan asset acquisition that closed on
January 25, 2013;
-- Generated record funds flow of $1.47 per share, an increase of 47
percent quarter over quarter and an increase of 30 percent when compared
to the same period in 2012;
-- Recorded a cash netback of $37.76 in Q1 2013, an increase of 38 percent
over the previous quarter;
-- Increased average daily production to a record level of 11,887 BOE per
day, an increase of 55 percent quarter over quarter and an increase of
85 percent over Q1 2012. If Spartan had been included from January 1,
2013 instead of January 25, 2013, average daily production for the first
quarter would have been 13,122 BOE per day and funds flow would have
been $1.61 per share;
-- Current production levels exceed 13,000 BOE per day and Bonterra is well
on track to meet its full year guidance of 12,000 BOE per day.
-- Substantially reduced operating costs on a BOE basis to $12.92 per BOE,
a decrease of 36 percent quarter over quarter and 16 percent when
compared with Q1 2012;
-- Executed a capital development program of $49.5 million which included
drilling 15 gross (14.8 net) Pembina and Willesden Green Cardium
operated wells, two (0.3 net) non-operated wells, facilities and
gathering systems;
-- Paid out $0.80 per share in dividends during Q1 2013 representing a
payout ratio of 53 percent of funds flow which included an increase to
the current level of $0.28 per share beginning with the dividend paid in
March, 2013; and
-- Reduced its net debt to cash flow ratio at March 31, 2013 to 1.36 to 1
times even though the Company spent approximately 50 percent of its
capital expenditures in Q1 2013. This ratio should be lower after Q2
2013 as there will be little capital spent during that quarter.
Operations
The first quarter of 2013 was exceptionally busy for the Company as it integrated the Spartan assets into its operations. The Spartan assets are a good geographical and operational fit with the Company's Cardium focused asset base. In addition, the Company spent approximately 50 percent of its $90 million capital budget during the first quarter on its capital development program that led to record production levels and enhanced operational performance. The Company was focused on front loading its capital program and ran three rigs throughout the first quarter in order to minimize the effects of spring break-up and maintain strong production through the second and third quarter of the year.
Due to this active first quarter, the Company's current production levels are exceeding 13,000 BOE per day. As previously reported, the Company will actively manage its corporate decline over the course of 2013 and reiterates its full year production guidance of 12,000 BOE per day. Bonterra's focus on managing the corporate decline will allow it to maintain its balance sheet strength and to continue to pay out a large monthly dividend.
The Company has worked extensively on improving its operations. Bonterra drilled the first horizontal well in the Cardium zone in 2009 and has since refined its horizontal drill program. In 2012, the Company's average cost to drill, complete and equip was approximately $3.2 million per well. In Q1 2013, Bonterra was able to substantially reduce average well costs to approximately $2.5 million per well.
In Q1 2013, the Company drilled its first horizontal well in its 98.5 percent owned Carnwood unit recording its best well results to date in the Pembina field with a seven day initial production rate of approximately 1,000 barrels of oil per day and 1,200 BOE per day. The well is currently pump limited at a volume of 250 barrels and its 90 day initial production rate is approximately 250 barrels of oil per day and 270 BOE per day. Bonterra plans to increase the pump capacity in Q2 2013. The Company has a large position in the Carnwood area of 24.5 sections representing approximately 98 horizontal locations at four wells per section. The Company is also investigating increased well density on its Cardium lands. This included an eight well per section pilot project in the Cynthia area which resulted in extremely encouraging 30 Day initial production rates. Bonterra is excited by its continued progress in reducing costs and increasing well results and expects to drill an additional 15 gross (14.9 net) operated wells over the course of 2013.
Financial
Oil and natural gas prices exhibited some strength quarter over quarter and the Company's average realized price for crude oil was $84.20 per barrel in Q1 2013, an increase of seven percent. The Canadian oil and gas industry was negatively impacted in 2012 by a large Canadian crude oil differential between WTI and the price eventually realized by the Company. This fluctuated substantially and ranged between $5.00 and $25.00 per barrel. However, in Q4 2012 the differential began to narrow and in Q1 2013 the differential tightened to an average of approximately $6.00.
As a result of this improved price environment and significant production volume increases, revenue and cash flow from operations increased 68 percent and 90 percent, respectively, over Q4 2012 levels. Due to its enhanced operations and the increased production volumes, Bonterra's Board of Directors and management elected to increase the monthly dividend to its current level of $0.28 per share beginning with the dividend paid out to shareholders in March. This represents a payout ratio of 53 percent of funds flow which is within the Company's guidance of 50 to 65 percent.
The netback of $37.76 per BOE is below the Company's 2013 guidance of approximately $43.00 per BOE. This deficiency was anticipated for Q1 2013 as natural gas accounted for 31 percent of production. This ratio will be substantially reduced for the balance of the year as most recent wells drilled will have a liquids/natural gas ratio of approximately 80/20 percent. In Q1 2013, there was only a small amount of 80/20 percent ratio production from wells drilled in that quarter.
Bonterra intends to continue focusing on maintaining 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, 2013, the Company was well within its guidance at 1.36 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 2013. The ratio in the first quarter is generally higher than any other quarter as capital expenditures are typically higher within that period.
Outlook
Bonterra is pleased with its continued controlled growth and its sustainability. The Company remains focused on improving production rates, sustaining a consistent pace of development and increasing project economics and it will continue to work diligently on maximizing value for shareholders.
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.