Exploration & Production | Rig Count | Private Equity | Deals - Acquisition, Mergers, Divestitures | Production Rates | Capital Markets | Drilling Contractor

Bellatrix Doubles Production Over Last Year

Share Print Bookmark    |    Tuesday,January 07,2014

Bellatrix Exploration Ltd. has announced it exited 2013 with record production and provides an update of its recent commodity price risk management activities.

2013 has been an extraordinary year earmarked by record production growth, announcing three separate joint ventures designed to accelerate our program on a promoted basis, an equity financing, redemption of its convertible debentures and closing on December 11, 2013 of an impactful corporate acquisition. These strategic transactions strengthen the Company by accelerating our ability to provide shareholder value accretion.

2013 Exit and 2014 Guidance

Bellatrix exited 2013 with a record production level of 38,000 boe/d (weighted total crude oil, condensate and NGLs representing 37%) and with approximately 2,000 boe/d behind pipe waiting to be brought on production due to infrastructure constraints. These current Infrastructure constraints are anticipated to be removed by mid-January 2014 after which time the Company's field production is expected to be at +/- 40,000 boe/d (weighted total crude oil, condensate and NGLs representing 37%). First quarter 2014 production is also expected to average +/- 40,000 boe/d (weighted total crude oil, condensate and NGLs exit at approximately 37%).

The Company navigated through severe weather challenges during the summer and fall of 2013 which contributed to significant unscheduled down time at plants that process Bellatrix's natural gas and which negatively impacted the Company's average annual 2013 production levels. Bellatrix was also negatively impacted during 2013 by regulatory delays in receiving well licenses which significantly delayed the start of the Q4 2014 drilling program. In addition, as previously announced in November 2013, as part of agreement with Troika Resources Private Equity Fund (Troika), Troika acquired 14 gross wells (as included in the total expected 63 gross well program) for wells that had been drilled since January 1, 2013 resulting in net proceeds of $16.7 million that was received by Bellatrix. This agreement resulted in the sale of approximately 1,300 boe/d to Troika at closing which negatively impacted production post-closing.

Despite these many challenges in 2013 the Company exited 2013 with record production levels of 38,000 boe/d which represented a 95% increase over its 2012 exit production level of 19,500 boe/d. Bellatrix's expects its 2013 calendar year average daily production will be +/- 22,000 boe/d which represents a 32% increase over 2012 average production of 16,686 boe/d.

Since November 2013 and for all of 2014, Bellatrix plans to continue to be active in drilling with 10-12 rigs operating in its two core resource plays, the Cardium oil (Bellatrix is the second largest land holder with 338 net sections in the Cardium play) and Mannville condensate rich gas, utilizing horizontal drilling multi-fracturing technology.

With the closing of the acquisition of Angle Energy Inc. in December 2013, an initial gross budget of $610 million (including JV partner capital) for a net capital budget of $370 million has been set for fiscal 2014. Based on the timing of proposed expenditures, downtime for anticipated plant turnarounds and normal production declines, execution of the 2014 budget is anticipated to provide 2014 average daily production of approximately +/- 44,000 boe/d and an exit rate of approximately +/- 47,000 boe/d.

The 2014 net capital budget of $370 million is comprised of drilling and completion costs of $250 million; facility and infrastructure costs of $100 million and land, geological and other related costs of $20 million. The Company plans to drill/participate in 146 gross (76.27 net) wells in 2014 resulting in 115 gross (65.71 net) Cardium oil wells and 31 gross (10.56 net) Mannville condensate rich gas wells.

2014 funds from operations are expected to be $360 million or $2.10 per basic share which when combined with the Company's existing $500 million credit facilities, will provide ample funds to execute the budget while maintaining a strong balance sheet.

Based on an assumed 2014 average Edmonton Light oil price of $90/bbl and AECO $4.00/mcf, average 2014 royalty rates of 18.8% and average 2014 operating costs of $7.50 boe/d, the Company expects to exit 2014 with net debt of approximately $410 million or 1.06 times net debt to trailing estimated fourth quarter 2014 funds from operations.

Bellatrix continues to focus on growth by development of its core Cardium and Notikewin/Falher assets utilizing its large inventory of geological prospects. The Company has developed an inventory of 742 net remaining Cardium locations, 381 net Notikewin/Falher and 128 Mannville locations representing a net remaining investment of $4.97 billion (based on current costs). Bellatrix has approximately 424,452 net undeveloped acres and including all opportunities of approximately 2,000 net exploitation drilling opportunities identified, with capital requirements of $10.1 billion representing over 30 years of drilling inventory based on current annual cash flow and costs.  The Company continues to focus on adding Cardium and Notikewin prospective lands.