Exploration & Production | Capital Markets | Capital Expenditure | Drilling Program

Bellatrix Exploration Revises 2015 Capital Budget; $300 Million

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Bellatrix Exploration revised 2015 capital budget focused on completing its strategic infrastructure initiatives and drilling high rate of return liquids-rich natural gas development opportunities, while maintaining a strong balance sheet. Bellatrix is also pleased to announce it has achieved its 2014 exit rate production guidance.

In light of the recent rapid declines in crude oil prices, Bellatrix has decided it is prudent to revise its 2015 capital budget to $300 million (from $400 million) to maintain balance between delivering organic growth and preserving its strong financial position in a lower commodity price environment. The focus of the 2015 budget is twofold: to complete construction of Phase 1 of the Bellatrix O'Chiese Nees-Ohpawganu'ck deep-cut gas plant at Alder Flats, and to drill high rate of return Spirit River (Notikewin / Falher) liquids-rich natural gas wells where production can be processed through the new plant. The Company's Cardium drilling program will be tempered to focus on expiring leases and commitment wells until oil prices recover.

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Approximately 35% of the 2015 capital budget is allocated to facilities which includes completing construction of Phase 1 of Bellatrix's new deep-cut gas plant, which remains on schedule and on budget for a July 2015 start-up, and which is designed to process up to 110 mmcf/d, thereby giving Bellatrix the ability to grow its net production to approximately 65,000 boe/d utilizing existing strategic and third party infrastructure. A total of 4% of the 2015 capital budget is allocated to land and seismic with the remaining 61% focused on drilling.

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The $100 million or 25% reduction in the 2015 capital budget from our previously announced expectation reflects a reduced drilling budget and a deferral of the timing of construction of Phase 2 of the deep-cut gas plant. Based on Bellatrix's forecast capacity requirements, the on-stream date of Phase 2 of the new deep-cut gas plant can be deferred until Q4 2016 from the original on stream date of Q2 2016 with no change in capital cost, which will then allow the Company access to approximately 80,000 boe/d of processing capacity.

As a corollary of the reduced capital budget, Bellatrix is reducing its previously announced 2015 average production guidance range to approximately 47,000 to 48,000 boe/d (70% natural gas, 30% liquids). The midpoint of this 2015 average production guidance range reflects an organic growth rate of approximately 23% over the expected 2014 average daily production guidance of approximately 38,500 boe/d.

Bellatrix has recently completed and placed on stream the first segment of the Twin Rivers pipeline, thereby accessing additional capacity. In addition, the 'booster compressor' required to flow more gas at a higher pressure into our north lateral is on schedule for start-up on December 22, 2014. These initiatives, combined with our Q4 drilling program, have enabled us to achieve our 2014 exit rate production guidance of 47,000 to 49,000 boe/d.