Quarterly / Earnings Reports | Second Quarter (2Q) Update

Bellatrix Reduced 2018 CapEx; Production Declined, Cardium

Share Print Bookmark    |    Friday,August 03,2018

Tucked away in Bellatrix Q2 2018 annoucement was revised.

Solid operational momentum from the first half 2018 drilling program has carried forward into the third quarter as a result of strong well performance and operational execution.  Bellatrix is announcing today, a decrease in its full year 2018 net capital expenditure guidance with no associated reduction in average production guidance given strong results year to date. 

Our Spirit River wells continue to outperform budget expectations, resulting in lower sustaining capital requirements for the remainder of 2018. As a result,  Bellatrix is reducing its full year net capital expenditures to a range of $50 to $60 million, down approximately 8% from the prior guidance range of $55 to $65 million.

FIRST HALF 2018 OPERATIONAL PERFORMANCE

Bellatrix completed the majority of its first half 2018 capital program during the first three months of the year, in advance of the seasonal spring break up period.  No wells were drilled or completed during the second quarter of 2018.  Well results for the first half 2018 program continue to exceed budget expectations; the average rate for the five operated Spirit River wells has averaged an IP90 rate of 8.6 MMcf/d, outperforming budget expectations by approximately 38%.

Exploration and development capital expenditures invested during the second quarter were $5.4 million.  First half 2018 exploration and development capital expenditures were $29.6 million, resulting in expected second half 2018 capital expenditures of approximately $20 to $30 million based on the Company’s updated full year annual capital expenditure guidance budget range of $50 to $60 million.

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OPERATIONAL AND FINANCIAL SUMMARY

• Production volumes in the second quarter of 2018 averaged 37,309 boe/d (72% natural gas weighted), roughly 2% higher than first quarter 2018 volumes.  First half 2018 average production volumes of 37,027 boe/d represent 7% outperformance compared with the mid-point of Bellatrix’s full year average production guidance range (34,000 to 35,500 boe/d).
• Adjusted funds flow generated in the three months ended June 30, 2018 was $10.1 million ($0.18 per basic and diluted share), compared to $14.7 million ($0.30 per basic share and diluted share) in the first quarter of 2018.
• Exploration and development capital expenditures were $5.4 million in the second quarter of 2018.  Total exploration and development capital expenditures for the first six months of 2018 were $29.6 million, in line with budget expectations and updated guidance for a full year 2018 capital expenditure range of $50 to $60 million.  The majority of first half 2018 capital expenditures were allocated to drilling, completion and equipping activity.
• Bellatrix’s borrowings under its Credit Facilities were $71.4 million and total net debt was $430.2 million at June 30, 2018.  At June 30, 2018, Bellatrix had approximately $28.6 million of undrawn capacity (approximately 17% undrawn) on its $100 million Credit Facilities after deducting outstanding letters of credit of $11.6 million that reduce the amount otherwise available to be drawn on the Credit Facilities.
• For the quarter ended June 30, 2018, Bellatrix’s Senior Debt to EBITDA (as defined in the MD&A) ratio was 1.36 times, well below the financial covenant of 3.0 times as permitted by the agreement governing the Credit Facilities.
• Total revenue was $54.0 million for the second quarter 2018, compared to $66.2 million in the first quarter of 2018, primarily attributed to a 40% decrease in average realized natural gas prices over the comparative periods.
• The corporate royalty rate in the three months ended June 30, 2018 averaged 13% of sales (after transportation), compared with 11% averaged in the first quarter of 2018.
• Production expenses in the second quarter of 2018 averaged $7.55/boe, down 9% compared with second quarter 2017 production expenses of $8.30/boe.  Bellatrix has provided a full year 2018 production expenditure guidance range of   $7.65/boe to $8.00/boe in 2018 given continued cost suppression activity, production volume guidance, and the contribution from lower costs attributed to Phase 2 of the Bellatrix Alder Flats Plant.
• Our corporate operating netback (including risk management) realized for the three months ended June 30, 2018 was $7.58/boe, down 16% compared with $9.07/boe realized in the first quarter 2018. This change reflects lower realized natural gas prices mitigated by lower production expenditures, and increased realized gains on risk management contracts over the comparable periods.
• Net general and administrative (“G&A”) expenses (after capitalized costs and recoveries) for the three months ended June 30, 2018 were $6.8 million ($2.01/boe), down 6% compared with $7.3 million ($2.10/boe) in the second quarter of 2017.
• Bellatrix recorded a net loss for the three months ended June 30, 2018 of $34.8 million compared to a net loss of $12.9 million for the three months ended March 31, 2018. The decrease in net profit period over period is primarily due to an increase in total loss on commodity contracts and a 19% decrease in commodity prices, offset partially by a decrease in production expenses.
• As at June 30, 2018, Bellatrix had approximately 137,893 net undeveloped acres of land principally in Alberta.
• As at June 30, 2018, Bellatrix had approximately $1.36 billion in tax pools available for deduction against future income.
• Bellatrix maintained a strong Liability Management Rating of 10.69 in Alberta versus an industry average of 4.81 as at July 7, 2018.