Quarterly / Earnings Reports | Second Quarter (2Q) Update | Deals - Acquisition, Mergers, Divestitures | Financial Results | Capital Markets

Bonterra Touts Cardium Acquisition; Talks 2Q Results

Share Print Bookmark    |    Thursday,August 13,2015

Bonterra Energy Corp. reported its operating and financial results for the three and six months ended June 30, 2015.

Bonterra's second quarter results improved compared to Q1 2015 due to higher oil prices resulting in the Company's realized prices increasing by 29 percent. With increased oil prices the Company continued with its development capital program by drilling 4 gross (3.9 net) wells and completing and tying-in 8 gross (7.9 net) wells that were drilled prior to the second quarter, but not completed or tied-in during the first quarter due to low oil prices.

During the first half of 2015 Bonterra dealt with lower than expected production volumes of approximately 1,200 BOE per day. The reduced volumes have resulted from pipeline restrictions on the TransCanada pipeline system, insufficient natural gas processing capacity, delaying the completion of wells due to low oil prices and the voluntary shut-in of production. By successfully redirecting the majority of these affected volumes the Company's current production is now in excess of 14,000 BOE per day.

On April 15, 2015, the Company acquired Cardium oil and gas assets in the Pembina area for $170.4 million which are complementary to Bonterra's current acreage and provide additional inventory of long-term drilling locations. The current production on the acquired assets is approximately 1,825 BOE per day with a decline rate of approximately 7 percent.

Q2 and the Six Months Ended June 30, 2015 Highlights:

• Average Canadian dollar realized commodity price per barrel of oil equivalent (BOE) were as follows: $49.95 in Q2 2015 compared to $78.42 in Q2 2014 and $44.47 for the six months ended June 30, 2015 compared to $77.48 for the same period in 2014;
• Corporate cash netback per BOE was $30.22 in Q2 2015 compared to $51.48 in Q2 2014 and $25.63 for the six months ended June 30, 2015 compared to $50.98 for the same period in 2014;
• Corporate funds flow for Q2 2015 was $43.1 million compared to $65.6 million in Q2 2014 and $65.2 million for the six months ended June 30, 2015 compared to $120.0 million for the same period in 2014;
• Second quarter cash flow would have been $35.9 million compared to $21.9 million for the first quarter of 2015 if the temporary effect of changes in non-cash working capital on operating activities had been excluded;
• The Company achieved Q2 2015 production of 12,743 BOE per day compared to 13,911 in Q2 2014 and 12,204 in Q1 2015. Production for the six months ended June 30, 2015 was 12,475 BOE per day compared to 12,964 BOE per day for the same period in 2014; and
• Second quarter net debt (includes working capital) to funds flow ratio of 2.5 to 1.0 times on a four quarter trailing basis.

Kindly refer to the "Highlights" and "Quarterly Comparison" sections of the full Q2 2015 quarterly report for further details.

Subsequent Event

• On July 8, 2015 Bonterra closed a private placement of 973,812 common shares to existing shareholders at a price of $32.00 per common share, raising gross proceeds of approximately $31.2 million. The proceeds were initially used to reduce debt.

Outlook

It is a volatile period for the oil and gas industry and difficult to predict future conditions for maintaining a five year plan. The largest impact items will likely be predicting oil prices and the impact of policies implemented by the new Alberta government.

Bonterra's favourable asset base makes it possible to operate successfully at low oil prices and with present debt levels. The Company continues to take the approach that capital spending and dividend payments will continue to be monitored on an ongoing basis and can be modified on short notice, depending on changes in production volumes, commodity prices and regulatory changes.

However, it is important to remember that not all is negative during difficult times. Capital costs on a per well basis have been reduced by 25 percent; operating and general and administration costs have been reduced by 14 percent per BOE and 38 percent per BOE, respectively; and the Canadian dollar compared to the U.S. is substantially lower which contributes to stronger Canadian dollar revenues. Each of these items help to somewhat offset the broader negative impact of low WTI oil pricing.

Another important advantage for Bonterra is that it has an inventory of undrilled Cardium locations that will last for 14 years. It is a difficult time for our industry, but survival is not an issue for Bonterra.

The Board of Directors wish to take the opportunity to thank the staff and consultants for all of the work that has been provided by them during the past six months. A significant amount of extra time and effort has been required.