TSX, NYSE: BXE
CALGARY, May 5, 2015 /CNW/ - Bellatrix
Exploration Ltd. ("Bellatrix" or the "Company") (TSX, NYSE: BXE)
announces its financial and operating results for the three months
ended March 31, 2015. This
press release contains forward-looking statements. Please
refer to our cautionary language on forward-looking statements and
the other matters set forth at the end of this press release and
the beginning of the Management's Discussion and Analysis (the
"MD&A") for the three months ended March
31, 2015 and 2014. Bellatrix's unaudited
condensed consolidated financial statements and notes, and the
MD&A are available on Bellatrix's website at
www.bellatrixexploration.com, and are filed on SEDAR at
www.sedar.com.
FIRST QUARTER 2015
HIGHLIGHTS
|
|
|
Three months ended
March 31,
|
|
|
2015
|
2014
|
SELECTED FINANCIAL
RESULTS
|
|
|
(CDN$000s except
share and per share amounts)
|
|
|
Total revenue
(2)
|
90,186
|
163,585
|
Funds flow from
operations (2)
|
24,858
|
77,642
|
|
Per basic share
(2) (3)
|
$0.13
|
$0.45
|
|
Per diluted share
(2) (3)
|
$0.13
|
$0.45
|
Cash flow from
operating activities
|
22,553
|
84,300
|
|
Per basic share
(3)
|
$0.12
|
$0.49
|
|
Per diluted share
(3)
|
$0.12
|
$0.48
|
Net profit
(loss)
|
(12,688)
|
25,167
|
|
Per basic share
(3)
|
($0.07)
|
$0.15
|
|
Per diluted share
(3)
|
($0.07)
|
$0.14
|
Capital – exploration
and development
|
81,344
|
152,686
|
Capital – corporate
assets
|
1,154
|
2,956
|
Property
acquisitions
|
701
|
260
|
Capital expenditures
– cash
|
83,199
|
155,902
|
Property dispositions
– cash
|
(20)
|
(39)
|
Total net capital
expenditures – cash
|
83,179
|
155,863
|
Other non-cash
items
|
7,475
|
4,990
|
Total capital
expenditures – net (2)
|
90,654
|
160,853
|
Long-term
debt
|
623,380
|
335,118
|
Adjusted working
capital deficiency (2)
|
73,068
|
137,970
|
Total net debt
(2)
|
696,448
|
473,088
|
Total
assets
|
2,264,748
|
1,707,929
|
Total shareholders'
equity
|
1,237,216
|
933,670
|
|
|
|
|
SELECTED OPERATING
RESULTS
|
|
|
Three months ended
March 31,
|
|
|
|
2015
|
2014
|
Average daily sales
volumes
|
|
|
|
|
|
Crude oil, condensate
and NGLs
|
(bbls/d)
|
|
12,644
|
12,405
|
|
Natural
gas
|
(mcf/d)
|
|
190,582
|
135,865
|
|
Total oil
equivalent
|
(boe/d)
(4)
|
|
44,408
|
35,049
|
Average realized
prices
|
|
|
|
|
Crude oil and
condensate
|
($/bbl)
|
|
49.67
|
98.27
|
|
NGLs (excluding
condensate)
|
($/bbl)
|
|
18.17
|
57.50
|
|
Crude oil, condensate
and NGLs
|
($/bbl)
|
|
32.72
|
80.41
|
|
Crude oil, condensate
and NGLs (including risk management (1))
|
($/bbl)
|
|
34.05
|
74.67
|
|
Natural
gas
|
($/mcf)
|
|
2.99
|
5.88
|
|
Natural gas
(including risk management (1))
|
($/mcf)
|
|
3.03
|
4.88
|
|
Total oil
equivalent
|
($/boe)
(4)
|
|
22.13
|
51.27
|
|
Total oil equivalent
(including risk management (1))
|
($/boe)
(4)
|
|
22.68
|
45.36
|
|
|
|
|
|
|
Net wells
drilled
|
|
|
3.2
|
25.6
|
|
|
|
|
|
Selected Key
Operating Statistics
|
|
|
|
|
|
Operating netback
(2)
|
($/boe)
(4)
|
|
9.03
|
33.45
|
|
Operating netback
(2) (including risk management
(1))
|
($/boe)
(4)
|
|
9.58
|
27.54
|
|
Transportation
|
($/boe)
(4)
|
|
1.22
|
1.61
|
|
Production
|
($/boe)
(4)
|
|
8.56
|
8.12
|
|
General &
administrative
|
($/boe)
(4)
|
|
1.83
|
1.75
|
|
Royalties as a % of
sales (after
transportation)
|
|
|
18%
|
17%
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON
SHARES
|
|
|
Common shares
outstanding
|
191,957,243
|
172,761,228
|
Share options
outstanding
|
10,783,003
|
9,472,505
|
Fully diluted common
shares outstanding
|
202,740,246
|
182,233,733
|
Weighted average
shares (3)
|
191,953,095
|
174,321,930
|
SHARE TRADING
STATISTICS
|
|
|
TSX and Other
(5)
|
|
|
(CDN$, except
volumes) based on intra-day trading
|
|
|
High
|
4.46
|
9.44
|
Low
|
2.38
|
7.64
|
Close
|
3.08
|
9.35
|
Average daily
volume
|
2,921,719
|
1,848,581
|
NYSE
|
|
|
(US$, except
volumes) based on intra-day trading
|
|
|
High
|
3.81
|
8.55
|
Low
|
1.86
|
6.93
|
Close
|
2.43
|
8.43
|
Average daily
volume
|
888,245
|
156,011
|
|
|
|
(1) The
Company has entered into various commodity price risk management
contracts which are considered to be economic hedges. Per unit
metrics after risk management include only the realized portion of
gains or losses on commodity contracts. The Company does not apply
hedge accounting to these contracts. As such, these contracts are
revalued to fair value at the end of each reporting date. This
results in recognition of unrealized gains or losses over the term
of these contracts which is reflected each reporting period until
these contracts are settled, at which time realized gains or losses
are recorded. These unrealized gains or losses on commodity
contracts are not included for purposes of per unit metrics
calculations disclosed.
|
|
(2) The
terms "funds flow from operations", "funds flow from operations per
share", "total net debt", "operating netbacks", "total capital
expenditures – net", "adjusted working capital deficiency
(excess)", and "total revenue" do not have a standard meaning under
generally accepted accounting principles ("GAAP"). Refer to
"Non-GAAP and other measures" disclosed at the end of this Press
Release.
|
|
(3)
Basic weighted average shares for the three months ended March
31, 2015 were 191,953,095 (2014: 171,626,707).
|
|
In computing
weighted average diluted profit (loss) per share, weighted average
diluted cash flow from operating activities per share, and weighted
average diluted funds flow from operations per share for the three
months ended March 31, 2015, a total of nil (2014: 2,695,223)
common shares were added to the denominator as a consequence of
applying the treasury stock method to the Company's outstanding
share options, resulting in diluted weighted average common shares
of 191,953,095 (2014: 174,321,930).
|
|
(4) In
accordance with National Instrument 51-101 Standards of Disclosure
for Oil and Gas Activities ("NI 51-101"), a boe conversion ratio of
6 mcf: 1 bbl has been used, which is based on an energy equivalency
conversion method primarily applicable at the burner tip. Given
that the value ratio based on the current price of crude oil as
compared to natural gas is significantly different than the energy
equivalency of the conversion ratio, utilizing the 6:1 conversion
ratio may be misleading as an indication of value.
|
|
(5) TSX
and Other includes the trading statistics for the Toronto Stock
Exchange ("TSX") and other Canadian trading markets.
|
PRESIDENT'S MESSAGE
Bellatrix remains committed to successfully
navigating the current pricing environment while sustaining long
term value for our shareholders. Bellatrix's low cost
structure and high quality asset base provide considerable benefits
during challenging periods within the commodity price
cycle.
First quarter 2015 activity was focused on three
principal initiatives. Firstly, the Company efficaciously
executed on several critical path items on construction of Phase 1
of the Bellatrix O'Chiese Nees-Ohpawganu'ck deep-cut gas plant in
the Alder Flats area of
Alberta ("Bellatrix Alder Flats
Plant") and the plant remains firmly on schedule to meet our
previous guidance for start-up on or before July 1, 2015. Secondly, drilling and
completion activity was directed toward high rate of return wells,
including a greater focus on our high impact and low finding cost
Spirit River opportunities which
will attract the majority of drilling and completion capital in
2015. Finally, Bellatrix remains committed to maintaining its
position as a low cost finder and operator, continuing our emphatic
approach to reduce costs and improve our full cycle corporate
profitability.
Capital spending on exploration and development
activities of $81.3 million included
$54.7 million on facilities and
equipment, which represented the highest forecast capital spending
quarter of 2015 as we near completion of the Bellatrix Alder Flats
Plant. Net capital spending in the second quarter is forecast at
approximately $30 million. Bellatrix
remains highly focused on key business objectives of maintaining
financial strength and optimizing capital investments which
it seeks to attain through a disciplined approach to capital
spending, a flexible investment program, and financial
stewardship. Bellatrix is actively engaged in exploring
several capital funding alternatives designed to sustain or reduce
year-end net debt in 2015 when compared to 2014 year-end net debt
of $638 million, while maintaining
delivery of the 2015 full year average production guidance of
43,000 to 44,000 boe/d, representing 14% year over year average
production growth. Bellatrix will revisit its capital budget
on a continuous basis, will strategically review all sources and
costs of capital available to the Company including monetization of
assets, and will further curtail capital spending, if necessary, in
order to preserve its balance sheet until commodity prices firmly
recover. In the first quarter of 2015, Bellatrix proactively
obtained amendments to certain of the financial covenants governing
the existing bank credit facilities thereby providing Bellatrix
enhanced flexibility to successfully navigate through 2015 and
optimize its capital decisions. The Company remains committed
to preserving the long term strategic value of its assets through
this challenging commodity price environment for the benefit of all
shareholders.
OPERATIONS HIGHLIGHTS
- Production in the quarter averaged 44,408 boe/d (72% natural
gas weighted) solidly at the top end of our full year average
guidance range of 43,000 to 44,000 boe/d. The first quarter 2015
production increased 27% from an average of 35,049 boe/d realized
in the first quarter of 2014.
- Capital spending on exploration and development activities of
$81.3 million included $54.7 million on facilities and equipment as we
near completion of the construction of Phase 1 of the Bellatrix
Alder Flats Plant.
- During the first quarter of 2015, Bellatrix drilled and/or
participated in 6 gross (3.2 net) wells, consisting of 3 gross (1.2
net) Cardium oil wells and 3 gross (2.0 net) Spirit River liquids-rich gas wells.
- As at March 31, 2015, Bellatrix
had approximately 379,165 net undeveloped acres of land in
Alberta, British Columbia, and Saskatchewan.
NEARING COMPLETION OF PHASE 1 OF THE BELLATRIX
ALDER FLATS DEEP-CUT GAS
PLANT
Significant activity and critical path items were
completed on Phase 1 of the Bellatrix Alder Flats Plant during the
first quarter of 2015. All major components were delivered
and installed in January. All pipe welding and installation
was completed by the end of the quarter. Additionally,
electrical power supply to the site is completed and
energized. Subsequent to the end of the first quarter,
pressure testing of pipe was materially completed as was electrical
commissioning.
The Company completed three major bores for
pipelines associated with the deep cut plant including a successful
2.4 kilometre bore under the North Saskatchewan River to
accommodate three pipelines (a 16" pipe, an 8" pipe, and a 4"
pipe). The total length of major pipeline installed was 13.5
kilometres of 16" natural gas lines, 20 kilometres of 8" fuel gas
lines, and 13.5 kilometres of 4" condensate lines.
Completion of Phase 1 of the Bellatrix Alder
Flats Plant remains firmly on budget and on schedule for start-up
on or before July 1, 2015.
EXPECTED CAPITAL EFFICIENCY IMPROVEMENT
FOLLOWING LARGE SCALE INFRASTRUCTURE BUILD-OUT
Bellatrix has invested over $245 million in facilities and infrastructure
over the past two calendar years with approximately $70 million additional spending planned in
2015. The investment in the Bellatrix Alder Flats Plant,
pipelines, compressor stations, and oil batteries provides
significant competitive advantages within our greater Ferrier
region. From a long term perspective, these strategic
infrastructure assets anchor a reduced operating cost
profile. Additionally these fixed assets are expected to
improve operational reliability given enhanced flexibility and
access to multiple processing facilities in addition to key receipt
points along the Canadian mainline gas transmission
system.
Upon completion of Phase 1 of the Bellatrix Alder
Flats Plant, Bellatrix will have unfettered processing capacity to
grow production volumes to approximately 60,000 boe/d without the
need for material spending on infrastructure. Beginning in
2014, infrastructure spending has averaged between 35% to 40% of
total capital spending, however starting in the second half of 2015
we anticipate infrastructure related spending will decline to
approximately 20% or less of total capital spending going
forward. Reduced infrastructure investment is expected to
drive improved corporate capital efficiency metrics, finding and
development costs, and result in enhanced corporate
profitability.
SERVICE COST DEFLATION AND OVERALL COST
REDUCTION INITATIVES
The entrepreneurial spirit of our team and
consistent focus on improving results and reducing costs remain
core competencies within the Bellatrix culture. During the
first quarter of 2015 the Company remained steadfast in its
approach to reduce costs within all aspects of its
operations. Reduced industry activity and improved
efficiencies has enabled Bellatrix to work with its drilling and
completion vendors to obtain average costs savings of up to 15%.
These cost savings initiatives have meaningfully impacted year to
date activity highlighted by our first quarter Spirit River drilling and completion program
which came in 20% lower than our original cost
projections.
Additional cost saving initiatives captured in
the first quarter included a renegotiation of all major compressor
rental agreements, providing an estimated cost savings annually of
$3.5 million. The Company has also
initiated a multitude of cost saving strategies to reduce general
and administrative costs that will be realized throughout
2015. We anticipate further cost savings from our corporate
initiatives across our business as we progress through this
year.
PLAN TO ACCESS UP TO $85 MILLION IN JOINT VENTURE PARTNER CAPITAL IN
2015
Bellatrix intends on accessing up to $85 million in joint venture ("JV") capital in
2015 principally sourced from our JV partnership with Grafton
Energy Co I Ltd. ("Grafton"). Pursuant to the JV terms,
Grafton contributes 82% of the
drill, complete, equip and tie-in costs to earn 54% of Bellatrix's
working interest before payout, reverting to a 33% working interest
after payout (convertible to a 17.5% gross overriding
royalty). Access to JV capital in 2015 provides significant
benefits to Bellatrix including insulation against weak commodity
prices given enhanced rate of return expectations, and improved
capital efficiencies on wells drilled.
FINANCIAL HIGHLIGHTS
- Net loss for the three months ended March 31, 2015 was $12.7
million. The reduction in earnings in the first quarter 2015
compared to the fourth quarter of 2014 was primarily due to the
continued weak commodity price environment which has resulted from
the over-supply in the market. Realized prices in the first quarter
2015 decreased by 31% in crude oil and condensate, 42% in NGL and
25% in natural gas from fourth quarter 2014.
- Total revenue decreased by 45% to $90.2
million for the three months ended March 31, 2015, compared to $163.6 million realized in the first quarter of
2014. Total crude oil, condensate, and NGL revenues contributed 41%
of total revenue realized in the first quarter of 2015, compared to
55% in the first quarter of 2014.
- Funds flow from operations generated in the three months ended
March 31, 2015 was $24.9 million ($0.13 per basic share), a decrease of 68% from
$77.6 million ($0.45 per basic share) in the first quarter of
2014.
- Production expenses totaled $34.2
million ($8.56/boe) for the
three months ended March 31, 2015,
compared to $25.6 million
($8.12/boe) in the first quarter of
2014. Production expenses increased on a per boe basis between the
first quarters of 2015 and 2014 due to one-time adjustments related
to prior periods of $0.62/boe
primarily attributable to third party realized facility
equalizations. Excluding these one-time adjustments, production
expenses per boe for the three months ended March 31, 2015 were $7.94/boe.
- The corporate operating netback realized for the three months
ended March 31, 2015 decreased by 73%
to $9.03/boe compared to $33.45/boe in the first quarter of 2014. After
including commodity risk management contracts, the corporate
operating netback for the first quarter of 2015 was $9.58/boe, compared to $27.54/boe in the first quarter of 2014.
- General and administrative ("G&A") expenses net of
capitalized G&A and recoveries for the three months ended
March 31, 2015 were $7.3 million ($1.83/boe), compared to $5.5 million ($1.75/boe) in the first quarter of 2014.
- Increased commodity price risk management contracts during the
first quarter 2015. The risk management program for the
April 1, 2015 through October 31, 2015 period represents approximately
90% of forecast natural gas volumes (before royalties) over the
duration of the contract period, compared with the midpoint of full
year 2015 average production guidance range.
- Announced amendments to the financial covenants governing the
existing bank credit facilities thereby providing Bellatrix
enhanced flexibility to successfully navigate through the current
challenging commodity price environment.
- As at March 31, 2015, Bellatrix
had $101.6 million undrawn on its
total $725 million credit
facilities.
- Total net debt as of March 31,
2015 was $696.4 million.
- At March 31, 2015, Bellatrix had
approximately $1.70 billion in tax
pools available for deduction against future income.
OUTLOOK
As we near completion on Phase 1 of the Bellatrix
Alder Flats Plant, it is important to reflect on the strategic
drivers behind our decision to construct the facility. The
first and arguably most important consideration is control.
The Bellatrix Alder Flats Plant provides control over the ability
and timing of production growth, reliability of processing
capacity, and firm service processing capacity. Furthermore,
the enhanced natural gas liquids recovery at the Bellatrix Alder
Flats Plant provides an estimated 14% uplift in revenue from the
same gas stream currently processed through third party
plants. Finally, the operating cost savings are significant
as we forecast a 55% reduction in unit operating costs attributed
to natural gas volumes processed through the plant relative to
third party processed volumes currently. The contribution of
the deep-cut plant is expected to anchor an overall reduction in
average 2015 corporate operating costs.
In conjunction with our decision to construct the
plant, Bellatrix secured firm takeaway capacity on the Canadian
mainline gas transmission system to align with the incremental
gross sales capacity of both Phase 1 and Phase 2 of our Bellatrix
Alder Flats Plant. Bellatrix's firm takeaway capacity on the
mainline system will grow from approximately 220 mmcf/d currently,
to approximately 330 mmcf/d upon completion of Phase 1 of our
plant, with subsequent growth to 430 mmcf/d upon completion of
Phase 2. Current takeaway constraints have placed pressure on many
producers across the Basin as interruptible capacity has been
significantly reduced, and at times restricted completely.
Bellatrix also put in place long term firm transportation and
fractionation agreements with an established midstream company
ensuring takeaway, processing and marketing of all NGL and
condensate products produced at the plant. Bellatrix's
foresight to build, control, and secure additional firm takeaway
capacity has put the Company in an enviable position to be able to
profitably grow production in the years ahead with significantly
reduced infrastructure constraints.
("Raymond G. Smith")
Raymond G. Smith, P.Eng.
President and CEO
May 4, 2015
OPERATIONAL REVIEW
Key Operational Area
Sales
Volumes
|
|
|
Three months ended
March 31,
|
|
|
|
2015
|
2014
|
Crude oil and
condensate
|
(bbls/d)
|
|
5,842
|
6,973
|
NGLs (excluding
condensate)
|
(bbls/d)
|
|
6,802
|
5,432
|
Total crude oil,
condensate, and NGLs
|
(bbls/d)
|
|
12,644
|
12,405
|
Natural
gas
|
(mcf/d)
|
|
190,582
|
135,865
|
Total sales volumes
(6:1 conversion)
|
(boe/d)
|
|
44,408
|
35,049
|
Sales volumes for the three months ended
March 31, 2015 averaged 44,408 boe/d,
an increase of 27% from an average of 35,049 boe/d realized in the
first quarter of 2014. The weighting towards crude oil,
condensate and NGLs for the three months ended March 31, 2015 was 28%, compared to 35% in the
first quarter of 2014.
During the first quarter of 2015, the industry
experienced system wide curtailment of interruptible transportation
on the Canadian mainline gas transmission system due to ongoing
maintenance and pipeline integrity management work and there were
also more specific curtailments at certain facilities utilized by
Bellatrix resulting from mainline gas transmission system issues.
In spite of these system constraints, Bellatrix has been able to
maintain production levels through proactive management of
Bellatrix's firm capacity on the Canadian mainline gas transmission
system and utilization of the Bellatrix's infrastructure by
providing flexibility to redirect volumes to unaffected plants and
delivery points.
The impact of ongoing Canadian mainline gas
transmission system curtailments is expected to continue to have a
minimal impact on production volumes with the combination of an
additional 110 mmscf/d of firm capacity on the system coming on
stream in the second quarter of 2015 in conjunction with the
startup of the Phase 1 of the Bellatrix Alder Flats Plant.
Drilling Activity
- 2015
|
|
Three months ended
March 31, 2015
|
|
|
Gross
|
Net
|
Success
Rate
|
Cardium
oil
|
3
|
1.2
|
100%
|
Spirit River
liquids-rich natural gas
|
3
|
2.0
|
100%
|
Cardium natural
gas
|
-
|
-
|
100%
|
Total
|
6
|
3.2
|
100%
|
|
|
|
|
|
|
Drilling Activity
- 2014
|
|
Three months ended
March 31, 2014
|
|
|
Gross
|
Net
|
Success
Rate
|
Cardium
oil
|
36
|
21.9
|
100%
|
Spirit River
liquids-rich natural gas
|
7
|
3.0
|
100%
|
Cardium natural
gas
|
1
|
0.7
|
100%
|
Total
|
44
|
25.6
|
100%
|
In the three months ended March 31, 2015, Bellatrix posted a 100% success
rate, drilling and/or participating in 6 gross (3.2 net) wells,
consisting of 3 gross (2.0 net) Spirit
River liquids-rich gas wells, and 3 gross (1.2 net) Cardium
oil wells. One operated Cardium well drilled in the first
quarter was included under our Troika joint venture program and one
operated Spirit River liquids-rich
gas well was drilled under our Grafton joint venture. We anticipate
directing the majority of our drilling and completion capital for
the remainder of 2015 to our Spirit
River opportunities and to continue to lever joint venture
capital.
By comparison, during the first quarter of 2014,
Bellatrix drilled and/or participated in 44 gross (25.6 net) wells,
consisting of 36 gross (21.9 net) Cardium light oil horizontal
wells, 7 gross (3.0 net) Spirit
River liquids-rich gas wells, and one gross (0.7 net)
Cardium gas well. Bellatrix's drilling activity in 2014 was
weighted 81% towards oil wells, and 19% towards gas
wells.
Capital Expenditures
Bellatrix invested $81.3
million in exploration and development capital projects,
excluding property acquisitions and dispositions during the three
months ended March 31, 2015, compared
to $152.7 million in the first
quarter of 2014. Included in first quarter of 2015 facilities
and equipment spending was approximately $5.7 million of capital spent on an outlet
condensate pipeline which will connect the Bellatrix Alder Flats
Plant with third party fractionation facilities. The Company
has entered into an arrangement to transfer ownership of the
constructed pipeline once commissioned, to a third party at project
cost, subject to normal terms and conditions agreeable to both
parties estimated to occur during the second quarter of 2015.
Exploration and development capital spending during the quarter,
net of this transaction, was approximately $75.6 million.
Capital
Expenditures
|
|
|
Three months ended
March 31,
|
($000s)
|
2015
|
2014
|
Lease acquisitions
and retention
|
2,356
|
2,473
|
Geological and
geophysical
|
603
|
745
|
Drilling and
completion costs
|
23,701
|
100,380
|
Facilities and
equipment
|
54,684
|
49,088
|
|
Capital – exploration
and development (1)
|
81,344
|
152,686
|
Capital – corporate
assets (2)
|
1,154
|
2,956
|
Property
acquisitions
|
701
|
260
|
|
Total capital
expenditures – cash
|
83,199
|
155,902
|
Property dispositions
– cash
|
(20)
|
(39)
|
|
Total net capital
expenditures – cash
|
83,179
|
155,863
|
Other – non-cash
(3)
|
7,475
|
4,990
|
Total
non-cash
|
7,475
|
4,990
|
Total capital
expenditures – net (4)
|
90,654
|
160,853
|
|
|
|
|
|
|
(1)
|
Excludes capitalized
costs related to decommissioning liabilities expenditures incurred
during the period.
|
|
(2)
|
Capital - corporate
assets includes office leasehold improvements, furniture, fixtures
and equipment before recoveries realized from landlord lease
inducements.
|
|
(3)
|
Other includes
non-cash adjustments for the current period's decommissioning
liabilities and share based compensation.
|
|
(4)
|
Total capital
expenditures – net is considered to be a non-GAAP
measure. Total capital expenditures – net includes the cash
impact of capital expenditures and property dispositions, as well
as the non-cash capital impacts of corporate acquisitions, property
acquisitions, adjustments to the Company's decommissioning
liabilities, and share based compensation.
|
Major Projects
Bellatrix continued the construction of the
Bellatrix Alder Flats Plant. The plant is being developed in
two phases with a combined sales capacity of 220 mmcf/d.
Phase 1 and Phase 2 of the plant are both designed to process
up to 110 mmcf/d each. Phase 1 of the plant remains on budget and
on schedule for a July 2015 start-up.
Included in net capital expenditures made during the first quarter
of 2015 was $34.6 million relating to
Phase 1 of the Bellatrix Alder Flats Plant and related
pipelines.
Undeveloped land
At March 31, 2015, Bellatrix had
approximately 379,165 undeveloped acres of land in Alberta, British
Columbia, and Saskatchewan.
FINANCIAL REVIEW
Cash Flow from
Operating Activities, Funds Flow from Operations and Net Profit
(Loss)
|
|
|
|
|
|
Three months ended
March 31,
|
($000s, except per
share amounts)
|
|
|
2015
|
2014
|
Funds flow from
operations
|
|
|
24,858
|
77,642
|
|
Per basic
share
|
|
|
0.13
|
0.45
|
|
Per diluted
share
|
|
|
0.13
|
0.45
|
Cash flow from
operating activities
|
|
|
22,553
|
84,300
|
|
Per basic
share
|
|
|
0.12
|
0.49
|
|
Per diluted
share
|
|
|
0.12
|
0.48
|
Net profit
(loss)
|
|
|
(12,688)
|
25,167
|
|
Per basic
share
|
|
|
(0.07)
|
0.15
|
|
Per diluted
share
|
|
|
(0.07)
|
0.14
|
Bellatrix generated funds flow from operations of
$24.9 million ($0.13 per basic and diluted share) in the first
quarter of 2015, a decrease of 68% from $77.6 million ($0.45 per basic share and $0.45 per diluted share) generated in the
comparative period in 2014. Bellatrix's cash flow from operating
activities for the three months ended March
31, 2015 decreased by 73% to $22.6
million ($0.12 per basic and
diluted share) from $84.3 million
($0.49 per basic share and
$0.48 per diluted share) generated in
the first quarter of 2014. For the three months ended
March 31, 2015, Bellatrix recognized
a net loss of $12.7 million
($0.07 per basic and diluted share),
compared to a net profit of $25.2
million ($0.15 per basic share
and $0.14 per diluted share) in the
first quarter of 2014.
Operating Netback
– Corporate (before risk management)
|
|
|
Three months ended
March 31,
|
($/boe)
|
|
|
|
2015
|
2014
|
Sales
(1)
|
|
|
22.56
|
51.86
|
Production
|
|
|
(8.56)
|
(8.12)
|
Transportation
|
|
|
(1.22)
|
(1.61)
|
Royalties
|
|
|
(3.75)
|
(8.68)
|
Operating
netback
|
|
|
9.03
|
33.45
|
|
|
|
|
|
|
(1)
Sales includes other income.
|
Bellatrix's corporate operating netback before
commodity price risk management contracts for crude oil and natural
gas during the three months ended March 31,
2015 averaged $9.03/boe, a
decrease of 73% from $33.45/boe
realized during the first quarter of 2014. After including
commodity risk management contracts, the corporate operating
netback for the three months ended March 31,
2015 was $9.58/boe, compared
to $27.54/boe in the first quarter of
2014. Per unit metrics including risk management include
realized gains or losses on commodity contracts and exclude
unrealized gains or losses on commodity contracts.
Total revenue decreased by 45% to $90.2 million for the three months ended
March 31, 2015, compared to
$163.6 million realized in the first
quarter of 2014. Total crude oil, condensate, and NGL revenues
comprised 41% of total first quarter 2015 revenue before other
income, royalties, and commodity price risk management contracts,
compared to 55% in the three months ended March 31, 2014.
Production expenses totaled $34.2 million ($8.56/boe) for the three months ended
March 31, 2015, compared to
$25.6 million ($8.12/boe) in the first quarter of 2014.
Production expenses are in line to achieve our $8.25/boe guidance in 2015 as cost reductions are
anticipated to be realized from the startup of the Bellatrix Alder
Flats Plant during the remainder of the year and continued field
optimization work.
For the three months ended March 31, 2015, royalties incurred totaled
$15.0 million, compared to
$27.4 million incurred in the first
quarter of 2014. Overall royalties as a percentage of revenue
(after transportation costs) in the first quarter of 2015 were 18%
compared with 17% in the comparative period in 2014.
Commodity Prices
Average Commodity
Prices
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
|
2015
|
2014
|
% Change
|
|
|
|
|
|
|
|
Exchange rate
(US$/CDN$1.00)
|
|
|
|
0.8066
|
0.9064
|
(11)
|
|
|
|
|
|
|
|
Crude oil:
|
|
|
|
|
|
|
WTI
(US$/bbl)
|
|
|
|
48.57
|
98.61
|
(51)
|
Canadian Light crude
blend ($/bbl)
|
|
|
|
53.22
|
99.76
|
(47)
|
Bellatrix's average
prices ($/bbl)
|
|
|
|
|
|
|
|
Crude oil and
condensate
|
|
|
|
|
49.67
|
98.27
|
(49)
|
|
NGLs (excluding
condensate)
|
|
|
|
|
18.17
|
57.50
|
(68)
|
|
Total crude oil and
NGLs
|
|
|
|
|
32.72
|
80.41
|
(59)
|
|
Total crude oil and
NGLs (including risk management (1))
|
|
|
|
|
34.05
|
74.67
|
(54)
|
|
|
|
|
|
|
|
Natural
gas:
|
|
|
|
|
|
|
NYMEX
(US$/mmbtu)
|
|
|
|
2.81
|
4.72
|
(40)
|
AECO daily index
(CDN$/mcf)
|
|
|
|
2.75
|
5.71
|
(52)
|
AECO monthly index
(CDN$/mcf)
|
|
|
|
2.95
|
4.75
|
(38)
|
|
Bellatrix's average
price ($/mcf)
|
|
|
|
|
2.99
|
5.88
|
(49)
|
|
Bellatrix's average
price (including risk management (1))
($/mcf)
|
|
|
|
|
3.03
|
4.88
|
(38)
|
(1) Per unit metrics
including risk management include realized gains or losses on
commodity contracts and exclude unrealized gains or losses on
commodity contracts.
|
The global oil markets late in 2014 reacted to
the over-supply created from continued production growth from shale
plays in the United States, slower
than anticipated global demand growth, and sustained production
from the OPEC with a significant price deterioration. The decline
in late 2014 of global oil prices was a market reaction to restore
the supply-demand balance. The overall weak global commodity price
environment continued through the first quarter 2015.
For crude oil and condensate, Bellatrix realized
an average price of $49.67/bbl before
commodity price risk management contracts during the three months
ended March 31, 2015, a decrease of
49% from the average price of $98.27/bbl received in the first quarter of
2014. In comparison, the Canadian Light price decreased by
47% and the average WTI crude oil benchmark price decreased by 51%
between the first quarters of 2014 and 2015.
Bellatrix's average realized price for NGLs
(excluding condensate) decreased by 68% to $18.17/bbl during the first quarter of 2015,
compared to $57.50/bbl received in
the three months ended March 31,
2014.
Bellatrix's natural gas sales are priced with
reference to the daily or monthly AECO indices. Bellatrix's
natural gas sold has a higher heat content than the industry
average, which results in slightly higher realized prices per mcf
than the daily AECO index. During the three months ended
March 31, 2015, the AECO daily
reference price decreased by 52% and the AECO monthly reference
price decreased by 38% compared to the first quarter of 2014.
Bellatrix's natural gas average sales price before commodity price
risk management contracts for the three months ended March 31, 2015 decreased by 49% to $2.99/mcf compared to $5.88/mcf in the first quarter of 2014.
As at March 31,
2015, Bellatrix was party to a series of commodity price
risk management contracts summarized below:
|
|
|
|
|
|
|
Q2
2015
|
Q3
2015
|
Q4
2015
|
Natural gas volumes
(mmcf/d)
|
|
156.7
|
156.7
|
85.9
|
Average price ($/mcf)
(1)
|
|
$2.93
|
$2.93
|
$2.94
|
|
|
|
|
|
Oil volumes
(bbl/d)
|
|
3,000
|
3,000
|
3,000
|
Average fixed price
($/bbl) (2)
|
|
$70.34
|
$70.34
|
$70.34
|
|
(1)
|
The conversion of
$/GJ to $/mcf is based on an average corporate heat content rate of
40.8Mj/m3.
|
|
(2)
|
Oil hedges are
Canadian dollar WTI equivalent.
|
The risk management program for the April 1, 2015 through October 31, 2015 period represents approximately
90% of forecast natural gas volumes (before royalties) over the
duration of the contract period, compared with the midpoint of full
year 2015 average production guidance range.
Credit Facilities
Bellatrix maintains extendible revolving
reserves-based credit facilities with a syndicate of lenders that
mature May 2017. The credit facilities do not require any
mandatory principal payments prior to maturity and can be further
extended beyond May 2017 with the
consent of the lenders. As of March
31, 2015, the credit facilities are available on an
extendible revolving term basis and consist of a $75 million operating facility provided by a
Canadian chartered bank and a $650
million syndicated facility provided by nine financial
institutions. The available credit facilities and related
borrowing base are subject to semi-annual reviews in May and
November of each year.
As at March 31,
2015, the Company had outstanding letters of credit totaling
$0.7 million that reduce the amount
otherwise available to be drawn on the syndicated facility, and the
Company had approximately $101.6
million or 14% of unused and available bank credit under its
credit facilities.
The agreement governing the credit facilities has
established financial covenants of Total Debt(1) to
EBITDA(2) at or below 3.5 times, Senior
Debt(3) to EBITDA at or below 3.0 times, and EBITDA to
interest expense of not less than 3.5 times (twelve months
trailing).
Effective March 11,
2015, the Company's banking syndicate agreed to amendments
to certain of the financial covenants in response to the recent
decline in commodity prices. The Total Debt to EBITDA and
Senior Debt to EBITDA financial covenants have been revised such
that they each must not exceed:
- 4.75 times for the fiscal quarters ending September 30, 2015, December 31, 2015, March
31, 2016 and June 30,
2016
- 4.0 times for the fiscal quarters ending September 30, 2016, December 31, 2016, and March 31, 2017
During the periods in which these revised
financial covenants are in place, the additional automatic
relaxation of the debt to EBITDA financial covenants following a
material acquisition will not apply. Commencing with the
second quarter of 2017, the maximum Senior Debt to EBITDA ratio
will return to 3.0 times (3.5 times for the two fiscal quarters
immediately following a material acquisition) and the maximum Total
Debt to EBITDA ratio will return to 3.5 times (4.0 times for the
two fiscal quarters immediately following a material
acquisition).
The minimum EBITDA to interest expense ratio of
3.5 times remains unchanged.
As a corollary to these expanded financial
covenants, the applicable margin rate will range from 0.8% to
4.75%, depending on the type of borrowing and the Company's Senior
Debt to EBITDA ratio and the standby fee will range from 0.405% to
1.06875% on the undrawn portion of the credit facilities, depending
on the Company's Senior Debt to EBITDA ratio.
Notes:
(1)
"Total Debt" is defined as the sum of the bank loan, the
principal amount of long-term debt and certain other liabilities
defined in the agreement governing the credit
facilities.
|
(2)
"EBITDA" refers to earnings before interest, taxes, depreciation
and amortization. EBITDA is calculated based on terms and
definitions set out in the agreement governing the credit
facilities, which adjusts net income for financing costs, certain
specific unrealized and non-cash transactions, acquisition and
disposition activity and is calculated based on a trailing twelve
month basis.
|
(3)
"Senior Debt" is defined as Total Debt, excluding any unsecured
or subordinated debt. Bellatrix currently does not have any
subordinated or unsecured debt.
|
CONFERENCE CALL INFORMATION
A conference call to discuss Bellatrix's first
quarter results will be held on May 5,
2015 at 9:00 am MT /
11:00 am ET. To participate, please
call toll-free 1-888-231-8191 or 647-427-7450. The conference call
will also be recorded and available until May 12, 2015 by calling 1-855-859-2056 or
403-451-9481 and entering passcode 32804463 followed by the pound
sign.
Bellatrix Exploration Ltd. is a Western Canadian
based growth oriented oil and gas company engaged in the
exploration for, and the acquisition, development, and production
of oil and natural gas reserves in the provinces of Alberta, British
Columbia, and Saskatchewan.
Common shares of Bellatrix trade on the Toronto
Stock Exchange and on the New York Stock Exchange under the symbol
"BXE".
NON-GAAP and other measures
This press release contains the term "funds
flow from operations" which should not be considered an alternative
to, or more meaningful than, cash flow from operating activities as
determined in accordance with GAAP as an indicator of the Company's
performance. Therefore reference to the additional GAAP measures of
funds flow from operations, or funds flow from operations per share
may not be comparable with the calculation of similar measures for
other entities. Management uses funds flow from operations to
analyze operating performance and leverage and considers funds flow
from operations to be a key measure as it demonstrates the
Company's ability to generate the cash necessary to fund future
capital investments and to repay debt. The reconciliation
between cash flow from operating activities and funds flow from
operations can be found in the MD&A. Funds flow from
operations per share is calculated using the weighted average
number of common shares for the period.
"Total net debt" and "adjusted working capital
deficiency (excess)" are considered to be additional GAAP
measures. Therefore reference to the additional GAAP measures
of total net debt or adjusted working capital deficiency (excess)
may not be comparable with the calculation of similar measures for
other entities. The Company's calculation of total net debt
excludes deferred lease inducements, decommissioning liabilities,
the long-term finance lease obligation, and the deferred tax
liability. Total net debt includes the adjusted working
capital deficiency (excess). The adjusted working capital
deficiency (excess) is an additional GAAP measure calculated as net
working capital deficiency (excess) excluding short-term commodity
contract assets and liabilities, current finance lease obligation,
and current deferred lease inducements. Management believes
these measures are useful supplementary measures of the total
amount of current and long-term debt. A reconciliation between
total liabilities under GAAP and total net debt as calculated by
the Company is found in the MD&A.
"Total revenue" is considered to be a non-GAAP
measure. Therefore reference to the non-GAAP measure of total
revenue may not be comparable with the calculation of similar
measures for other entities. The Company's calculation of
total revenue includes petroleum and natural gas sales and other
income, and excludes commodity price risk management.
"Operating netbacks" and "total capital
expenditures – net" are considered to be non-GAAP
measures. Operating netbacks are calculated by subtracting
royalties, transportation, and operating costs from total
revenue. Total capital expenditures – net includes the cash
impact of capital expenditures and property dispositions, as well
as the non-cash capital impacts of corporate acquisitions,
adjustments to the Company's decommissioning liabilities, and share
based compensation. The detailed calculations of operating netbacks
are found in the MD&A.
These measures have been described and
presented in this news release in order to provide shareholders and
potential investors with additional information regarding
Bellatrix's liquidity and its ability to generate funds to finance
its operations.
FORWARD LOOKING STATEMENTS
Certain information contained herein may
contain forward looking statements including management's
assessment of future plans, operations and strategy, including
completion of construction of Phase 1 of the Bellatrix Alder Flats
Plant on or before July 1, 2015,
capital allocation toward high rate of return wells, the
profitability of the Company's Spirit
River drilling opportunities, plans to maintain the
Company's position as a low cost finder and operator, expectations
of year-end total net debt, expected 2015 average production,
forecast second quarter 2015 and full-year capital spending, plans
and expected timing related to Phase 2 of the Bellatrix Alder Flats
Plant, the competitive advantages within the Company's greater
Ferrier region, the ability of the Company's strategic
infrastructure assets to anchor a reduced operating cost profile,
the Company's access to multiple processing facilities in addition
to key receipt points along the Canadian mainline gas transmission
system, the ability of the Company to have unfettered processing
capacity to grow production volumes to approximately 60,000 boe/d
without the need for material spending on infrastructure, the
ability of the Company to reduce infrastructure related spending to
approximately 20% or less of total capital spending going forward,
and the ability for this reduced infrastructure investment to drive
improved corporate capital efficiency metrics, finding and
development costs, and result in enhanced corporate profitability
going forward, the Company's ability to realize operating cost and
G&A expense savings as anticipated, plans to access to JV
capital and the expected benefits therefrom, the Company's ability
to control the timing of production growth, reliability of
processing capacity, and firm service transportation and processing
capacity, expected enhanced natural gas liquids recovery from the
Bellatrix Alder Flats Plant, the ability to profitably grow
production in the years ahead, and plans to direct the majority of
the Company's drilling and completion capital for the remainder of
2015 to Spirit River opportunities
and continue to lever joint venture capital, and details of the
Company's future strategy may constitute forward-looking statements
under applicable securities laws. To the extent that any
forward-looking information contained herein constitute a financial
outlook, they were approved by management on May 4, 2015 and are included herein to provide
readers with an understanding of the anticipated funds available to
Bellatrix to fund its operations and readers are cautioned that the
information may not be appropriate for other purposes.
Forward-looking statements necessarily involve risks, including,
without limitation, risks associated with oil and gas exploration,
development, exploitation, production, marketing and
transportation, loss of markets, volatility of commodity prices,
currency fluctuations, imprecision of reserve estimates,
environmental risks, competition from other producers, inability to
retain drilling rigs and other services, incorrect assessment of
the value of acquisitions, failure to realize the anticipated
benefits of acquisitions, delays resulting from or inability to
obtain required regulatory approvals and ability to access
sufficient capital from internal and external sources. Events
or circumstances may cause actual results to differ materially from
those predicted, as a result of the risk factors set out and other
known and unknown risks, uncertainties, and other factors, many of
which are beyond the control of Bellatrix. In addition,
forward‑looking statements or information are based on a number of
factors and assumptions which have been used to develop such
statements and information but which may prove to be incorrect and
which have been used to develop such statements and information in
order to provide shareholders with a more complete perspective on
Bellatrix's future operations. Such information may prove to
be incorrect and readers are cautioned that the information may not
be appropriate for other purposes. Although the Company
believes that the expectations reflected in such forward‑looking
statements or information are reasonable, undue reliance should not
be placed on forward‑looking statements because the Company can
give no assurance that such expectations will prove to be
correct. In addition to other factors and assumptions which
may be identified herein, assumptions have been made regarding,
among other things: the impact of increasing competition; the
general stability of the economic and political environment in
which the Company operates; the timely receipt of any required
regulatory approvals; the ability of the Company to obtain
qualified staff, equipment and services in a timely and cost
efficient manner; drilling results; the ability of the operator of
the projects which the Company has an interest in to operate the
field in a safe, efficient and effective manner; the ability of the
Company to obtain financing on acceptable terms; field production
rates and decline rates; the ability to replace and expand oil and
natural gas reserves through acquisition, development or
exploration; the timing and costs of pipeline, storage and facility
construction and expansion and the ability of the Company to secure
adequate product transportation; future commodity prices; currency,
exchange and interest rates; the regulatory framework regarding
royalties, taxes and environmental matters in the jurisdictions in
which the Company operates; and the ability of the Company to
successfully market its oil and natural gas products. Readers
are cautioned that the foregoing list is not exhaustive of all
factors and assumptions which have been used. As a
consequence, actual results may differ materially from those
anticipated in the forward-looking statements. Additional
information on these and other factors that could affect
Bellatrix's operations and financial results are included in
reports on file with Canadian and US securities regulatory
authorities and may be accessed through the SEDAR website
(www.sedar.com), through the SEC website (www.sec.gov), and at
Bellatrix's website (www.bellatrixexploration.com).
Furthermore, the forward‑looking statements contained herein are
made as at the date hereof and Bellatrix does not undertake any
obligation to update publicly or to revise any of the included
forward‑looking statements, whether as a result of new information,
future events or otherwise, except as may be required by applicable
securities laws.
BARRELS OF OIL EQUIVALENT
The term barrels of oil equivalent ("boe") may
be misleading, particularly if used in isolation. A boe conversion
ratio of six thousand cubic feet of natural gas to one barrel of
oil equivalent (6 mcf/bbl) is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. All boe
conversions in this press release are derived from converting gas
to oil in the ratio of six thousand cubic feet of gas to one barrel
of oil. Given that the value ratio based on the current price of
crude oil as compared to natural gas is significantly different
from the energy equivalency of 6:1, utilizing a conversion on a 6:1
basis may be misleading as an indication of value.
SOURCE Bellatrix Exploration Ltd.