CALGARY, ALBERTA–(Marketwired – May 11, 2016) – Bonterra Energy Corp. (“Bonterra” or “the Company”) (TSX:BNE) is pleased to announce its operating and financial results for the three months ended March 31, 2016. The related unaudited condensed financial statements and notes, as well as management’s discussion and analysis (MD&A), are available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com and on Bonterra’s website at www.bonterraenergy.com.
HIGHLIGHTS
| As at and for the three months ended ($000s except $ per share) |
March 31, 2016 |
December 31, 2015 |
March 31, 2015 |
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| FINANCIAL | |||||||||
| Revenue – realized oil and gas sales | 33,510 | 44,678 | 42,480 | ||||||
| Funds flow (2) | 16,372 | 24,046 | 22,090 | ||||||
| Per share – basic | 0.49 | 0.71 | 0.69 | ||||||
| Per share – diluted | 0.49 | 0.71 | 0.69 | ||||||
| Payout ratio | 61 | % | 62 | % | 87 | % | |||
| Cash flow from operations | 11,146 | 27,808 | 26,079 | ||||||
| Per share – basic | 0.34 | 0.84 | 0.81 | ||||||
| Per share – diluted | 0.34 | 0.84 | 0.81 | ||||||
| Payout ratio | 89 | % | 54 | % | 74 | % | |||
| Cash dividends per share | 0.30 | 0.45 | 0.60 | ||||||
| Net loss | (11,555 | ) | (4,113 | ) | (1,935 | ) | |||
| Per share – basic | (0.35 | ) | (0.13 | ) | (0.06 | ) | |||
| Per share – diluted | (0.35 | ) | (0.13 | ) | (0.06 | ) | |||
| Capital expenditures, net of dispositions | 1,683 | 8,384 | 21,760 | ||||||
| Acquisition | – | – | 17,200 | (1 | ) | ||||
| Total assets | 1,174,141 | 1,183,593 | 1,072,534 | ||||||
| Working capital deficiency | 13,115 | 29,804 | 37,633 | ||||||
| Long-term debt | 345,118 | 332,471 | 207,217 | ||||||
| Shareholders’ equity | 575,925 | 595,805 | 613,886 | ||||||
| OPERATIONS | |||||||||
| Oil | |||||||||
| – barrels per day | 8,325 | 8,424 | 8,128 | ||||||
| – average price ($ per barrel) | 37.33 | 49.50 | 48.70 | ||||||
| NGLs | |||||||||
| – barrels per day | 845 | 710 | 791 | ||||||
| – average price ($ per barrel) | 14.72 | 21.49 | 22.36 | ||||||
| Natural gas | |||||||||
| – MCF per day | 22,274 | 20,423 | 19,709 | ||||||
| – average price ($ per MCF) | 2.02 | 2.61 | 2.97 | ||||||
| Total barrels of oil equivalent per day (BOE) (3) | 12,882 | 12,538 | 12,204 | ||||||
| (1) | Includes a deposit of $17,200,000 for a purchase of primarily Pembina Cardium oil and gas assets that closed on April 15, 2015. |
| (2) | Funds flow is not a recognized measure under IFRS. For these purposes, the Company defines funds flow as funds provided by operations including proceeds from sale of investments and investment income received excluding the effects of changes in non-cash working capital items and decommissioning expenditures settled. |
| (3) | BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 MCF: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. |
Bonterra’s results for the first quarter of 2016 were largely in line with expectations despite continued volatility in commodity markets, and demonstrate the Company’s high quality assets and ongoing commitment to cost reductions.
During the first three months of 2016, WTI averaged US$33.45 per bbl, with the price periodically trading below US$30. Despite the very low price environment, Bonterra continued to generate positive cash flow. Since the end of March, the market has experienced a rebound in the benchmark WTI oil price and has averaged over US$40 per bbl. Should this price level continue or increase, it would represent a very positive development that would contribute to improved netbacks and increased cash flow.
In response to continued low commodity pricing and to protect its balance sheet by spending within cash flow, Bonterra reduced its monthly dividend to $0.10 per share commencing with the January 2016 dividend. The Company believes this dividend level can be maintained at current price levels, and that it provide flexibility to manage capital spending by allowing for accelerated development should commodity prices improve.
Operationally, Bonterra continued to further reduce its drilling costs relative to the fourth quarter of 2015, achieving a 12 percent reduction on a per well basis and reduced production costs per BOE by eight percent. These continued cost improvements were achieved through a combination of innovation, optimization and broader industry service cost reductions. Bonterra invested $1,683,000 directed to the drilling of two gross (2.0 net) operated wells and tie-in of six gross (4.5 net) wells which were drilled and completed in 2015. The two operated wells that Bonterra drilled in the first quarter of 2016 will be completed and tied-in early in the second quarter, and are expected to have a positive impact on production volumes in the second quarter.
First quarter 2016 production averaged 12,882 BOE per day, above the Company’s 2016 annual guidance of 12,500 BOE per day. During the quarter, realized production volumes were impacted by approximately 1,100 BOE per day primarily due to the shut-in of uneconomic production caused by low prices and the deferral of its well workover maintenance program. With increased commodity prices, the Company will recommence its well maintenance program, which will increase production and cash flow but would also result in modestly higher production costs.
Q1 2016 Highlights:
- Increased Q1 2016 production to 12,882 BOE per day compared to 12,204 BOE per day during the same period in Q1 2015 and 12,538 BOE per day in Q4 2015;
- Placed six gross (4.5 net) wells on production that were drilled and completed in the latter part of 2015 and drilled two gross (2.0 net) wells that were placed on production in the first part of Q2 2016;
- Generated revenue per BOE of $28.59 in Q1 2016 compared to $38.68 per BOE in Q1 2015 and $38.73 per BOE in the previous quarter, resulting in field netbacks per BOE of $10.70 in Q1 2016, compared to $20.78 per BOE in Q1 2015 and $19.76 per BOE in the previous quarter;
- Reduced production costs to $10.89 per BOE in Q1 2016 from $11.93 per BOE in Q1 2015, and $11.81 per BOE in the previous quarter; and
- Generated funds flow of $16.4 million, or $0.49 per share, compared to $22.1 million in Q1 2015, or $0.69 per share, and $24.0 million, or $0.71 per share in the previous quarter.
Outlook
The past 18 months have been a very volatile period for the oil and gas industry. Recent increases in the WTI benchmark oil price have provided a welcome improvement, but concerns remain about the sustainability of the stronger price levels given continued high inventories and global supply.
A critical component of Bonterra’s strategy is sustainability through a variety of commodity price cycles. The Company has assembled an asset base that provides opportunities to operate successfully at low oil prices and continue to generate reasonable rates of return. In addition to featuring one of the lowest production decline rates among its peers, Bonterra’s assets offer a current inventory of over 20 years of undrilled locations. Given the significant reduction in costs across the industry, Bonterra has been able to benefit from lower service, drilling and production costs, and can effectively do more with less capital. The Company intends to continue monitoring capital spending and dividend payments on a monthly basis, both of which could be modified on short notice dependent on funds flow related to production volumes, commodity prices or changes to the regulatory regime.
Early in 2016, the provincial government of Alberta announced the key highlights of its proposed Modernized Royalty Framework (“MRF”), scheduled to take effect in January, 2017. Details of the MRF calibration formulas have been released and more specific information will be provided by the government in the coming months to help crude oil and natural gas producers better understand the economics of investing in Alberta. The Company cannot determine if the MRF overall will have a material impact on Bonterra’s results of operations on a go forward basis until all components are released and calculated.
Bonterra will continue pursuing its sustainable growth strategy by minimizing debt levels and managing the dividend and capital spending in a responsible manner. The future of Bonterra remains positive over the long term as the Company will continue to be conservatively managed to effectively withstand future challenging commodity price environments.
Bonterra Energy Corp. is a conventional oil and gas corporation with operations in Alberta, Saskatchewan and British Columbia. The shares are listed on The Toronto Stock Exchange under the symbol “BNE”.
Cautionary Statements
This summarized news release should not be considered a suitable source of information for readers who are unfamiliar with Bonterra Energy Corp. and should not be considered in any way as a substitute for reading the full report. For the full report, please go to www.bonterraenergy.com.
Use of Non-IFRS Financial Measures
Throughout this release the Company uses the terms “payout ratio” and “cash netback” to analyze operating performance, which are not standardized measures recognized under IFRS and do not have a standardized meaning prescribed by IFRS. These measures are commonly utilized in the oil and gas industry and are considered informative by management, shareholders and analysts. These measures may differ from those made by other companies and accordingly may not be comparable to such measures as reported by other companies.
The Company calculates payout ratio by dividing cash dividends paid to shareholders by cash flow from operating activities, both of which are measures prescribed by IFRS which appear on our statements of cash flows. We calculate cash netback by dividing various financial statement items as determined by IFRS by total production for the period on a barrel of oil equivalent basis.
Forward-Looking Information
Certain statements contained in this release include statements which contain words such as “anticipate”, “could”, “should”, “expect”, “seek”, “may”, “intend”, “likely”, “will”, “believe” and similar expressions, relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about development, results and events which will or may occur in the future, constitute “forward-looking information” within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis made by us derived from our experience and perceptions. Forward-looking information in this release includes, but is not limited to: expected cash provided by continuing operations; cash dividends; future capital expenditures, including the amount and nature thereof; oil and natural gas prices and demand; expansion and other development trends of the oil and gas industry; business strategy and outlook; expansion and growth of our business and operations; and maintenance of existing customer, supplier and partner relationships; supply channels; accounting policies; credit risks; and other such matters.
All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties, and assumptions are difficult to predict and may affect operations, and may include, without limitation: foreign exchange fluctuations; equipment and labour shortages and inflationary costs; general economic conditions; industry conditions; changes in applicable environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced; the ability of oil and natural gas companies to raise capital; the effect of weather conditions on operations and facilities; the existence of operating risks; volatility of oil and natural gas prices; oil and gas product supply and demand; risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by us; and other factors, many of which are beyond our control.
Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do, what benefits will be derived there from. Except as required by law, Bonterra disclaims any intention or obligation to update or revise any forward -looking information, whether as a result of new information, future events or otherwise.
The forward-looking information contained herein is expressly qualified by this cautionary statement.
Frequently recurring terms
Bonterra uses the following frequently recurring terms in this press release: “bbl” refers to barrel, “NGL” refers to Natural gas liquids, “MCF” refers to thousand cubic feet and “BOE” refers to barrels of oil equivalent. Disclosure provided herein in res pect of a BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 MCF: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Numerical Amounts
The reporting and the functional currency of the Company is the Canadian dollar.
George F. Fink
Chairman and CEO
(403) 262-5307
(403) 265-7488 (FAX)
Bonterra Energy Corp.
Robb D. Thompson
CFO and Secretary
(403) 262-5307
(403) 265-7488 (FAX)
[email protected]
www.bonterraenergy.com
