World News: 22:00 GMT Wednesday 15th May 2019. [Bellatrix Exploration Ltd. via Globe Newswire via SPi World News]
CALGARY, Alberta, May 15, 2019 (GLOBE NEWSWIRE) --
Bellatrix’s first quarter results were marked by strong operational performance including robust well productivity and continued reductions in operating expenditures. First quarter 2019 performance included the following operational and financial achievements:
Bellatrix delivered strong operational performance in the first three months of 2019 relative to 2019 annual guidance expectations as summarized below:
Drilling and completion activities planned for the first half of 2019 are weighted heavily to the first quarter as a result of the seasonal spring break up period that curtails activity in the second quarter. During the first quarter, Bellatrix drilled five gross (5.0 net) operated wells, including four Spirit River wells and one Cardium well. The four Spirit River wells were brought on-stream throughout the first quarter of 2019, and the Cardium well was drilled late in the first quarter and brought on-stream in April. The Company's first quarter 2019 Spirit River drilling program has delivered the following initial production rates:
Total natural gas liquid ("NGL") recoveries (including plant condensate) at the Bellatrix O'Chiese Nees-Ohpawganu'ck deep-cut plant at Alder Flats (the "Alder Flats Plant") have increased in the first quarter of 2019, with NGL sales yields of approximately 68 bbl/MMcf, up approximately from first quarter 2018 total sales yields of approximately 54 bbl/MMcf. In the three months ended March 31, 2019, crude oil, condensate and NGL natural production declines were offset by approximately 18% increase in liquid recoveries due to the commissioning of Phase 2 of the Alder Flats Plant in March 2018. Exploration and development capital expenditures invested during the first quarter were $20.5 million. The Company’s capital expenditure plans remain in line with the current annual guidance range of $40 to $50 million for 2019.
Bellatrix continues to focus on improving capital efficiencies from its invested capital through the combination of reduced capital costs and improved well performance. During the first quarter of 2019, all five operated wells were drilled off existing pad sites. The ability to utilize existing above ground infrastructure, access roads, and gathering systems provides a competitive advantage for the Company as it seeks to maximize long term returns from its development program. All-in average Spirit River well costs (drill, complete, equip and tie-in) in the first quarter of 2019 have averaged approximately $3.4 million, consistent with the cost performance achieved in 2018. Average well performance from the Company's 2019 Spirit River well program to date have outperformed expected results by approximately 15% on an IP45 basis. Bellatrix has systematically reduced overall sustaining capital requirements for our business over the past two years, including a reduction in the number of wells required to maintain average corporate production volumes. Based on an assumed average 6.0 Bcf performance curve, the Company requires only 10 to 12 wells per year to maintain corporate production volumes in the mid 30,000 boe/d range.
With the completion of Phase 2 of the Alder Flats Plant in 2018, our long-term infrastructure build out is complete. Bellatrix expects the majority of future capital investment to be utilized directly in drilling, completion and production addition activities, with minimal capital required for facilities and infrastructure projects over the near term. Management expects that the Company's existing facilities and processing capacity provide the capability to grow production volumes beyond 60,000 boe/d, with minimal future facility related capital.
Bellatrix maintains strong commodity price risk management and market diversification coverage through 2020 which is expected to reduce the impact of commodity price volatility on our business. Bellatrix has approximately 62 MMcf/d of natural gas volumes hedged in the last nine months of 2019, at an average fixed price of approximately $1.77/mcf, representing approximately 50% of 2019 daily average natural gas volumes (based on the mid-point of 2019 full year daily average production guidance). Bellatrix has diversified its natural gas price exposure through physical sales contracts that give the Company exposure to the Dawn, Chicago, and Malin natural gas pricing hubs. This long-term diversification strategy reduces Bellatrix’s exposure to AECO pricing on approximately 50% of the Company’s natural gas volumes.
In combination, market diversification sales and fixed price hedges cover approximately 50% to 60% of natural gas volumes through October 2020 (based on the mid-point of 2019 full year daily average production guidance). A summary of Bellatrix’s commodity price risk management contracts as at March 31, 2019 include:
In summary, Bellatrix’s market diversification contracts include a total of 75,000 MMbtu/d of market exposure as follows:
As announced on March 29, 2019, following Bellatrix’s strategic review efforts, the Company advanced a series of proposed transactions (collectively, the “Recapitalization Transaction”), which would on implementation, among other things, (i) reduce the Company’s total outstanding debt by approximately $110 million (approximately 23%), (ii) reduce annual cash interest payments by over $12 million annually until December 31, 2021, (iii) address certain debt maturities such that the Company would have no maturity dates in respect of any non-revolving debt until 2023; and (iv) improve and strengthen the Company’s overall financial position.
In the event the Recapitalization Transaction is not completed, the Company will need to evaluate all of its options and alternatives related to any future court proceedings or other alternatives to address key liquidity and debt leverage matters which exist today. The value available to stakeholders may be significantly less if the Recapitalization Transaction is not completed and there is a risk that any proceeds available for distribution to stakeholders under other alternatives would be paid in priority to the lenders under the Company's Credit Facilities, the holders of the second lien notes due 2023 ("Second Lien Notes"), the holders of the 8.5% senior unsecured notes due May 15, 2020 (the "Senior Notes"), other general creditors, and the holders of the Convertible Debentures, with the remaining proceeds, if any, paid to the Company's shareholders. There is significant risk that there may be no recovery of any kind, or amount available for, those parties which are lower in the priority waterfall in such circumstances.
First quarter 2019 average production volumes of 36,991 boe/d are above the high end of the 2019 full year average daily production guidance range and within management expectations given the front end weighted capital program. Bellatrix is reiterating its full year 2019 guidance metrics as outlined below.
Bellatrix Exploration Ltd. is a publicly traded 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, with highly concentrated operations in west central Alberta, principally focused on profitable development of the Spirit River liquids rich natural gas play.
Common shares of Bellatrix trade on the Toronto Stock Exchange under the symbol "BXE".
Steve Toth, CFA, Vice President, Investor Relations & Corporate Development (403) 750-1270
Globe Newswire: 22:00 GMT Wednesday 15th May 2019
SPi News is published by Sector Publishing Intelligence Ltd.
© Sector Publishing Intelligence Ltd 2019. [Admin Only]
Sector Publishing Intelligence Ltd.
Agriculture House, Acland Road, DORCHESTER, Dorset DT1 1EF United Kingdom
Registered in England and Wales number 07519380.