News Releases

Bonterra Energy Corp. Announces Second Quarter 2011 Results

Aug 11, 2011 - 05:00 ET

CALGARY, ALBERTA--(Marketwire - Aug. 11, 2011) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

Bonterra Energy Corp. (Bonterra or the Company) (TSX:BNE) is pleased to announce its operating and financial results for the second quarter ended June 30, 2011. The related unaudited condensed consolidated financial statements and notes, as well as management's discussion and analysis, 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 periods ended Three months ended   Six months Ended  
($ 000s except $ per share) June 30, 2011   June 30, 2010 Restated (1 ) June 30, 2011   June 30, 2010 Restated (1 )
FINANCIAL                
Revenue – oil and gas sales 44,754   29,191   82,924   56,439  
Funds flow (2) 27,906   17,723   55,172   33,264  
  Per share – basic 1.44   0.95   2.86   1.78  
  Per share – diluted 1.42   0.92   2.80   1.73  
  Payout ratio (3) 54 % 68 % 52 % 68 %
Cash flow from operations 25,465   16,644   49,499   31,705  
  Per share – basic 1.32   0.89   2.57   1.69  
  Per share – diluted 1.29   0.86   2.52   1.65  
  Payout ratio (3) 59 % 72 % 58 % 71 %
Cash dividends per share (3) 0.78   0.64   1.50   1.21  
Net earnings 14,533   10,388   28,157   17,986  
  Per share – basic 0.75   0.55   1.46   0.96  
  Per share – diluted 0.74   0.54   1.43   0.93  
Cash netback (4) 48.11   33.61   44.96   33.97  
Capital expenditures and acquisitions net of                
  dispositions 5,872   10,994   26,216   26,135  
Total assets         348,097   318,251  
Working capital deficiency         30,823   4,020  
Long-term debt         72,608   78,434  
Shareholders' equity         192,297   182,774  
OPERATIONS                
Oil and NGLs – barrels per day 4,536   3,874   4,566   3,611  
    – average price ($ per barrel) 98.34   71.09   90.58   72.84  
Natural gas – MCF per day 11,024   11,157   10,772   10,600  
    – average price ($ per MCF) 4.15   3.97   4.14   4.51  
Total barrels of oil equivalent per day (BOE) (5) 6,373   5,733   6,361   5,378  
  1. The comparative highlights have been restated with the adoption of International Financial Reporting Standards.
  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 operating working capital items, restricted cash and decommissioning expenditures settled.
  3. Cash dividends per share are based on payments made in respect of production months within the period ended.
  4. Cash netback is oil and gas sales less royalties, production costs, general and administrative costs, interest and other expense on a per BOE basis.
  5. BOE is calculated using a conversion ratio of 6 MCF to 1 barrel of oil. The conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead and as such may be misleading if used in isolation.

Bonterra Energy Corp. (Bonterra or the Company) is pleased to report its second quarter 2011 results. As a result of continued strong operating performance, a solid balance sheet and higher commodity prices, Bonterra was able to increase its dividend to shareholders in the second quarter of 2011.

OPERATIONAL HIGHLIGHTS

  • The Company's operations are currently focused on creating value through the execution of its Cardium horizontal drill program and efficient operating practices in order to drive future growth and superior returns for shareholders. The Company has continued to successfully execute its strategy and production volumes averaged 6,361 BOE per day in the first six months of 2011, representing an increase of 18 percent compared with the same period last year.
  • Bonterra's capital expenditures during the first six months of 2011 totaled $26.2 million net of drilling credits. The costs related to the drilling and completion of six gross (five net) Pembina and Willesden Green Cardium wells, the completion and tie-in of four wells drilled in the fourth quarter of 2010, constructing infrastructure to reduce operating costs and preliminary work for future drilling.
  • The second quarter capital program and production was negatively impacted by a number of uncontrollable factors including a longer than average spring break-up, shut-in production due to flooding, forest fires, pipeline issues and a scheduled plant turn-around at the Company's northeast British Columbia properties. Despite this difficult operating environment, Bonterra was able to hold production levels flat quarter over quarter. Due to these factors, the majority of the Company's drilling activity has been planned for the second half of the year.
  • The Company is currently executing its second half capital program with two drilling rigs employed. Bonterra's capital expenditure program for the full year is estimated at $50 to $60 million and the Company currently anticipates drilling more than 10 operated Cardium horizontal wells in the third and fourth quarters of this year. With a back-end loaded drilling program, production is anticipated to increase in the latter part of the year and the Company continues to forecast 2011 full year production guidance at 6,200 to 6,500 BOE per day.
  • Bonterra has focused primarily in drilling Cardium horizontal wells outside of the main Cardium fields. Beginning in the third quarter of 2010, Bonterra has participated in successfully drilling seven gross non- operated horizontal Berrymoor Cardium unit wells (15 percent working interest) in the main Pembina pool and results to date have been extremely encouraging with the majority of these wells outperforming expectations. The Berrymoor wells are some of the best performing wells in the Pembina Cardium field. Bonterra plans to continue advancing the use of horizontal multi-stage technology in the main Pembina Cardium pool in 2011 by initiating an operated multi-well horizontal drilling program later in the year with the objective of changing the pool exploitation strategy to horizontal well development from vertical well development.
  • Operating costs in the first half of 2011 increased approximately 10 percent on a per BOE basis to $15.46 per BOE when compared with the first six months of 2010 mainly due to increased costs related to gas compression and processing at third party facilities, weather-related delays that have held back the completion of infrastructure projects at Willesden Green and Warburg (which when completed during the third quarter will result in lower processing and oil hauling costs) and increased trucking and road lease maintenance costs due to weather. Most of these issues will be resolved in the third quarter.
  • The Company anticipates that operating costs for the remainder of the year will be lower on a per BOE basis than in the first half of the year, however, due to the higher costs in the first half of 2011, the guidance for the full year will be increased from $12.50 to $13.50 per BOE to $14.50 to $15.25 per BOE. Bonterra will continue to seek out opportunities for greater operational efficiencies and cost-reduction initiatives across its operations.
  • The Company has begun to realize capital expenditure savings with the use of foam water fracs on some of the recently drilled horizontal wells. This new technology is applicable in some areas of the Cardium field and there are significant capital cost savings in the range of $300,000 to $400,000 per well. Bonterra has utilized this technology on two wells drilled so far this year and has been pleased with the results, noting no initial negative results from using foam water versus the more traditional oil-based fracs. The Company will continue to assess whether foam water fracs are preferable on an individual well basis and apply the technology where best suited.

FINANCIAL HIGHLIGHTS

  • Oil prices during the quarter increased significantly when compared to the second quarter of 2010. The Company's average realized price for crude oil and natural gas liquids was $98.34 in the second quarter of 2011 versus $82.83 recorded during the first quarter of the year and $71.09 in the same period last year. As a result of this higher crude oil pricing environment and the Company's stronger production volumes, revenue from oil and gas sales before royalties increased 47 percent in the first half of 2011 to $82.9 million compared with $56.4 million recorded in the first half of 2010 while funds flow increased 66 percent in the first half of the year to $55.2 million compared with $33.3 million in the first half of 2010.
  • Bonterra was able to increase dividends to shareholders during the second quarter. Dividends to shareholders during the quarter totaled $0.78 per share which included an increase to the current level of $0.26 per share beginning with the April dividend that was paid on May 31, 2011. The payout ratio was 54 percent of funds flow from operations.
  • Bonterra intends to continue paying out approximately 55 to 70 percent of its annual funds flow as dividends while retaining the remainder for capital expenditure requirements. Dividends can and may fluctuate in the future. Funds flow is derived mainly from producing and selling oil, natural gas and related products and as such, it is highly dependent on commodity prices. Bonterra's board of directors will continue to examine dividends on a monthly basis while considering overall market conditions to set the dividend level each month.
  • The Company has retained its strong balance sheet with a net debt to annualized cash flow ratio of 1.2 times, well within the Company's forecasted range of 1.0 to 1.5 times. Bonterra's strong financial position provides significant flexibility and will allow the Company to capitalize on any opportunities in Western Canada that may be determined to add value for shareholders.

Outlook

  • Recently, there has been instability in the world economy with renewed weakness in the commodity and credit markets. However, the Company has and will continue to take a long-term approach to both operating its business and creating additional value for shareholders. It is difficult to predict when the world's economies and commodity prices may experience a turnaround but from an operational and financial perspective Bonterra will continue to prosper.
  • The Company has many competitive advantages that will allow it to continue to pay a high dividend on a monthly basis including its large drilling inventory, premium quality oil production which generally results in higher netbacks and cash flow, large tax pools that should assist in reducing taxes for many years into the future and experienced, capable employees dedicated to maximizing returns for shareholders.
  • Should this lower commodity price environment persist, the Company may take advantage of opportunities that might become available related to lower land and acquisition costs. The Company will also remain committed to preserving its conservative capital structure. Taking this approach will allow Bonterra to maintain its dividend policy and ensure the long term sustainability of its business.

Cautionary Statement

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 press 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 to shareholder 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 operation and deficit statement items as determined by IFRS by total production on a barrel of oil equivalent basis.

Forward-Looking Information

Certain statements contained in this press 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 press 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.

The TSX does not accept responsibility for the accuracy of this release.



FOR FURTHER INFORMATION PLEASE CONTACT:

Bonterra Energy Corp.
George F. Fink
CEO and Chairman of the Board
(403) 262-5307
(403) 265-7488 (FAX)

Bonterra Energy Corp.
Robb D. Thompson
CFO and Secretary
(403) 262-5307
(403) 265-7488 (FAX)

Bonterra Energy Corp.
Kirsten Lankester
Manager, Investor Relations
(403) 262-5307
(403) 265-7488 (FAX)
info@bonterraenergy.com
www.bonterraenergy.com
 

 

 
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