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Bonterra Energy Corp. Announces First Quarter 2011 Results

Jun 2, 2011 - 05:00 ET

CALGARY, ALBERTA--(Marketwire - June 2, 2011) -

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

Bonterra Energy Corp. (TSX:BNE) (Bonterra or the Company) is pleased to announce its operating and financial results for the first quarter ended March 31, 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 three months ended
($ 000s except $ per share)

March 31, 2011
December 31, 2010
Restated (1)
March 31, 2010 Restated (1)
FINANCIAL      
Revenue – realized oil and gas sales 38,170 34,208 27,248
Funds flow (2) 25,719 21,094 21,387
  Per share – basic 1.33 1.12 1.14
  Per share – diluted 1.31 1.09 1.11
  Payout ratio (3) 54% 61% 50%
Cash flow from operations 24,034 16,976 15,061
  Per share – basic 1.25 0.90 0.81
  Per share – diluted 1.22 0.88 0.78
  Payout ratio (3) 58% 76% 70%
Cash dividends per share (3) 0.72 0.68 0.57
Net earnings 13,624 11,837 7,598
  Per share – basic 0.71 0.62 0.41
  Per share – diluted 0.69 0.61 0.40
Capital expenditures and acquisitions net of dispositions 20,344 25,318 15,141
Total assets 357,000 347,825 316,018
Working capital deficiency 39,777 17,905 16,150
Long-term debt (4) 70,568 85,386 63,097
Shareholders' equity 192,054 190,173 182,620
OPERATIONS      
Oil and NGLs – barrels per day 4,597 4,378 3,345
    – average price ($ per barrel) 82.83 75.91 74.88
Natural gas – MCF per day 10,517 10,214 10,038
    – average price ($ per MCF) 4.12 3.78 5.11
Total barrels of oil equivalent per day (BOE) (5) 6,350 6,080 5,018

(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 before changes in non-cash operating working capital items but including gain on sale of property, adjustments of investment tax credit receivable and excluding restricted cash and decommissioning expenditures.
(3) Cash payments per share are based on payments made in respect of production months within the quarter.
(4) At December 31, 2010, long-term debt includes bank debt and subordinated promissory note.
(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.

Operational and Financial Highlights

  • During the first quarter of the year, Bonterra continued to focus on its horizontal mulit-stage frac Cardium drilling program, improving its financial performance and providing increased value to its shareholders.
  • Bonterra increased its dividend to $0.24 per share per month in the first quarter from $0.22 per share per month in the fourth quarter of 2010 while the payout ratio dropped to 54 percent of funds flow from 61 percent quarter over quarter. Based on strong first quarter results, Bonterra was able to increase the dividend to $0.26 per share in May 2011.
  • Production in the first quarter of 2011 averaged 6,350 BOE per day, an increase of approximately 27 percent over the comparable quarter of 2010 and four percent over the fourth quarter of 2010. These increases are mainly attributable to the positive results from the Company's horizontal drilling program. Bonterra continues to forecast 2011 production levels between 6,200 and 6,500 BOE per day.
  • During the first quarter, Bonterra spent approximately $20.4 million primarily on the drilling of six gross (five net) Pembina Cardium horizontal wells and the completing, equipping and tieing-in of four wells drilled in the fourth quarter of 2010. Only two of the six wells drilled in the first quarter were on production during March and thus had little impact on first quarter production numbers. Currently, five of these wells have now been placed on production with the last well expected to be completed and tied-in as soon as spring break-up is complete and road bans are lifted. The summer drill program will commence at this time as well.
  • Capital expenditures during this quarter account for more than one-third of the $50 million to $60 million 2011 Cardium focused capital budget. This resulted in a small increase in long-term debt and negative working capital. Capital expenditures in the second quarter of 2011, will be substantially lower due to road bans. This will result in a positive impact on long term debt and working capital in that quarter.
  • Financial results during the first quarter substantially improved due to increased production levels and strengthening crude oil prices, partially offset by lower natural gas prices. Revenue and cash flow from operations increased 40 percent and 60 percent, respectively, when compared to the same period in 2010. Average realized crude oil and NGL prices improved approximately 11 percent while natural gas prices decreased approximately 19 percent over the same time frame. As well, quarter over quarter saw improvements of 12 percent in revenue and 42 percent in cash flow from operations due mainly to increased commodity prices and production levels.
  • Bonterra's netbacks have also shown improvements with a 21 percent increase to $41.75 per BOE in the first quarter of 2011 compared with $34.38 per BOE in the first quarter of 2010 and an increase of 15 percent from $36.30 per BOE for the fourth quarter of 2010. Netbacks have been positively impacted by commodity prices. In addition, Bonterra has decreased field operating costs quarter over quarter which has also contributed to these enhanced levels.

Outlook

  • Bonterra currently intends to pay out between 55 to 70 percent of its annual funds flow while retaining the remainder for capital expenditure requirements. Considering the Company's sustainable capital program for 2011, it is anticipated that production volumes may increase in subsequent quarters. Monthly dividends will continue to be influenced by production volumes and commodity prices.
  • Bonterra was pleased to welcome Robb D. Thompson to the Company in February 2011 as Vice President, Finance. Mr. Thompson now holds the position of Chief Financial Officer and Secretary.
  • The Company intends to continue with its sustainable, strategic approach to developing its asset base through the allocation of capital to its high return Cardium horizontal drilling program, the active pursuit of improved reserve recovery and continued improvements in ongoing operations. This approach will ensure that Bonterra remains well-positioned to continue paying a high dividend while maintaining the long-term sustainability of its business and providing increased returns to its shareholders.

IFRS Transition

  • For the first quarter of 2011, the Company's Management's Discussion and Analysis (MD&A) and Financial Statements along with the notes thereto, are reported under International Financial Reporting Standards (IFRS). It is mandatory that all Canadian publically accountable enterprises prepare their financial statements in accordance with Canadian Generally Accepted Accounting Principles (Canadian GAAP) revised to incorporate new accounting standards under IFRS. This change in accounting principles significantly affected certain financial information and disclosures from past financial reporting of the Company and may be confusing to Bonterra's shareholders. Reporting under IFRS will result in Canadian standards now being more aligned with European and Australian accounting standards and away from previous Canadian principles and present United States principles. IFRS permits companies to be flexible with their reporting and this may result in making it more difficult to compare Canadian companies with each other, or in some instances, cross border reporting Canadian companies with their U.S. peers. This change may be regressive for Canadian investors and companies and it may have been better if the change had been delayed to coincide with a U.S. conversion.
  • Bonterra will ensure that appropriate disclosures and discussions are provided in the MD&A and the financial statements to assist shareholders, analysts and other parties with their respective evaluations and has provided additional information in the above "Highlights" section to assist readers with their reviews.

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 we use the terms "payout ratio", "cash netback" and "funds flow" 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.

We calculate 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. See note 2 in the above Highlights section for an explanation of funds flow.

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