CALGARY, Dec. 2, 2014 /CNW/ – Bellatrix Exploration Ltd. (“Bellatrix” or the “Company”) (TSX, NYSE: BXE) is pleased to announce the sale of minority interests in its new Bellatrix O’Chiese Ness-Ohpawganu’ck deep-cut gas plant at Alder Flats (the “Plant”) and related pipeline infrastructure currently under construction (collectively the “Facilities”) to Keyera Partnership (“Keyera”) and O’Chiese Gas Plant GP Inc. (“O’Chiese”). Separately, Bellatrix is pleased to announce that it has entered into an agreement with Keyera for 19 MMcf/d of firm service processing capacity beginning immediately, increasing to 30 MMcf/d on April 1, 2016, at Keyera’s Strachan deep-cut gas plant.
The sale of minority interests in the Plant is consistent with the Company’s strategy to maintain operatorship and control of strategic facilities, while being a good steward of available capital. The transaction aligns the Company’s working interest processing capacity in the Facilities with its forecasted average net working interest volumes to be processed through the Plant going forward. Additionally, the sale reduces future capital cost outlays associated with the Facilities through construction, thereby preserving capital to invest in high rate of return wells and development drilling projects. Finally, the announced firm service agreement with Keyera at its Strachan deep cut gas plant provides Bellatrix with long-term incremental gas processing ability, thereby facilitating further potential volume growth from the Strachan area.
Minority working interest sale maintains operatorship and control while reducing capital spending requirements
Under the agreed upon terms, Keyera and O’Chiese will participate as 35% and 5%, respectively, minority interest owners in the Facilities, which consist of the two proposed phases of the Bellatrix-operated deep-cut gas plant and related plant infrastructure, as well as the associated pipelines, all of which are currently under construction. Bellatrix will retain a 60% ownership interest in the Facilities and will be the operator.
The design inlet capacity of the Plant is 220 MMcf/d and will be developed in two phases at an estimated total cost of approximately $190 million; the total cost of the Facilities which includes the Plant and related infrastructure is estimated at $230 million. Forecast capital spending on Phase I of the Plant to December 31, 2014 is anticipated at approximately $65 million; therefore the immediate recovery of capital spent to year end from the minority interest sale is expected to be approximately $26 million. Bellatrix remains favorably positioned to utilize the incremental processing capacity anticipated upon start-up of Phase I of the new Plant, which remains on time and on budget with an expected on-stream date of July 1, 2015. Timing for Phase II of the new Plant remains unchanged with an expected on-stream date in Q2 2016.
As part of our 2015 capital program, we are pleased to announce current plans to drill one horizontal exploration well during the second half of the year targeting the Second White Specks (“SWS”) oil shale formation. The SWS is considered the source rock for formations such as the Cardium and Belly River. It is a regionally thick formation, laterally continuous, and prevalent across a substantial portion of our land base in west central Alberta. Bellatrix maintains significant exposure to this formation, with 247 net sections of SWS rights across our west central land base which we believe is principally situated within the oil window. Regional vertical wells that encounter the interval in naturally fractured areas have demonstrated encouraging hydrocarbon recovery, with the most prolific vertical well recovering in excess of 1.28 million barrels of light gravity sweet crude and 2.7 Bcf of natural gas. Our strong technical team continues to work indefatigably in expanding and high-grading a large inventory of potential drilling locations.
Adding strategic firm service capacity at Strachan
As previously mentioned, Bellatrix has also entered into a separate arrangement with Keyera whereby Bellatrix has immediately secured 19 MMcf/d of firm processing capacity which increases to 30 MMcf/d on April 1, 2016 at Keyera’s Strachan deep-cut gas plant. The Keyera Strachan plant is well connected to multiple gathering pipelines and has inlet compression, gas dehydration and deep-cut natural gas liquids recovery. The addition of firm service capacity is anticipated to improve overall operational reliability and facilitate execution of our projected growth plans from this area.
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.
All amounts in this press release are in Canadian dollars unless otherwise identified.
SOURCE Bellatrix Exploration Ltd.
For further information: Steve Toth, CFA, Vice President, Investor Relations, (403) 750-1270; or Troy Winsor, Investor Relations, (800) 663-8072; Bellatrix Exploration Ltd., 1920, 800 – 5th Avenue SW, Calgary, Alberta, Canada, T2P 3T6, Phone: (403) 266-8670, Fax: (403) 264-8163, www.bellatrixexploration.com