CALGARY, ALBERTA–(Marketwired – Dec. 17, 2015) – Bonterra Energy Corp. (www.bonterraenergy.com) (TSX:BNE) (“Bonterra” or “the Company”) today announces its 2016 capital budget, an operations update, and an adjustment to its dividend level to $0.10 per share commencing with the December 2015 dividend payable January 29, 2016. With the recent further deterioration in commodity prices, Bonterra is proactively making capital allocation decisions to ensure the Company is able to maintain its financial strength and long-term strategic objectives.
Based on current commodity prices, Bonterra will take the following steps to position the Company to withstand lower prices for a longer period:
- Set its capital expenditures budget for 2016 at approximately $40 million compared to the 2015 capital budget of $58 million and the 2014 budget of $140 million. Given Bonterra’s low corporate production decline rate of approximately 18 percent, the 2016 level of capital is anticipated to hold production roughly flat year over year;
- Reduce the monthly dividend to $0.10 per share ($1.20 per share annually) from the current dividend level of $0.15 per share ($1.80 per share annually) commencing with the December dividend payable January 29, 2016; and
- Continue to thoroughly review all expenditure areas, including capital expenditures, operating costs and general and administration costs with the view to implement further cost reductions where possible.
During the fourth quarter of 2015, Bonterra was subject to production curtailments of approximately 1,100 BOE per day primarily related to a corporate strategy to restrict volumes because of low commodity prices, third party pipeline outages and a less intensive well servicing program. As such, average production volumes for full year 2015 are expected to be at the low end of guidance of 12,600 to 12,900 BOE per day.
By the end of 2015, Bonterra will have an inventory of six gross (4.5 net) drilled and completed wells, which can be tied-in and brought on production through 2016 as commodity prices and project economics warrant. Capital expenditures for the first quarter of 2016 are estimated at $1.0 million related to tie-in costs for wells drilled in 2015. Assuming current commodity price levels of US$35 WTI oil and C$2.20 AECO natural gas, the Company’s first quarter 2016 funds flow is expected to exceed the funds needed for the revised $0.10 per share dividend level plus the $1.0 million capital expenditures budget, with all excess funds being used to reduce debt.
In the interests of ensuring financial sustainability, the Company plans to assess its results on a monthly basis and set the monthly dividend level based on the prior month’s actual funds flow. Adjustments to funds flow allocated to capital, dividends and debt reduction will be made in accordance with commodity prices. Consistent with its underlying corporate strategy, the Company’s priorities remain focused on maintaining financial flexibility while positioning Bonterra to achieve long-term growth in production, reserves and cash flow per share and overall returns to shareholders.