TSX, NYSE: BXE
CALGARY, June 17, 2016 /CNW/ – Bellatrix Exploration Ltd. (“Bellatrix” or the “Company”) (TSX, NYSE: BXE) is pleased to announce a focused second half 2016 capital budget targeting profitable development of the Company’s Spirit River liquids rich natural gas play and investment in strategic infrastructure projects. The board of directors has approved a second half net capital budget of up to $40 million, with funding limited to available cash flow. The second half capital budget is designed to maximize return on investment by balancing the timing and on-stream delivery of value enhancing development projects.
Phased second half development activity planned to maximize return on investment
In response to unsustainably low natural gas prices forecast through the summer and into the fall, Bellatrix has phased its second half 2016 development plans and on-stream delivery of new Spirit River wells to coincide with stronger forecast pricing later in the year. Given the steep contango in the current forward strip, pricing for AECO natural gas in December 2016 of approximately C$2.70/GJ is 55% higher or nearly C$1.00/GJ above current spot pricing. By delaying the on-stream delivery of new flush natural gas production to the latter part of 2016, Bellatrix plans to maximize the rate of return of the second half 2016 capital program. Production volumes are anticipated to wane through the third quarter before regaining a growth trajectory through the fourth quarter. Additionally, the deferral of on-stream activity to late 2016 is expected to position Bellatrix favorably to capitalize on a much stronger natural gas pricing environment in 2017.
The majority of the Company’s second half capital budget is expected to be invested directly in drilling, completion and tie-in activity with approximately 15% of total expenditures invested in facilities and infrastructure, including approximately $5.5 million invested into Phase 2 of the Bellatrix Alder Flats deep-cut gas plant.
Budget & Guidance Summary
Second Half 2016 Guidance |
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Average daily production (boe/d) |
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Second Half of 2016 (+/- 500 boe/d)
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34,500 |
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December month average (+/- 500 boe/d)
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36,500 |
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Average product mix |
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Crude oil, condensate and NGLs (%)
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27% |
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Natural gas (%) |
73% |
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Net capital spending ($ millions) (1) |
$40 |
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Expenses ($/boe) |
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Production (2) |
$8.00 |
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(1) Capital spending includes exploration and development capital projects and corporate assets, and |
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Operations update
Bellatrix prudently curtailed drilling activity and reduced its budget in March in response to the unsustainably low commodity price environment. Capital investment for the first half of 2016 remains on plan and within guidance for the revised $40 million budget. In response to the persistently weak natural gas pricing environment experienced during the second quarter, Bellatrix elected to shut in minor natural gas volumes at non-core properties in southern Alberta. Despite this minor impact on volumes, Bellatrix expects first half average production to meet the first half 2016 guidance range of 37,500 to 38,500 boe/d.
Bellatrix maintains an active risk management program designed to reduce the impact of commodity price volatility and provide greater predictability of future cash flow. As at June 17, 2016 the Company has hedged approximately 60% of gross natural gas volumes at an average fixed price of approximately C$2.96/Mcf in the second half of 2016 (based on the midpoint of second half 2016 average production guidance of 34,500 boe/d, 73% natural gas weighted). Additionally Bellatrix has already layered in a base level of risk management protection for 2017, with approximately 35% of gross natural gas volumes hedged at an average fixed price of approximately C$3.37/Mcf.
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.