In the interests of maintaining a prudent balance between funds flow and capital spending plus dividends, Bonterra has set its 2017 capital expenditures budget at approximately $70 million which will largely be directed to new wells and facility upgrades primarily in the Pembina Cardium area. Given Bonterra’s low corporate production decline rate of approximately 19 percent, the 2017 capital budget is anticipated to increase average annual production by approximately five percent over 2016, with volumes expected to range between 13,000 and 13,500 BOE per day.
Bonterra’s 2017 forecasted funds flow is approximately $140 million along with an additional $10 million anticipated to be received for stock option exercises by directors and employees. With capital expenditures of $70 million and monthly dividends maintained at $0.10 per share representing approximately $40 million annually, the Company anticipates approximately $40 million will be available to reduce the outstanding bank debt.
The Company’s budget and guidance are based on estimated commodity price levels for 2017 averaging US$55 / bbl WTI oil and C$3.00 / mcf AECO natural gas, an exchange rate of $0.725 $US/$CDN and a quality differential of US$3.50 / bbl. The Company’s product mix for 2017 is anticipated to be weighted 66 percent to oil, 29 percent to natural gas and five percent to natural gas liquids.
In the context of ongoing volatility in commodity prices, Bonterra may elect to adjust the amount and timing of capital spending to ensure optimal returns while seeking to further lower its debt levels.
Operational Highlights for 2016
- Relative to other operators in the Pembina Cardium, Bonterra achieved one of the lowest all-in corporate cost structures (including royalties, operating costs, general and administration and loan interest payments) of approximately $20 per BOE (US$ 15 per BOE).
- The Company has a significant economic drilling inventory of approximately 750 net identified low-risk Pembina Cardium locations with incremental locations in the Belly River and Edmonton Sands plays in Alberta. The Company also has additional drill locations in Saskatchewan and NE BC.Bonterra owns and controls its infrastructure and operates approximately 89 percent of its Pembina Cardium production.
- The Company remains on target to exceed its full year average production guidance of 12,500 BOE per day, given solid performance reported in the third quarter that has continued into the fourth quarter. As such, average production volumes for full year 2016 are expected to be approximately 12,700 BOE per day.
- At December 31, 2016 Bonterra will have an inventory of four gross (2.2 net) drilled and uncompleted wells, which will be completed, tied-in and brought on production early in 2017.
Consistent with its underlying corporate strategy, Bonterra’s priorities remain focused on maintaining financial flexibility while positioning the Company to achieve long-term growth in production, reserves and cash flow per share and overall returns to shareholders.
Bonterra Energy Corp. is a conventional oil and gas corporation with operations in Alberta, Saskatchewan and British Columbia. The shares are listed on the Toronto Stock Exchange under the symbol “BNE”.