CALGARY, Alberta, Jan. 15, 2019 (GLOBE NEWSWIRE) — Bellatrix Exploration Ltd. (“Bellatrix” or the “Company”) (TSX, NYSE: BXE) announces a fourth quarter 2018 operational update with full year average volumes exceeding guidance, and its 2019 capital budget designed to deliver stable corporate production volumes, supported by strong commodity price risk management and market diversification contracts.
2018 Production Volumes Exceed Full Year Average Guidance
Bellatrix drilled and or participated in 5 gross (3.0 net) wells during the fourth quarter including 4 gross (2.99 net) operated Spirit River liquids rich natural gas wells and 1 gross (0.02 net) non-operated Cardium well. Fourth quarter production volumes averaged approximately 35,100 boe/d based on field estimates, contributing to annual average production volumes of approximately 35,600 boe/d, surpassing the high end of Company guidance.
|Estimated Results Versus
|Average daily production (boe/d)||35,600||35,000 – 35,500||1%|
|Average product mix|
|Natural gas (%)||73||73||-%|
|Crude oil, condensate and NGLs (%)||27||27||-%|
2019 Capital Budget Designed to Deliver Stable Production Volumes
Bellatrix’s Board of Directors has approved a 2019 capital budget of between $40 to $50 million, designed to maintain average production volumes between 34,000 to 36,000 boe/d. Bellatrix plans to fund the 2019 capital budget primarily through cash flow from operating activities. The capital budget incorporates forward pricing expectations of US$65/bbl WTI, $1.60/GJ AECO, a $1.34 CAD/USD exchange rate, and is underpinned by strong commodity price risk management protection and natural gas market diversification contracts.
Delivery of the 2019 capital budget will remain flexible throughout the year, focused primarily on profitable development of Bellatrix’s high rate of return investment opportunities. With our long-term infrastructure build out complete, the majority of capital investment will be utilized directly in drilling, completion and production addition activities, with minimal capital required for facilities and infrastructure projects. Delivery of the 2019 budget incorporates the following attributes:
- Reduced Maintenance Capital Requirements. In 2018, Bellatrix continued to make meaningful cost reductions for its average Spirit River well, with all-in well costs reduced to $3.4 million and enhanced productivity with average well performance outperforming expected results by approximately 38% on an IP90 basis. The combination of lower costs and improved results has reduced the number of assumed Spirit River wells to 12 per year (assuming an average 6.0 Bcf performance curve) required to maintain total corporate production volumes in the mid 30 mboe/d range.
- Financial Flexibility. The 2019 capital budget remains flexible, with the potential to accelerate or decelerate capital expenditures throughout the year.
- Continued Cost Suppression Focus. Third quarter 2018 production expenses of $7.71/boe and $23.8 million represent 27% and 23% reductions respectively, compared with fourth quarter 2016 levels. Bellatrix continues to focus on cost suppression activities through ongoing technological and operationally focused initiatives. Bellatrix also remains focused on reducing general and administrative (“G&A”) expenses. Third quarter 2018 gross G&A expenses have been reduced by 17% compared with fourth quarter 2017 G&A expenses with reductions remaining a focus in 2019.
- Optimized Returns. The 2019 drilling program will balance development of Spirit River liquids rich natural gas investment opportunities and higher liquids weighted opportunities in the Cardium play.
|2019 Average daily production||34,000 – 36,000|
|Production Mix (%)|
|Crude oil, condensate and NGLs||28|
|Capital Expenditures ($000)(1)|
|Capital – exploration and development||40,000 – 50,000|
|(1) Excludes property acquisitions and dispositions.|
Strong Commodity Price Risk Management Protection and Market Diversification Benefits
Bellatrix entered into a series of natural gas market diversification contracts beginning in 2017, that give the Company access to non-AECO market natural gas prices. Bellatrix’s market diversification sales into the Dawn, Chicago and Malin markets represent approximately 55% of Bellatrix’s natural gas volumes (based on the mid-point of 2019 average production guidance).
Bellatrix has proactively fixed the prices on a portion of these non-AECO markets to reduce the impact of commodity price volatility on our business. Bellatrix locked in fixed prices in December 2018 (approximately 30% of natural gas volumes based on annual 2019 production guidance at a Canadian equivalent price of approximately $4.33/Mcf) and the first quarter of 2019 (approximately 20% of natural gas volumes at a Canadian equivalent price of approximately $4.20/Mcf) as follows:
|Month(s)||Market||Quantity||US$/MMBtu Price||Net Cdn$/Mcf Price(1)|
|Dec 2018||NYMEX/Dawn/Chicago Avg.||50,000 MMBtu/d||US$4.59/MMBtu||$4.33/Mcf|
|Jan – Feb 2019||NYMEX/Dawn Avg.||30,000 MMBtu/d||US$4.64/MMBtu||$4.40/Mcf|
|Mar 2019||Malin/Dawn Avg.||30,000 MMBtu/d||US$4.19/MMBtu||$3.78/Mcf|
Note (1): Net Canadian equivalent price is calculated as the US$ fixed price, less contracted differential, adjusted to Canadian dollars at an assumed exchange rate of $1.30 USD/CAD.
In summary, Bellatrix’s market diversification contracts include a total of 75,000 MMBtu/d of market exposure as follows:
|Product||Market||Start Date||End Date||Volume|
|Natural gas||Chicago||February 1, 2018||October 31, 2020||15,000 MMBtu/d|
|Natural gas||Chicago||November 1, 2018||October 31, 2020||15,000 MMBtu/d|
|Natural gas||Dawn||February 1, 2018||October 31, 2020||15,000 MMBtu/d|
|Natural gas||Dawn||November 1, 2018||October 31, 2020||15,000 MMBtu/d|
|Natural gas||Malin||February 1, 2018||October 31, 2020||15,000 MMBtu/d|