CALGARY, AB – Bonterra Energy Corp. (www.bonterraenergy.com) (TSX: BNE) (“Bonterra” or the “Company”) today announces its operating and financial results for the three and six month periods ended June 30, 2021. The related unaudited condensed financial statements and notes, as well as management’s discussion and analysis (“MD&A”), are available on SEDAR at www.sedar.com and on Bonterra’s website at www.bonterraenergy.com.
HIGHLIGHTS
Three months ended |
Six months ended |
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As at and for the periods ended |
June 30, |
June 30, |
June 30, |
June 30, |
FINANCIAL |
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Revenue – realized oil and gas sales |
59,163 |
22,171 |
107,957 |
60,726 |
Funds flow (1) |
23,105 |
4,185 |
39,697 |
18,855 |
Per share – basic |
0.69 |
0.13 |
1.18 |
0.56 |
Per share – diluted |
0.67 |
0.13 |
1.16 |
0.56 |
Cash flow from operations |
18,874 |
4,429 |
33,619 |
26,902 |
Per share – basic |
0.56 |
0.13 |
1.00 |
0.81 |
Per share – diluted |
0.55 |
0.13 |
0.98 |
0.81 |
Net earnings (loss)(2) |
157,354 |
(5,954) |
155,670 |
(290,607) |
Per share – basic |
4.68 |
(0.18) |
4.63 |
(8.70) |
Per share – diluted |
4.55 |
(0.18) |
4.53 |
(8.70) |
Capital expenditures |
7,607 |
104 |
31,068 |
21,845 |
Total assets |
948,260 |
732,462 |
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Net debt(3) |
319,310 |
299,445 |
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Working capital deficiency |
273,141 |
299,445 |
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Long-term debt |
46,169 |
– |
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Shareholders’ equity |
353,431 |
212,342 |
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OPERATIONS |
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Light oil – barrels (bbl) per day |
7,370 |
5,553 |
7,103 |
6,306 |
– average price ($ per bbl) |
71.49 |
33.31 |
66.84 |
42.47 |
NGLs – bbl per day |
996 |
1,104 |
1,011 |
1,052 |
– average price ($ per bbl) |
35.59 |
12.14 |
35.59 |
15.50 |
Conventional natural gas – MCF per day |
26,057 |
21,142 |
25,184 |
22,503 |
– average price ($ per MCF) |
3.37 |
2.14 |
3.40 |
2.20 |
Total barrels of oil equivalent per day (BOE)(4) |
12,709 |
10,181 |
12,311 |
11,108 |
(1) |
Funds flow is not a recognized measure under IFRS. For these purposes, the Company defines funds flow as funds provided by operations including proceeds from sale of investments and investment income received excluding the effects of changes in non-cash working capital items and decommissioning expenditures settled. |
(2) |
In the first quarter of 2020 the Company recorded a $331,678,000 impairment provision less a $54,107,000 deferred income tax recovery related to its Alberta CGU’s oil and gas assets due to the impact of COVID-19 effect on the forward benchmark prices for crude oil. With stronger forward prices in Q2 2021, the Company recorded a $203,197,000 impairment reversal on its Alberta CGU’s oil and gas assets less $47,149,000 deferred income tax expense. |
(3) |
Net debt is not a recognized measure under IFRS. The Company defines net debt as current liabilities less current assets plus long-term subordinated debt. |
(4) |
BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 MCF: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. |
Q2 2021 FINANCIAL & OPERATING SNAPSHOT
QUARTER IN REVIEW
Since the beginning of 2021, the Company has benefitted from increasing crude oil and natural gas prices as stability returns to global commodity markets following severe volatility through most of 2020. During the second quarter of 2021, Bonterra introduced new production volumes into a much higher commodity price environment which resulted in realized average oil prices of $71.49 per bbl in the quarter, an increase of 115 percent over Q2 2020 prices. In addition, the Company’s average realized NGL price was $35.59 per bbl, or 193 percent higher than the same period in 2020, while the average realized natural gas price of $3.37 per mcf was 57 percent higher. This price improvement helped to drive meaningful growth in netbacks in the second quarter of 2021, with field and cash netbacks of $27.59 per BOE and $19.98 per BOE, respectively, compared to $9.40 per BOE and $4.52 per BOE in Q2 2020, respectively. Bonterra will continue to regularly monitor commodity price changes and funds flow with the primary objective of reducing bank debt while continuing to add production and grow reserves value.
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1 |
“Funds Flow”, “Field Netback” and “Net Debt” are not recognized measures under IFRS. See “Cautionary Statements” below. |
In concert with realizing higher prices during the second quarter of 2021, Bonterra also benefited from stronger production volumes, which averaged 12,709 BOE per day, an increase of seven percent over the preceding quarter, and 25 percent over the same period of 2020. Throughout the first half of 2021, the Company invested a total of $31.0 million of capital, or approximately 48 percent of the lower end of its full year capital budget range, with $24.6 million allocated to drilling, completion, equip and tie-in activities. This resulted in 16 gross (15.9 net) wells being drilled and 20 gross (19.7 net) wells being completed, equipped, tied-in and placed on production, with four of the completed and equipped wells having been drilled late in 2020. Approximately $6.4 million was allocated primarily to related infrastructure and recompletions.
As a result of the Company’s 2021 capital program, wells that had been drilled, completed and brought on production through the first quarter of the year benefited Bonterra by contributing volumes for a full quarter in Q2 2021. The majority of the production volumes coming from new wells were brought online through March and April of 2021. These higher volumes helped reduce per unit production costs in the quarter, which averaged $14.98 per BOE compared to $15.60 per BOE in the previous quarter despite higher absolute dollar costs, and were $13.84 per BOE in Q2 2020 which reflects the very low levels of activity in that period.
In addition to undertaking new drilling to date in 2021, Bonterra also remained committed to efficiently managing decommissioning liabilities, having abandoned 137.3 net wells during the first six months of this year, supported by the Alberta Site Rehabilitation Program (“SRP”). As Bonterra continues to advance its abandonment program through the remainder of this year and next, it is estimated that a further 170.5 net wells with no deemed future potential can be abandoned.
OUTLOOK
During the third quarter of 2021, approximately eight gross (6.9 net) operated wells are expected to be drilled and completed as Bonterra continues to execute its capital expenditure program. In light of the successful execution of the capital program to date, combined with favourable price forecasts and positive well performance, the Company anticipates average production for 2021 will be within its previously announced annual guidance range of 12,800 to 13,200 BOE per day.
As part of Bonterra’s ongoing efforts to diversify commodity prices and protect future cash flows, the Company has put in place physical delivery sales and risk management contracts to the end of June 30, 2022, details of which are included in Note 12 to the financial statements. Through subsequent quarters, Bonterra can continue to participate in upward oil price movements while mitigating market volatility and locking-in economics given approximately 30 percent of forecast volumes are hedged.
Financial discipline and cost control continue to be priorities for Bonterra, and the Company remains committed to reducing bank debt and strengthening the balance sheet, while continuing to add reserve value, particularly into rising commodity prices. Bonterra believes the Company is strategically positioned to drive profitable growth through this period of improving oil and natural gas markets by prudently developing its high-quality, light oil weighted asset base and directing excess funds flow to a combination of debt repayment plus modest growth. The Company continues to prioritize environmental, social and governance (“ESG”) initiatives, including being a positive and meaningful contributor to the economic and social success of the communities where it operates in central Alberta, upholding a responsible abandonment and reclamation program, and maintaining stringent safety measures for all employees, contractors and partners.
Bonterra Energy Corp. is a conventional oil and gas corporation with operations in Alberta, Saskatchewan and British Columbia, focused on its strategy of long-term, sustainable growth and value creation for shareholders. The Company’s shares are listed on The Toronto Stock Exchange under the symbol “BNE”.
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