Bonterra is pleased with the progress and success realized from its 2022 drilling program to date, targeting high rate-of-return, low-risk light oil opportunities. The Company brought on production 24 gross (19.6 net) wells through the first five months of 2022, to be followed by post-spring breakup drilling and completion operations which are scheduled to commence in late June, 2022. Annual production is anticipated to average 13,500 BOE per day1 (mid-point of annual guidance) based on a capital expenditure budget of approximately $70 million, which is $5 million higher than previously announced annual guidance due to inflationary cost pressures.
The Company’s significant torque to oil prices combined with increasing production volumes is expected to drive forecasted 2022 free funds flow2 of approximately $165 million, based on an average forward strip WTI oil price of approximately US$103 for the remainder of the year. Bonterra anticipates a net debt to funds flow leverage ratio2 of approximately 0.5x by year end 2022. For further information regarding future pricing sensitivities and outlook, see Bonterra’s current corporate presentation posted on the Company’s website.
Bonterra and its syndicate of lenders have finalized an amended and restated credit agreement which improves alignment with the Company’s debt reduction goals and results in decreased interest costs on bank debt going forward (the “New Facility”). The New Facility provides the following features and benefits:
- Provides appropriately-sized credit capacity given the Company’s strong forecast cash flow profile and capital program in the current commodity price environment;
- Includes a $165 million borrowing base, comprised of a $150 million revolving credit facility and a $15 million operating facility (estimated to be drawn $120 million as of May 31, 2022), supporting the Company’s ongoing focus on the repayment of outstanding bank debt;
- Features five monthly step-down commitments of $10 million each, which conclude on October 31, 2022, resulting in an expected borrowing base capacity at that time of $115 million; and
- Has a maturity date of November 30, 2022, at which time Bonterra expects amounts drawn to be minimal at current commodity prices.
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”.
This summarized news release should not be considered a suitable source of information for readers who are unfamiliar with Bonterra Energy Corp. and should not be considered in any way as a substitute for reading the full report. For the full report, please go to www.bonterraenergy.com.
Throughout this release the Company uses the terms “funds flow”, “free funds flow”, “net debt to twelve-month trailing cash flow ratio” and “net debt” to analyze operating performance, which are not standardized measures recognized under IFRS and do not have a standardized meaning prescribed by IFRS. These measures are commonly utilized in the oil and gas industry and are considered informative by management, shareholders and analysts. These measures may differ from those made by other companies and accordingly may not be comparable to such measures as reported by other companies.
The Company defines funds flow as funds provided by operations including proceeds from sale of investments and investment income received excluding effects of changes in non-cash working capital items and decommissioning expenditures settled. Free funds flow is defined as funds flow less dividends paid to shareholders, capital and decommissioning expenditures settled. Net debt is defined as long-term subordinated debt and subordinated debentures plus working capital deficiency (current liabilities less current assets). Net debt to twelve-month trailing cash flow ratio is defined as net debt at the end of the period divided by cash flow for the trailing twelve months.