FINANCIAL AND OPERATIONAL HIGHLIGHTS
As at and for the year ended |
December 31, |
December 31, |
December 31, |
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FINANCIAL |
|||||||
Revenue – realized oil and gas sales |
319,517 |
384,197 |
251,616 |
||||
Funds flow(1) |
147,305 |
185,583 |
104,843 |
||||
Per share – basic |
3.96 |
5.16 |
3.11 |
||||
Per share – diluted |
3.95 |
4.98 |
3.02 |
||||
Cash flow from operations |
140,183 |
183,553 |
96,103 |
||||
Per share – basic |
3.77 |
5.10 |
2.85 |
||||
Per share – diluted |
3.76 |
4.92 |
2.76 |
||||
Net earnings(2) |
44,943 |
79,023 |
179,299 |
||||
Per share – basic |
1.21 |
2.20 |
5.32 |
||||
Per share – diluted |
1.20 |
2.12 |
5.16 |
||||
Capital expenditures |
126,478 |
79,769 |
67,282 |
||||
Total assets |
967,870 |
919,682 |
945,721 |
||||
Net debt(3) |
140,400 |
149,831 |
267,179 |
||||
Bank debt |
14,822 |
17,601 |
162,945 |
||||
Shareholders’ equity |
528,258 |
479,839 |
392,019 |
||||
OPERATIONS |
|||||||
Light oil |
-bbl per day |
7,209 |
7,095 |
7,204 |
|||
-average price ($ per bbl) |
97.58 |
113.93 |
74.53 |
||||
NGLs |
-bbl per day |
1,359 |
1,141 |
1,013 |
|||
-average price ($ per bbl) |
48.80 |
66.00 |
43.86 |
||||
Conventional natural gas |
-MCF per day |
33,814 |
31,023 |
27,176 |
|||
-average price ($ per MCF) |
3.12 |
5.44 |
3.97 |
||||
Total barrels of oil equivalent per day (BOE)(4) |
14,204 |
13,407 |
12,747 |
||||
(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) |
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 in Q2 2021, due to the recovery of crude oil forward benchmark prices from the impact of COVID-19 in 2020. |
(3) |
Net debt is not a recognized measure under IFRS. The Company defines net debt as current liabilities less current assets plus long-term bank debt, subordinated debentures and subordinated term 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. |
FINANCIAL & OPERATING HIGHLIGHTS
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1 Non-IFRS measure. See advisories later in this press release. |
YEAR IN REVIEW
Bonterra’s successful 2023 drilling and completions program drove strong production volumes, which averaged 14,204 BOE per day in 2023, exceeding the upper end of the Company’s previously announced annual guidance range of 13,500 to 13,700 BOE per day and increasing six percent over 2022. In the fourth quarter, production averaged a record 15,128 BOE per day, increasing 16 percent over Q4 2022 without any contribution from the Montney well, supported by a full quarter of production from 12 gross (11.8 net) operated wells that were drilled in Q3 2023.
Net debt declined to $140.4 million at December 31, 2023, a reduction of six percent or $9.4 million from year-end 2022, while bank debt declined 16 percent to $14.8 million at quarter-end, a $2.8 million decrease over the prior year. Relative to year end 2021, the Company has successfully reduced net debt by 47 percent, showcasing Bonterra’s ability to generate free funds flow and to focus on strengthening the balance sheet in order to continue supporting the future implementation of a return of capital model.
Revenue, Netbacks and Funds Flow
The Company’s higher value light oil and liquids production represented 88 percent of the Company’s total realized oil and gas sales in 2023, helping offset downward pricing pressure from persistent global supply and demand imbalances for natural gas throughout the year. When combined with gains on risk management contracts resulting from the Company’s hedging program, Bonterra’s strategic production profile generated average field and cash netbacks1 of $37.01 and $28.12 per BOE, respectively, driving total funds flow1 of $147.3 million ($3.95 per fully diluted share) and free funds flow1 of $12.5 million in 2023. Bonterra also continued to post positive net earnings with $44.9 million ($1.20 per diluted share) generated in the year.
Efficient Capital Program
Bonterra executed a highly successful capital program in 2023 that was largely directed to the continued development of its high-quality, light oil weighted asset base, with annual capital expenditures totaling $126.5 million, and $91.6 million being directed to drilling 41 gross (39.2 net) operated wells and having 37 gross (35.6 net) operated wells completed, equipped, tied-in and placed on production. The remaining four gross (3.6 net) operated wells were placed on production in the first quarter of 2024.
In addition to drilling and completions, Bonterra’s 2023 capital program also invested in strategic infrastructure development, recompletions, and non-operated capital, including the successful expansion of a wholly-owned gas plant to alleviate processing capacity limitations, upgrading equipment to drive down per unit production costs, and the drilling of a Bonterra’s first exploration Montney well, as detailed further below.
__________________ |
1 Non-IFRS measure. See advisories later in this press release. |
CHARLIE LAKE ACQUISITION
Subsequent to year end, Bonterra established a new core area in the Charlie Lake fairway, one of North America’s top decile oil plays. As previously announced, the Acquisition involves the addition of 79 net sections of land in Bonanza, Alberta which are prospective for light oil and are expected to yield substantial growth opportunities while supporting the Company’s continued focus on free funds flow generation. The Acquisition, including 330 BOE per day of production, is highly complementary to Bonterra’s existing 37 net sections of Charlie Lake land, and results in 116 net sections of contiguous land in the light oil prone Charlie Lake.
Charlie Lake production is anticipated to reach production of 6,000 BOE per day by 2026 that can be maintained over the long-term, while also maintaining its leverage metrics that support efforts to implement a return of capital framework.
See the Company’s press release dated March 4, 2024 for additional details, including information on the Acquisition’s strategic rationale and Bonterra’s plans for development and growth in the area.
Testing of First Montney Test Well
In the fourth quarter of 2023, Bonterra achieved a significant milestone with the completion of its first Montney test well at 04-03-074-6W6, drilled under budget, which expands the Company’s potential drilling inventory. The Company has since successfully negotiated a processing agreement and secured natural gas egress through third party infrastructure, with expectations of flowing the Montney well in the second quarter of 2024. This positive development positions Bonterra to consider drilling a second well from the same pad in order to further derisk the Company’s land block while also holding its acreage. The results of Bonterra’s first Montney well support continued testing and delineation in the area, though the Company intends to take a measured approach to align the pace of development with available egress.
Bonterra’s Montney land base, situated north of Grand Prairie, Alberta (Valhalla), features a contiguous 45 sections (28,880 acres) of land with 100 percent working interest. The positive Montney well results to date indicate the potential for an expanded development runway for the future and ensures optionality for shareholders.
Ongoing Abandonment and Reclamation
The Company continued to responsibly pursue abandonment and reclamation efforts in 2023, having leveraged support from the Alberta Site Rehabilitation Program (“SRP”), which concluded in Q2 2023. The Company abandoned 84.1 net wells and 155 pipelines throughout the year, representing a total pipe length of 135.7 kilometers. By year-end 2024, approximately 75 percent of all wells previously identified as having no further economic potential are expected to be successfully abandoned.
OUTLOOK
Subsequent to year-end 2023, the Company has remained focused on executing its 2024 capital program, having drilled seven gross operated (6.5 net) wells to date, which are expected to be completed, equipped and placed on production by the end of the Q1 2024, along with four gross operated (3.6 net) wells that were drilled in Q4 2023. With the addition of the Charlie Lake asset, the Company’s previous focus on M&A activity will be re-directed to the efficient deployment of capital and ongoing operational execution to optimally develop the expanded inventory within Bonterra’s three core areas.
Return Of Capital Strategy
Bonterra remains committed to prioritizing responsible free funds flow2 generation in 2024 which can be directed towards further balance sheet strengthening, achieving modest production growth, or the implementation of a return of capital model. Should low commodity prices persist, the Company intends to prioritize the continued management of the balance sheet and maintaining ongoing financial discipline.
Enhanced Stability Through Risk Management
In order to protect future cash flows, diversify the Company’s commodity price exposure and add stability during periods of market volatility, hedges have been layered on approximately 30 percent of Bonterra’s expected crude oil and natural gas production through Q3 2024. Through the next nine months, Bonterra has secured the following risk management contracts:
Bonterra remains committed to executing its focused business strategy, and responsibly developing its high-quality, oil-weighted asset base. The Company believes that it is strategically positioned to deliver long-term value to stakeholders and achieve sustainable profitability, strengthened by its recent core area addition which adds considerable value and development runway to Bonterra’s existing portfolio.
About Bonterra
Bonterra Energy Corp. is a conventional oil and gas corporation forging a grounded path forward for Canadian energy. Operations include a large, concentrated land position in Alberta’s Pembina Cardium, one of Canada’s largest oil plays. Bonterra’s liquids-weighted Cardium production provides a foundation for implementing a return of capital strategy over time, which is focused on generating long-term, sustainable growth and value creation for shareholders. An emerging Montney exploration opportunity is expected to provide enhanced optionality and an expanded potential development runway for the future. Our shares are listed on the Toronto Stock Exchange under the symbol “BNE” and we invite stakeholders to follow us on LinkedIn and X (formerly Twitter) for ongoing updates and developments.