Bonterra Energy Corp. Announces Year end 2018 Results

Source Press Release
Company Bonterra Energy Corp. 
Tags Shale Oil, Shale Gas, Unconventional Resources, Asset Deals, Deals, Upstream Activities, Guidance
Date March 12, 2019

Bonterra Energy Corp. () (TSX: BNE) ("Bonterra" or the "Company") is pleased to announce its operating and financial results for the year ended December 31, 2018. The related financial statements and notes, as well as management's discussion and analysis ("MD&A") for the year ended December 31, 2018 and annual information form ("AIF") as of December 31, 2018 are available on SEDAR at  and on Bonterra's website at  .


As at and for the year ended  December 31,
December 31,
  December 31,
($000s except $ per share)   
Revenue - realized oil and gas sales  223,388  202,566    169,863 
Funds flow (1)    107,251  102,444    96,305 
Per share - basic and diluted  3.22  3.08    2.90 
Dividend payout ratio  34%  39%    41% 
Cash flow from operations  115,963  103,873    75,294 
Per share - basic and diluted  3.48  3.12    2.26 
Dividend payout ratio  32%  38%    53% 
Cash dividends per share  1.11  1.20    1.20 
Net earnings (loss)    7,167  2,506    (24,135) 
Per share - basic and diluted  0.22  0.08    (0.73) 
Capital expenditures    78,737  82,441    40,797 
Disposition    56,752  (2) 
Total assets    1,103,833  1,125,551    1,147,834 
Working capital deficiency  30,281  27,790    24,921 
Long-term debt    298,660  292,212    329,204 
Shareholders' equity    483,970  510,260    543,824 
Oil  -bbl per day  8,119  7,907    7,942 
  -average price ($ per bbl)  65.51  59.30    49.46 
NGLs  -bbl per day  995  905    894 
  -average price ($ per bbl)  40.32  31.47    19.93 
Natural gas  -MCF per day  24,549  24,087    22,888 
  -average price ($ per MCF)  1.63  2.40    2.34 
Total barrels of oil equivalent per day (BOE)(3)  13,206  12,827    12,650 
(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)  For 2017, includes the disposition of a two percent overriding royalty interest on the total production from the Company's Pembina Cardium pool that closed December 20, 2017 and was effective January 1, 2018. Consideration consisted of $52 million of cash and incremental Cardium assets valued at $4.7 million which is included in capital expenditures (refer to Note 5 of the December 31, 2017 audited annual financial statements). 
(3)  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. 


Bonterra is pleased to report its financial and operational results for the year ended December 31, 2018. Through the year, the Company continued to focus on sustainability while prudently investing capital at a pace designed to enhance funds flow and grow reserves and production on a per share basis. In 2018, Bonterra achieved record average annual production of 13,206 BOE per day for the year, three percent higher than in 2017, on a capital expenditure budget that was four percent lower than the prior year. This conservative and disciplined strategy, combined with a supportive global oil price environment for the first nine months of the year, enabled the Company to generate solid funds flow supported by its oil-weighted asset base.

2018 Highlights

  • Achieved record average annual production of 13,206 BOE per day, in-line with guidance and three percent higher than 2017 volumes of 12,827 BOE per day due to a successful drilling and wellreactivation program in the Pembina Cardium area weighted to the first quarter, supported by the Company's low corporate decline rate of approximately 22 percent.
  • Generated annual funds flow of $107.3 million ($3.22 per share) compared to $102.4 million ($3.08per share) in the same period in 2017 due to higher production volumes and stronger realized prices.
  • Derived 94 percent of 2018 revenue from oil and natural gas liquids ("NGLs"), as the average realized price for crude oil was $65.51 per bbl and $40.32 per bbl for NGLs.
  • Drilled, completed, equipped and tied-in 27 gross (26.9 net) operated and seven gross (1.1 net) non-operated horizontal wells in the light oil Pembina Cardium pool, with a 100 percent drilling success rate, which contributed to strong volumes in 2018.
  • Invested $78.7 million in net capital expenditures, or four percent less than in 2017, of which $65 million was directed to drill, complete and tie-in new wells, $10 million on infrastructure, recompletions and other capital expenditures and $3.7 million was allocated to mineral rights and the purchase of incremental Cardium oil and gas assets. 
  • Bonterra's commitment to delivering strong operational execution continued through 2018, demonstrated by the following:
    • Two percent higher cash netbacks in 2018 of $22.24 per BOE compared to $21.85 per BOEin 2017; 
    • Reduced all-in costs (royalties, operating costs, general and administrative and interest) by 19 percent to $21.67 per BOE in Q4 compared to $26.87 per BOE in Q3;
    • Q4 2018 production costs per BOE of $14.23 was lower by 13 percent compared to Q3 2018. The decrease was primarily in response to extremely low commodity prices as the Company decreased maintenance programs; and 
    • Realized a seven percent higher price per BOE which averaged $46.34 in 2018 compared to $43.29 in 2017.
  • Paid out $1.11 per share in cash dividends to shareholders in 2018, resulting in a payout ratio of 34 percent of funds flow.
  • Increased proved plus probable ("P+P") reserves by one percent to 101.2 mmboe (68 percent oiland liquids) and grew P+P reserves on a fully diluted per share basis to 3.04 BOE per share, an increase of one percent compared to 3.00 BOE per share in 2017.

Through the first ten months of 2018, benchmark prices for crude oil and NGLs strengthened, and in concert with higher production volumes, contributed to the strongest funds flow Bonterra has achieved in the past three years, totaling $107.3 million or $3.22 per share (basic and diluted) in 2018. During the fourth quarter of 2018, an oversupply of Canadian crude oil inventory caused by a lack of pipeline capacity caused the Canadian / US oil differential to rapidly widen and reach unprecedented levels near US$35.00 per bbl in December. In an effort to alleviate the severe discount on Canadian crude, the Government of Alberta implemented mandatory oil production cuts for operators effective January 1, 2019, with the first 10,000 bbls per day being exempt. Since the Company's oil production is below the exemption, the required cuts are expected to have a minimal impact on overall production.

In order to prudently manage bank debt during the oil price erosion in Q4 2018, the Company adjusted its monthly dividend to $0.01 per common share. To date in the first quarter of 2019, Alberta's mandated curtailment has contributed to a narrowing of Canadian light, sweet crude oil differentials back to normalized ranges and the improved prices are expected to positively support Bonterra's realized oilprices in the first quarter. The Company will continue to regularly monitor commodity price changes and funds flow, with the view to adjusting dividend levels and capital expenditures as appropriate.

Bonterra also posted growth in production and reserves on a per share basis in 2018.  Relative to 2017, production per share grew three percent in 2018, while P+P) reserves per fully diluted share totaled 3.04 BOE compared to 3.00 BOE per share, a one percent increase. Total proved reserves per fully diluted share totaled 2.42 BOE, a three percent increase over 2.36 BOE in 2017. These achievements contribute to the Company's sustainability as Bonterra delivered growth per share, while funding a targeted capital expenditure program and paying a monthly dividend. 

The Company exited 2018 with an inventory of over 700 net identified undrilled, economic Cardium horizontal locations, which represents an estimated 21 years of development based on current production levels. With approximately one third of its undrilled identified well locations for the Pembina and Willesden Green Cardium included in its year end 2018 reserves evaluation, Bonterra continues to be wellpositioned to capture further upside as commodity prices increase.  


Bonterra's 2019 capital budget of $57 to $77 million is intended to maintain a balance between funds flow and capital spending with any excess cash used to reduce debt. Annual production volumes in 2019 are estimated to be in the range of 12,600 to 13,200 BOE per day, of which approximately 69 percent would be sweet crude oil and NGLs, with a forecast exit rate between 13,000 and 14,000 BOEper day.  

Bonterra intends to continue focusing financial discipline and cost control, including taking steps to further reduce debt levels relative to peers and strengthening its balance sheet. With one of the lowest annual production decline rates and one of the largest inventory of economic undrilled locations, the Company is well positioned to continue returning capital to shareholders in the form of dividends while focusing on measured per share growth in cash flow, production and reserves.

Year End Filings

Bonterra has also filed its Annual Information Form ("AIF") today on SEDAR. Selected financial and operational information is outlined above and should be read in conjunction with the Financial Statements, which were prepared in accordance with IFRS, and the related MD&A. The AIF includes information pursuant to the requirements of National Instrument 51-101 – Standards of Disclosure for Oil and GasActivities ("NI 51-101") of the Canadian Securities Administrators relating to reserves data and other oiland gas information. The AIF, Financial Statements, and related MD&A can be accessed either on Bonterra's website at  or under the Company's profile on SEDAR at  .

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd