Bellatrix Announces 2015 Year End Reserves

TSX, NYSE: BXE

CALGARY, March 16, 2016 /CNW/ - Bellatrix Exploration Ltd. ("Bellatrix" or the "Company") (TSX, NYSE: BXE) is pleased to announce its 2015 year-end reserves information.  Reserves at December 31, 2015 were independently evaluated by Sproule Associates Limited ("Sproule"). The evaluation encompasses 100% of Bellatrix's oil and gas properties and was prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101").

2015 represented a transformational year for Bellatrix with the completion and commissioning of the Bellatrix O'Chiese Nees-Ohpawganu'ck deep cut gas plant (the "Alder Flats Plant") and a defined drilling program focused on the low supply cost Spirit River play which delivers industry leading returns on investment making it one of the most profitable plays in the Western Canadian Sedimentary Basin. The Company delivered a 100% success rate through the drill bit in 2015 demonstrating another strong year of consistent operational results and technical work as highlighted by the following achievements:

  • As at December 31, 2015 Proved plus Probable ("2P") reserves were comprised of 70 million barrels of oil and natural gas liquids as well as 0.9 trillion cubic feet of natural gas, with a 32% liquids weighting on a boe basis.  Total Proved ("1P"), and 2P reserves at year end 2015 decreased by 11% compared to year end 2014 given an 80% reduction in total capital expenditures made in 2015 compared to 2014, and also reflective of lower commodity price assumptions.

  • Bellatrix's corporate decline rate forecast by Sproule for PDP reserves in 2016 is 27% (compared to Sproule's 2015 forecast PDP decline rate of 29% at December 31, 2014) demonstrating the company's shallowing base production profile which provides a strong foundation to support future growth.

  • Bellatrix maintained a focused capital program in 2015 adding PDP reserves at a finding, development and acquisition ("FD&A") cost of $9.54/boe excluding gas plant capital and $12.37/boe including total capital investment.  The PDP recycle ratio excluding gas plant capital was 1.2 times.

  • Bellatrix's three year 2P and 1P FD&A costs including changes in future development capital ("FDC") averaged $10.11/boe and $13.19/boe respectively.

  • On a 2P basis, the Company replaced 148% of total production in 2015, excluding revisions, acquisitions and divestitures. Annual production increased by 9% in 2015 to 15.1 million boe from 13.9 million boe in 2014.

  • Bellatrix's December 31, 2015 2P net asset value (2P NPV10 before tax) is $820 million ($4.27/share) which incorporates future net revenue adjusted for year-end net debt, seismic, risk management contracts, and land value.

  • The Company has calculated the impact of applying January 1, 2015 forecast pricing to 2015 year end reserves.  With no other changes to the evaluation, this results in a 2P before tax net present value (10% discount rate) of $2.2 billion, up 4% compared to Bellatrix's 2014 year end 2P reserve value of $2.1 billion using the same price forecast.

  • The Company's calculated 2P reserve life index improved by 8% to 14.3 years and is 10.1 years on 1P reserves.

  • Bellatrix drilled 12.4 net Sprit River wells in 2015 for a total net capital cost of $45.9 million, adding PDP reserves of 9.1 million boe equating to a simple PDP capital cost of $5.07/boe, further demonstrating the robust development costs realized in the Company's Spirit River liquids-rich natural gas play. The Company booked 2.5 net Spirit River well locations for each net Spirit River well drilled in 2015 reflecting the Company's 100% success rate on development drilling and demonstrating the high quality nature of the play and increased confidence in offset development drilling locations.

A conference call to discuss Bellatrix's annual financial and reserves results will be held on March 16, 2016 at 9:00 am MT / 11:00 am ET. To participate, please call toll-free 1-888-231-8191 or 647-427-7450. The conference call will also be recorded and available by calling 1-855-859-2056 or 403-451-9481 and entering passcode 48923171#.

2015 HIGHLIGHTS

       
  Twelve months ended December,
  2015 2014
Reserves (Company Interest (1), mboe)    
  Proved Developed Producing 63,577 74,181
  Total Proved 143,845 161,448
    Proved Undrilled/Total Proved 56% 54%
  Total Proved and Probable 223,116 250,098
    Probable/Total Proved and Probable 36% 35%
     
Net Present Value of Reserves (Before Tax, 10% Discount Rate)    
  Total Proved ($MM) $820 $1,412
  Proved and Probable ($MM) $1,336 $2,116
     
Net Asset Value    
  Proved and Probable ($MM) (2) $820 $1,729
  Proved and Probable Net Asset Value, per basic share $4.27 $9.01
     
FD&A costs    
  PDP, excluding deep-cut gas plant capital ($/boe) $9.54 $17.43
  PDP, including deep-cut gas plant capital ($/boe) $12.37 $18.42
  3 year average 1P, including changes in FDC ($/boe) $13.19  
  3 year average 2P, including changes in FDC ($/boe) $10.11  
     
Selected Key Operating Statistics    
  Annual Average Sales Volumes (boe/d) 41,441 38,065
  Q4 Average Sales Volumes (boe/d) 40,705 42,945
  Operating netback ($/boe) (3) $11.30 $22.70
  Funds Flow From Operations ($MM) (4) $109.5 $270.8
  Funds Flow per basic share $0.57 $1.48
     
Reserve Life Index    
  Proved 10.1 yrs.   10.6 yrs.
  Proved and Probable 14.3 yrs.   13.3 yrs.
Recycle Ratio (3)    
  PDP, excluding deep-cut gas plant capital 1.2 x   1.3 x
     
Evaluated Future Horizontal Drilling Locations    
  Gross Mannville 194 185 
  Net Mannville 121.2 95.2
  Gross Cardium 248 281
  Net Cardium 182.9 206.6

(1)"Company Interest" means Bellatrix's working interest (operated or non-operated) share before deduction of royalties but after including any royalty interests of Bellatrix. May not add due to rounding.
(2)Proved plus Probable net asset value incorporates 2P NPV10 (before tax) value and adjusts for year-end net debt, seismic, risk management contracts, and land value.
(3)Operating netback is not a recognized term under Canadian generally accepted accounting principals ("GAAP") and is calculated by deducting transportation, royalties and operating costs from revenue. Operating netback includes the impact of commodity price risk contracts. See "Non-GAAP Measures".
(4)Funds flow from operations is not a recognized term under Canadian generally accepted accounting principles. See "Non-GAAP Measures".

SELECT 2015 OPERATING RESULTS

  CAPITAL EXPENDITURES

         
        Years ended December 31,
($000s) 2015 2014
Lease acquisitions and retention     5,317 16,701
Geological and geophysical     661 1,601
Drilling and completion costs     61,454 298,313
Facilities and equipment     96,358 220,773
Property transfers - cash     (8,639) (32,921)
Capital - exploration and development(1)       155,151 504,467
Capital - corporate assets(2)     3,440 11,163
Property acquisitions     1,036 176,428
  Total capital expenditures - cash     159,627 692,058
Property dispositions - cash     (15,436) (9,809)
  Total net capital expenditures - cash     144,191                       682,249
Property acquisitions - non cash     - 68,616
Other - non cash(3)     8,613 20,000
   Total -  non - cash     8,613 88,616
Total capital expenditures - net(4)     152,804 770,865

(1)Excludes capitalized costs related to decommissioning liabilities expenditures incurred during the period.
(2)Capital - corporate assets includes office leasehold improvements, furniture, fixtures and equipment before recoveries realized from landlord lease inducements.
(3)Other includes non-cash adjustments for the current period's decommissioning liabilities and share based compensation.
(4)Total capital expenditures - net is considered to be a non-GAAP measure. Total capital expenditures - net includes the cash impact of capital expenditures and property dispositions, as well as the non-cash capital impacts of corporate acquisitions, property acquisitions, adjustments to the Company's decommissioning liabilities, and share based compensation.

The $153 million capital program for the year ended December 31, 2015 was financed from funds flow from operations, property transfers and dispositions, and bank debt.

  RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES AND FUNDS FLOW FROM OPERATIONS

         
($000s) Years ended December 31,
2015 2014
Cash flow from operating activities     103,075 294,828
Decommissioning costs incurred     2,725 1,743
Change in non-cash working capital     3,685 (25,818)
Funds flow from operations (1)     109,485 270,753

(1) Funds flow from operations is not a recognized term under Canadian generally accepted accounting principles. See "Non-GAAP Measures".

Bellatrix generated funds flow from operations of $109.5 million ($0.57 per basic share and diluted share) in the year ended December 31, 2015, a decrease of 60% from $270.8 million ($1.48 per basic share and $1.46 per diluted share) generated in 2014. The decrease in funds flow from operations between 2014 and 2015 was principally due to a 48% decrease in the Company's combined commodity pricing per boe for sales volumes. This was in part offset by a net realized gain on commodity contracts in 2015 compared to a net realized loss on commodity contracts in 2014 and decreased production, transportation, general and administrative and royalty expenses related to operational efficiencies in 2015. Bellatrix's cash flow from operating activities for the year ended December 31, 2015 decreased by 65% to $103.1 million ($0.54 per basic and diluted share) from $294.8 million ($1.61 per basic share and $1.59 per diluted share) generated during the 2014 year.

2015 RESERVES

Bellatrix engaged Sproule to complete a reserve report in accordance with NI 51-101, on 100% of Bellatrix's oil and gas properties effective December 31, 2015 (the "Sproule Report").

Highlights of Bellatrix's December 31, 2015 reserves report include:

  • 223 million boe total Company interest 2P reserves and 144 million boe total Company interest 1P reserves.

  • $1.3 billion net present value of future net revenue of 2P reserves before tax at 10% discount rate.

  • Net asset value is $4.27 per basic share outstanding based on the Sproule evaluation of 2P reserves at a 10% discount rate.

  • Bellatrix maintained a focused capital program in 2015 adding PDP reserves at an FD&A cost of $9.54/boe excluding gas plant capital and $12.37/boe including total capital investment.

  • Bellatrix's three year 2P and 1P FD&A costs including changes in FDC averaged $10.11/boe and $13.19/boe respectively.

  • The Company's calculated 2P reserve life index improved by 8% to 14.3 years and is 10.1 years on 1P reserves.

  • 194 gross (121 net) Mannville evaluated future undrilled horizontal locations.

  • 248 gross (183 net) Cardium evaluated future undrilled horizontal locations.
               
Company interest 2015 Reserves   2014 Reserves    
  Oil & Liquids Natural Gas Total   Total   Variance
  (mbbl) (mmcf) (mboe)   (mboe)   %
Proved 45,288 591,343 143,845   161,448   -11%
Probable 25,230 324,242 79,270   88,650   -11%
Proved Plus Probable 70,518 915,585 223,116   250,098   -11%

May not add due to rounding.

NET ASSET VALUE - PROVED PLUS PROBABLE

The following table of net asset value, as at December 31, 2015, is based on the Sproule evaluation of future net revenue of the Company's 2P reserves before tax, which does not represent fair market value and does not take into account possible reserve additions from reinvestment of cash flow in existing properties.

           
($000s except acre, unit and per unit amounts)
  PW 0% PW 5% PW 8% PW 10% PW 12%
Proved plus Probable Reserves (1) 2,925,861 1,904,195 1,528,049 1,336,455 1,179,289
Undeveloped Lands (2) 163,322 163,322 163,322 163,322 163,322
Value of Seismic (3) 22,100 22,100 22,100 22,100 22,100
Risk Management Contract Value (4) 15,408 15,408 15,408 15,408 15,408
Net Debt (5) (717,645) (717,645) (717,645) (717,645) (717,645)
Net Asset Value 2,409,046 1,387,380 1,011,234 819,640 662,474
           
Per Basic Common Share (6) $12.55 $7.23 $5.27 $4.27 $3.45

(1) As evaluated by Sproule as at December 31, 2015 based on forecast prices and costs before income tax.
(2) As estimated by Bellatrix as at December 31, 2015 based on 326,235  net acres of undeveloped land at an average price of $500.63 per acre.
(3) Based on 26% of $85 million replacement value based on seismic costs to buy data at an average of $1,500/km for 2D and  $14,500/km2 for 3D.
(4) Risk management contracts include both commodity contracts and foreign exchange contracts. The fair value of foreign exchange contracts is determined based on the difference between the contracted forward rate and current forward rates, using the remaining settlement amount. The fair value of risk management contracts as at December 31, 2015 was a net asset of $15.4 million.
(5) The Company's calculation of Net Debt as at December 31, 2015, includes long-term debt, Senior Unsecured notes translated into Canadian dollars using the year end Canadian/U.S. foreign exchange rate, and the net working capital deficiency (excess). The net working capital deficiency (excess) excludes the current portions of: finance lease obligation, deferred lease inducements and commodity contract liability and asset. See non-GAAP Measures.
(6) Based on 191.96 million common shares outstanding as at December 31, 2015.

  NET PRESENT VALUE OF FUTURE NET REVENUE ("NPV")

The forecast prices used in the Sproule Report were an average of the forecast prices published by Sproule, GLJ Petroleum Consultants Ltd. and McDaniel & Associates Consultants Ltd., as at January 1, 2016 (the "Consultants' Average Forecast Prices")It should not be assumed that the NPV estimated by Sproule represents the fair market value of Bellatrix's reserves. Estimated future net revenues are reduced for estimated future abandonment and reclamation costs, estimated royalties payable, estimated operating costs, the Saskatchewan Capital Tax and estimated capital for future development associated with the reserves.

In the Sproule Report, the net total future capital over the life of the reserves associated with 1P reserves is $766 million ($590 million discounted at 10%) and $1,125 million ($851 million discounted at 10%) for 2P reserves. The change in 2015 net total future capital over the life of the reserves associated with 1P reserves is negative $97 million (negative $153 million discounted at 10%) and negative $211 million (negative $301 million discounted at 10%) for 2P reserves. Calculated changes in net future capital exclude future capital from acquired properties. Negative changes to FDC incorporate the positive capital cost reductions achieved throughout 2015 across drilling, completion, equipping and tie-in activities. Significant reductions in drill times, revised well configurations where practical, minimized lease sizes and other initiatives in addition to improved competitive pricing of services have all contributed to overall cost reductions.

  SUMMARY OF NPV BEFORE INCOME TAXES (1), (2)

             
As at December 31, 2015 0% 5% 8% 10% 12%
Proved          
  Developed producing 762,093 619,225 554,174 517,575 485,489
  Developed non-producing 12,122 9,825 8,765 8,159 7,620
  Undeveloped 867,007 496,039 361,605 294,107 239,479
Total proved 1,641,222 1,125,089 924,544 819,842 732,558
Probable 1,284,639 779,106 603,505 516,613 446,731
Total proved plus probable 2,925,861 1,904,195 1,528,049 1,336,455 1,179,289

(1) Forecast Prices and Costs ($000s). Discounted at (%/year).
(2) May not add due to rounding.  


  SUMMARY OF NPV AFTER INCOME TAXES (1), (2), (3)

             
As at  December 31, 2015 0% 5% 8% 10% 12%
Proved          
  Developed producing 762,093 619,225 554,174 517,575 485,489
  Developed non-producing 12,122 9,825 8,765 8,159 7,620
  Undeveloped 867,007 496,039 361,605 294,107 239,479
Total proved 1,641,222 1,125,089 924,544 819,842 732,558
Probable 950,673 604,737 480,906 418,389 367,297
Total proved plus probable 2,591,896 1,729,826 1,405,450 1,238,231 1,099,855

(1) Forecast Prices and Costs ($000s), Discounted at (%/year).
(2) May not add due to rounding.
(3) The after-tax NPV of Bellatrix's oil and gas properties reflects the tax burden on the properties on a stand-alone basis and utilizes corporate tax pools. It does not consider the business-entity-level tax situation, or tax planning. It does not provide an estimate of the value at the level of the business entity, which may be significantly different. Bellatrix's consolidated financial statements and management's discussion and analysis should be consulted for information at the business entity level.

  FD&A COSTS (1)

In response to protracted commodity prices, Bellatrix curtailed capital investment and activity levels in 2015 relative to 2014. The Company achieved significant capital cost reductions in 2015 resulting in average drill, complete, equip and tie-in costs for its Spirit River program in the second half of 2015 averaging less than $4.0 million per well. The combination of curtailed capital activity levels, reduced capital costs, and decreased year end reserve values resulted in negative changes in FDC in 2015, which more than offset capital expenditure levels during the year, causing non-meaningful FD&A cost calculations across both total 1P and 2P reserve addition categories for 2015. The negative change in FDC calculations does not affect the PDP finding and development cost numbers as reported herein. Given non-meaningful 2015 calculations for 1P and 2P FD&A costs, Bellatrix has presented three year average 1P and 2P FD&A cost information.

         
  2015 2014 2013 2013 - 2015 Avg.
PROVED DEVELOPED PRODUCING FD&A COSTS        
FD&A Costs, PDP ($/boe)        
  Exploration and development(2) 12.65 17.06 14.82 15.47
  Acquisitions (excluding dispositions)(3) 2.87 23.81 32.08 29.33
  Total (including acquisitions) 12.37 18.42 23.31 19.64
  Total excluding plant capital 9.54 17.43 N/A 18.81
         
         

THREE YEAR AVERAGE FD&A COSTS (2013 - 2015)

     
  1P 2P
FD&A Costs excluding FDC    
  Exploration and development(2) 11.48 11.62
  Acquisitions (excluding dispositions)(3) 13.58 8.19
  Total (including acquisitions) 12.34 9.78
     
FD&A Costs including FDC(2)    
  Exploration and development 12.92 12.33
  Acquisitions (excluding dispositions)(3) 13.58 8.19
  Total (including acquisitions) 13.19 10.11

(1) Bellatrix provides FD&A costs that incorporate all acquisitions net of any dispositions during the year. The foregoing calculation is based on working interest reserves.
(2) The aggregate of exploration and development costs incurred in the most recent year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year.
(3) FD&A is calculated using the announced purchase price for corporate acquisitions rather than the actual amount allocated to property, plant and equipment for accounting purposes.

  RESERVE LIFE INDEX

Bellatrix's reserve life index has been determined for 1P and 2P working interest reserves using forecast prices and costs. The reserve life index for 2015 is calculated by dividing reserves as at the effective date of the Sproule Report, December 31, 2015, by 2016 forecasted average production of 42,562 boe/d for 2P reserves and 38,837 boe/d for 1P reserves, as set forth in the Sproule Report, representing a measure of the amount of time production could be sustained at the production rates based on the reserves at the applicable point in time.

                   
  2015   2014   2013   2012   2011
Proved 10.1   10.6   9.1   8.6   8.0
Proved and Probable 14.3   13.3   13.7   12.4   10.0

  

  RECYCLE RATIO (OPERATING NETBACK (1)/FD&A COST)

The recycle ratio is a measure for evaluating the effectiveness of a company's reinvestment program. The ratio measures the efficiency of capital investment. It accomplishes this by comparing the operating netback per boe to that year's reserve FD&A cost per boe. In 2015, the Company completed significant facilities and equipment investments totalling $96 million including $36 million directly on the Alder Flats Plant.  For this reason, recycle ratio information is included for the exploration and development program excluding capital spent directly on the Alder Flats Plant.

     
As at December 31, 2015 Proved Developed
Producing
Operating netback after commodity price risk management contracts ($/boe)(1)   $11.30
Recycle ratio (excluding deep-cut gas plant capital) 1.2 x
   
Operating netback before commodity price risk management contracts ($/boe)(1)  $10.83
Recycle ratio (excluding deep-cut gas plant capital) 1.1 x

(1)Operating netback is calculated by deducting transportation, royalties and operating costs from revenue. (See Non-GAAP Measures)

   RESERVES SUMMARY

Reserves included herein are stated either on a company interest basis (working interest plus royalty interests prior to deduction of royalty burdens), a gross (working interest excluding royalty interests and burdens) or a net (working interest plus royalty interest less royalty burdens) basis as defined in NI 51-101. "Company interest" is not a term defined by NI 51-101 and as such the estimates of company interest reserves herein may not be comparable to estimates prepared in accordance with NI 51-101 or to other issuers' estimates of company interest reserves.

At December 31, 2015 the Company's 2P Company interest reserves as evaluated by Sproule, using forecast prices and costs, were 223,116 mboe, a decrease of 11% compared to 250,098 mboe at December 31, 2014; total 1P Company interest reserves were 143,845 mboe, a decrease of 11% compared to 161,448 mboe at December 31, 2014. By commodity type, natural gas made up 68% and oil and natural gas liquids 32% of total 2P reserves. In addition to the information disclosed herein, more detailed information on the Company's reserves are included in the Company's Annual Information Form.

Reserves, at December 31, 2015, as evaluated by Sproule, are summarized below and in the following tables.

Summary of Oil and Gas Working Interest Reserves (1) (Gross)
Forecast Prices and Costs

 
    As at Dec. 31, 2015 As at Dec. 31, 2014
    Natural Gas(2) Heavy Oil Light and Natural Gas Total Total
        Medium Oil Liquids    
    (mmcf) (mbbl) (mbbl) (mbbl) (mboe, 6:1) (mboe, 6:1)
Proved            
  Developed producing 258,571 26 5,247 15,033 63,401 74,016
  Developed non-producing 5,033 80 58 257 1,234 1,647
  Undeveloped 326,164 108 6,291 18,102 78,861 84,926
Total proved 589,769 213 11,596 33,392 143,496 160,589
Probable 323,622 230 5,534 19,432 79,133 88,277
Total proved plus probable 913,391 443 17,130 52,824 222,629 248,866

(1)"Working Interest" means Bellatrix's working interest (operated or non-operated) share before deduction of royalties. Also referred to as "Gross" reserves under NI 51-101. May not add due to rounding.
(2)Includes natural gas from coal bed methane and shale gas reserves. Coal bed methane and shale gas reserves represent an immaterial portion of the Company's natural gas reserves.

Summary of Oil and Gas Net Reserves(1) (Net)
Forecast Prices and Costs

               
    As at Dec. 31, 2015 As at Dec. 31, 2014
    Natural Gas(2) Heavy Oil Light and Natural Gas Total Total
        Medium Oil Liquids    
    (mmcf) (mbbl) (mbbl) (mbbl) (mboe, 6:1) (mboe, 6:1)
Proved            
  Developed producing 219,181 25 4,480 10,661 51,696 57,796
  Developed non-producing 4,333 65 48 187 1,022 1,343
  Undeveloped 289,277 93 5,376 14,248 67,930 68,953
Total proved 512,790 183 9,904 25,097 120,648 128,091
Probable 276,981 188 4,553 14,661 65,565 69,158
Total proved plus probable 789,771 371 14,458 39,757 186,214 197,249

(1)"Net" means Bellatrix's working interest (operated or non-operated) share after deduction of royalty obligations, plus Bellatrix's royalty interests in reserves. May not add due to rounding.
(2)Includes natural gas from coal bed methane and shale gas reserves. Coal bed methane and shale gas reserves represent an immaterial portion of the Company's natural gas reserves.

  TAX POOLS

At December 31, 2015, the Company had approximately $1.7 billion in tax pools available for deduction against future income as follows:

       
($000s) Rate % 2015 2014
Intangible resource pools:      
  Canadian exploration expenses 100 118,000 116,700
  Canadian development expenses 30 825,500 758,700
  Canadian oil and gas property expenses 10 193,100 207,900
  Foreign resource expenses 10 700 800
Alberta Non Capital losses greater than Federal non-capital losses (Alberta) 100 16,100 16,100
Undepreciated capital cost(1) 6 - 100 371,500 367,600
Non capital losses (expire through 2033) 100 151,000 162,300
Financing  costs 20 Straight-Line 9,300 14,100
Total Tax Pools   1,685,200 1,644,200

(1)Approximately $298 million of undepreciated capital cost pools are class 41, which is claimed at a 25% rate.

  FUTURE DEVELOPMENT COSTS USING FORECAST PRICES AND COSTS

At year-end, 2015, Sproule had evaluated certain future development opportunities on Company lands including 194 gross (121 net) evaluated future undrilled Mannville horizontal locations and 248 gross (183 net) future undrilled Cardium horizontal locations.

For purposes of assigning net present value of future revenue, future development locations were committed as detailed in the following table.

     
($000s) Proved Future
Development Costs
Proved plus Probable
Future Development Costs
2016 111,199 121,301
2017 119,266 174,982
2018 156,420 229,780
2019 and subsequent 379,600 598,576
Undiscounted total 766,485 1,124,639
Discounted @ 10%/yr. 589,589 851,088

  RESERVE REPORT COMMODITY PRICING

The following is a summary of the Consultants' Average Forecast Prices as at January 1, 2016:

  OIL          
Year
Forecast
WTI
Cushing
Oklahoma
($US/bbl)
Canadian
Light Sweet
Crude
($/bbl)
AECO
Natural
Gas   
($/MMBtu)
Butane
($/bbl)
Propane
($/bbl)
Condensate
($/bbl)
Exchange
Rate(1)
($US/$Cdn)
2016 44.67 55.89 2.57 38.73 9.76 60.16 0.74
2017 55.20 66.47 3.14 46.91 15.88 70.95 0.77
2018 63.47 73.21 3.47 52.58 24.09 78.05 0.80
2019 71.00 81.35 3.80 59.42 30.49 86.58 0.82
2020 74.77 84.57 3.99 62.81 33.69 90.00 0.83
2021 78.24 87.88 4.13 62.25 34.95 93.46 0.84
2022 81.75 92.01 4.30 68.33 36.45 97.79 0.84
2023 85.37 96.24 4.48 71.46 38.06 102.23 0.84
2024 87.32 98.17 4.60 72.90 38.79 104.29 0.84
2025 88.90 99.94 4.70 74.22 39.50 106.16 0.84
Thereafter +1.83%/yr. +1.83%/yr. +1.83%/yr. +1.83%/yr. +1.83%/yr. +1.83%/yr.  
               

(1) Exchange rates used to generate the benchmark reference prices in this table

Weighted average historical prices realized by Bellatrix (before commodity price risk management contracts) for the year ended December 31, 2015, were $2.95/mcf for natural gas, $54.34/bbl for crude oil and condensate, and $14.16/bbl for natural gas liquids (excluding condensate).

  RESERVES COMMITTEE

Bellatrix has a reserves committee, comprised of independent board members, that reviews the qualifications and appointment of the independent reserve evaluators. The committee also reviews the procedures for providing information to the evaluators. All booked reserves are based upon annual evaluations by the independent qualified reserve evaluators conducted in accordance with the Canadian Oil and Gas Evaluation Handbook and NI 51-101. The evaluations are conducted using all available geological and engineering data. The reserves committee has reviewed the reserves information and approved the reserve report.

  LAND

As at December 31, 2015, Bellatrix had approximately 326,235 net undeveloped acres in Alberta, British Columbia and Saskatchewan.

Land Statistics

   
  2015 2014
Average working interest    
 Developed 62% 61%
 Undeveloped 72% 74%
Total 67% 68%

Land Holdings(1)

   
  2015 2014
  Gross Net Gross Net
Developed    
  British Columbia 8,612 2,428 9,285 2,765
  Alberta 457,300 284,002 462,741 282,478
  Saskatchewan 13,327 12,720 13,327 12,720
  Total 479,239 299,150 485,353 297,962
Undeveloped    
  British Columbia 98,850 40,212 106,180 47,208
  Alberta 347,482 278,291 405,991 330,835
  Saskatchewan 8,005 7,732 7,641 7,641
  Total 454,337 326,235 519,812 385,685
Developed and Undeveloped    
  British Columbia 107,462 42,640 115,465 49,973
  Alberta 804,782 562,292 868,732 613,313
  Saskatchewan 21,332 20,452 20,968 20,361
Total 933,576 625,385 1,005,165 683,647
(1)May not add due to rounding        
         

OPERATIONS OUTLOOK

The operational reliability and competitive cost structure of the Company has never been stronger. The strategic investment in infrastructure including the Alder Flats Plant has structurally improved the operational reliability and cost structure of our business, evidenced by the 28% reduction in fourth quarter 2015 operating costs to $6.87/boe relative to the comparable period in 2014. The investment in infrastructure has structurally reduced transportation costs and royalty rates, enhanced natural gas liquids recoveries, and improved overall reliability of processed production volumes.

Commodity prices for both oil and natural gas currently remain at what we believe are unsustainably low levels. As market supply and demand forces naturally realign, we anticipate this will drive commodity prices to higher levels.  Bellatrix remains focused on development of the Spirit River formation, which is one of the lowest supply cost natural gas plays in North America. The Company is favorably positioned with a deep inventory of high rate of return well locations, supported by infrastructure and firm takeaway capacity, to profitably grow when commodity prices improve. Our acreage position in the Spirit River play provides the value enhancing growth platform for our Company as we move through the commodity price cycle.

Bellatrix has maintained an active two rig drilling program leveraging joint venture capital through the majority of the first quarter of 2016 focused on development drilling in the Spirit River play. Approximately 70% of the Company's first half 2016 capital budget will be invested within the first quarter, which is expected to provide average corporate production in the first six months of 2016 at approximately 39,000 boe/d (midpoint of guidance +/- 500 boe/d).

Bellatrix Exploration Ltd. is a Western Canadian based growth oriented oil and gas company engaged in the exploration for, and the acquisition, development and production of oil and natural gas reserves in the provinces of Alberta, British Columbia and Saskatchewan. Common shares of Bellatrix trade on the Toronto Stock Exchange and on the New York Stock Exchange under the symbol "BXE".

All amounts in this press release are in Canadian dollars unless otherwise identified.

READER ADVISORIES:

CONVERSION: The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 mcf/bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this press release are derived from converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

NON-GAAP MEASURES: This press release contains the term "funds flow from operations" which should not be considered an alternative to, or more meaningful than "cash flow from operating activities" as determined in accordance with GAAP as an indicator of the Company's performance. Therefore reference to non-GAAP measures of funds flow from operations or funds flow from operations per share may not be comparable with the calculation of similar measures for other entities. Management uses funds flow from operations to analyze operating performance and leverage and considers funds flow from operations to be a key measure as it demonstrates the Company's ability to generate the cash necessary to fund future capital investments and to repay debt. Funds flow from operations is calculated as cash flow from operating activities, excluding decommissioning costs incurred and changes in non-cash working capital incurred. The reconciliation between cash flow from operating activities and funds flow from operations can be found in the Company's Management Discussion and Analysis for the year ended December 31, 2015 and 2014. Funds flow from operations per share is calculated using the weighted average number of shares for the period. This press release also contains the term of operating netbacks, which is not a recognized measure under GAAP. Operating netbacks are calculated by subtracting royalties, transportation, and operating expenses from revenues before other income. Management believes this measure is a useful supplemental measure of the amount of revenues received after transportation, royalties and operating expenses. Readers are cautioned, however, that this measure should not be construed as an alternative to net profit or loss determined in accordance with GAAP as a measure of performance. Bellatrix's method of calculating this measure may differ from other entities, and accordingly, may not be comparable to measures used by other companies.

"Net debt" is considered to be a non-GAAP measure. Therefore reference to the non-GAAP measures of net debt may not be comparable with the calculation of similar measures for other entities. The adjusted working capital deficiency (excess) is an non-GAAP measure calculated as net working capital deficiency (excess) excluding short-term commodity contract assets and liabilities, current finance lease obligation, and current deferred lease inducements.  Management believes these measures are useful supplementary measures of the total amount of current and long-term debt. A reconciliation between total liabilities under GAAP and net debt as calculated by the Company is found in the Company's Management Discussion and Analysis for the year ended December 31, 2015 and 2014.

FORWARD LOOKING STATEMENTS:  This news release contains certain forward-looking information and statements that involve various risks, uncertainties and other factors. The use of any of the words "continue", "believe", "anticipate", "position", "provides", "will", "expected", and similar expressions are intended to identify forward-looking information. In particular, but without limiting the generality of the foregoing, this news release contains forward-looking information including management's assessment of future plans and operations, production forecasts used to calculate reserve life, reserve life calculations, reserves estimates, anticipated additional drilling locations and confidence in offset development drilling locations, the total future capital associated with development of drilling locations and reserves, operational reliability and competitive cost structure of the Company, management's expectations regarding commodity prices and expected recovery, management's expectation that it is favorably positioned as a result of its deep inventory of high rate of return well locations, management's assessment that the Company's land position in the Spirit River will be value enhancing for the Company, 2016 capital expenditures and expected amount of total program including capital to be invested by various joint venture partners, and 2016 average corporate production. In addition, references to reserves are deemed to be forward-looking information, as they involve the implied assessment, based on certain estimated and assumptions that the reserves described exist in the quantities predicted or estimated. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. These risks include, but are not limited to: the risks associated with the oil and gas industry; commodity prices; and exchange rate changes. Industry related risks could include, but are not limited to: operational risks in exploration; development and production; delays or changes in plans; risks associated to the uncertainty of reserve estimates; health and safety risks, and; the uncertainty of estimates and projections of production, costs and expenses. The recovery and reserve estimates of Bellatrix's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. In addition, forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which the Company operates; the timely receipt of any required regulatory approvals; the ability of the Company  to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in operating the field in a safe, efficient and effective manner; the ability of the Company to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Company to secure adequate product transportation and processing; future commodity prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates; and the ability of the Company to successfully market its oil and natural gas products. Readers are cautioned that the foregoing lists of factors and assumptions are not exhaustive. Additional information on these and other factors that could affect Bellatrix's operations and financial results are included in reports on file with Canadian and United States securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), through the SEC website (www.sec.gov), and at Bellatrix's website (www.bellatrixexploration.com). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. 

 

 

SOURCE Bellatrix Exploration Ltd.

PDF available at: http://stream1.newswire.ca/media/2016/03/16/20160316_C9044_DOC_EN_44713.pdf

For further information:

Steve Toth, CFA, Vice President, Investor Relations (403) 750-1270

or

Troy Winsor, Investor Relations (800) 663-8072

Bellatrix Exploration Ltd.
1920, 800 - 5th Avenue SW
Calgary, Alberta, Canada T2P 3T6
Phone: (403) 266-8670
Fax: (403) 264-8163
www.bellatrixexploration.com


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890