Bellatrix Exploration reports year-end reserves, net asset value and land
holdings and industry leading FD&A costs
TSX: BXE
CALGARY, Feb. 22 /CNW/ - Bellatrix Exploration Ltd ("Bellatrix" or the "Company") announces the results of its 2009 year-end reserves as evaluated by GLJ Petroleum Consultants Ltd. ("GLJ"), the independent reserves evaluator, for 100% of Bellatrix's oil and gas properties prepared in accordance with National Instrument 51-101 ("NI 51-101").
As Bellatrix plans to announce its audited 2009 financial results on or about March 11, 2010, certain financial estimates have been made by Bellatrix in this release to facilitate the discussion with respect to the performance of our capital program. Readers are advised that these financial estimates are subject to audit and may be amended as necessary.
FINDING, DEVELOPMENT AND ACQUISITION COSTS ("FD&A") HIGHLIGHTS ------------------------------------------------------------------------- ($/boe) 2007-2009 2009 2008 Average ------------------------------------------------------------------------- Proved (excluding FDC) $6.01 $18.24 $16.07 Proved (including FDC) $9.50 $20.86 $17.06 Proved Plus Probable (excluding FDC) $6.97 $31.46 $16.63 Proved Plus Probable (including FDC) $6.97 $36.06 $17.20 ------------------------------------------------------------------------- - The Company established a recycle ratio, after commodity price risk management contracts and excluding future development costs, of 3.14x on a proved basis and 2.71x on a proved plus probable basis. - The Company's reserves life index has extended to 6.5 years for proved reserves and is 9.6 years for proved plus probable reserves.
FIRST QUARTER DRILLING PROGRAM UPDATE
In the first quarter of 2010, the Company plans to drill 8 gross (6.25 net) Cardium horizontal wells and 2 gross (1.85 net) Notikewin horizontal wells. To date the Company has drilled three Cardium horizontal wells (100% WI), at Norbuck and Pembina. Bellatrix has conducted a multi-staged completion on all three wells and is currently flowing back load oil on two of the wells. The third well (100% WI) in the Lodgepole area of Pembina is on production after recovering all of its load oil and is averaging 375 bopd. In the Ferrier area the Company has drilled and conducted a multi-staged completion on a Notikewin horizontal well (100% WI) and is in the process of testing the well prior to placing on production. The Company is currently drilling 3 gross (1.46 net) Cardium horizontal wells at Norbuck, West Pembina and Willesden Green.
OPERATING HIGHLIGHTS
Bellatrix's corporate thrust in 2009 was to improve the Company's balance sheet by reducing total outstanding debt and streamlining its operating cost structure. This strategy resulted in a reduced 2009 capital program of approximately $16 million, from $43 million in 2008, and strategic divestitures for proceeds of approximately $93 million which were expected to negatively impact reserves and production.
The consequence of this planned activity was total net debt levels decreasing by $108 million from $215 million at December 31, 2008 to $107 million at December 31, 2009 including the liability component of the convertible debentures and excluding unrealized commodity contract assets and liabilities, future income taxes and asset retirement obligations. The accompanying reduction posted in reserves and production was within the planned parameters.
Bellatrix continues to tighten its cost structure in the current economically challenging climate with forecasted reductions of approximately 22% to total operating expenses which includes general and administrative costs ("G&A") and lease operating costs in 2010. As stated in the press release dated January 29, 2010 Bellatrix has announced a $75 million capital expenditures budget for 2010. Based on the timing of proposed expenditures, downtime for anticipated plant turnarounds and normal production declines, execution of the 2010 budget is anticipated to provide 2010 average daily production of approximately 8,500 boe/d and an exit rate of approximately 10,000 boe/d. The 2010 capital budget is expected to be directed primarily towards horizontal drilling and completions activities in the Cardium and Notikewin resource plays.
As an added layer of protection of its cash flow forecast, Bellatrix has hedged approximately 54% of its estimated 2010 natural gas production for the balance of the year at an average fixed price of $6.56/mcf ($5.972 CAD per GJ).
Bellatrix reports the following highlights of the Company's reserves and undeveloped land at December 31, 2009 in comparison to the prior year end, including:
- 100% drilling success rate in 2009 that consisted of 18 gross (11.68 net) wells at Pembina, Willesden Green, Mantario and Irvine. - Following securityholder and regulatory approval, on November 1, 2009, the Company was converted (the "Reorganization") from an open- ended, unincorporated investment trust into a growth oriented, public exploration and production company. Strategically, the Reorganization re-positioned the Company, allowing Bellatrix to move forward with a corporate organic growth model and a strong balance sheet. - Total net proceeds from the sale of properties in 2009 were $93 million; the net proceeds from the dispositions were used to pay down debt. - Company's total net debt including the liability component of its convertible debentures, excluding unrealized commodity contract assets and liabilities, future income taxes and asset retirement obligations, as at December 31, 2009 was $107 million, down from $215 million as at December 31, 2008 and $250 million as at December 31, 2007. - The Company's credit facility was renewed on November 1, 2009 and consists of a $10 million demand operating facility provided by one Canadian bank and a $75 million extendible revolving term credit facility provided by one Canadian bank and one Canadian financial institution. The next borrowing base review is scheduled for March 31, 2010. - As at December 31, 2009, Bellatrix has approximately $28 million drawn on its extendible, revolving bank credit facility leaving $57 million available to assist in managing our operations and capital program. On January 28, 2010, Bellatrix closed an equity issuance of 13.64 million common shares on a bought deal basis at a price of $3.30 per share for gross proceeds of $45.0 million (net proceeds of $42.7 million after underwriter fees and before other closing costs). The net proceeds from this financing were used to temporarily reduce outstanding indebtedness. - Bellatrix's net asset value, based on the GLJ evaluation at a 10% discount rate, equates to $3.76 per share on a basic and fully diluted basis as at December 31, 2009. - Based on the reserves information and other data as at December 31, 2009, the Company has performed ceiling test calculations in accordance with the requirements of CICA AcG 16 "Oil and Gas Accounting - Full Cost". No ceiling test impairment of oil and gas properties is anticipated for accounting purposes as at December 31, 2009. - The Company has approximately $400 million in tax pools available for deduction against future income. - Bellatrix has over 258,500 net undeveloped acres in Alberta, British Columbia and Saskatchewan.
RESERVES
The Company has experienced several years of positive revisions to the reserve base as its assets continue to mature and expects this trend to continue. Additionally, reserves expected from the Company's developing Cardium and Notikewin resource plays remain largely unassigned due to the nascent development of the play and the horizontal drilling and completion technologies involved. Specifically, the reserve evaluation includes only one (net) undeveloped Notikewin horizontal gas location at Ferrier and two (net) undeveloped Cardium horizontal oil locations at Pembina. Focusing on the Cardium oil play, the Company is in the process of developing and proving reserves across 133 gross (81 net) sections of land, an average 61% working interest.
Bellatrix's average sales volumes for 2009 are estimated to be 8,426 boe/d. Fourth quarter 2009 sales volumes averaged 6,572 boe/d, weighted 75% toward natural gas, 17% toward light oil and natural gas liquids with the remaining 8% being heavy oil. Omitting properties subject to disposition in 2009, proved and probable company interest reserve additions in 2009 replaced 99% of production.
At December 31, 2009 the Company's proved and probable company interest reserves, using forecast prices and costs, were 25,872 mboe, a decrease of 34% compared to 39,488 mboe at December 31, 2008. Property dispositions accounted for 12,858 mboe or 94 % of the decrease. By commodity type, natural gas makes up 72%, light oil and natural gas liquids 21% and heavy oil 7% of total reserves. At December 31, 2009, the Company's total proved company interest reserves were 16,573 mboe, a decrease of 29% compared to 23,453 mboe at December 31, 2008; property dispositions accounted for 6,464 mboe or 94% of the decrease.
Exploration and development capital expenditures after drilling incentive credits but excluding acquisitions and dispositions were $15.8 million in 2009. During the fourth quarter of 2009, Bellatrix spent $9.6 million on capital projects, excluding corporate and asset acquisitions and dispositions, compared to $11.0 million in 2008. In 2009, Bellatrix drilled or participated in 18 (11.68 net) wells including 12 gross (7.62) net natural gas wells, and 4 gross (3.5 net) oil wells and 2 gross (0.56 net) awaiting completion.
PRODUCTION
For the 2009 year, sales volumes averaged 8,426 boe/d compared to 11,900 boe/d for the same period in 2008, representing a 29% decrease. The reduction in average sales volumes from the 2008 year to 2009 is a result of natural production decline, minimal 2009 capital spending and approximately 3,600 boe/d in dispositions during the first half of 2009.
As stated in the press release dated January 29, 2010 Bellatrix has announced a $75 million capital expenditures budget for 2010, which compares with the Company's $19 million 2009 capital expenditures budget. Based on the timing of proposed expenditures, downtime for anticipated plant turnarounds and normal production declines, execution of the 2010 budget is anticipated to provide 2010 average daily production of approximately 8,500 boe/d and an exit rate of approximately 10,000 boe/d. The 2010 capital budget is expected to be directed primarily towards horizontal drilling and completions activities in the Cardium and Notikewin resource plays.
As part of the 2010 capital expenditures budget the Corporation anticipates drilling 44 gross wells (31.6 net wells) primarily in the Pembina and Ferrier areas of Alberta, for an approximate cost of $57.0 million. In addition, the Corporation anticipates spending approximately $4.0 million on land and seismic acquisitions, $6.25 million on well site equipping and field facilities, $0.75 million on geological and geophysical expenditures, $3.0 million on optimization and recompletions and $4.0 million on non-operated joint venture billings.
CAPITAL EXPENDITURES ------------------------------------------------------------------------- Years ended December 31, 2009 2008 ($000s) (unaudited) ------------------------------------------------------------------------- Lease acquisitions and retention 649 1,244 Geological and geophysical 31 318 Drilling and completion costs 13,715 19,008 Facilities and equipment 3,616 16,129 Drilling Incentive Credits (2,168) - ------------------------------------------------------------------------- Exploration and development 15,843 36,699 Corporate 644 589 Property acquisitions - 5,714 ------------------------------------------------------------------------- Total capital expenditures - cash 16,487 43,002 Property dispositions - cash (92,921) (44,340) ------------------------------------------------------------------------- Total net capital expenditures - cash (76,434) (1,338) ------------------------------------------------------------------------- Other - non-cash(2) (492) 3,710 ------------------------------------------------------------------------- Total capital expenditures(1) (76,926) 2,372 ------------------------------------------------------------------------- (1) Excludes capitalized costs related to asset retirement obligation expenditures incurred during the year. (2) Other includes current period's asset retirement obligations and unit based compensation capitalized.
DISPOSITIONS
The Company's focus in 2009 has been on the restructuring and strengthening of its balance sheet. The Company had two minor dispositions in the second quarter and successfully completed the divestiture of the majority of its petroleum and natural gas properties in Saskatchewan in the third quarter. Net proceeds from the dispositions were used to reduce the Company's bank indebtedness; these strategic accomplishments have allowed the Company to progress forward with substantially improved financial flexibility.
On June 30, 2009, Bellatrix sold 145 boe/d, including 0.63 mmcf/d of natural gas, in the Penhold Area of Central Alberta for $4.7 million, after purchase adjustments and closing costs. In addition, in June 2009, Bellatrix completed a disposition of certain royalty interests for approximately $3.7 million, after purchase adjustments and closing costs. The proceeds from these two dispositions were used to reduce Bellatrix's bank indebtedness.
On July 30, 2009, the Company successfully completed the divestiture of a majority of its oil and natural gas assets in Saskatchewan for net proceeds of $86 million (the "Saskatchewan Divestiture"). The Saskatchewan Divestiture excludes the Saskatchewan properties of Mantario and Cypress. Bellatrix's interests to the base Belly River in three sections in the Ferrier area of West Central Alberta were also included in the divestiture package. In the second quarter of 2009, the Company recorded a $114.2 million non-cash loss on the assets sold being the excess of the allocated net book value to these assets, compared to the total estimated net proceeds, after purchase adjustments and estimated closing costs.
TOTAL DEBT
Bellatrix's net debt, excluding unrealized commodity contract assets and liabilities, future income taxes and asset retirement obligations, as at December 31, 2009 was $107 million, representing $27.9 million outstanding on the credit facility, $81.7 million in convertible debentures (liability component) and the net balance of working capital.
On January 28, 2010, Bellatrix closed an equity issuance to sell 13.64 million common shares on a bought deal basis at a price of $3.30 per share for gross proceeds of $45.0 million (net proceeds of $42.7 million after underwriter fees and before other closing costs). The net proceeds from this financing will be used to temporarily reduce outstanding indebtedness, thereby freeing up borrowing capacity that may be redrawn to fund Bellatrix's ongoing capital expenditure program and for general purposes.
TAX POOLS
At December 31, 2009, the Company had $399.6 million in tax pools available for deduction against future income as follows:
------------------------------------------------------------------------- ($000s) Rate % 2009 2008 (unaudited) ------------------------------------------------------------------------- Canadian exploration expenses 100 43,200 43,300 Canadian development expenses 30 210,500 214,100 Canadian oil and gas property expenses 10 15,100 63,300 Foreign resource expenses 10 1,100 700 Attributed Canadian Royalty Income (Alberta) 100 16,100 16,100 Undepreciated capital cost 6-55 100,600 128,300 Non capital losses (expire through 2027) 100 12,800 39,800 Financing costs 20 S.L 200 5,400 ------------------------------------------------------------------------- Total Tax Pools 399,600 511,000 -------------------------------------------------------------------------
The reduction in tax pools from 2008 to 2009 is primarily due to the dispositions that closed during the year. As a result of the Reorganization, $1.7 million of tax pools related to financing costs were eliminated effective November 1, 2009.
Reserves, at December 31, 2009, as evaluated by GLJ, are summarized below and in the following tables.
Summary of Oil and Gas Company Interest(1) Reserves(2) (Gross + Royalties Receivable) Forecast Prices and Costs ------------------------------------------------------------------------- As At December 31, 2009 As at Dec. 31, Light 2008 and Natural Total Natural Heavy Medium Gas Total Gas(3) Oil Oil Liquids (mboe, (mboe, (mmcf) (mbbl) (mbbl) (mbbl) 6:1) 6:1) ------------------------------------------------------------------------- Proved Developed producing 55,438 759 1,057 1,289 12,345 17,465 Developed non- producing 5,572 - 40 50 1,019 1,565 Undeveloped 9,415 619 751 270 3,209 4,413 ------------------------------------------------------ Total proved 70,425 1,378 1,848 1,610 16,573 23,453 Probable 41,961 477 794 1,034 9,299 16,035 ------------------------------------------------------ Proved plus probable, producing 73,459 943 1,458 1,755 16,399 23,135 ------------------------------------------------------ Total proved plus probable 112,386 1,855 2,642 2,644 25,872 39,488 ------------------------------------------------------------------------- (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. (2) May not add due to rounding. (3) Includes 1,518 mmcf of total proved and 1,950 Gross mmcf total proved plus probable assigned to natural gas from coal bed methane reserves. Summary of Oil and Gas Working Interest(1) Reserves(2) (Gross) Forecast Prices and Costs ------------------------------------------------------------------------- As At December 31, 2009 As at Dec. 31, Light 2008 and Natural Total Natural Heavy Medium Gas Total Gas(3) Oil Oil Liquids (mboe, (mboe, (mmcf) (mbbl) (mbbl) (mbbl) 6:1) 6:1) ------------------------------------------------------------------------- Proved Developed producing 55,173 741 1,057 1,278 12,272 17,336 Developed non-producing 5,572 - 40 50 1,019 1,562 Undeveloped 9,386 617 751 269 3,201 4,407 ------------------------------------------------------ Total proved 70,131 1,358 1,848 1,597 16,492 23,306 Probable 41,795 471 794 1,027 9,259 15,972 ------------------------------------------------------ Proved plus probable, producing 73,170 919 1,457 1,743 16,315 22,963 ------------------------------------------------------ Total proved plus probable 111,926 1,830 2,642 2,624 25,750 39,278 ------------------------------------------------------------------------- (1) "Working Interest" means Bellatrix's working interest (operated or non operated) share before deduction of royalties and without including any royalty interests of Bellatrix.. Also referred to as "Gross" reserves under NI 51-101. (2) May not add due to rounding. (3) Includes 1,518 mmcf of total proved and 1,950 Gross mmcf total proved plus probable assigned to natural gas from coal bed methane reserves. Summary of Oil and Gas Net Reserves(1),(2) (Net) Forecast Prices and Costs ------------------------------------------------------------------------- As At December 31, 2009 As at Dec. 31, Light 2008 and Natural Total Natural Heavy Medium Gas Total Gas(3) Oil Oil Liquids (mboe, (mboe, (mmcf) (mbbl) (mbbl) (mbbl) 6:1) 6:1) ------------------------------------------------------------------------- Proved Developed producing 45,482 650 911 816 9,954 14,277 Developed non-producing 4,548 - 27 32 817 1,231 Undeveloped 7,335 489 627 178 2,516 3,559 ------------------------------------------------------ Total proved 57,365 1,140 1,565 1,025 13,291 19,067 Probable 33,741 384 597 659 7,263 12,915 ------------------------------------------------------ Proved plus probable, producing 60,253 803 1,224 1,103 13,172 18,835 ------------------------------------------------------ Total proved plus probable 91,106 1,524 2,162 1,684 20,555 31,982 ------------------------------------------------------------------------- (1) "Net" means Bellatrix's working interest (operated or non operated) share after deduction of royalty obligations, plus Bellatrix's royalty interests in reserves. (2) May not add due to rounding. (3) Includes 1.510 mmcf of total proved and 1,681 Gross mmcf total proved plus probable assigned to natural gas from coal bed methane reserves. RESERVES RECONCILIATION COMPANY INTEREST(1),(2) (Gross + Royalties Receivable) Light and Medium Heavy Total Crude Oil Crude Oil Crude Oil NGLs (mbbl) (mbbl) (mbbl) (mbbl) ------------------------------------------------------------------------- PROVED PRODUCING Opening Balance(3) 1,240 4,550 5,790 1,122 Discoveries 0 0 - 4 Extensions 37 0 37 167 Infill Drilling 203 57 260 10 Improved Recovery 0 0 - - Technical Revisions (4) 68 64 258 Acquisitions 0 54 54 - Dispositions (252) (3,338) (3,590) (45) Economic Factors (1) 15 14 (8) Production (167) (646) (813) (237) Closing Balance(4) 1,057 759 1,817 1,289 ------------------------------------------------------------------------- TOTAL PROVED Opening Balance(3) 1,497 7,055 8,552 1,358 Discoveries 0 0 - 2 Extensions 0 19 19 219 Infill Drilling 743 0 743 25 Improved Recovery 0 0 - - Technical Revisions 29 115 144 304 Acquisitions 0 106 106 - Dispositions (253) (5,272) (5,525) (45) Economic Factors (1) 0 (1) (17) Production (167) (646) (813) (237) Closing Balance(4) 1848 1,378 3,226 1,610 ------------------------------------------------------------------------- PROBABLE Opening Balance(3) 792 6,170 6,963 965 Discoveries 0 0 0 9 Extensions 0 8 8 54 Infill Drilling 98 0 98 10 Improved Recovery 0 0 0 0 Technical Revisions (15) (140) (156) 22 Acquisitions 0 34 34 0 Dispositions (81) (5,601) (5,683) (28) Economic Factors 0 7 7 3 Production 0 0 0 0 Closing Balance(4) 794 477 1,271 1,034 ------------------------------------------------------------------------- PROVED PLUS PROBABLE Opening Balance(3) 2,289 13,226 15,515 2,322 Discoveries 0 0 - 11 Extensions 0 27 27 273 Infill Drilling 842 0 842 34 Improved Recovery 0 0 - - Technical Revisions 13 (25) (12) 3275 Acquisitions 0 140 140 - Dispositions (334) (10,873) (11,207) (73) Economic Factors (1) 7 6 (14) Production (167) (646) (813) (237) Closing Balance(4) 2,642 1,855 4,497 2,644 ------------------------------------------------------------------------- Conventional Natural Gas Total Oil Natural Gas from Coal Natural Gas Equivalent (mmcf) (mmcf) (mmcf) (mboe) ------------------------------------------------------------------------- PROVED PRODUCING Opening Balance(3) 61,773 1,604 63,377 17,475 Discoveries 119 0 119 24 Extensions 4,282 0 4,282 917 Infill Drilling 245 0 245 311 Improved Recovery 0 0 - - Technical Revisions 5,268 171 5,439 1,247 Acquisitions 0 0 0 54 Dispositions (5,303) 0 (5,303) (4,518) Economic Factors (538) (30) (568) (89) Production (11,886) (266) (12,153) (3,075) Closing Balance(4) 53,959 1,479 55,438 12,346 ------------------------------------------------------------------------- TOTAL PROVED Opening Balance(3) 79,606 1,656 81,261 23,453 Discoveries 67 0 67 13 Extensions 5,628 0 5,628 1,176 Infill Drilling 588 0 588 866 Improved Recovery 0 0 - - Technical Revisions 1,088 159 1,247 656 Acquisitions 0 0 - 106 Dispositions (5,365) 0 (5,365) (6,464) Economic Factors (817) (31) (848) (158) Production (11,886) (266) (12,153) (3,075) Closing Balance(4) 68,907 1,518 70,425 16,573 ------------------------------------------------------------------------- PROBABLE Opening Balance(3) 48,210 435 48,645 16,035 Discoveries 234 0 234 48 Extensions 1,300 0 1,300 278 Infill Drilling 459 0 459 184 Improved Recovery 0 0 0 0 Technical Revisions (4,436) (4) (4,440) (873) Acquisitions 0 0 0 34 Dispositions (4,101) 0 (4,101) (6,394) Economic Factors (137) 1 (136) (13) Production 0 0 0 0 Closing Balance(4) 41,530 432 41,961 9,299 ------------------------------------------------------------------------- PROVED PLUS PROBABLE Opening Balance(3) 127,815 2,090 129,906 39,488 Discoveries 301 0 301 61 Extensions 6,927 0 6,927 1,454 Infill Drilling 1,047 0 1,047 1,050 Improved Recovery 0 0 - - Technical Revisions (3,349) 156 (3,193) (217) Acquisitions 0 0 - 140 Dispositions (9,466) 0 (9,466) (12,858) Economic Factors (954) (30) (984) (171) Production (11,886) (266) (12,153) (3,075) Closing Balance(4) 110,437 1,950 112,386 25,872 ------------------------------------------------------------------------- (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. (2) Based on forecast prices and costs. (3) As at December 31, 2008. (4) As at December 31, 2009. RESERVES RECONCILIATION WORKING INTEREST(1) (Gross) Light and Medium Heavy Total Crude Oil Crude Oil Crude Oil NGLs (mbbl) (mbbl) (mbbl) (mbbl) ------------------------------------------------------------------------- PROVED PRODUCING Opening Balance(2) 1,235 4,529 5,764 1,110 Discoveries 0 0 0 4 Extensions 37 0 37 167 Infill Drilling 203 57 260 10 Improved Recovery 0 0 0 0 Technical Revisions (4) 68 64 272 Acquisitions 0 54 54 0 Dispositions (247) (3,338) (3,584) (42) Economic Factors (1) 15 14 (9) Production (166) (644) (811) (234) Closing Balance(3) 1,057 741 1,798 1,278 ------------------------------------------------------------------------- TOTAL PROVED Opening Balance(2) 1,490 7,035 8,524 1,344 Discoveries 0 0 0 2 Extensions 0 18 18 219 Infill Drilling 743 0 743 25 Improved Recovery 0 0 0 0 Technical Revisions 28 115 143 300 Acquisitions 0 106 106 0 Dispositions (247) (5,271) (5,518) (42) Economic Factors 0 0 0 (17) Production (166) (644) (811) (234) Closing Balance(3) 1,848 1,358 3,206 1,597 ------------------------------------------------------------------------- PROBABLE Opening Balance(2) 791 6,165 6,956 957 Discoveries 0 0 0 9 Extensions 0 8 8 54 Infill Drilling 98 0 98 10 Improved Recovery 0 0 0 0 Technical Revisions (15) (140) (156) 24 Acquisitions 0 34 34 0 Dispositions (80) (5,601) (5,681) (27) Economic Factors 0 7 7 1 Production 0 0 0 0 Closing Balance(3) 794 471 1,266 1,027 ------------------------------------------------------------------------- PROVED PLUS PROBABLE Opening Balance(2) 2,280 13,200 15,480 2,301 Discoveries 0 0 0 11 Extensions 0 25 25 273 Infill Drilling 842 0 842 34 Improved Recovery 0 0 0 0 Technical Revisions 13 (25) (12) 324 Acquisitions 0 140 140 0 Dispositions (326) (10,872) (11,199) (69) Economic Factors 0 7 7 (16) Production (166) (644) (811) (234) Closing Balance(3) 2,642 1,830 4,472 2,624 ------------------------------------------------------------------------- Conventional Natural Gas Total Oil Natural Gas from Coal Natural Gas Equivalent (mmcf) (mmcf) (mmcf) (mboe) ------------------------------------------------------------------------- PROVED PRODUCING Opening Balance(2) 61,172 1,604 62,776 17,336 Discoveries 119 0 119 24 Extensions 4,282 0 4,282 917 Infill Drilling 245 0 245 311 Improved Recovery 0 0 0 0 Technical Revisions 5,193 171 5,364 1,230 Acquisitions 0 0 0 54 Dispositions (4,993) 0 (4,993) (4,458) Economic Factors (551) (30) (581) (91) Production (11,772) (266) (12,039) (3,051) Closing Balance(3) 53,694 1,479 55,173 12,272 ------------------------------------------------------------------------- TOTAL PROVED Opening Balance(2) 78,969 1,656 80,624 23,306 Discoveries 67 0 67 13 Extensions 5,628 0 5,628 1,175 Infill Drilling 588 0 588 866 Improved Recovery 0 0 0 0 Technical Revisions 1,014 159 1,173 638 Acquisitions 0 0 0 106 Dispositions (5,050) 0 (5,050) (6,401) Economic Factors (830) (31) (860) (160) Production (11,772) (266) (12,039) (3,051) Closing Balance(3) 68,613 1,518 70,131 16,492 ------------------------------------------------------------------------- PROBABLE Opening Balance(2) 47,923 435 48,358 15,972 Discoveries 234 0 234 48 Extensions 1,300 0 1,300 277 Infill Drilling 459 0 459 185 Improved Recovery 0 0 0 0 Technical Revisions (4,431) (4) (4,434) (870) Acquisitions 0 0 0 34 Dispositions (3,982) 0 (3,982) (6,372) Economic Factors (141) 1 (140) (16) Production 0 0 0 0 Closing Balance(3) 41,364 432 41,795 9,258 ------------------------------------------------------------------------- PROVED PLUS PROBABLE Opening Balance(2) 126,892 2,090 128,982 39,278 Discoveries 301 0 301 61 Extensions 6,927 0 6,927 1,452 Infill Drilling 1,047 0 1,047 1,050 Improved Recovery 0 0 0 0 Technical Revisions (3,417) 156 (3,261) (231) Acquisitions 0 0 0 140 Dispositions (9,032) 0 (9,032) (12,773) Economic Factors (970) (30) (1,000) (176) Production (11,772) (266) (12,039) (3,051) Closing Balance(3) 109,976 1,950 111,926 25,750 ------------------------------------------------------------------------- (1) "Working Interest" means Bellatrix's working interest (operated or non operated) share before deduction of royalties and without including any royalty interest of Bellatrix. Also referred to as "Gross" reserves under NI 51-101. (2) As at December 31, 2008. (3) As at December 31, 2009.
NET PRESENT VALUE OF FUTURE NET REVENUE
The forecast prices used in GLJ's reserve report effective December 31, 2009 (the "GLJ Report") were an average of the forecast prices published by GLJ, Sproule Associates Limited and McDaniel & Associates Consultants Ltd., as at January 1, 2010 (the "Consultants' Average Forecast Prices"). In the GLJ Report the forecast prices used were the average of the same firms' published forecast prices and cost inflation factors as at January 1, 2010 prior to provision for interest, debt service charges and general and administrative expenses. It should not be assumed that the net present values of future net revenues estimated by GLJ represent the fair market value of the reserves.
Estimated future net revenues are stated before deducting future estimated site restoration costs but are reduced for estimated future abandonment costs, the Saskatchewan Capital Tax and estimated capital for future development associated with the reserves. In the GLJ Report, the net total future capital over the life of the reserves associated with the proved reserves is $56.2 million ($45.9 million discounted at 10%) and $94.1 million ($75.4 million discounted at 10%) for the total proved plus probable reserves. The change in 2009 net total future capital (excluding dispositions) over the life of the reserves associated with the proved reserves is $9.2 million ($6.2 million discounted at 10%) and $0 (negative $1.8 million discounted at 10% due to extended future schedules for some projects) for the total proved plus probable reserves.
Summary of Net Present Values of Future Net Revenue(1) Forecast Prices and Costs ($000s) Before Income Taxes, Discounted at (%/year) ------------------------------------------------------------------------- As at December 31, 2009 0% 5% 10% 15% 20% ------------------------------------------------------------------------- Proved Developed producing 307,573 248,416 209,215 181,494 160,930 Developed non-producing 22,810 15,004 11,089 8,705 7,092 Undeveloped 65,973 45,175 32,340 23,768 17,758 ------------------------------------------------------ Total proved 396,356 308,595 252,644 213,966 185,780 Probable 256,020 155,145 104,696 75,817 57,688 ------------------------------------------------------ Proved Plus Probable Producing 434,711 322,148 257,823 216,478 187,735 ------------------------------------------------------ Total proved plus probable 652,375 463,740 357,340 289,783 243,468 ------------------------------------------------------------------------- (1) May not add due to rounding
The following table provides an estimate of the net present value of future net revenue on an after tax basis assuming that Bellatrix would be subject to corporate income tax on its income beginning in 2010. It should be noted that this estimate does not take into account any corporate tax deductions such as interest and general and administrative expenses or for any tax pools generated by capital expenditures beyond what exists in the GLJ forecast.
Summary of Net Present Values of Future Net Revenue(1) Forecast Prices and Costs ($000s) After Income Taxes, Discounted at (%/year) ------------------------------------------------------------------------- As at December 31, 2009 0% 5% 10% 15% 20% ------------------------------------------------------------------------- Proved Developed producing 307,573 248,416 209,215 181,494 160,930 Developed non-producing 22,810 15,004 11,089 8,705 7,092 Undeveloped 62,682 43,953 31,824 23,530 17,642 ------------------------------------------------------ Total proved 393,065 307,374 252,128 213,729 185,665 Probable 191,781 119,123 82,619 61,453 47,923 ------------------------------------------------------ Proved Plus Probable Producing 421,825 317,238 255,764 215,552 187,296 ------------------------------------------------------ Total proved plus probable 584,846 426,497 334,748 275,182 233,587 ------------------------------------------------------------------------- (1) May not add due to rounding The following is a summary of the Consultants' Average Forecast Prices as at January 1, 2010: OIL ---------------------------- Edmonton Par Hardisty NATURAL WTI Price 40 Heavy 12 GAS NATURAL GAS EXCH- Cushing degrees degrees AECO LIQUIDS at INFLA- ANGE Oklahoma API API Price Edmonton(3) TION RATE(2) Year ($US/ ($Cdn/ ($Cdn/ ($Cdn/ ($Cdn/ RATES(1) ($US/ Forecast Bbl) Bbl) Bbl) MMBtu) Bbl) %/Year $Cdn) ------------------------------------------------------------------------- 2010 79.72 83.57 67.67 5.79 85.47 0.0 0.94 2011 83.69 87.80 68.88 6.58 89.77 2.0 0.94 2012 86.76 91.06 69.14 6.83 93.10 2.0 0.94 2013 90.17 94.64 69.46 7.21 96.73 2.0 0.94 2014 93.10 97.74 71.07 7.61 99.91 2.0 0.94 2015 95.70 100.48 73.06 7.82 102.67 2.0 0.94 2016 97.61 102.51 74.55 8.05 104.77 2.0 0.94 2017 99.56 104.57 76.05 8.34 106.86 2.0 0.94 2018 101.53 106.66 77.57 8.64 108.97 2.0 0.94 2019 103.59 108.83 79.17 8.83 111.21 2.0 0.94 2020 105.64 111.00 80.72 9.00 113.41 2.0 0.94 2021 107.76 113.19 82.35 9.19 115.67 2.0 0.94 2022 109.90 115.45 83.98 9.38 117.96 2.0 0.94 2023 112.10 117.76 85.66 9.57 120.36 2.0 0.94 2024 114.37 120.15 87.39 9.76 122.76 2.0 0.94 2025 116.66 122.55 89.14 9.96 125.22 2.0 0.94 + 2%/ + 2%/ + 2%/ + 2%/ + 2%/ Thereafter year year year year year 2.0 0.94 ------------------------------------------------------------------------- (1) Inflation rates for forecasting prices and costs (2) Exchange rates used to generate the benchmark reference prices in this table (3) Natural Gas Liquids is represented by the pentanes plus price
Weighted average historical prices realized by Bellatrix (before hedging) for the year ended December 31, 2009, were $4.50/Mcf for natural gas, $61.24 /bbl for light and medium gravity crude oil, $49.10 /bbl for heavy oil and $27.73 /bbl for natural gas liquids.
NET ASSET VALUE - Proved Plus Probable
The following table of net asset value is based on the GLJ evaluation of future net revenue, which does not represent fair market value and does not take into account possible reserve additions from reinvestment of cash flow in existing properties.
------------------------------------------------------------------------- ($000's except acre, unit and per unit amounts) ------------------------------------------------------------------------- PW 0% PW 5% PW 10% PW 15% PW 20% ------------------------------------------------------------------------- Reserves(1) 652,375 463,740 357,340 289,783 243,468 Undeveloped Lands(2) 45,837 45,837 45,837 45,837 45,837 Net Debt(3) (106,963) (106,963) (106,963) (106,963) (106,963) ------------------------------------------------------ Net asset value 591,249 402,614 296,214 228,657 182,342 ------------------------------------------------------------------------- Per Common Share - Basic $7.50 $5.11 $3.76 $2.90 $2.31 - Fully diluted $7.50 $5.11 $3.76 $2.90 $2.31 ------------------------------------------------------------------------- (1) As evaluated by GLJ as at December 31, 2009 based on forecast prices and costs before income tax (2) As estimated by Bellatrix as at December31, 2009 on 258,507 net acres of undeveloped land at an average price of $177.32 per acre. (3) Long term debt net of working capital excluding unrealized commodity contract losses as at December 31, 2009, including the liability portion of convertible debenture ($81.7 million). As at December 31, 2009, the principal amount of convertible debentures outstanding was $84.9 million. (4) Based on 78.809 million common shares outstanding as at December 31, 2009. On January 28, 2010, Bellatrix issued 13.64 million common shares for net proceeds of $42.7 million. FINDING, DEVELOPMENT AND ACQUISITION COSTS(1) PROVED PLUS PROBABLE ------------------------------------------------------------------------- 2007-2009 2009 2008 2007 Avg. ------------------------------------------------------------------------- Excluding Future Development Costs FD&A Costs Proved plus Probable ($/boe) Exploration and development(2) 7.35 37.30 17.41 17.15 Acquisitions (excluding dispositions) - 16.46 6.75 10.47 ---------------------------------------- Total (including acquisitions) 6.97 31.46 17.00 16.63 ---------------------------------------- Including Future Development Costs(2) FD&A costs - Proved plus Probable ($/boe) Exploration and development 7.35 43.69 17.15 17.76 Acquisitions (excluding dispositions) - 16.46 6.75 10.47 ---------------------------------------- Total (including acquisitions) 6.97 36.06 16.75 17.20 ------------------------------------------------------------------------- (1) NI 51-101 specifies how finding and development costs should be calculated if they are reported. Essentially NI 51-101 requires that the exploration and development costs incurred in the year along with the change in estimated future development costs be aggregated and then divided by the applicable reserve additions. The calculation specifically excludes the effects of acquisitions and dispositions on both reserves and costs. By excluding the effects of acquisitions and dispositions Bellatrix believes that the provisions of the NI 51-101 do not fully reflect Belltrrix's ongoing reserve replacement costs. Since acquisitions can have a significant impact on Bellatrix's annual reserve replacement costs, excluding these amounts could result in an inaccurate portrayal of Bellatrix's cost structure. Accordingly, Bellatrix also provides finding, development and acquisition costs that incorporate all acquisitions net of any dispositions during the year. The foregoing calculation is based on working interest reserves. (2) The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year. FINDING, DEVELOPMENT AND ACQUISITION COSTS(1) PROVED ------------------------------------------------------------------------- 2007-2009 2009 2008 2007 Avg. ------------------------------------------------------------------------- Excluding Future Development Costs FD&A Costs Proved ($/boe) Exploration and development(2) 6.26 17.50 21.38 16.02 Acquisitions (excluding dispositions) - 24.15 15.84 16.90 ---------------------------------------- Total (including acquisitions) 6.01 18.24 21.25 16.07 ---------------------------------------- Including Future Development Costs(2) FD&A costs - Proved ($/boe) Exploration and development 9.90 20.45 19.80 16.20 Acquisitions (excluding dispositions) - 24.15 15.84 16.90 ---------------------------------------- Total (including acquisitions) 9.50 20.86 19.71 17.06 ------------------------------------------------------------------------- (1) NI 51-101 specifies how finding and development costs should be calculated if they are reported. Essentially NI 51-101 requires that the exploration and development costs incurred in the year along with the change in estimated future development costs be aggregated and then divided by the applicable reserve additions. The calculation specifically excludes the effects of acquisitions and dispositions on both reserves and costs. By excluding the effects of acquisitions and dispositions Bellatrix believes that the provisions of the NI 51-101 do not fully reflect Bellatrix's ongoing reserve replacement costs. Since acquisitions can have a significant impact on Bellatrix's annual reserve replacement costs, excluding these amounts could result in an inaccurate portrayal of Bellatrix's cost structure. Accordingly, Bellatrix also provides finding, development and acquisition costs that incorporate all acquisitions net of any dispositions during the year. The foregoing calculation is based on working interest reserves. (2) The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year. RECYCLE RATIO (OPERATING NETBACK(1)/FD&A COST) ------------------------------------------------------------------------- As at December 31, 2009 Proved Proved Plus Probable ------------------------------------------------------------------------- Operating netback before commodity price risk management contracts ($/boe)(1) $13.11 $13.11 ------------------------------------------------------------------------- Recycle ratio (excluding future development costs) 2.18x 1.88x ------------------------------------------------------------------------- ------------------------------------------------------------------------- Operating netback after commodity price risk management contracts ($/boe)(1) $18.88 $18.88 ------------------------------------------------------------------------- Recycle ratio (excluding future development costs) 3.14x 2.71x ------------------------------------------------------------------------- (1) Operating netback is calculated by deducting transportation, royalties and operating costs from revenue.
RESERVE LIFE INDEX
Bellatrix's reserve life index has been determined for proved plus probable working interest reserves using forecast prices and costs. The reserve life index is calculated by dividing reserves as at the effective date of the GLJ Report, December 31, 2009, by the first year production as set forth in the GLJ 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.
Reserve Life Index ------------------------------------------------------------------------- 2009 2008 2007 2006 2005 ------------------------------------------------------------------------- Proved 6.5 6.4 5.6 4.7 4.4 Proved plus probable 9.6 10.1 7.9 6.4 4.5 -------------------------------------------------------------------------
METHOD OF PREPARATION
In this press release both "Working Interest" reserves (being working interest reserves, excluding royalty interest reserves, before deduction of royalty burdens payable) and "Net Interest" reserves (being working interest reserves and royalty interests less royalty burdens payable) are disclosed. Working Interest reserves are also referred to as "Gross" reserves under NI 51-101. In addition "Company Interest" reserves are disclosed (being working interest reserves and royalty interests, before deduction of royalty burdens payable). The GLJ Report was prepared utilizing definitions as set out under NI 51-101.
LAND
As at December 31, 2009, Bellatrix had over 258,507 net undeveloped acres in Alberta, British Columbia and Saskatchewan.
Land Statistics ------------------------------------------------------------------------- 2009 2008 ------------------------------------------------------------------------- Average working interest Developed 57% 59% Undeveloped 61% 64% ------------------------------------------------------------------------- Total 59% 62% ------------------------------------------------------------------------- Land Holdings(1) ------------------------------------------------------------------------- 2009 2008 Gross Net Gross Net ------------------------------------------------------------------------- Developed British Columbia 21,265 7,740 21,265 7,740 Alberta 386,844 220,343 414,432 237,814 Saskatchewan 14,324 13,531 69,619 56,320 ------------------------------------------ Total 422,433 241,614 505,316 301,874 ------------------------------------------ Undeveloped British Columbia 146,612 61,987 152,190 63,794 Alberta 258,036 176,184 327,114 221,225 Saskatchewan 20,437 20,336 105,760 90,323 ------------------------------------------ Total 425,085 258,507 585,063 375,343 ------------------------------------------ Developed and Undeveloped British Columbia 167,878 69,726 173,455 71,534 Alberta 644,879 396,527 741,545 459,039 Saskatchewan 34,761 33,867 175,379 146,644 ------------------------------------------ Total 847,518 500,120 1,090,379 677,216 ------------------------------------------------------------------------- (1) May not add due to rounding
Bellatrix Exploration Ltd. is a growth oriented exploration and production company based in Calgary, Alberta, Canada. An updated corporate presentation will be posted on www.bellatrixexploration.com.
READER ADVISORIES:
BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 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.
Statements in this document may contain forward-looking information including management's assessment of future plans and operations, drilling plans, reserve estimates, capital expenditures and the nature of the expenditures, expected increases to reserves and the timing thereof and the total future capital associated with development of reserves, forecast reductions in operating expenses, and 2010 average production and exit rate estimates. 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 not 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 to operate 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 of exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Company to secure adequate product transportation; 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 effect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), at the Company'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.
The reader is further cautioned that the preparation of financial statements in accordance with Generally Accepted Accounting Principles ("GAAP") requires management to make certain judgements and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Estimating reserves is also critical to several accounting estimates and requires judgments and decisions based upon available geological, geophysical, engineering and economic data. These estimates may change, having either a negative or positive effect on net earnings as further information becomes available, and as the economic environment changes.
This document also contains other terms such as net debt and operating netbacks, which are not recognized measures under GAAP. Management believes these measures are useful supplemental measures of firstly, the total amount of current and long-term debt and secondly, the amount of revenues received after transportation, royalties and operating costs. Readers are cautioned, however, that these measures should not be construed as an alternative to other terms such as current and long-term debt or net income determined in accordance with GAAP as measures of performance. Bellatrix's method of calculating these measures may differ from other entities, and accordingly, may not be comparable to measures used by other trusts or companies.
For further information: BELLATRIX EXPLORATION LTD., Raymond G. Smith, President & CEO, (403) 750-2420; Edward Brown, Vice President, Finance & CFO, (403) 750-2655; Troy Winsor, Investor Relations, (800) 663-8072
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