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Bellamont's Board of Directors has approved a $27 million capital budget for 2011. The vast majority of the budget is planned to be funded out of cash flow, supplemented by the Corporation's recently expanded operating credit facility.
Approximately 90% of the budget will target low risk light oil drilling opportunities and will include a total of 13 wells (11.2 net). The primary focus will be continued development of the Corporation's Montney oil pools in Grimshaw, Grande Prairie and Rycroft and Doe Creek oil pools in Saddlehills, all via horizontal multi-staged fraced wells. All of these projects are located in Alberta and will qualify for the new horizontal oil royalty rate of 5.0%. The expected average operating netback from these drilling locations is in excess of $50/boe. In total, the Corporation expects over 50% growth in its oil and natural gas liquids production from 2010.
Highlights of the 2011 capital budget are as follows:
|Capital expenditures||$27 million|
|Average yearly production||2,850 Boe/d (47.0% oil and liquids)|
|Year-end production||3,250 Boe/d (50.0 % oil and liquids)|
|Funds generated from operations||$25 million|
|- per share||$0.16|
|Average operating netback||$28/Boe|
|Year end debt||$35 million|
|Oil price (WTI)||$85.00 (US$)|
|Natural gas price (AECO)||$3.60 (Can$/GJ)|
|US/CDN Exchange rate||0.98|
Bellamont's objective is to achieve superior growth on a per share basis while maintaining a conservative 1.5 X debt to cash flow. The planned budget is expected to deliver annual per share growth of approximately 20.0% on average daily production and 40% on funds generated from operations, while ending the year with a 1.2X debt to cash flow. Bellamont's balance sheet strength will provide it the flexibility to accelerate additional capital projects, such as initiating water flood projects at its Grimshaw Montney and Grande Prairie Dunvegan oil pools. The capital budget does not include corporate or property acquisitions, which are separately considered and evaluated.
The Corporation has the following active risk management contracts in place for 2011:
i) 100 Bbl/d; January 2011, WTI - CAD, costless collar - $75.00 x $87.90;
ii) 100 Bbl/d; January 2011 - April 2011, WTI - CAD, costless collar - $70.00 x $93.10;
iii) 200 Bbl/d; January 2011 - December 2011, WTI - USD, fixed price swap; $88.55; and,
iv) 100 Bbl/d; February 2011 - December 2011, WTI - USD, costless collar - $81.00 x $95.10.
Bellamont has a deep inventory of over $100 million of capital projects on its lands, which should deliver growth for several years beyond 2011. Bellamont's strategy is to build a low risk reserve, production and cash flow base through acquiring, developing and exploring primarily in the Peace River Arch area of Alberta. Bellamont has a strong technically focused management team that internally generates and develops high quality large resource based prospects.
Bellamont is an oil and gas company focused on the acquisition, exploration, development and production of oil and natural gas in western Canada and trades on the TSX Venture Exchange under the symbols "BMX.A" and "BMX.B". The Corporation has 140,787,699 Class A shares and 1,012,000 Class B shares outstanding.
FORWARD LOOKING STATEMENTS
The 2011 capital budget and guidance provides shareholders with information on Management's expectations for results of operations, excluding any acquisitions for 2011. Readers are cautioned that the 2011 capital budget and guidance may not be appropriate for other purposes.
This press release is primarily comprised of forward-looking statements as to the Corporation's internal projections, expectations or beliefs relating to future events or future performance, including the Corporation's 2011 guidance and the amount of 2011 budgeted capital expenditures set forth herein. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expects", "projects", "plans", "anticipates" and similar expressions but are contained in virtually every paragraph of this news release. These statements represent management's expectations or beliefs concerning, among other things, future capital expenditures and future operating results and various components thereof or the economic performance of Bellamont. The projections, estimates and beliefs contained in such forward-looking statements are based on Management's assumptions relating to the production performance of Bellamont's oil and gas assets, the cost and competition for services throughout the oil and gas industry in 2011, the results of exploration and development activities during 2011, the market price for oil and gas, expectations regarding the availability of capital, estimates as to the size of reserves and resources, and the continuation of the current regulatory and tax regime in Canada, and necessarily involve known and unknown risks and uncertainties inherent in exploration and development activities, geological, technical, drilling and processing problems and other risks and uncertainties, including the business risks discussed in management's discussion and analysis and Bellamont's annual information form, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. The internal projections, expectations or beliefs are based on the 2011 budget which is subject to change in light of ongoing results, prevailing economic circumstances, commodity prices and industry conditions and regulations. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted. The Corporation does not undertake to update any forward-looking information in this document whether as to new information, future events or otherwise except as required by securities rules and regulations.
OIL AND GAS ADVISORY
This press release contains disclosure expressed as "Boe/d". All oil and natural gas equivalency volumes have been derived using the ratio of six thousand cubic feet of natural gas to one barrel of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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For further information: For further information:
Steve Moran, President and Chief Executive Officer, (403) 802-1355; or
Tavis Carlson, Vice President Finance and Chief Financial Officer, (403) 802-0117
1208, 250 - 2nd Street S.W. Calgary, Alberta T2T 5S8