CALGARY, Alberta, Aug. 07, 2019 (GLOBE NEWSWIRE) -- Bellatrix Exploration Ltd. (“Bellatrix”, "we", "us", "our" or the “Company”) (TSX: BXE) announces its financial and operating results for the three and six months ended June 30, 2019. This press release contains forward-looking statements. Please refer to our cautionary language on forward-looking statements and the other matters set forth at the end of this press release and the beginning of the Management’s Discussion and Analysis (the “MD&A”) for the three and six months ended June 30, 2019 and 2018. Bellatrix's unaudited interim condensed financial statements and notes, and the MD&A for the three and six months ended June 30, 2019 and 2018 are available on our website at www.bxe.com, and are filed on SEDAR at www.sedar.com.
|Three months ended|
|Six months ended|
|SELECTED FINANCIAL RESULTS|
|(CDN$000s except share and per share amounts)|
|Cash flow from operating activities||26,653||12,004||34,179||26,619|
|Per diluted share (1)||$1.58||$2.61||$2.89||$6.11|
|Adjusted funds flow (2)||11,209||10,142||32,445||24,812|
|Per diluted share (1)||$0.66||$2.21||$2.74||$5.70|
|Net profit (loss)||3,728||(34,768||)||(15,381||)||(47,669||)|
|Per diluted share (1)||$0.22||($7.57||)||($1.30||)||($10.95||)|
|Capital – exploration and development||4,908||5,402||25,454||29,634|
|Total capital expenditures – net (2)||5,114||6,641||29,827||28,715|
|Second Lien Notes||197,166||—||197,166||—|
|Third Lien Notes||71,847||—||71,847||—|
|Convertible Debentures (liability component)||—||40,530||—||40,530|
|Adjusted working capital deficiency (2)||28,134||16,829||28,134||16,829|
|Total net debt (2)||357,606||430,226||357,606||430,226|
|SELECTED OPERATING RESULTS|
|Average daily sales volumes|
|Crude oil, condensate and NGLs||(bbl/d)||10,310||10,467||10,492||9,975|
|Total oil equivalent (3)||(boe/d)||35,917||37,309||36,450||37,027|
|Average realized prices|
|Crude oil and condensate||($/bbl)||71.95||83.93||70.60||80.31|
|NGLs (excluding condensate)||($/bbl)||13.31||24.70||15.99||25.49|
|Total oil equivalent||($/boe)||12.29||15.71||16.20||17.58|
|Total oil equivalent (including risk management (4))||($/boe)||12.76||18.77||16.89||19.71|
|Selected Key Operating Statistics|
|Operating netback (2)||($/boe)||3.55||4.53||6.89||6.19|
|Realized gain (loss) on risk management contracts||($/boe)||0.47||3.05||0.69||2.13|
|Operating netback (2) (including risk management (4))||($/boe)||4.02||7.58||7.58||8.32|
|Three months ended|
|Six months ended|
|Common shares outstanding (5)||40,863,009||5,146,915||40,863,009||5,146,915|
|Weighted average shares (1)||16,865,988||4,590,528||11,832,082||4,353,996|
|SHARE TRADING STATISTICS|
|TSX and Other (6) (7)|
|(CDN$, except volumes) based on intra-day trading|
|Average daily volume||122,562||73,280||88,015||58,643|
(1) On June 4, 2019, Bellatrix completed a 12 for 1 common share consolidation (the "Consolidation"), which has been reflected in the calculation of cash flow from operating activities per share, funds flow from operations per share, and net profit (loss) per share for the three and six month periods ended June 30, 2019 and 2018. After giving effect to the Consolidation, basic weighted average shares for the three and six months ended June 30, 2019 were 16,865,988 (2018: 4,590,528) and 11,832,082 (2018: 4,353,996), respectively. In computing weighted average diluted profit (loss) per share, weighted average diluted cash flow from operating activities per share, and weighted average diluted adjusted funds flow per share for the three and six months ended June 30, 2019, after giving effect to the Consolidation, a total of nil (2018: nil) common shares were added to the denominator as a consequence of applying the treasury stock method to the Company’s outstanding share options, a total of nil (2018: nil) common shares issuable on conversion of the Company's outstanding 6.75% convertible unsecured subordinated debentures (the "Convertible Debentures") were added to the denominator, and a total of nil (2018: nil) common shares issuable on exercise of the Company's outstanding warrants were added to the denominator for the three and six month period resulting in diluted weighted average common shares outstanding of 16,865,988 (2018: 4,590,528) and 11,832,082 (2018: 4,353,996), respectively.
(2) The terms “adjusted funds flow”, “adjusted funds flow per share”, “total net debt”, “adjusted working capital deficiency”, “operating netbacks”, and “total capital expenditures - net” do not have standard meanings under generally accepted accounting principles (“GAAP”). Refer to “Non-GAAP measures” disclosed at the end of this Press Release.
(3) See "Barrels of Oil Equivalent" at the end of this Press Release.
(4) The Company has entered into various commodity price risk management contracts which are considered economic hedges. Per unit metrics after risk management include only the realized portion of gains or losses on commodity contracts. The Company does not apply hedge accounting to these contracts. As such, these contracts are revalued to fair value at the end of each reporting date. This results in recognition of unrealized gains or losses over the term of these contracts which is reflected each reporting period until the contracts are settled, at which time realized gains or losses are recorded. These unrealized gains or losses on commodity contracts are not included for purposes of per unit metrics calculations disclosed.
(5) After giving effect to the Consolidation, fully diluted common shares outstanding for the three and six months ended June 30, 2019 were 42,984,531 (2018: 5,797,462) and 42,984,531 (2018: 5,797,462), respectively. This includes 78,360 (2018: 136,144) and 78,360 (2018: 136,144), respectively, of share options outstanding, nil (2018: 514,403) and nil (2018: 514,403), respectively, of shares issuable on conversion of the Convertible Debentures, and 2,043,162 (2018: nil) and 2,043,162 (2018: nil), respectively, of warrants outstanding. Shares issuable on conversion of the Convertible Debentures are calculated by dividing the $50 million principal amount of the Convertible Debentures by the post-Consolidation conversion price of $97.20 per share.
(6) TSX and Other includes the trading statistics for the Toronto Stock Exchange (“TSX”) and other Canadian trading markets.
(7) Bellatrix voluntarily delisted the Company's common shares from the New York Stock Exchange (the "NYSE") effective February 12, 2019. On May 8, 2019, Bellatrix filed a Form 15F with the United States Securities and Exchange Commission to voluntarily terminate the registration of its securities and its reporting obligations under Section 13(a) and Section 15(d) of the United States Securities Exchange Act of 1934, as amended ("Exchange Act"). Bellatrix’s Exchange Act reporting obligations were immediately suspended upon filing the Form 15F. The termination of Bellatrix’s registration and reporting obligations under Section 13(a) and Section 15(d) of the Exchange Act was effective 90 days after filing. Bellatrix will continue to comply with its Canadian continuous disclosure obligations and its common shares will continue to trade on the TSX.
FINANCIAL & OPERATIONAL HIGHLIGHTS
Bellatrix’s second quarter 2019 operational and financial performance included the following achievements:
In summary, Bellatrix delivered the following operational performance in the first half of 2019 relative to guidance expectations:
|First Half 2019|
|Average daily production (boe/d)||36,450||35,000||4||%|
|Average product mix|
|Natural gas (%)||71||72||(1||)%|
|Crude oil, condensate and NGLs (%)||29||28||4||%|
|Capital Expenditures ($000’s)|
|Total net capital expenditures(2)||25,454||45,000||n/a|
(1) 2019 Annual guidance metrics represent the mid-point of the previously set guidance range (January 15, 2019) where applicable.
(2) Excludes corporate asset additions and property acquisitions and dispositions.
RECAPITALIZATION TRANSACTION COMPLETED
As previously announced, Bellatrix completed a recapitalization transaction (collectively, the "Recapitalization Transaction") on June 4, 2019, designed to improve and strengthen the Company's overall financial position, which included among others, the following key elements:
FIRST HALF 2019 OPERATIONAL ACTIVITIES AND PERFORMANCE
Bellatrix completed the majority of its first half capital program during the first three months of the year, in advance of the seasonal spring break up period that curtails activity in the second quarter. During the first quarter, Bellatrix drilled five gross (5.0 net) operated wells, including four Spirit River wells and one Cardium well. No wells were drilled during the second quarter of 2019.
Bellatrix continues to focus on improving capital efficiencies from its invested capital through the combination of reduced capital costs and improved well performance. All five operated wells drilled in 2019 were drilled off existing pad sites. The ability to utilize existing above ground infrastructure, access roads, and gathering systems provides a competitive advantage for the Company as it seeks to maximize long term returns from its development program. All-in average Spirit River well costs (drill, complete, equip and tie-in) in 2019 have averaged approximately $3.4 million, consistent with the cost performance achieved in 2018. Average well performance from the Company's 2019 Spirit River well program to date have outperformed expected results by approximately 15% on an IP150 basis.
The Company's 2019 Spirit River drilling program has delivered the following initial production rates:
Total natural gas liquid ("NGL") recoveries (including plant condensate) at the Bellatrix O'Chiese Nees-Ohpawganu'ck deep-cut plant at Alder Flats (the "Alder Flats Plant") remain strong, with NGL sales yields of approximately 66 bbl/MMcf in the first half of 2019, compared to first half 2018 total sales yields of approximately 55 bbl/MMcf. Given continued strong liquids recoveries, Bellatrix's corporate liquids weighting has averaged 29% year to date, resulting in a commensurate improvement in our 2019 full year average guidance expectation to 29%, up from 28% previously. During the second quarter, Bellatrix completed a planned five-day turnaround at the Alder Flats Plant, which was completed safely, on-time, and on-budget.
Exploration and development capital expenditures invested during the second quarter were $4.9 million. First half 2019 exploration and development capital expenditures were $25.5 million.
COMMODITY PRICE RISK MANAGEMENT PROTECTION AND MARKET DIVERSIFICATION INITIATIVES
Bellatrix maintains strong commodity price risk management and market diversification coverage through 2020, which is expected to reduce the impact of commodity price volatility on our business. Bellatrix has approximately 65 MMcf/d of natural gas volumes hedged in the last six months of 2019 at an average fixed price of approximately $1.75/mcf, representing approximately 50% of 2019 daily average natural gas volumes (based on the mid-point of 2019 full year daily average production guidance). Bellatrix has diversified its natural gas price exposure through physical sales contracts that give the Company exposure to the Dawn, Chicago, and Malin natural gas pricing hubs. This long-term diversification strategy reduces Bellatrix’s exposure to AECO pricing on approximately 50% of the Company’s natural gas volumes.
In combination, market diversification sales and fixed price hedges cover approximately 50% to 70% of natural gas volumes through October 2020 (based on the mid-point of 2019 full year daily average production guidance). A summary of Bellatrix’s commodity price risk management contracts as at July 31, 2019 include:
|Product||Financial Contract||Period||Volume||Average Price (1)|
|Natural gas||Fixed price swap||July 1, 2019 to October 31, 2019||62 MMcf/d||$1.77/mcf (2)|
|Natural gas||Fixed price swap||July 1, 2019 to October 31, 2019||18 MMcf/d||$2.01/mcf|
|Natural gas||Fixed price swap||July 1, 2019 to September 30, 2019||9 MMcf/d||$1.15/mcf|
|Natural gas||Fixed price swap||July 1, 2019 to October 31, 2019||9 MMcf/d||$1.18/mcf|
|Natural gas||Fixed price swap||November 1, 2019 to March 31, 2020||9 MMcf/d||$2.33/mcf|
|Natural gas||AECO/NYMEX basis swap||November 1, 2019 to March 31, 2020||20,000 MMBtu/d||-US$1.05/MMBtu|
|Crude oil||Sold C$WTI call||July 1, 2019 to December 31, 2019||500 bbl/d||$80.00/bbl|
|Crude oil||Sold C$WTI call||July 1, 2019 to December 31, 2019||500 bbl/d||$95.00/bbl|
|Crude oil||Sold C$WTI call||January 1, 2020 to December 31, 2020||1,000 bbl/d||$77.90/bbl|
(1) Prices for natural gas fixed price swap contracts assume a conversion of $/GJ to $/mcf based on an average corporate heat content rate of 40.0Mj/m3.
(2) Net Canadian equivalent price is calculated as the US$ fixed price, less the contracted differential, adjusted to Canadian dollars at an assumed exchange rate of $1.33 USD/CAD.
In summary, Bellatrix’s market diversification contracts include a total of 75,000 MMBtu/d of market exposure as follows:
|Natural gas||Chicago||October 31, 2020||30,000 MMBtu/d|
|Natural gas||Dawn||October 31, 2020||30,000 MMBtu/d|
|Natural gas||Malin||October 31, 2020||15,000 MMBtu/d|
OPERATIONAL AND FINANCIAL SUMMARY
OUTLOOK & 2019 CORPORATE GUIDANCE
First half 2019 average production volumes of 36,450 boe/d are in line with the high end of the 2019 full year average daily production guidance range and within management expectations given the front end weighted capital program for the year. Bellatrix is announcing today a minor update to its full year 2019 guidance metrics as outlined below, which relates to a higher average corporate liquids weighting realized to date and anticipated through the back half of the year. The full year weighting for crude oil, condensate and NGLs is expected to average 29% of total corporate volumes, up from a 28% weighting expectation within our initial 2019 announced guidance. The average daily production volume and total net capital expenditure guidance ranges for 2019 remain unchanged.
(August 7, 2019)
|Previously Set 2019|
(January 5, 2019)
|2019 Average daily production (boe/d)||34,000 - 36,000||34,000 - 36,000|
|Average product mix|
|Natural gas (%)||71||72|
|Crude oil, condensate and NGLs (%)||29||28|
|Net capital expenditures|
|Total net capital expenditures ($000) (1)||40,000 - 50,000||40,000 - 50,000|
(1) Excludes property acquisitions and dispositions.
Bellatrix plans to fund its second half 2019 capital budget through adjusted funds flow, and will remain flexible and focused on optimizing return on invested capital through focused development of the Company's Spirit River liquids rich natural gas play. However, management is monitoring available liquidity in light of strip pricing as at June 30, 2019 and may adjust the Company's operating and capital budgets in response to liquidity constraints. For additional information, see "Future Operations" and "Liquidity and Capital Resources" in the MD&A.
CONFERENCE CALL INFORMATION
A conference call to discuss Bellatrix's second quarter results will be held on August 8, 2019 at 9:00 am MT / 11:00 am ET. To participate, please call toll-free 1-800-319-4610 or 403-351-0324 or 416-915-3239. The call can also be heard live through an internet webcast accessible via the investors section of Bellatrix's website at http://www.bxe.com/investors/presentations-events.cfm and will be archived on the website for approximately 30 days following the call.
Bellatrix Exploration Ltd. is a publicly traded 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, with highly concentrated operations in west central Alberta, principally focused on profitable development of the Spirit River liquids rich natural gas play.
Common shares of Bellatrix trade on the Toronto Stock Exchange under the symbol "BXE".
Throughout this press release, the Company uses terms that are commonly used in the oil and natural gas industry, but do not have a standardized meaning presented by International Financial Reporting Standards ("IFRS") and therefore may not be comparable to the calculations of similar measures for other entities. Management believes that the presentation of these non-GAAP measures provide useful information to investors and shareholders as the measures provide increased transparency and the ability to better analyze performance against prior periods on a comparable basis.
Operating netbacks are calculated by subtracting royalties, transportation, and operating expenses from total revenue. Management believes this measure is a useful supplemental measure of the amount of total revenue received after transportation, royalties and operating expenses. 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.
This press release contains the term "adjusted funds flow" 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 adjusted funds flow or adjusted funds flow per share may not be comparable with the calculation of similar measures for other entities. Management uses adjusted funds flow to analyze operating performance and leverage and considers adjusted funds flow 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. Adjusted funds flow 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 adjusted funds flow can be found in the MD&A. Adjusted funds flow per share is calculated using the weighted average number of shares for the period.
This press release also contains the terms "total net debt" and "adjusted working capital deficiency", which also are not recognized measures under GAAP. Therefore reference to total net debt and adjusted working capital deficiency, may not be comparable with the calculation of similar measures for other entities. The Company's calculation of total net debt excludes other deferred liabilities, deferred capital obligations, long-term risk management contract liabilities, lease obligations and other, and decommissioning liabilities. Total net debt includes the adjusted working capital deficiency, Second Lien Notes, Third Lien Notes, Senior Notes, Convertible Debentures (liability component), and Credit Facilities. The adjusted working capital deficiency is calculated as net working capital deficiency excluding current risk management contract assets and liabilities, Credit Facilities, current portion of other deferred liabilities, current portion of decommissioning liabilities and current portion of Third Lien Notes. Management believes these measures are useful supplementary measures of the total amount of current and long-term debt.
These measures have been described and presented in this press release in order to provide shareholders and potential investors with additional information regarding Bellatrix's liquidity and its ability to generate funds to finance its operations. For additional information about these non-GAAP measures, including reconciliations to the most directly comparable GAAP terms, see our MD&A.
FORWARD LOOKING STATEMENTS
Certain information contained in this press release may contain forward looking statements within the meaning of applicable securities laws. The use of any of the words "position", "continue", "opportunity", "expect", "plan", "maintain", "estimate", "assume", "target", "believe" "forecast", "intend", "strategy", "anticipate", "enhance" and similar expressions are intended to identify forward-looking statements. More particularly and without limitation, this press release contains forward-looking statements concerning management's assessment of future plans, management's expectations with respect to future commodity prices and the various factors that may affect commodity prices; the potential breach of the financial covenants under the Company's debt obligations; the ability of the Company to satisfy its future operations if the strip prices as at June 30, 2019 are realized; the intent of the Company to seek covenant relief from the holders of its Second Lien Notes and lenders under its Credit Facilities; the intent of the Company to engage in negotiations for other potential alternative financing arrangements; 2019 annual guidance including forecast average annual production and commodity mix, capital expenditures and production expense; the Company's drilling and capital expenditure plans for the remainder of 2019; the intent of the Company to fund its second half 2019 capital budget through adjusted funds flow and to remain flexible and focused on optimizing forecast return on invested capital through focused development of the Company's Spirit River liquids rich natural gas play; expectations that the Company commodity price risk management and market diversification coverage in 2019 through 2020 will reduce the impact of commodity price volatility on our business; and the expectation of the percentage of production hedged or subject to other market diversification strategies. To the extent that any forward-looking information contained herein constitute a financial outlook, they were approved by management on August 7, 2019 and are included herein to provide readers with an understanding of the anticipated funds available to Bellatrix to fund its operations and readers are cautioned that the information may not be appropriate for other purposes. Forward-looking statements necessarily involve risks, including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions and dispositions, delays resulting from or inability to obtain required regulatory approvals, the risk that the Company will not be able to obtain covenant relief from the holders of its Second Lien Notes and lenders under its Credit Facilities, the risks identified under the headings "Future Operations" and "Liquidity and Capital Resources" in the MD&A, actions taken by the Company's lenders that reduce the Company's available credit and ability to access sufficient capital from internal and external sources. Events or circumstances may cause actual results to differ materially from those predicted, as a result of the risk factors set out and other known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Bellatrix. 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 and which have been used to develop such statements and information in order to provide shareholders with a more complete perspective on Bellatrix's future operations. Such information may prove to be incorrect and readers are cautioned that the information may not be appropriate for other purposes. 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; the ability of the Company to obtain covenant relief from the holders of its Second Lien Notes and lenders under its Credit Facilities; and the ability of the Company to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Additional information on these and other factors that could affect Bellatrix's operations and financial results are included in reports, including under the heading "Risk Factors" in the Company's annual information form for the year ended December 31, 2018, on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) and at Bellatrix's website (www.bxe.com). Furthermore, the forward looking statements contained herein are made as at the date hereof and Bellatrix 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.
BARRELS OF OIL EQUIVALENT
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.
INITIAL RATES OF PRODUCTION
References in this press release to initial production or "IP" rates associated with certain wells are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company. The Company cautions that such production rates should be considered to be preliminary.
For further information, please contact:
Steve Toth, CFA, Vice President, Investor Relations & Corporate Development (403) 750-1270
Bellatrix Exploration Ltd.
1920, 800 – 5th Avenue SW
Calgary, Alberta, Canada T2P 3T6
Phone: (403) 266-8670
Fax: (403) 264-8163