Bonterra Energy Corp T.BNE

Alternate Symbol(s): BNEFF

Energy Oil & Gas E&P

Bonterra Energy Corp. is a Canada-based conventional oil and gas company with operations in Alberta, Saskatchewan, and British Columbia. The Company operates through development and production of oil and natural gas in the Western Canadian Sedimentary Basin segment. Its operating areas include Pembina Cardium and other areas, which include Saskatchewan and Northeast British Columbia. The Company is focused on the development of the Pembina and Willesden Green Cardium lands within central Alberta. It has Shaunavon properties in the Chambery field, which produce medium density crude oil from the upper Shaunavon formation under waterflood. It also has assets in the Prespatou area of northeast British Columbia, which consists almost entirely of natural gas and associated natural gas liquids. It also has an undeveloped Charlie Lake asset that is prospective for light oil in Bonanza, Alberta. The Company has over 116 net sections of contiguous land in the light oil prone Charlie Lake.

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Bonterra Energy Corp > New operations update out

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Comment by Desjadeon Feb 17, 2021 11:19am

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Post# 32584521

RE:RE:RE:RE:New operations update out

Good post AliNaimi,

We can argue with some of the details/inputs, but by-and-large my numbers reflect your figures (I'm a little under on the under vs your figures).

As for the debt, I agree we could see Debt/CFO close on 2X pretty closely, but I would argue what is more exciting would be Debt/PDP at FYE 2021.

We could see a combination of paying down some debt in FY21 and higher PDP valuation because of: 1) higher oil prices; and 2) significantyl reducing decomission liabilities due to the SRP, which is even more important in the last few years given these are ranked in front of the Reserve Based Lending Facility.

There are thus potentially many tailwinds to lowering Debt/PDP, which is a more important metric than debt/CFO for creditors. We were at 50% Debt/PDP at FYE19 vs 37% for WCP, which is viewed as having low to moderate leverage. We need a 35% reduction in Debt/PDP to be where WCP was at FYE19. Through addressing potentially both the nominator (debt) and the denominator (PDP) in 2021, we could be coming into 2022 with a significantly improved credit profile.

AliNaimi wrote:
Those comparisons are false as BNE's FCF is not 60 cents. A neutral budget to maintain production would see FCF of about $1.50 @ $60 wti. That is why BNE trades similar to the names you mention.

We can rehash OBE offer ad nausem but the fact remains it has been rejected twice because it is inadequate. BNE is now in a much better finiancial position at $60 oil then when offer was made. 2022 at current commodity pricing should see $2 FCF and if all 2021/22 FCF was directed to paying down debt PDP value would increase substanially and debt to cashflow in 2022 would be under 2X.

If oil rises to $70 over next 12 months as many believe it will as bullish sentiment increases BNE will become a go to name. A wall of FCF under $70 is just too compelling. (However $60 oil is still a FCF bonanza for BNE)