Bellatrix enters $300-million JV with Korean compa
Bellatrix enters $300-million JV with Korean company
2013-01-22 02:54 ET - News Release
Mr. Raymond Smith reports
BELLATRIX ANNOUNCES A $300 MILLION CARDIUM JOINT VENTURE, ACQUIRES ADDITIONAL DEVELOPMENT LANDS, UPDATES OPERATING RESULTS AND SECURES ADDITIONAL COMMODITY HEDGES
Bellatrix Exploration Ltd. has entered into a joint venture agreement with a company based in Seoul, Korea, to accelerate development of Bellatrix's extensive undeveloped Cardium landholdings in west-central Alberta. Under the terms of the agreement, the JV Partner will contribute 50%, or CDN$150 million, to a $300 million joint venture (the "Joint Venture") to participate in an expected 83 Cardium well program. Under the agreement, the JV Partner will earn 33% of Bellatrix's working interest in the Cardium well program until payout (being recovery of the JV Partner's capital investment plus an 8% return on investment) on the total program, which is expected to occur prior to a maximum of 7 years, reverting to a 20% working interest after payout. The effective date of the agreement is April 1, 2013 but with the ability of the JV Partner to elect to invest in the wells drilled between January 1 up to April 30, 2013. Certain conditions precedent are expected to be satisfied or waived by April 22, 2013 which is expected to enable closing to occur on or before April 30, 2013. Bellatrix will be required to provide a guarantee of the return of the JV Partner's capital investment of up to $30 million if not recovered within 7 years.
As a result of the Joint Venture, Bellatrix's net capital expenditure plan for 2013 is expected to increase from the previously announced $180 million level to between $230 and $240 million not including JV Partner capital. Based on the timing of proposed expenditures, downtime from anticipated plant turnarounds, completion of anticipated infrastructure and normal production declines, execution of the increased 2013 capital expenditure plan is anticipated to provide average daily production of 24,000 to 25,000 boe/d. The Company is anticipating a 2013 exit rate of 30,000 to 31,000 boe/d.
On December 14, 2012, Bellatrix acquired an additional 11 gross and net sections of highly prospective Cardium and Notikewin/Falher lands in the Ferrier area of west central Alberta. This acquisition is anticipated to provide an additional 37 net drilling locations in the Cardium, 9 net locations in the Notikewin/Falher and an additional 66 net locations in the Duvernay formation.
Bellatrix continues to focus on growth by development of its core Cardium and Notikewin/Falher assets utilizing its large inventory of geological prospects. The Company has developed an inventory of 692 net remaining Cardium locations and 401 net Notikewin/Falher locations representing a net remaining capital requirements of $4.34 billion based on current costs. As at December 31, 2012, Bellatrix has approximately 206,638 net undeveloped acres and including all opportunities has in excess of 1,700 net exploitation drilling opportunities identified, with capital requirements of $8.17 billion based on current costs representing over 40 years of drilling inventory based on current annual cash flow. The Company continues to focus on adding Cardium and Notikewin prospective lands.
Bellatrix's second long reach horizontal well (50% WI) drilled in Q4 2012 has been placed on production at the following rates for the initial producing 7 days (IP7), 15 days (IP15), and 30 days (IP30):
IP7 -1,280 boe/d IP15 -1,127 boe/d IP30 -944 boe/d (25% gas and 75% liquids)
Bellatrix recently entered into additional commodity price risk management contracts for natural gas fixed price swaps for 10,000 GJ/d for the period February 1, 2013 to December 31, 2013 and 15,000 GJ/d for the period April 1, 2013 to June 30, 2014 at prices of CDN$3.05/GJ (CDN$3.51/mcf).
As at January 21, 2013, Bellatrix has the following crude oil and natural gas commodity fixed price risk management contracts in place for 2013 and 2014 (converted to a mcf basis excluding the crude oil call options). The conversion of $/GJ to $/mcf is based on an average corporate heat content rate of 40.8 Mj/m3.
Product Term Volume Average Price Crude Oil Jan. 1, 2013 to Dec. 31, 20131,500 bbl/d$94.50 CDN/bbl Natural GasFeb. 1, 2013 to Mar. 31, 20138.7 mmcf/d $3.51 CDN/mcf Natural GasApr. 1, 2013 to Oct. 31, 201347.8 mmcf/d $4.17 CDN/mcfNatural GasNov. 1, 2013 to Dec. 31, 201321.7 mmcf/d $3.51 CDN/mcf Natural GasJan. 1, 2014 to Jun. 30, 201413.0 mmcf/d $3.51 CDN/mcf
As at January 21, 2013, the details of the above commodity price risk management arrangements are as follows:
Type Period Volume Crude oil fixed Jan. 1, 2013 to Dec. 31, 2013 1,500 bbl/d Crude oil call options Jan. 1, 2013 to Dec. 31, 2013 3,000 bbl/d Crude oil call options Jan. 1, 2014 to Dec. 31, 2014 3,000 bbl/d Natural gas fixed Apr. 1, 2013 to Oct. 31, 2013 20,000 GJ/d Natural gas fixed Apr. 1, 2013 to Oct. 31, 2013 10,000 GJ/d Natural gas fixed Feb. 1, 2013 to Dec. 31, 2013 10,000 GJ/d Natural gas fixed Apr. 1, 2013 to Jun. 30, 2014 15,000 GJ/d Type Price Floor Price Ceiling IndexCrude oil fixed $ 94.50 CDN $ 94.50 CDN WTI Crude oil call options - $ 110.00 US WTI Crude oil call options - $ 105.00 US WTI Natural gas fixed $ 4.0875 CDN $ 4.0875 CDN AECO Natural gas fixed $ 4.15 CDN $ 4.15 CDN AECO Natural gas fixed $ 3.05 CDN $ 3.05 CDN AECO Natural gas fixed $ 3.05 CDN $ 3.05 CDN AECO
Bellatrix will be a presenter at the National Bank Financial Energy Conference being held in Toronto, Canada on February 13th and 14th, 2013. Prior to this conference, an updated Corporate Presentation will be made available at www.bellatrixexploration.com.
We seek Safe Harbor.