Bellatrix Exploration Ltd (Canada) BXEFF

Scotia maintaining $10/sh one-year target price.

[cohoe]

For Reg AC Certification and important disclosures see Appendix A of this report. Analysts employed by non-U.S.
affiliates are not registered/qualified as research analysts with FINRA in the U.S.
Bellatrix Exploration Ltd.
(BXE-T C$8.35)
(BXE-A US$8.14)
Busy Getting Bigger: Angle Acquisition and Third
Joint Venture
Jason Bouvier, CFA - [phone]
(Scotia Capital Inc. - Canada)
[e-mail]
Cameron Bean - [phone]
(Scotia Capital Inc. - Canada)
[e-mail]
Rating: Sector Outperform Target 1-Yr: C$10.00 ROR 1-Yr: 19.8%
Risk Ranking: High
Valuation: 1.0x our 2P NAV plus risked upside.
Key Risks to Target: Oil and natural gas prices; Drilling program success.
Div. (NTM) $0.00
Div. (Curr.) $0.00
Yield (Curr.) 0.0%
Event
Pertinent Revisions
New Old
CFPS13E $1.28 $1.26
CFPS14E $1.90 $1.88
■ Bellatrix announced the ~$576M (~$3.85/sh) acquisition of Angle
Energy (NGL-T, T) and a $240M JV with TCA Energy Limited.
Implications
■ Angle acquisition extends core areas. BXE will add ~10.5 mboe/d
(58% oil and NGLS), 60.9 mmboe (55% oil and NGLs) of 2P reserves
and 228,250 net undeveloped acres at ~$55,000/boe/d and $18/boe (2P,
including FDC) - in-line with BXE's pre-deal trading metrics. The
assets will extend BXE's west-central Alberta footprint to the south
(Harmattan and Lone Pine) and north (Edson).
■ Third JV further accelerates growth profile. The agreement calls for
BXE and TCA to each contribute $120M (through YE14) toward
drilling 63 Ferrier Cardium wells. BXE will hold a 65% working
interest in the wells until TCA receives payout plus a 15% IRR and
75% working interest in the wells thereafter.
■ Estimates updated. We have increased our 2014 capital expenditure
and production forecasts to $430M and 44.2 mboe/d; however, we see
the deals as neutral to CFPS (~1% increases in 2013 and 2014) with the
dilution from the equity financing.
Recommendation
■ We are maintaining our $10/sh one-year target price, pending a deeper
review of NGL's asset base and its position in BXE's portfolio. We
maintain our SO rating.
Qtly CFPS (FD) Q1 Q2 Q3 Q4 Year P/CFPS Capitalization
Shares O/S (M) 183.7
Market Cap (M) $1,534
Float O/S (M) 158.3
Net Debt + Pref. (M) $289
Enterprise Value (M) $1,823.5