BONTERRA ENERGY CORP. ANNOUNCES 2017 YEAR END CORPORATE RESE
Bonterra Energy's 2017 reserves at 99.84 MMboe P+P
2018-02-07 17:26 ET - News Release
An anonymous director reports
BONTERRA ENERGY CORP. ANNOUNCES 2017 YEAR END CORPORATE RESERVES INFORMATION
Bonterra Energy Corp. has provided the summary results of its independent reserve report prepared by Sproule Associates Ltd. with an effective date of Dec. 31, 2017.
Corporate Reserves Information
The following summarizes certain information contained in the Sproule Report. The Sproule Report was prepared in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Additional reserve information as required under NI 51-101 will be included in the Company's Annual Information Form which will be filed on SEDAR on or by March 13, 2018.
Reserve Report Highlights
- Increased proved plus probable ("P+P") reserves by five percent to 99.8 million BOE (70 percent oil and liquids) and total proved reserves by six percent to 78.6 million BOE (70 percent oil and liquids).
- Increased total proved reserves by 4.3 million BOE which replaced production by 193 percent.
- Total proved reserves represent 79 percent of total P+P reserves.
- P+P reserves per fully diluted share increased to 3.00 BOE per share compared to 2.85 BOE per share from the prior year, an increase of five percent.
- Reserve life index of approximately 21 years on a P+P basis, 17 years on a total proved basis, and nine years on a proved developed producing ("PDP") basis (based on 2017 average production rate of 12,827 BOE per day).
Summary of Gross Oil and Gas Reserves as of December 31, 2017 Light and Medium Oil Solution Gas Natural Gas Natural Gas Liquids Oil equivalent(4)Future (MBbl) (MMcf) (MMcf) (MBbl) (MBoe) Development Proved Capital (000s) Developed Producing 25,760 66,598 7,152 3,147 41,199 - Developed Non-producing617 1,468 244 69 971 1,136 Undeveloped 22,369 52,022 13,893 3,068 36,423 605,140 Total proved 48,746 120,088 21,288 6,284 78,592 606,275 Total Probable 13,148 31,894 6,604 1,684 21,248 9,651 Total P+P(1) (2) (3) 61,894 151,982 27,893 7,968 99,840 615,926
Notes:
(1) Reserves have been presented on gross basis which are the Company's total working interest share before the deduction of any royalties and without including any royalty interests of the Company.
(2) Totals may not add due to rounding.
(3) Based on Sproule's December 31, 2017 escalated price deck.
(4) Oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil. Reconciliation of Company Gross Reserves by Principal Product Type as of
December 31, 2017 (1)(2) Light and Conventional medium oil natural gas Total proven Proven + Total proven Proven + probable probable (MBbl) (MBbl) (MMcf) (MMcf) Opening Balance, December 31, 2016 47,581 60,320 129,108 167,269 Extensions & Improved Recovery(2) 4,086 5,166 7,130 9,009 Technical Revisions (882) (1,785) 11,905 9,803 Discoveries - - - - Acquisitions 697 868 1,730 2,170 Dispositions(3) - - - - Economic Factors 150 211 295 415 Production (2,886) (2,886) (8,792) (8,792) Closing Balance, December 31, 2017 (4)48,746 61,894 141,376 179,874 Natural gas Oil liquids equivalent Total proven Proven + Total Proven Proven + probable probable (MBbl) (MBbl) (MBoe) (MBoe) Opening Balance, December 31, 2016 5,157 6,707 74,257 94,905 Extensions & Improved Recovery(2) 427 540 5,701 7,207 Technical Revisions 960 964 2,062 814 Discoveries - - - - Acquisitions 57 71 1,043 1,301 Dispositions(3) - - - - Economic Factors 13 16 212 296 Production (331) (331) (4,682) (4,682) Closing Balance, December 31, 2017 (4) 6,284 7,968 78,592 99,840
Notes:
(1) Gross Reserves means the Company's working interest reserves before calculation of royalties, and before consideration of the Company's royalty interests.
(2) Increases to Extensions & Improved Recovery include infill drilling and are the result of step-out locations drilled by Bonterra and other operators on and near Company-owned lands.
(3) Includes volumes associated with Farm outs.
(4) Totals may not add due to rounding.
Summary of Net Present Values of Future Net Revenue as of December 31, 2017 ($M) Net Present Value Before Income Taxes Discounted at (% per Year) Reserves Category: 0 % 5 % 10 % 15 % Proven Producing 1,379,164 935,526 706,099 569,452 Non-producing 20,761 18,112 14,854 12,272 Undeveloped 930,643 514,685 306,474 190,432 Total proved 2,330,568 1,468,324 1,027,427 772,156 probable 946,292 492,725 317,563 231,218 Total proved plus probable(1)(2)(3)3,276,860 1,961,049 1,344,990 1,003,374
Notes:
(1) Evaluated by Sproule as at December 31, 2017. Net present value of future net revenue does not represent fair value of the reserves.
(2) Net present values equals net present value before income taxes based on Sproule's forecast prices and costs as of December 31, 2017. There is no assurance that the forecast prices and costs assumptions will be attained and variances could be material.
(3) Includes abandonment and reclamation costs as defined in NI 51-101.
Finding, Development & Acquisition ("FD&A") and Finding & Development ("F&D") Costs
Over the past three years, Bonterra has incurred the following FD&A(3) and F&D(3) costs both excluding and including Future Development Capital ("FDC"):
Total Proven Reserves Net Additions P+P Reserves Net Additions 2017 2016 20153 Yr Avg (4) 2017 2016 20153 Yr Avg (4) FD&A Costs per BOE (1)(2)(3) Including FDC$15.66 $10.87 $11.52$12.60 $13.74$9.93$11.60$11.77 Excluding FDC$9.06 $4.91 $15.50$10.62 $8.57 $4.58$15.29$10.51 F&D Costs per BOE (1)(2)(3) Including FDC$17.02 $10.89 $4.76 $13.04 $15.22$9.91$3.12 $11.96 Excluding FDC$9.55 $4.81 $33.26$9.73 $9.25 $4.44$56.32$9.64
Notes:
(1) Barrels of oil equivalent may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 MCF: 1 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.
(2) The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development capital generally will not reflect total finding and development costs related to reserve additions for that year.
(3) FD&A and F&D costs are net of proceeds of disposition and the FD&A costs per BOE are based on reserves acquired net of reserves disposed of.
(4) Three year average is calculated using three year total capital costs and reserve additions on both a total proved and P+P reserves on a weighted average basis.
FD&A and F&D Highlights
The increase in FDC was primarily a result of increased investment infrastructure capital of $13 million directed to initiatives designed to reduce future operating costs by enhancing water and gas handling capabilities, as well as increased drilling and completion costs due to higher industry demand.
FD&A for 2017 was positively impacted by reserve additions from two acquisitions totaling $5.5 million.
On December 20, 2017, the Company closed the sale of a two percent non-convertible gross overriding royalty ("GORR") on its Pembina Cardium pool for consideration of $56.7 million (comprised of $52 million cash and incremental Cardium assets). The GORR transaction has been reflected in the Company's net reserves.
Operational Highlights
Bonterra realized ongoing success in its core Pembina Cardium area through 2017 and maintained stable production volumes as a result of its low corporate decline rate and successful drilling program. The Company was able to grow reserves and lower net debt with no shareholder dilution due to the GORR transaction and its successful 2017 development program. Bonterra's realized oil prices are based on Edmonton Par pricing; accordingly, the Company has not been exposed to the significantly lower differentials which have negatively impacted the Western Canadian Select benchmark price.
Bonterra's 2017 full year and fourth quarter production summary follows:
Average daily production for the full year was 12,827 BOE per day (70 percent oil and liquids), which was in line with the Company's 2017 guidance of 12,900 BOE per day, representing a two percent increase over the 12,650 BOE per day average in 2016;
Average daily production in the fourth quarter was 12,807 BOE per day, an increase of six percent compared to the fourth quarter of 2016; and
During the fourth quarter of 2017, the Company experienced pipeline restrictions which resulted in 80 barrels of oil per day being produced into inventory rather than being sold. In addition, due to extremely cold weather, numerous pipelines and wellhead freeze offs resulted in unplanned downtime of 218 BOE per day. Without these production curtailments, the Company would have averaged 13,105 BOE per day in Q4 2017. The inventory build will be included in Q1 2018 production and unplanned downtime is expected to be resolved early in the first quarter of 2018.
2018 Guidance
Bonterra is maintaining the 2018 capital budget at $75 million which will be directed largely to new wells and facility upgrades focused primarily in the Pembina Cardium area. Bonterra anticipates the 2018 average annual production to range between 13,200 and 13,500 BOE per day.
We seek Safe Harbor.