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

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Post by Resilience2on Dec 19, 2023 2:39am

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Post# 35791145

On the Montney wells and capital efficiencies

From my post on IV:

BNE: how the Montney wells compare to Cardium & how the MT engine works for big divvy

For info: The Kelt curve in the area has IP365 type-curve off ~ 820 Boe/d 62% liquids vs 112/boe/d in the Cardium.

Montney vs Cardium capital efficiencies:

Since BNE was restricted at 523 boe/d with a peak of 753 boe/d on this exploration well: say just under mid point is 625 boe/d IP 365. That's 62%-65% 40 degree API oil with BNE Cardium being 50% oil. That's a big difference since oil is ~ 80% of revenue.

The comparison then looks as follows:

Cardium IP 365 is 112 boe/d with 50% oil (56 BO/d) - cost $ 2,5 mln
Montney IP 365 est @ 625 boe/d (~ 394 BO/d or 7x the amount of oil) - cost $ 3,5 drill, $ 4,2 mln complete ($ 7.7 mln)

Considering the oil weighting of 80% in $ value and 20% gas (prob lower now)

The ratio in value is then Montney being 6.4x value in $ production vs
$ 7.7 mln / $ 2,5 mln = 3.1 x the cost or 200%+ better capital efficiency

In simple terms: a Montney well brings more than twice the cash flow value per 1$ spend (and more than halves the payback time ~ 6 months) - much better than any Cardium location.

No value at all is attributed to this and BNE now notes 33% of PDP @ $ 70 (48% of PDP @ $ 80) oil at current share price, WITHOUT the Montney.

I don't think divvy is the biggest draw here anymore right now, though I would very much like to have it.

Also pouring capital into better efficiencies will make the divvy accelerate over time as the debenture and term debt get paid off.

Additionally the ARO investment have been closing off most liabilities and will continue to do so until it's done - freeing up that capital as well.

The ultimate divvy potential lies in:

Starting with a small divvy (and special divvies if O&G prices are strong)
Accelerating CF potential with better capital efficiencies (Montney)
Pay down debt (both the debt pay down and the interest cost will free up additional cash) - consider here that term debt is already paid down as we go and the debenture can earliest be paid down oct '24, latest oct '25 but we would need to have the cash for it
Pay down ARO in full