Contact Information: Bonterra Energy Corp. George F. Fink Chairman and CEO (403) 262-5307 (403) 265-7488 (FAX) or Bonterra Energy Corp. Randy M. Jarock President and COO (403) 262-5307 (403) 265-7488 (FAX) or Bonterra Energy Corp. Kirsten Lankester Manager, Investor Relations (403) 262-5307 (403) 265-7488 (FAX) info@bonterraenergy.com www.bonterraenergy.com
Bonterra Energy Corp. Announces Significant Year-End Corporate Reserves Growth and Provides an Operational Update Including 2011 Guidance
| Source: Bonterra Energy Corp.
CALGARY, ALBERTA --(Marketwire - Feb. 9, 2011) - Bonterra Energy Corp. ("Bonterra" or "the Company") (www.bonterraenergy.com) (TSX:BNE) is pleased to announce the results of its independent reserve report prepared by Sproule Associates Limited with an effective date of December 31, 2010 and provide an operational update including 2011 guidance.
In 2010, Bonterra maintained its focus on providing investors with continued superior growth on a per share basis, a sustainable pace of development and monthly income through its dividend policy. Bonterra's one year total return to shareholders for 2010 was 59.0 percent.
The Company will continue to execute its corporate strategy in 2011 by pursuing the development of its horizontal drilling program in the Cardium light oil play. Bonterra has a 14 year drilling inventory with 420 gross locations already identified including at least 52 gross horizontal locations in the Halo area of the Pembina field. Bonterra plans to advance the use of horizontal multi-stage technology in the main Pembina Cardium pool in 2011 by initiating a multi-well horizontal drilling program later in the year with the objective of changing the pool exploitation strategy to horizontal well development from vertical well development.
2010 Year End Reserve Highlights:
- Total Proved plus Probable (P+P) reserves of 39.4 million barrels of oil equivalent (BOE) (77.3 percent liquids), a ten percent increase over December 2009 reserves of 35.8 million BOE.
- Total Proved (TP) reserves of 28.6 million BOE (77.5 percent liquids), a 12.8 percent increase over December 2009 reserves of 25.3 million BOE.
- Added a total of 5.3 million BOE TP reserves and 5.6 million BOE P+P reserves which equates to 2.6 and 2.7 times 2010 production, respectively.
- Reserves per share (P+P) increased five percent to 2.09 BOE per share compared to December 2009.
- The reserve life index (RLI) of 12.9 years on a TP basis and 17.8 years on a P+P basis remains well above industry average.
- A total of 7.0 million BOE on a TP basis and 11.3 million BOE on a P+P basis of reserves have been assigned to 78 net (91 gross) horizontal wells in the company's Cardium horizontal project.
- Finding, development and acquisition (FD&A) costs including future development costs were $20.86 per BOE on a TP basis and $18.13 per BOE on a P+P basis compared with the three-year average of $14.26 per BOE on a TP basis and $11.51 per BOE on a P+P basis.
- Finding and Development (F&D) costs were $21.98 per BOE on a TP basis and $19.19 per BOE on a P+P basis compared with the three-year average of $15.07 per BOE on a TP basis and $12.34 per BOE on a P+P basis.
- FD&A and F&D cost increases are primarily due to 1) a 12 percent increase to the Company's average horizontal well costs, reflecting the deeper Cardium targets in West Pembina and Willesden Green and the placing of more fracs per well; 2) capital for infrastructure which will reduce operating expense but not increase reserves was included that was not included in the previous reserve report; and 3) due to 51-101 Standards of Disclosure, only six of a possible 22 wells were assigned reserves in Willesden Green.
2010 Operational Highlights
The Company has not released its audited 2010 financial results therefore the numbers provided below are currently estimates and unaudited.
- Average daily production in 2010 totaled 5,628 BOE per day (68.9 percent liquids), an increase of 12.7 percent when compared with 2009 levels.
- Average daily production in the fourth quarter of 2010 totaled 6,080 BOE per day (72.0 percent liquids), an increase of 24.6 percent when compared to the fourth quarter of 2009.
- Production per share increased in 2010 to 0.109 BOE per share, an increase of 7.9 percent over 2009 levels.
- Bonterra participated in drilling five gross (0.75 net) non-operated, horizontal Berrymoor Cardium Unit wells in the main Pembina Cardium pool and is pleased to present the following gross production volumes to February 6, 2011 for the wells that are currently on production.
/T/
Cumulative Initial Oil Current
Days on Oil Production Production 30 Day Oil
Location Production (bbls) days (bbls/day) (bbls/day)
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10-10-049-06 W5 34 8,542.1 245 308.9
12-12-049-06 W5 21 5,633.8 268 (1) 347.8
02-07-049-06 W5 84 2,118.8 235 282.2
04-12-049-06 W5 126 25,511.6 187 164.2
05-31-049-05 W5 (2) 113 3,655.1 45 29.2
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(1) 21 day rate
(2) Well was not frac'd
/T/
2011 Guidance
- The Board of Directors has approved a capital development program of $50 to $60 million.
- At least 20 gross wells are planned with the majority targeted in the Halo Area of the Pembina Cardium and Willesden Green fields with the remainder in the main pool of the Pembina Cardium.
- Full year production levels are expected to average between 6,200 to 6,500 BOE per day, an increase of 10 - 15 percent over 2010 levels.
- Operating costs are anticipated to be in the range of $12.50 per BOE to $13.50 per BOE, a reduction of approximately 10 to 15 percent compared to estimated 2010 costs.
- Bonterra anticipates fully funding its capital expenditure program out of cash flow, proceeds from the exercise of employee stock options and sale of investments.
- Bonterra intends to continue paying out dividends to its shareholders with the dividend payout ratio estimated to remain between 55 to 70 percent of funds flow.
The capital development program may be affected by items such as drilling results, commodity prices, and industry, regulatory and economic conditions. The Board of Directors and management will regularly review the capital program during the year and will make any adjustments to the amount and targets if required.
Corporate Reserves Information:
Bonterra engaged the services of Sproule Associates Limited to prepare a reserve evaluation with an effective date of December 31, 2010. The gross reserve figures from the following tables represent Bonterra's ownership interest before royalties and before consideration of the Company's royalty interests. Tables may not add due to rounding.
/T/
Summary of Gross Oil and Gas Reserves as of December 31, 2010
Light and Natural Natural Gas
Medium Oil Gas Liquids BOE (1)
Reserve Category: (Mbbl) (MMcf) (Mbbl) (MBOE)
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PROVED
Developed Producing 15,594.4 32,552 1,400.7 22,420.3
Developed Non-Producing 206.1 507 12.6 303.3
Undeveloped 4,693.0 5,441 251.7 5,851.4
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TOTAL PROVED 20,493.5 38,500 1,665.0 28,575.1
PROBABLE 7,708.2 15,192 581.7 10,822.0
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TOTAL PROVED PLUS PROBABLE 28,201.7 53,692 2,246.7 39,397.0
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Reconciliation of Company Gross Reserves by Principal Product
Type as of December 31, 2010
Light and Medium Oil
and Natural Gas
Liquids Natural Gas BOE (1)
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Proved Proved Proved
plus plus Plus
Proved Probable Proved Probable Proved Probable
(Mbbl) (Mbbl) (Mmcf) (Mmcf) (MBOE) (MBOE)
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December 31,
2009 19,220.1 27,567.7 36,642 49,539 25,327.1 35,824.2
Extension 2,984.1 4,915.8 2,706 4,374 3,435.1 5,644.8
Improved
Recovery 0 0 0 0 0 0
Technical
Revisions 1,474.1 (489.9) 3,512 4,193 2,059.4 208.9
Discoveries 0 0 0 0 0 0
Acquisitions 0 0 0 0 0 0
Dispositions (178.9) (213.3) (318) (376) (231.9) (276.0)
Economic
factors 73.5 82.5 (202) (198) 39.8 49.5
Production (1,414.4) (1,414.4) (3,840) (3,840) (2,054.4) (2,054.4)
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December 31,
2010 22,158.5 30,448.4 38,500 53,692 28,575.2 39,397.1
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Summary of Net Present Values of Future Net Revenue as of December 31, 2010
Before Income Taxes
Discounted at (% per Year)
($ Millions) 0% 5% 10%
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Reserve Category:
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PROVED
Developed Producing 1,097,743 656,935 479,876
Developed Non-Producing 14,365 10,745 8,575
Undeveloped 207,140 135,809 93,100
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TOTAL PROVED 1,319,248 803,489 581,552
PROBABLE 644,497 251,757 132,060
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TOTAL PROVED PLUS PROBABLE 1,963,745 1,055,246 713,611
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The Company has historically been active in its capital development
program. Over three years, Bonterra has incurred the following F&D and
FD&A (3) costs:
2010 F&D 2009 F&D 2008 F&D Three
Costs per Costs per Costs per Year
BOE (1)(2) BOE (1)(2) BOE (1)(2) Average
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Proved Reserve
Net Additions $21.98 $16.23 $7.00 $15.07
Proved plus Probable
Reserve Net Additions $19.19 $11.01 $6.82 $12.34
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2010 2009 2008
FD&A FD&A FD&A Three
Costs per Costs per Costs per Year
BOE (1)(2)(3) BOE (1)(2)(3) BOE (1)(2)(3) Average
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Proved Reserve
Net Additions $20.86 $13.25 $8.67 $14.26
Proved plus
Probable Reserve
Net Additions $18.13 $8.93 $7.47 $11.51
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(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 costs generally will not reflect total finding and
development costs related to reserve additions for that year.
(3) FD&A costs are net of proceeds of disposal and the FD&A costs per BOE
are based on reserves acquired net of reserves disposed of.
/T/
Certain financial and operating information, such as production information, finding and development costs and net asset values, included in this press release for the quarter and year ended December 31, 2010 are based on estimated unaudited financial results for the year and are subject to the same limitations as discussed under Forward Looking Statements set out below. These estimated amounts may change upon the completion of audited financial statements for the year ended December 31, 2010 and changes could be material. All reserve numbers provided above are Bonterra's interest before royalties.
It should not be assumed that the estimates of future net revenue presented in the above tables represent the fair market value of the reserves. There is no assurance that the forecast prices and costs assumptions will be attained and variances could be material.
Estimates of reserves and future net revenues for individual properties may not reflect the same confidence level as estimates of reserves and future net revenues for all properties due to the effects of aggregation.
Caution Regarding Engineering Terms:
Disclosure provided herein in respect of barrels of oil equivalent (BOE) may be misleading, particularly if used in isolation. In accordance with NI 51-101, a BOE conversion ratio of 6 MCF to 1 barrel has been used in all cases in this disclosure. This BOE conversion ratio is based on an energy equivalency conversion method primarily available at the burner tip and does not represent a value equivalency at the wellhead.
Caution Regarding Forward Looking Information:
Certain information set forth in this press release, including management's assessment of Bonterra's future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Bonterra's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Bonterra's actual results, performance or achievement could differ materially from those expressed in, or implied by these forward-looking statements, and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Bonterra will derive therefrom. Bonterra disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.