Bonavista Energy Corporation Announces a Reduction in Monthly

Bonavista Energy Corporation Announces a Reduction in Monthly
Dividends, Closing of a Synergistic Deep Basin Acquisition,
Confirmation of the 2013 Capital Budget and Increased Production
Guidance 
CALGARY, ALBERTA -- (Marketwire) -- 01/09/13 -- Bonavista Energy
Corporation (TSX:BNP) ("Bonavista") announces that its Board of
Directors has approved a reduction in the monthly dividend from $0.12
per share to $0.07 per share, beginning with the payment due February
15, 2013 to common shareholders of record on January 31, 2013, with
an ex-dividend date of January 29, 2013. 
Despite encouraging signs of recovery in the fall of 2012, North
American natural gas fundamentals have deteriorated significantly
since that point. Driven by widespread technological success in the
development of natural gas from unconventional reservoirs, the price
curve for North American natural gas has shifted materially lower
over the past two years. To compound this natural gas supply
imbalance, a similar phenomenon has been evolving with the supply of
natural gas liquids and crude oil. Unfortunately, producers in
western Canada have been exposed to unusually high differential
pricing for their product resulting from insufficient export
alternatives. The western Canadian oil and gas business will continue
to experience excessive pressure throughout 2013 until structural
adjustments are realized. 
Forward commodity prices are below a level that provides adequate
cash flow to sustain our prior monthly dividend, capitalize on our
numerous opportunities, and maintain a strong balance sheet.
Notwithstanding the implementation of several initiatives to preserve
our prior dividend throughout 2012, current forward commodity prices
do not allow for these activities to continue under our "dividend
plus growth" business model. The long-term goal of this business
model remains intact with a commitment to generate an attractive
return for our shareholders through a sustainable balance between
dividends and corporate growth. 
To deliver on this model, Bonavista embarked upon a strategy five
years ago to assemble a concentrated portfolio of assets in highly
prospective, multi-zone areas that will create maximum value for our
shareholders. The approach was to extract incremental value by
enhancing both c
apital and operating efficiencies through control of
operations, consolidation and the development of low-risk, scalable
opportunities. We have validated our commitment to this strategy over
the past twelve months illustrated by acquiring two synergistic
assets in our Deep Basin area, and by divesting of numerous non-core
properties that were unable to compete for capital allocation. This
acquisition and divestiture activity, coupled with our concentrated
exploration and development efforts will result in the allocation of
greater than 90% of the 2013 capital budget in two areas: the Deep
Basin and West Central areas of Alberta. Complementing this focused
acquisition and development activity, Bonavista will continue to
optimize its asset portfolio and is currently in the process of
marketing additional non-core assets for sale with a bidding process
due in February 2013. 
Today, Bonavista's asset base and drilling inventory is of the
highest quality it's been since inception of the company. We have
improved the capital efficiency of our key development plays and we
continue to find ways to add discipline to our cost structure. Most
importantly, we have an experienced, entrepreneurial team driven by
profitability and results. 
Synergistic Deep Basin Acquisition 
Bonavista today completed another synergistic acquisition in its Deep
Basin area for a closing purchase price of $72.5 million. This
acquisition is consistent with our strategy of acquiring high
quality, multi-zone oil and liquids rich natural gas assets in a
region proximal to existing operations where we have identified
opportunities to optimize netbacks through lowering operating costs
and utilizing proven technology to enhance the value of existing
reservoirs.  
Highlights of the acquisition include: 


 
--  Increases our land position in the Deep Basin by approximately 18%
    (40,000 net acres) providing an excellent overlay with our existing land
    position; 
--  Increases production by 2,450 boe per day (77% natural gas weighted) of
    low decline production with the capability of increasing production by
    350 boe per day by the end of January 2013 through the completion of an
    existing Rock Creek horizontal well; 
--  Adds approximately 12.5 mmboe of proven and probable reserves (54%
    proven); 
--  Increases our development portfolio by 19 gross (17.2 net) horizontal
    drilling locations, nine of which are targeting a Rock Creek light oil
    pool. This pool is currently underdeveloped with less than a 2% recovery
    factor to date, producing at a 15% decline rate. Four horizontal wells
    will be drilled in this pool in 2013; 
--  Adds two wholly-owned natural gas plants with approximately 24 mmcf per
    day of capacity and 130 kilometers of infrastructure augmenting
    Bonavista's existing operational presence in the area. This alignment of
    operations will result in a 25% reduction in the current operating costs
    of these properties; 
--  Adds $20.5 million in net operating income in 2013 with the capability
    of growing substantially in future years; and 
--  Collectively, acquisition metrics are attractive at $29,600 per boe per
    day, $12.00 per boe, including future development costs and 3.5 times
    2013 cash flow based on forward commodity pricing. 

 
2013 Capital Budget and Upwardly Revised Production Guidance 
Bonavista's 2013 net capital spending plans remain consistent with
prior guidance at $423 million; however, we have incorporated certain
budget adjustments to accommodate approximately $20 million of
development expenditures allocated to the Deep Basin properties we
have just acquired. We expect our 2013 capital program will result in
average production of between 73,500 and 74,500 boe per day
representing a modest increase over prior guidance and resulting in
6-7% growth over 2012. Similarly, we expect our 2013 year-end debt to
forward 2014 cash flow ratio to improve to 2.0:1 based on current
strip commodity pricing.  
Through the consistent application of our proven strategy, we are
confident that the current measures we are taking will not only
result in additional financial flexibility in the short-term but lead
to a stronger and more profitable company in the long-term. As in
prior years, we will continue to monitor the economic landscape,
commodity prices and our drilling results and adjust our capital
spending levels as conditions warrant. Additionally, we remain
attentive to an increasing number of incremental acquisition
opportunities which complement our core regions and enhance our
capabilities to create value. 
Forward Looking Statements 
Corporate information provided herein contains forward-looking
information. The reader is cautioned that assumptions used in the
preparation of such information, particularly those pertaining to
cash dividends, production volumes, commodity prices, operating costs
and drilling results, which are considered reasonable by Bonavista at
the time of preparation, may be proven to be incorrect. Actual
results achieved during the forecast period will vary from the
information provided herein and the variations may be material. There
is no representation by Bonavista that actual results achieved during
the forecast per
iod will be the same in whole or in part as those
forecasts.
Contacts:
Keith A. MacPhail
Executive Chairman
(403) 213-4300 
Jason E. Skehar
President & CEO
(403) 213-4300 
Glenn A. Hamilton
Senior Vice President & CFO
(403) 213-4300 
Bonavista Energy Corporation
1500, 525- 8th Avenue SW
Calgary, AB T2P 1G1
www.bonavistaenergy.com
 
 
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