Bonavista Energy Corporation Announces 2013 First Quarter Results

Bonavista Energy Corporation Announces 2013 First Quarter Results 
CALGARY, ALBERTA -- (Marketwired) -- 05/02/13 -- Bonavista Energy
Corporation ("Bonavista") (TSX:BNP) is pleased to report to
shareholders its condensed consolidated interim financial and
operating results for the three months ended March 31, 2013. The
unaudited financial statements and notes, as well as management's
discussion and analysis, are available on the System for Electronic
Document Analysis and Retrieval ("SEDAR") at http://www.sedar.com and
on Bonavista's website at www.bonavistaenergy.com. 


 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Highlights                                                                  
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                Three months                
                                              ended March 31,            %  
                                                 2013        2012   Change  
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Financial                                                                   
($ thousands, except per share)                                             
Production revenues                           227,493     227,034        -  
Funds from operations(1)                      110,008     104,635        5% 
  Per share(1) (2)                               0.57        0.63      (10%)
Dividends declared(3)                          37,670      52,183      (28%)
  Per share                                      0.21        0.36      (42%)
Net income (loss)                              (3,219)     43,723     (107%)
  Per share(4)                                  (0.02)       0.26     (108%)
Adjusted net income(5)                         16,614      40,966      (59%)
  Per share(4)                                   0.09        0.25      (64%)
Total assets                                4,157,694   3,959,126        5% 
Long-term debt, net of working capital      1,065,159   1,151,453       (7%)
Long-term debt, net of adjusted working                                     
 capital(6)                                 1,046,540   1,146,417       (9%)
Shareholders' equity                        2,269,232   2,015,380       13% 
Capital expenditures:                                                       
  Exploration and development                 115,802     153,807      (25%)
  Acquisitions, net of dispositions            35,968     (58,221)     162% 
Weighted average outstanding equivalent                                     
 shares: (thousands)(4)                                                     
  Basic                                       194,686     166,253       17% 
  Diluted                                     196,709     167,253       18% 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating                                                                   
(boe conversion - 6:1 basis)                                                
Production:                                                                 
  Natural gas (mmcf/day)                          273         251        9% 
  Natural gas liquids (bbls/day)               14,746      14,623        1% 
  Oil (bbls/day)(7)                            12,085      13,795      (12%)
    Total oil equivalent (boe/day)             72,333      70,202        3% 
Product prices:(8)                                                          
  Natural gas ($/mcf)                            3.26        2.38       37% 
  Natural gas liquids ($/bbl)                   48.65       50.62       (4%)
  Oil ($/bbl)(7)                                75.05       82.73       (9%)
Operating expenses ($/boe)                       9.16        9.39       (2%)
General and administrative expenses                                         
 ($/boe)                                         1.09        0.96       14% 
Cash costs ($/boe)(9)                           13.25       13.46       (2%)
Operating netback ($/boe)(10)                   19.49       18.94        3% 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
NOTES:                                                                      
(1) Management uses funds from operations to analyze operating performance, 
    dividend coverage and leverage. Funds from operations as presented does 
    not have any standardized meaning prescribed by IFRS and therefore it   
    may not be comparable with the calculations of similar measures for     
    other entities. Funds from operations as presented is not intended to   
    represent operating cash flow or operating profits for the period nor   
    should it be viewed as an alternative to cash flow from operating       
    activities, net income or other measures of financial performance       
    calculated in accordance with IFRS. All references to funds from        
    operations throughout this report are based on cash flow from operating 
    activities before changes in non-cash working capital, decommissioning  
    expenditures and interest expense. Funds from operations per share is   
    calculated based on the weighted average number of shares outstanding   
    consistent with the calculation of net income per share.                
(2) Basic funds from operations per share calculations include exchangeable 
    shares which are convertible into common shares on certain terms and    
    conditions.                                                             
(3) Dividends declared includes both cash dividends and common shares issued
    pursuant to Bonavista's dividend reinvestment plan (DRIP) and           
    Bonavista's stock dividend program (SDP). For the three months ended    
    March 31, 2013 approximately 1.3 million common shares were issued under
    the DRIP and SDP with an approximate value of $17.3 million.            
(4) Basic net income per share calculations include exchangeable shares     
    which are convertible into common shares on certain terms and           
    conditions.                                                             
(5) Amounts have been adjusted to exclude unrealized gains and losses on    
    financial instrument commodity contracts.                               
(6) Amounts have been adjusted to exclude associated assets or liabilities  
    from financial instrument commodity contracts.                          
(7) Oil includes light, medium and heavy oil.                               
(8) Product prices include realized gains and losses on financial instrument
    commodity contracts.                                                    
(9) Cash costs equal the total of operating, transportation, general and    
    administrative, and financing expenses.                                 
(10)Operating netback equals production revenues including realized gains   
    and losses on financial instrument commodity contracts, less royalties, 
    operating and transportation expenses, calculated on a boe basis.       
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                              Three months ended            
                                   March 31,  December   September  June 30,
Share Trading Statistics                2013  31, 2012    30, 2012      2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
($ per share, except volume)                                                
----------------------------------------------------------------------------
High                                   15.18     18.85       19.14     20.15
Low                                    12.25     14.05       15.46     13.76
Close                                  14.94     14.82       17.44     15.92
Average Daily Volume - Shares        676,012   626,743     596,502   720,519
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
MESSAGE TO SHAREHOLDERS 
After navigating through a challenging natural gas price environment
in 2012, Bonavista successfully delivered on its commitment to create
long term shareholder value in the first quarter of 2013 with an
active exploration and development program complemented with
attractive acquisition and divestiture activity. 
Bonavista remains committed to a business plan that provides a
sustainable balance of both growth and income to our shareholders. On
January 9, 2013 Bonavista announced its decision to rebalance the
growth and income components of our business plan with an adjustment
in our monthly dividend from $0.12 per share to $0.07 per share. This
dividend adjustment provides Bonavista with added flexibility to
pursue our strategy focused on sustainability, capital agility, asset
concentration and development efficiency.   
Since announcing the dividend reduction there has been a material
improvement in natural gas prices. This price improvement has created
an opportunity to remain active with our commodity hedging program
which has been designed to maintain a healthy balance sheet as we
deliver on our growth and income objectives in the coming years.  
Our intentions throughout 2013 will be to: 


 
--  Execute an exploration and development program focused on low risk,
    repeatable drilling opportunities; 
    
--  Continue with an acquisition and divestiture program designed to high
    grade and concentrate our asset portfolio in the most prospective,
    multi-zone areas of the Western Canadian Sedimentary Basin; 
    
--  Maintain flexibility with our capital program to pursue the highest
    return opportunities; 
    
--  Focus on restoring sustainability and balance sheet strength; and 
    
--  Continue to profitably grow our production base.

 
Specific accomplishments for Bonavista in the first quarter of 2013
include: 


 
--  Increased production volumes to 72,333 boe per day representing a 3%
    increase over the 70,202 boe per day of production in the first quarter
    of 2012. Bonavista was able to achieve these growth rates in the first
    quarter of 2013 despite being impacted by a loss of approximately 850
    boe per day in unscheduled third party facility downtime; 
    
--  Executed a successful exploration and development program, investing
    $115.8 million, drilling 31 gross (26.5 net) wells with an overall 100%
    success rate;  
    
--  Continued to concentrate our asset portfolio completing an active
    acquisition and divestiture program, divesting of $42.3 million of non-
    core assets and reinvesting $78.2 million primarily in our deep basin
    core region to enhance the concentration of our asset portfolio;  
    
--  Improved our operating netback to $19.49 per boe representing a 3%
    increase over the same period in 2012. This improvement was achieved
    despite a 12% reduction in oil production and demonstrates our efforts
    over the past year to increase the quality of our asset portfolio;  
    
--  Managed our exposure to commodity price fluctuations resulting in
    approximately 50% of our forecasted natural gas production (net of
    royalties) hedged at an average floor price of $3.01 per mcf and 38% of
    our forecasted oil and liquids production (net of royalties) hedged at
    an average floor price of $87.27 per bbl for 2013. Furthermore, we have
    extended our hedging activity into 2014 and 2015; 
    
--  Generated funds from operations of $110.0 million ($0.57 per share) for
    the three months ended March 31, 2013; and 
    
--  Since 2003, when Bonavista introduced an income component to our total
    shareholder return, Bonavista has delivered cumulative dividends of over
    $2.4 billion or $26.40 per common share. 

 
First Quarter 2013 Acquisition and Divestiture Highlights  
Consistent with our goal to increase asset quality and concentration,
Bonavista has been an active acquirer in the Deep Basin over the past
several years. Complementing our 2012 acquisition of 6,700 boe per
day in this area, Bonavista closed a second acquisition on January 9,
2013 for $72.5 million, adding 2,450 boe per day of production,
further enhancing our land position and our control of synergistic
facility infrastructure. The geographic alignment of this asset with
our existing operations, coupled with our operating philosophy will
result in a 25% reduction in the operating expenses of this property
over the next six months. Furthermore, growth and capital
efficiencies within the Deep Basin will be improved through increased
economies of scale.   
In addition, Bonavista divested of 760 boe per day of non-core assets
for $42.3 million in the first quarter of 2013. Collectively,
acquisitions totaling $78.2 million offset by divestitures of $42.3
million has resulted in a net acquisition and divestiture capital
activity of $36.0 million in the first quarter of 2013.  
Bonavista will continue to rationalize non-strategic assets in 2013
which will further enhance the concentration of our asset base and
allow capital deployment into the most efficient areas of operation.  
First Quarter 2013 Operational Highlights  
West Central Alberta Core Area  
Hoadley Glauconite Liquids Rich Natural Gas:  
Bonavista drilled twelve horizontal wells in the first quarter
focused on maximizing facility utilization across the play resulting
in optimal operating efficiencies. Eight of these wells were
completed and brought on production with initial production results
consistent with type curve expectations. Completion operations on the
remaining four wells are currently underway with production tie-in
expected in the second quarter.  
Bonavista's Hoadley Glauconite play generates single well economics
that rank in the top decile of all North American natural gas plays,
having an estimated 3.4:1 recycle ratio and a 50% internal rate of
return at current commodity prices. With recent improvements in
natural gas prices, we will increase our drilling activity by 25%
over last year with plans to drill 42 wells. The Glauconite formation
remains a key growth platform because of its predictable results,
attractive natural gas liquids yield, low operating costs and strong
capital efficiencies.  
Cardium Light Oil: 
Bonavista completed another active Cardium program in the first
quarter drilling 11 horizontal wells focused on our proven productive
trends. Seven horizontal wells were drilled at Willesden Green area,
four of which were completed in the quarter with production rates
consistent with type curve expectations. Completion operations on the
remaining three Willesden Green wells are underway and will be on
production within the month of May. Bonavista also drilled four wells
in the Harmattan field to confirm our understanding of the production
capability of our land in this area. All four Harmattan wells were
successfully completed at the end of the quarter and initial testing
indicates positive results.  
Our first quarter Cardium program incorporated the use of pad
drilling and emerging drilling technology which significantly reduced
drilling costs by approximately $200,
000 per well. Bonavista will
continue to find ways to improve our capital efficiencies within this
play to enhance the economics of our drilling inventory of 140
locations.  
With 97 horizontal wells drilled over the past four years, Bonavista
has been successful in maintaining a disciplined and efficient
development approach with the Cardium program. Bonavista's current
Cardium production is approximately 4,500 boe per day illustrating
30% year over year growth and representing approximately 35% of total
corporate oil volumes.  
At current commodity prices, Bonavista's Cardium development program
offers an estimated recycle ratio of 2.8:1 and a 45% internal rate of
return. Bonavista plans to drill approximately 20 horizontal wells in
2013. 
Ellerslie Liquids Rich Natural Gas:  
Throughout the first quarter, Bonavista focused on increasing
pipeline and compression capacity to accommodate future development
of the Ellerslie play in west central Alberta. Bonavista continues to
observe the results of our 2012 drilling program and remains
encouraged by the horizontal production performance of this play. Our
last horizontal well drilled in the fourth quarter of 2012 continues
to perform above type curve expectations, in spite of completing only
four stages in the horizontal leg. These results support our
interpretation of the size and capability of this liquid rich natural
gas resource and illustrate the benefits from horizontal drilling and
multi stage fracture technology in reducing geological risk and
improving development economics. 
Currently, our type curve well generates an estimated recycle ratio
of 2.8:1 and an internal rate of return of 40% owing to a liquids
yield of greater than 100 bbls per mmcf. These economics will
continue to improve with additional production performance and
further horizontal development.  
Bonavista's drilling inventory in this play is growing with our
confidence in our ability to access the resource economically. We
plan further delineation of this resource in 2013 by drilling 6 to 8
horizontal wells.  
Deep Basin Core Area  
Bonavista drilled six horizontal wells in the first quarter of 2013,
consisting of three Bluesky wells, one Rock Creek well and two
Wilrich natural gas wells. Current gross production from this program
is estimated at 2,600 boe per day illustrating a robust production
profile in line with type curve expectations. Since entering this
area in 2010, Bonavista's activities have expanded from an initial
focus on low risk opportunities in the Bluesky and Rock Creek
formations to include an emerging, prolific Wilrich natural gas play. 
Current production in the Deep Basin area has grown to approximately
14,500 boe per day. We currently have access to approximately 210,000
net acres of land to develop, operate over 230 mmcf per day of
licensed natural gas processing capacity and have grown our drilling
inventory to approximately 185 horizontal locations.  
Bonavista plans to drill 15 to 20 horizontal wells in 2013 in our
Deep Basin area focused on continued improvement in both capital and
operational efficiencies. We anticipate reducing operating expenses
to approximately $5.50 per boe in 2013, down nearly 40% from $9.00
per boe in early 2010.  
Additional Emerging Opportunities  
Bonavista continues to observe the production results of its 2012
drilling program in two emerging development opportunities. These are
the Viking oil development at Provost in eastern Alberta and the
liquids rich Montney natural gas development at Blueberry in
northeast British Columbia. Production results in the Viking
formation at Provost continue to meet expectations, such that
Bonavista intends to drill 15 to 20 Viking oil wells in the second
half of 2013. Bonavista will further delineate its liquids rich
Montney acreage at Blueberry with up to two horizontal wells planned
in the second half of 2013. Industry activity in the Montney
formation offsetting our land base has significantly accelerated in
conjunction with increased visibility to west coast LNG export
initiatives. Bonavista intends to observe the results of this
activity and prudently validate the scale of this opportunity
situated on its 55 net section land base.  
In addition to the Montney and Viking formations, our technical teams
continue to evaluate numerous resource opportunities with a focus on
light oil and liquids rich natural gas formations. 
Strengths of Bonavista Energy Corporation  
Beginning in 1997, with an initial restructuring to create a high
growth junior exploration company, throughout the energy trust phase
between July 2003 and December 2010, and now operating as a dividend
paying corporation, Bonavista remains committed to the same
strategies that have resulted in our success over the past 15 years.
We have steadily improved the quality and maintained a high level of
investment activity on our asset base, increasing production by
approximately 100% since converting to an energy trust in July 2003
and a further 10% since converting back to a corporation at the end
of 2010. These results stem from the operational, technical and
financial expertise of our people with their entrepreneurial approach
to generating low risk, highly profitable projects within the Western
Canadian Sedimentary Basin. Our experienced technical teams have a
solid understanding of our assets as they exercise the discipline and
commitment required to deliver long-term value to our shareholders.
We actively participate in undeveloped land acquisitions, property
purchases and farm-in opportunities, which have all enhanced the
quality and quantity of our extensive drilling inventory. These
activities have led to low cost reserve additions, and a predictable
production base that continues to grow at a healthy pace. Our
production base is currently 63% weighted towards natural gas and is
geographically focused within select, multi-zone regions primarily in
Alberta and British Columbia. The low cost structure of our asset
base ensures positive operating netbacks in most operating
environments. Furthermore, our assets are predominantly operated by
Bonavista, providing control over the pace of operations and optimum
influence over our operating and capital cost efficiencies. 
Our team brings a successful track record of executing low to medium
risk development programs, including both asset and corporate
acquisitions, along with sound financial management. Our Board of
Directors and management team possess extensive experience in the oil
and natural gas business. They have successfully guided our
organization through many different economic cycles utilizing a
proven strategy consisting of disciplined cost controls and prudent
financial management. Directors, management and employees also own
approximately 13% of the equity of Bonavista, resulting in the
alignment of interests with all shareholders.  
Outlook  
As we progress beyond the first quarter of 2013, Bonavista remains
committed to a strategy built on maximizing total shareholder return
through a balance of growth and income. This strategy includes the
pursuit of low risk, repeatable drilling opportunities, coupled with
an active acquisition and divestiture program to concentrate our
asset base in the areas where our capital efficiency is optimal and
growth prospects are abundant. Currently, the outlook for natural gas
prices has improved considerably due to reduced natural gas focused
drilling activity and the arrival of a late winter which reduced US
natural gas storage levels below the five year historical average.
Furthermore, while global crude oil prices continue to be influenced
by bearish economic and supply factors, Canadian oil price
differentials have narrowed with the recent transportation and
debottlenecking initiatives. Collectively these commodity price
improvements, our capital expenditure discipline, our improved
flexibility due to the recent dividend reduction and our active
hedging program, have all enhanced Bonavista's financial strength and
our ability to capitalize on the numerous opportunities in front of
us. As always, Bonavista intends to remain nimble throughout 2013
while focusing on our core strengths that have proven to add
shareholder value over the past 15 years. 
Bonavista's 2013 capital budget will remain within the range of $420
and $430 million, with a program to drill between 120 and 125 wells
within our core areas. This capital program is expected to result in
2013 production volumes of between 73,500 and 74,500 boe per day
representing an approximate 7% gain over 2012. While we are
encouraged by the number of acquisition opportunities in the market,
we will remain disciplined in our approach and seek to capitalize
only on those that provide a synergistic advantage similar to those
recently completed.  
We would like to thank our employees for their commitment to
Bonavista's proven operating strategies and our shareholders for
their support as we pursue an objective to generate profitable
returns similar to our
 historical track record. We remain confident
that our strategies are appropriate for today's environment and that
our asset base is well positioned to maximize total return for our
shareholders. Our team is very committed to this vision. 
FORWARD LOOKING INFORMATION  
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 period will be the same in whole or in part as those
forecast.  
Bonavista is a mid-sized energy corporation committed to maintaining
its emphasis on operating high quality oil and natural gas
properties, providing moderate growth and delivering consistent
dividends to its shareholders and ensuring financial strength and
sustainability.
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
 
 
Press spacebar to pause and continue. Press esc to stop.