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Bonavista Energy Corporation Announcing 2013 Fourth Quarter Results

Bonavista Energy Corporation Announcing 2013 Fourth Quarter Results  CALGARY, ALBERTA -- (Marketwired) -- 02/27/14 -- Bonavista Energy Corporation (TSX:BNP) is pleased to report to shareholders its results for the fourth quarter ended December 31, 2013. Bonavista's Audited Consolidated Financial Statements and Notes, as well as Management's Discussion and Analysis for the years ended December 31, 2013 and 2012 are available on SEDAR at www.sedar.com or can be obtained from Bonavista's website at www.bonavistaenergy.com.      ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Highlights                                                                   ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                    Three months ended                  Years ended                                    December 31,      %          December 31,       %                           2013     2012 Change        2013      2012  Change   ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                                                              Financial                                                                    ($ thousands,                                                                 except per share)                                                                                                                                        Production revenues  245,466  223,021     10%    964,312   832,491      16%                                                                               Funds from                                                                    operations(1)       124,354  110,015     13%    477,578   378,667      26%    Per share(1) (2)      0.62     0.57      9%       2.42      2.16      12%                                                                               Dividends                                                                     declared(3)          38,904   63,481    (39%)   152,968   224,801     (32%)   Per share             0.21     0.36    (42%)      0.84      1.44     (42%)                                                                              Net income             6,667   14,442    (54%)    49,505    64,202     (23%)   Per share(4)          0.03     0.07    (57%)      0.25      0.37     (32%)                                                                              Adjusted net                                                                  income(5)            23,702   16,535     43%     75,297    58,049      30%    Per share(4)          0.12     0.09     33%       0.38      0.33      15%                                                                               Total assets                                   4,235,626 4,062,852       4%                                                                               Long-term debt, net                                                           of working capital                            1,155,764   963,678      20%                                                                               Long-term debt, net                                                           of adjusted                                                                  working capital(6)                            1,124,198   963,500      17%                                                                               Shareholders'                                                                 equity                                        2,270,015 2,285,889      (1%)                                                                              Capital                                                                       expenditures:                                                                 Exploration and                                                               development       111,596   76,937     45%    443,829   402,090      10%    Acquisitions, net                                                             of dispositions     4,815  118,837    (96%)    20,530   (10,956)    287%                                                                               Weighted average                                                              outstanding                                                                  equivalent shares:                                                           (thousands)(4)                                                                Basic              199,254  192,638      3%    197,296   175,581      12%    Diluted            201,756  194,322      4%    199,340   176,747      13%                                                                               ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                                                              Operating                                                                    (boe conversion -                                                             6:1 basis)                                                                                                                                               Production:                                                                    Natural gas                                                                   (mmcf/day)            287      269      7%        278       253      10%    Natural gas                                                                   liquids                                                                      (bbls/day)         15,103   14,563      4%     15,093    14,074       7%    Oil (bbls/day)(7)   12,208   12,395     (2%)    12,039    12,997      (7%)     Total oil                                                                     equivalent                                                                   (boe/day)        75,072   71,842      4%     73,406    69,250       6%                                                                               Product prices:(8)                                                             Natural gas                                                                   ($/mcf)              3.54     3.22     10%       3.35      2.60      29%    Natural gas                                                                   liquids ($/bbl)     49.35    42.60     16%      47.61     45.19       5%    Oil ($/bbl)(7)       72.73    75.73     (4%)     79.32     77.30       3%                                                                               Operating expenses                                                            ($/boe)                8.77     8.69      1%       8.93      9.07      (2%)                                                                              General and                                                                   administrative                                                               expenses ($/boe)       1.21     1.22     (1%)      1.15      1.10       5%                                                                               Cash costs                                                                    ($/boe)(9)            12.91    12.67      2%      13.00     13.26      (2%)                                                                              Operating netback                                                             ($/boe)(10)           20.82    19.12      9%      20.54     17.70      16%                                                                               ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                                                                                                                                                                                  Years ended December 31,          %   Highlights (cont'd)                           2013         2012     Change   ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Drilling (gross wells):                        128          115         11%    Natural gas                                   58           47         23%    Oil                                           68           67          1%      Average success rate                        98%          99%        (1%)                                                                              Land:                                                                            Undeveloped (net acres)              1,281,191    1,253,141          2%      Total (net acres)                    2,891,947    2,832,701          2%                                                                               Reserves: (11)                                                                                                                                                Proved:                                                                        Natural gas (bcf)                      950.4        921.0          3%        Oil and natural gas liquids                                                   (mbbls)                              97,822       94,914          3%          Total oil equivalent (mboe)        256,216      248,409          3%      Proved plus probable:                                                          Natural gas (bcf)                    1,472.0      1,372.3          7%        Oil and natural gas liquids                                                   (mbbls)                             153,195      143,505          7%          Total oil equivalent (mboe)        398,529      372,220          7%                                                                                         % Proved producing                    39%          40%        (1%)           % Proved                              64%          67%        (3%)           % Probable                            36%          33%         3%    Net present value of future cash                                             flow before income taxes ($                                                  millions):                                                                       0% discount rate                       9,726        9,005          8%        5% discount rate                       6,310        5,742         10%        10% discount rate                      4,608        4,126         12%        15% discount rate                      3,608        3,183         13%      Reserve life index (years): (12)                                               Total proved                             9.1          9.6         (5%)       Total proved plus probable              13.2         13.5         (2%)     Reserves (boe per thousand shares                                             - basic):                                                                     Total proved                           1,282        1,283          -         Total proved plus probable             1,994        1,924          4%                                                                               Finding and development expenditures -                                       proved plus probable ($/boe):                                                    Including changes in future                                                   development expenditures                11.95        14.66        (18%)     Excluding changes in future                                                   development expenditures                11.56        11.23          3%                                                                               Finding, development and acquisition                                         expenditures - proved plus probable                                          ($/boe):                                                                         Including changes in future                                                   development expenditures                11.03        11.16         (1%)     Excluding changes in future                                                   development expenditures                 8.75         6.98         25%                                                                               Recycle ratio - proved plus probable: (13)                                       Including changes in future                                                   development expenditures                  1.9          1.6         19%      Excluding changes in future                                                   development expenditures                  2.3          2.5         (8%) ---------------------------------------------------------------------------- ----------------------------------------------------------------------------    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         December 31, 2013 approximately 1.2 million common shares were issued        under the DRIP and SDP with an approximate value of $14.2 million. For       the year ended December 31, 2013, approximately 4.6 million common           shares were issued under the DRIP and SDP with an approximate value of       $59.2 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 and decommissioning            liabilities.                                                           (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.                                                                 (11)  Working interest reserves are gross reserves prior to deduction of           royalties and without including any of Bonavista's royalty interests.  (12)  Calculated based on the amount for the relevant reserve category             divided by the 2014 production forecast prepared by the independent          reserve evaluator (GLJ).                                               (13)  Recycle ratio is calculated using operating netback per boe divided by       finding, development and acquisition expenditures per boe.                                                                                                                                                                       ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                           Three months ended                 ----------------------------------------------------------------------------                              December 31,  September 30,  June 30, March 31, Share Trading Statistics             2013           2013      2013      2013 ---------------------------------------------------------------------------- ($ per share, except                                                          volume)                                                                     ---------------------------------------------------------------------------- High                                14.04          14.37     16.77     15.18 Low                                 11.25          12.70     13.33     12.25 Close                               13.92          12.93     13.65     14.94 Average Daily Volume -                                                        Shares                         1,000,966        620,864   428,813   676,012 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------    MESSAGE TO SHAREHOLDERS  In 2013, Bonavista successfully executed on its commitment to maximize shareholder value demonstrated by a solid year of performance as we validated the quality of our asset base and the capabilities of our team. As a key component of our business plan, we demonstrated a 26% increase in our funds from operations over 2012, representing growth of 12% on a per share basis.   Improved natural gas prices and our focus on enhancing our operating and capital efficiencies were the primary sources for this increase in funds from operations. This was evidenced by steadily lowering our cost of adding production to approximately $21,000 per boe per day during the fourth quarter of 2013 from $32,500 per boe per day during the fourth quarter of 2012, on a trailing 12 month basis. Additionally, our ability to improve our finding and development costs by 18% to $11.95 per boe (including changes in future development expenditures) and our finding, development and acquisition costs to $11.03 per boe (including changes in future development expenditures) are a testament to this focus on efficiency gains. Lastly, we achieved a two percent improvement in operating and cash costs and when included with a seven percent increase in realized product prices, resulted in a year-over-year improvement in our recycle ratio to 1.9:1 from 1.6:1 in 2012.   These achievements were realized by focusing our attention in our West Central and Deep Basin core areas where we have the opportunity and expertise to drive enhancements in our performance and execution. Our strategy has led to an increased concentration of land, production and reserves in these multi-zone, prolific areas of the Western Canadian Sedimentary Basin. As a result, a group of non-core assets which cannot compete for investment within these core areas were rationalized for approximately $110.9 million as part of our concentration strategy.  Our business plan to maximize shareholder value is based upon a balanced approach of generating income and growth. In 2013, we experienced a six percent increase in our production volumes while our dividend program delivered an annualized yield of approximately six percent, collectively exceeding our total return goal. Our growth strategy is centered on achieving total returns in excess of 10% at fixed commodity prices of $3.50 per gj for natural gas at AECO and Cdn$95.00 per bbl WTI equivalent over the next five years. The continued success of this business plan will lie in our ability to remain focused on continued improvements in both operating and capital efficiencies and our ability to manage risk and safeguard our funds from operations through our hedging strategy.  The successful implementation of our business plan has led to multiple achievements during 2013, some of which are outlined below.  Operational and Financial Accomplishments for 2013 include:      --  Achieved a record average annual production rate of 73,406 boe per day,     representing a 6% increase over last year and record quarterly     production of 75,072 boe per day in the fourth quarter. Bonavista is     currently producing approximately 74,000 boe per day, net of recent     dispositions of approximately 2,500 boe per day in the first quarter of     2014 for proceeds of $103 million;  --  Improved our 2013 operating costs on a per boe basis by 2% to $8.93 per     boe from $9.07 per boe as compared to 2012. Operating costs for the     three months ended December 31, 2013 were $8.77 per boe;  --  Executed an effective capital expenditure program, investing $443.8     million in exploration and development activities drilling 128 wells     with an overall success rate of 98%. In the fourth quarter, Bonavista     spent approximately $111.6 million on exploration and development,     drilling 27 wells with an overall success rate of 100%;  --  Production revenues were 16% higher at $964.3 million in 2013 when     compared to 2012. For the fourth quarter, production revenues were     $245.5 million representing a 10% increase from the fourth quarter of     2012;  --  Realized funds from operations of $477.6 million in 2013 representing a     26% increase from 2012. Funds from operations during the fourth quarter     were $124.4 million, a 13% improvement from the same period in 2012;  --  Managed our exposure to commodity price fluctuations for 2014 resulting     in approximately 66% of our forecasted net natural gas revenues hedged     at an average floor price of $3.40 per gj at AECO and 70% of our net oil     and liquids revenues hedged at an average floor price of Cdn$89.35 per     bbl WTI. Additionally, in 2015 we have hedged approximately 50% of net     natural gas revenues at an average floor price of $3.60 per gj at AECO     and 30% of our net oil and liquids revenues at an average floor price of     Cdn$90.00 per bbl WTI;  --  Delivered cumulative dividends of over $2.6 billion or $27.03 per common     share since we introduced an income component to our shareholder return     in July 2003; and  --  Elected to reduce the commitment amount under our bank credit facility     to $600 million from $1.0 billion. The $400 million reduction in the     commitment results in annual savings of approximately $1.7 million in     standby fees or $0.06 per boe on our cash costs. With the reduction, we     still have committed bank credit availability of approximately $367.8     million. The weighted average interest rate under the bank facility was     3.1% for the year ended December 31, 2013.     2013 Reserves Highlights      --  Replaced 2013 annual production by 198%, adding 53.1 mmboe of proved     plus probable reserves, bringing total year end 2013 reserves to 398.5     mmboe representing a 7% increase over 2012 equivalent to a 4% per share     increase;  --  Generated a solid reserve life index of 9.1 years on a proved basis and     13.2 years on a proved plus probable basis;  --  Reduced finding and development costs (excluding acquisitions and     divestitures) by 18% to $11.95 per boe on a proved plus probable basis     (including changes in future development capital), which reflects the     improvement in capital efficiencies achieved in 2013 with our     exploration and development program;  --  Achieved 2013 finding, development and acquisition costs, including     changes in future development expenditures, of $14.60 per boe on a     proved basis ($13.44 per boe excluding changes in future development     expenditures) and $11.03 per boe on a proved plus probable basis ($8.75     per boe excluding changes in future development expenditures);  --  Three year average finding, development and acquisition costs, including     changes in future development expenditures are $15.31 per boe on a     proved basis ($10.93 per boe excluding changes in future development     expenditures) and $12.07 per boe on a proved plus probable basis ($9.37     per boe excluding changes in future development expenditures);  --  Generated an attractive proved plus probable operating netback recycle     ratio of 1.9:1 based on 2013 operating netbacks and 2.2:1 based on     forecasted 2014 operating netbacks; and  --  Increased proved plus probable future development capital by 9% to $1.5     billion, representing the future growth and development potential in our     asset portfolio. Future development capital as a ratio of forecasted     2014 capital expenditures and cash flow are 3.1:1 and 2.5:1 times     respectively.      The reserves estimates contained in the following tables represent Bonavista's gross reserves as at December 31, 2013 and are defined under NI 51-101, as our interest before deduction of royalties and without including any of our royalty interests.  A summary of this independent reserves evaluation is presented in the tables below:      ----------------------------------------------------------------------------                                 Light and            Natural Gas       Total                   Natural Gas  Medium Oil  Heavy Oil     Liquids Reserves(2) Reserves:(1)(4)        (mmcf)     (mbbls)    (mbbls)     (mbbls)      (mboe) ---------------------------------------------------------------------------- Proved:                                                                        Proved                                                                        producing          575,880      21,450      3,153      34,250     154,833   Proved non-                                                                   producing           19,319         720        431         984       5,356   Proved                                                                        undeveloped        355,169       4,914        266      31,652      96,028 ---------------------------------------------------------------------------- Total proved          950,368      27,085      3,851      66,886     256,216   Probable            521,634      11,733      2,109      41,532     142,313 ---------------------------------------------------------------------------- Total proved plus                                                             probable           1,472,002      38,818      5,959     108,418     398,529 ---------------------------------------------------------------------------- Proved reserve life index                                                     (years)(3)                                                              9.1 ---------------------------------------------------------------------------- Proved plus probable reserve life index                                       (years)(3)                                                             13.2 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1)  Bonavista's gross reserves are based on the GLJ reserve report dated         February 20, 2014, GLJ reserve estimates based on forecast prices and        costs as of January 1, 2014.                                            (2)  Boe 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.                          (3)  Calculated based on the amount for the relevant reserve category             divided by the 2014 production forecast prepared by GLJ.                (4)  Amounts may not add due to rounding.                                       The following table highlights Bonavista's proved plus probable reserves, proved plus probable finding and development ("F&D") expenditures and proved plus probable finding, development and acquisition ("FD&A") expenditures and the associated recycle ratios:      ----------------------------------------------------------------------------                                                  2013       2012       2011  ----------------------------------------------------------------------------                                                                              Proved plus probable reserves (mboe):(1)                                       Opening balance                             372,220    341,390    310,749    Discoveries and extensions                   41,946     36,645     33,667    Acquisitions and dispositions                14,655     20,266     22,402    Revisions and economic factors               (3,537)      (844)      (365)   Production                                  (26,755)   (25,236)   (25,063) ----------------------------------------------------------------------------                                                                              Closing balance                               398,529    372,220    341,390  ----------------------------------------------------------------------------                                                                              Operating netback ($/boe) (2)                   20.54      17.70      24.53  Operating netback ($/boe) three-year                                          average(2)                                     20.92      22.03      24.05  ----------------------------------------------------------------------------                                                                              Finding and development expenditures:                                          Total F&D expenditures (excluding changes                                     in future development expenditures)                                          ($millions)                                  443.8      402.1      453.6    Proved plus probable F&D costs ($/boe)(3)     11.56      11.23      13.62    F&D recycle ratio(4)                            1.8        1.6        1.8    Proved plus probable F&D three-year costs                                     ($/boe)(3)                                   12.09      11.30      11.35    F&D recycle ratio three-year average(4)         1.7        1.9        2.1    Total F&D expenditures (including changes                                     in future development expenditures)                                          ($millions)                                  458.8      524.7      480.5    Proved plus probable F&D costs ($/boe)(3)     11.95      14.66      14.43    F&D recycle ratio(4)                            1.7        1.2        1.7    Proved plus probable F&D three-year costs                                     ($/boe)(3)                                   13.62      13.89      13.32    F&D recycle ratio three-year average(4)         1.5        1.6        1.8                                                                               ----------------------------------------------------------------------------                                                                              Finding, development and acquisition                                          expenditures:                                                                 Total FD&A expenditures (excluding                                            changes in future development                                                expenditures) ($millions)                    464.4      391.1      617.1      Proved plus probable FD&A costs ($/boe)                                       (3)                                         8.75       6.98      11.08      FD&A recycle ratio(4)                         2.3        2.5        2.2      Proved plus probable FD&A three-year                                          costs ($/boe)(3)                            9.37       9.02       9.15      FD&A recycle ratio three-year                                                 average(4)                                   2.2        2.4        2.6    Total FD&A expenditures (including                                            changes in future development                                                expenditures) ($millions)                    585.1      625.8      778.7      Proved plus probable FD&A costs                                               ($/boe)(3)                                 11.03      11.16      13.98      FD&A recycle ratio(4)                         1.9        1.6        1.8      Proved plus probable FD&A three-year                                          costs ($/boe)(3)                           12.07      12.82      12.86      FD&A recycle ratio three-year                                                 average(4)                                   1.7        1.7        1.9  ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1)  Amounts may not add due to rounding.                                    (2)  Operating netback is calculated using production revenues including          realized gains and losses on financial instruments commodity contracts       less royalties, transportation and operating costs calculated on a per       barrel of oil equivalent basis.                                         (3)  Both F&D and FD&A costs take into account reserve revisions during the       year on a per barrel of oil equivalent basis (6:1).                     (4)  Recycle ratio is defined as operating netback per barrel of oil              equivalent divided by either F&D or FD&A costs on a per barrel of oil        equivalent.                                                                Future development costs of $1.5 billion at year end 2013 have the following development schedule:      ----------------------------------------------------------------------------                     Future Development Costs, Proved plus probable reserves, Year                                               undiscounted ($ millions) ---------------------------------------------------------------------------- 2014                                                                     319 2015                                                                     521 2016                                                                     289 2017                                                                     207 2018                                                                     109 Thereafter                                                                49 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Total                                                                  1,494 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------    2013 Acquisition and Divestiture Highlights      --  Completed 30 property transactions in 2013, resulting in net     expenditures of $20.5 million;   --  Completed acquisitions of $131.4 million adding production of 3,670 boe     per day at closing and 2,430 boe per day on average for the year, and     proved plus probable reserves of 20.5 mmboe;  --  Divested of $110.9 million of non-core assets comprising 1,290 boe per     day of production at closing and 745 boe per day on average for the year     and 5.8 mmboe of proved plus probable reserves; and  --  Closed a strategic acquisition during the fourth quarter in the Deep     Basin area of $29 million, adding production of approximately 725 boe     per day and over 26 Bluesky locations. Since closing, optimization and     drilling investment of $9.7 million has resulted in production growing     to approximately 2,100 boe per day.     2013 Core Area Highlights  West Central Alberta Core Area  Hoadley Glauconite Liquids Rich Natural Gas:  Bonavista drilled 12 horizontal Glauconite wells during the fourth quarter for a total of 42 wells in 2013. Our activity during the year was focused primarily on optimizing capital efficiencies. We achieved this through maximizing facility and infrastructure utilization while reducing the development cost of this substantial resource through initiatives like our extended reach horizontal well program. Based upon our first three extended reach horizontal wells, we experienced an average cost reduction of 13% per well when compared to the cost of equivalent reservoir access from two wells. As we refine this extended reach technology, we expect the use of this development technique to improve capital efficiencies throughout the entire Glauconite trend.  Our Glauconite horizontal well program in 2013 exceeded our expectations with average first month production rates of 500 boe per day. Production from the Hoadley Glauconite play in 2013 was 16,860 boe per day representing a 13% increase from the prior year. We have been successful with our cost structure achieving an overall reduction in costs of four percent when compared to 2012. Bonavista's Hoadley development program generates an internal rate of return of 50% and a recycle ratio of 3.8:1 at an AECO price of $3.50 per gj. These compelling economics rank it amongst the top natural gas plays in North America. Given these attractive economics, the predictability of well performance and our continued success in optimizing capital efficiencies, we have increased our 2014 activity by 57%, with plans to spend $141 million drilling approximately 66 wells. This level of development will result in a record year of activity for Bonavista within the Hoadley Glauconite trend.   To support this increase in activity, Bonavista has recently partnered with an area midstream operator, in the building of two 28 kilometer pipelines which will provide an incremental 130 mmcf per day of gathering capacity from the Hoadley Glauconite play to the Rimbey processing facility. The two pipelines include a 12 inch line to gather natural gas and a six inch line to gather natural gas liquids. This project is scheduled to be commissioned in the third quarter of 2014. Additionally, during the first quarter of 2015, we expect the commissioning of the Rimbey deep cut facility which will positively impact our economics as a result of increased natural gas liquids recoveries.  Bonavista continues to be an industry leader in the Hoadley Glauconite play having drilled a total of 186 horizontal wells since 2008. Our land acquisition program and down spacing initiatives have resulted in a current drilling inventory in excess of 400 horizontal locations. With more than 75% of the original natural gas in place remaining in the reservoir, a stable inventory contemplating four wells per section, and the predictability and repeatability of the reservoir, the Glauconite will remain the anchor development project for Bonavista in 2014.   Cardium Light Oil:   Bonavista drilled two horizontal Cardium wells in the fourth quarter bringing total 2013 activity to 27 wells. The 2013 program involved the development of emerging areas of our land base such as Lochend and Strachan to confirm our understanding of reservoir capabilities. Despite this commitment to emerging areas in 2013, our continued focus on improving capital efficiencies has resulted in cost reductions on average of approximately $200,000 per well when compared to 2012.   The Willesden Green area has been a focus area over the past 18 months. With numerous wells on production for a full year, we are confident in our completion approach of utilizing slick water fracture treatments to generate a 10 to 15% improvement in well performance. Our 2014 development plans involve drilling five wells and initiating a water flood pilot.   At Lochend, we drilled one well in the fourth quarter and seven wells in total for the year. Despite being constrained by facility limitations, initial well performance has been strong with first month production averaging over 300 boe per day. As a result of this well performance, we invested approximately $9 million in the construction of a 29 kilometer, eight inch pipeline from Lochend to a deep cut facility at Harmattan during the fourth quarter. This pipeline addition will not only add to our extensive operated infrastructure, it will create an unrestricted flow path for our current producing wells and will adequately accommodate our planned activity for 2014 at Lochend.  Our 2014 capital expenditure plan is primarily focused on development in Willesden Green and Lochend, totaling approximately $53 million and drilling 20 wells. We have remained prudently active in the Cardium over the past five years drilling a total of 113 horizontal wells to date, while maintaining a healthy inventory of horizontal locations, representing a profitable, multi-year development opportunity.  Ellerslie Liquids Rich Natural Gas:  During the fourth quarter, Bonavista drilled one horizontal Ellerslie oil well at Garrington, which had an initial 30-day rate of 350 boe per day, which includes 170 bbls per day of oil production. We expect this well to perform similar to our offset well that has demonstrated stable production performance at an average 190 bbls per day of oil over the first eight months. The significant presence of oil in the Ellerslie at Garrington creates an attractive netback of $40 per boe resulting in individual well payouts of approximately one year.   In the second half of 2013, we drilled our first liquids rich natural gas Ellerslie horizontal well at Westerose which has demonstrated an initial 90-day production rate of 840 boe per day. With a well cost of $2.7 million, the economic performance of this well has encouraged our investment in a three dimensional seismic program to determine the extent of the Ellerslie reservoir.   Similarly at Caroline, we drilled an Ellerslie liquids rich natural gas horizontal well in the second half of 2013. Despite having many operational challenges with the well, we successfully completed four stages (originally designed for 12) resulting in a stable rate of 525 boe per day over its first five months of production.   We are exceedingly pleased with our development results in the Ellerslie formation throughout 2013. Hence, our 2014 plan contemplates a drilling program of 12 wells with an associated budget of approximately $44 million, representing a two-fold increase in activity over 2013. We will focus on the opportunities with lower operational risk at Garrington and Westerose where we anticipate an increase in execution success. As we become more intimate with the reservoir, we anticipate well performance that continues to meet or exceed our expectations. With a meaningful oil and natural gas liquids yields of approximately 100 bbls per mmcf on average, economic performance will continue to strengthen as we refine our operational approach. As an active operator in the Ellerslie over the past decade, our strategy had been to continue to strengthen our land position as we delineated the resource opportunity with vertical well development. Over the past 24 months we have acquired valuable horizontal operational experience in the play which has enhanced and accelerated the value of this play within our organization. Since 2010, we have grown our inventory of horizontal locations in excess of 200 locations and have assembled an extensive land base of 135 prospective sections. With netbacks currently averaging $30 per boe and decline rates approximating 50% in the first year of production, our 2013 activity has certainly exceeded our economic expectations. Consequently, we see the Ellerslie becoming a cornerstone of our development program in the near future.  Deep Basin Core Area  Bonavista had an active drilling program in the fourth quarter participating in 10 horizontal wells bringing our total 2013 drilling activity to 21 horizontal wells in our Deep Basin core area. We have been tremendously pleased with the overall results and look forward to continued success.  Current production in the Deep Basin core area is approximately 16,500 boe per day and has grown 22% from a year ago. Our capital plan for 2014 involves spending $102 million, drilling 29 wells and infrastructure spending of $34 million.  Our expansion in this core area is expected to result in capital efficiency improvements as larger drilling programs take place. Over the past four years, we have assembled a position of approximately 238,000 net acres with over 200 future horizontal locations. Bonavista currently operates natural gas processing capacity of approximately 230 mmcf per day and we continue to invest in additional infrastructure in 2014. We see the Deep Basin core area providing both near-term and mid-term growth especially as we transition from the building phase to commercial development with many of our plays. We remain committed to our Deep Basin area and are confident about its growth profile.   Wilrich Natural Gas:  We have experienced tremendous success with the Wilrich formation in 2013. Building on an important asset acquisition of 5,000 boe per day of production and 79,000 net acres of land in 2012, we exited 2013 acquiring access to an additional 26,000 acres of land and have added 2,800 boe per day of production through our exploration and development program.   The majority of this land acquisition throughout 2013 has taken place in the Ansell area of the Deep Basin. Early in 2013, we gained access to 20,000 acres of Wilrich land at Ansell and have since drilled and completed two horizontal wells on this acreage. The results of these two wells have exceeded our expectations at restricted 90-day production rates averaging 900 boe per day per well. The first well has been on production for 10 months and has cumulatively produced 1.2 bcf of raw natural gas in that period of time. Currently, with access to over 44 sections of land at Ansell and the potential of multiple prospective zones, we have planned an $84 million capital budget for this area for 2014. We have committed to drilling 12 wells, five of which will be drilled in the first quarter of 2014. The first two have been drilled and completed using one drilling pad and have resulted in a combined rate of 34 mmcf per day after a 50 hour flow test. We have also committed to an infrastructure project in the first quarter of 2014, consisting of a 10 inch, 100 mmcf per day pipeline and a 30 mmcf per day compressor station. The pipeline and compressor station are expected to be commissioned by April 2014. The economic performance of our Wilrich play in Ansell is compelling at a natural gas price of $3.50 per gj at AECO. Single-well economics portray a recycle ratio of 3.5:1 with a 10 month payout. The impact of a stronger natural gas price, coupled with the success of our 2013 drilling program speaks well to the future development of this play.  At Marlboro, Bonavista holds approximately 28,000 net acres of Wilrich land. Our 2013 drilling program involved six gross horizontal wells (4.8 net) drilled into the Wilrich formation with these wells currently producing at a combined rate of 1,700 boe per day. The Wilrich at Marlboro provides Bonavista with an additional 35 horizontal drilling locations. Although the natural gas from the Wilrich formation at Marlboro tends to have less associated natural gas liquids, economics remain robust due to the prolific production performance with payouts under two years and rates of return in excess of 35% at a natural gas price of $3.50 per gj at AECO.   Bluesky Liquids Rich Natural Gas:  In the fourth quarter, Bonavista participated in five horizontal Bluesky wells consisting of two operated and three non-operated, totaling nine wells for 2013. Our latest Pine Creek horizontal well drilled in the fourth quarter is our highest rate Bluesky result to date, producing at an average 30-day raw natural gas rate of 8.6 mmcf per day and 35 bbls per mmcf of liquids, of which 50% is condensate. We remained active during the fourth quarter by adding to our Bluesky position in Pine Creek with the acquisition of approximately 725 boe per day of Bluesky production and access to approximately 12,000 net acres of Bluesky rights where we have identified an additional 25 horizontal locations. On a rate of return perspective, the individual well economics of the Bluesky are the best of our liquids rich natural gas plays.   Additional Emerging Opportunities  The Blueberry Montney play remains an important part of our long-term development plans. Industry activity in the Montney formation remains strong on all fronts with recent industry acquisition metrics of approximately $4,000 per acre, solidifying our interpretation of the value of our land base. Through focused efforts on efficiencies, we reduced our drilling, completion and tie-in costs to $6.3 million representing a 25% reduction from the average of the previous wells drilled into the formation. As our industry remains focused on exporting Canadian natural gas from the west coast, the Blueberry Montney field will continue to play an important role as a potential supply, as it is uniquely positioned to participate in LNG export economics. Meanwhile, Bonavista will continue to improve its understanding of the technology required to optimize the recovery of the Montney liquids rich resource at our Blueberry field. As such, we have planned to drill two wells in Blueberry during 2014.  In addition, Bonavista drilled and completed a Falher horizontal well in the West Central Alberta core area during the third quarter which has resulted in an initial 90-day production rate of approximately 600 boe per day including 60 bbls per mmcf of natural gas liquids. With the success of this well, we plan on additional reservoir delineation by drilling five horizontal wells in 2014.   Strengths of Bonavista Energy Corporation  Throughout our history, from an initial restructuring in 1997 to create a high growth junior exploration company, through the energy trust phase between July 2003 and December 2010, and since January 2011 as a dividend paying corporation, Bonavista has remained committed to the same operating philosophies despite the endless volatility and uncertainly inherent in a commodity business like the energy sector. We have consistently improved the quality of our projects and have maintained a high level of investment activity on our asset base. This has resulted in an increase in corporate production by approximately 110% since converting to an energy trust in July 2003 and a further 10% since converting back to a corporation three years ago. These results stem from the expertise of our people and their entrepreneurial approach to consistently generating profitable development projects in an unpredictable commodity price environment 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 purchases, producing property acquisitions and farm-in opportunities, which have all enhanced the quality 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 steady pace. Our production is currently approximately 65% natural gas weighted and is geographically focused in multi-zone regions primarily in Alberta. The predictable production performance and low cost structure of our asset base ensures favourable operating netbacks in most operating environments. Furthermore, our assets are predominantly operated by Bonavista, providing control over the pace of operations and direct influence over our operating and capital cost efficiencies.  Our team brings a successful track record of executing low to medium risk development programs, while incorporating acquisitions and 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, aligning our interests with external shareholders.  Outlook  With the recent strengthening in natural gas prices due to cold weather across much of North America, we remain cautiously optimistic as we move into 2014. We do however remain aware of the robust natural gas production capability on this continent. This capability has been powered by prolific resource discoveries, associated natural gas production from oil and liquids drilling and continued improvements in the techniques used to exploit these resources. Given this backdrop, Bonavista will maintain a disciplined approach to commodity hedging and continue to take advantage of the recent increases in natural gas prices to secure future funds from operations. Operationally, we will continue to focus on being one of the most efficient producers within our peer group and continue to pursue low cost, repeatable opportunities throughout our concentrated portfolio of assets. These strategies coupled with our on-going asset concentration program will support our commitment to maximize shareholder returns through a balance of income and growth.  To support this strategy and in light of the successful first quarter dispositions, Bonavista has a budgeted capital program of between $460 and $500 million in 2014. This includes spending between $560 and $600 million on exploration and development activities, offset by approximately $100 million of dispositions and does not contemplate further acquisitions at this time. The exploration and development program is expected to result in approximately 150 wells drilled and an average daily production forecast for the year of between 76,000 and 78,000 boe per day. Using the mid-point of our production estimate, Bonavista will deliver approximately five percent production growth in 2014 in spite of the non-core dispositions. With current commodity prices and hedges in place, we expect to exit 2014 with a debt to funds from operations ratio of approximately 1.8:1 and an all in payout ratio of 106%.  Bonavista wishes to announce that Mr. Harry Knutson is retiring from the Board of Directors of the Company effective today. Mr. Knutson has served on the Board of Directors since 1997 and has provided valuable guidance, expertise and oversight since then. We would like to thank him for his 17 years of service to Bonavista and wish him all the best in the future.  Bonavista previously announced the addition of Ms. Sue Lee as a member of the Board of Directors in November 2013 and is currently conducting a search for an additional director, which we expect to communicate at our next annual general meeting in May.  We thank our employees and directors for their commitment and dedication to our strategy throughout the year and our shareholders for their trust and support. We firmly believe that we have the right people and assets required to execute our five year strategy with efficiency and precision. Our employees are the foundation of our continued success.   On behalf of the Board of Directors      Keith A. MacPhail             Jason E. Skehar                                Executive Chairman            President and Chief Executive Officer                                                                                       February 27, 2014                                                            Calgary, Alberta                                                                                                                                          BONAVISTA ENERGY CORPORATION                                                                                                                              Supplemental Financial Information                                           Consolidated Statements of Financial Position                                                                                                             ----------------------------------------------------------------------------                                                 December 31,   December 31,  (thousands)                                             2013           2012  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                                                              (unaudited)                                                                  Assets:                                                                        Current assets:                                                                Accounts receivable                        $     124,431  $     102,500      Prepaid expenses                                   7,322         11,089      Marketable securities                              2,645          2,768      Other assets                                      13,786         12,191      Financial instrument commodity contracts             419          8,608  ----------------------------------------------------------------------------                                                      148,603        137,156    Financial instrument commodity contracts               346          1,224    Financial instrument contracts                       8,023          4,293    Property, plant and equipment                    3,845,344      3,691,572    Exploration and evaluation assets                  222,085        217,382    Goodwill                                            11,225         11,225  ----------------------------------------------------------------------------                                                $   4,235,626  $   4,062,852  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                                                                                                                                           Liabilities and Shareholders' Equity:                                          Current liabilities:                                                           Accounts payable and accrued liabilities   $     213,118  $     181,674      Decommissioning liabilities                        9,313              -      Dividends payable                                 13,087         21,303      Financial instrument commodity contracts          31,985          8,786  ----------------------------------------------------------------------------                                                      267,503        211,763  ----------------------------------------------------------------------------   Financial instrument commodity contracts             3,710          1,550    Long-term debt                                   1,046,177        889,071    Other long-term liabilities                         13,853         13,650    Decommissioning liabilities                        397,174        447,753    Deferred income taxes                              237,194        213,176    Shareholders' equity:                                                          Shareholders' capital                          2,228,210      2,059,305      Exchangeable shares                              307,468        405,183      Contributed surplus                               61,247         44,848      Deficit                                         (326,910)      (223,447) ----------------------------------------------------------------------------                                                    2,270,015      2,285,889  ----------------------------------------------------------------------------                                                $   4,235,626  $   4,062,852  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                                                              BONAVISTA ENERGY CORPORATION                                                                                                                              Supplemental Financial Information                                           Consolidated Statements of Income and Comprehensive Income                                                                                                ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                    Three months ended           Years ended                                           December 31,          December 31,                                                                               (thousands, except per share                                                  amounts)                             2013       2012       2013       2012  ---------------------------------------------------------------------------- (unaudited)                                                                  Revenues:                                                                      Production                     $ 245,466  $ 223,021  $ 964,312  $ 832,491    Royalties                        (30,099)   (29,650)  (124,489)  (124,300) ----------------------------------------------------------------------------                                    215,367    193,371    839,823    708,191  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------   Realized gains (losses) on                                                    financial instrument                                                         commodity contracts              (1,769)       204    (13,652)     8,581    Unrealized gains (losses) on                                                  financial instrument                                                         commodity contracts             (22,742)    (2,793)   (34,426)     8,210  ----------------------------------------------------------------------------                                    (24,511)    (2,589)   (48,078)    16,791  ----------------------------------------------------------------------------                                    190,856    190,782    791,745    724,982  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                                                              Expenses:                                                                      Operating                         60,601     57,464    239,196    229,847    Transportation                     9,206      9,732     36,595     38,367    General and administrative         8,361      8,049     30,802     27,927    Share-based compensation           5,777      5,845     23,868     19,450    Gain on disposition of                                                        property, plant and equipment   (28,760)   (21,449)   (38,115)   (59,675)   Loss (gain) on disposition of                                                 exploration and evaluation                                                   assets                              (19)       311    (18,143)     5,938    Depletion, depreciation and                                                   amortization                     90,844     90,282    349,285    331,023  ----------------------------------------------------------------------------                                    146,010    150,234    623,488    592,877  ---------------------------------------------------------------------------- Income from operating activities    44,846     40,548    168,257    132,105  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------   Finance costs                     20,439      9,493     98,439     53,350    Finance income                    16,525      8,791     (3,730)   (11,739) ----------------------------------------------------------------------------   Net finance costs                 36,964     18,284     94,709     41,611  ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Income before taxes                  7,882     22,264     73,548     90,494    Deferred income taxes              1,215      7,822     24,043     26,292  ---------------------------------------------------------------------------- Net income and comprehensive                                                  income                          $   6,667  $  14,442  $  49,505  $  64,202  ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Net income per share - basic     $    0.03  $    0.07  $    0.25  $    0.37  ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Net income per share - diluted   $    0.03  $    0.07  $    0.25  $    0.36  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                                                              BONAVISTA ENERGY CORPORATION                                                                                                                              Supplemental Financial Information                                           Consolidated Statements of Changes in Equity                                 For the years ended December 31                                                                                                                           ----------------------------------------------------------------------------                             Shareholders'     Exchangeable      Contributed  (thousands)                       capital           shares          surplus  ---------------------------------------------------------------------------- (unaudited)                                                                  Balance as at December                                                        31, 2012                 $     2,059,305  $       405,183  $        44,848                                                                               Net income                              -                -                -  Issue costs, net of                                                           future tax benefit                   (74)               -                -  Issued for cash on                                                            exercise of common share                                                     incentive rights                   1,984                -                -  Exercise of common share                                                      incentive rights                   2,708                -           (2,708) Conversion of restricted                                                      share awards                       7,410                -           (7,410) Share-based compensation                                                      expense                                -                -           23,868  Share-based compensation                                                      capitalized                            -                -            2,649  Issued pursuant to the                                                        dividend reinvestment                                                        and stock dividend plans          59,162                -                -  Exchangeable shares                                                           exchanged for common                                                         shares                            97,715          (97,715)               -  Dividends declared                      -                -                -  ----------------------------------------------------------------------------                                                                              Balance as at December                                                        31, 2013                 $     2,228,210  $       307,468  $        61,247  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                                                              Balance as at December                                                        31, 2011                 $     1,446,804  $       585,754  $        32,092                                                                               Net income                              -                -                -  Issuance of equity, net                                                       of issue costs                   334,736                -                -  Issued for cash on                                                            exercise of common share                                                     incentive rights                   4,510                -                -  Exercise of common share                                                      incentive rights                   4,609                -           (4,609) Conversion of restricted                                                      share awards                       5,183                -           (5,183) Share-based compensation                                                      expense                                -                -           20,070  Share-based compensation                                                      capitalized                            -                -            2,478  Issued pursuant to the                                                        dividend reinvestment                                                        and stock dividend plans          82,892                -                -  Exchangeable shares                                                           exchanged for common                                                         shares                           180,571         (180,571)               -  Dividends declared                      -                -                -  ----------------------------------------------------------------------------                                                                              Balance as at December                                                        31, 2012                 $     2,059,305  $       405,183  $        44,848  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------   -----------------------------------------------------------                                                      Total                                               shareholders'  (thousands)                       Deficit           equity  ----------------------------------------------------------- (unaudited)                                                 Balance as at December                                       31, 2012                 $      (223,447) $     2,285,889                                                              Net income                         49,505           49,505  Issue costs, net of                                          future tax benefit                     -              (74) Issued for cash on                                           exercise of common share                                    incentive rights                       -            1,984  Exercise of common share                                     incentive rights                       -                -  Conversion of restricted                                     share awards                           -                -  Share-based compensation                                     expense                                -           23,868  Share-based compensation                                     capitalized                            -            2,649  Issued pursuant to the                                       dividend reinvestment                                       and stock dividend plans               -           59,162  Exchangeable shares                                          exchanged for common                                        shares                                 -                -  Dividends declared               (152,968)        (152,968) -----------------------------------------------------------                                                             Balance as at December                                       31, 2013                 $      (326,910) $     2,270,015  ----------------------------------------------------------- -----------------------------------------------------------                                                             Balance as at December                                       31, 2011                 $       (62,848) $     2,001,802                                                              Net income                         64,202           64,202  Issuance of equity, net                                      of issue costs                         -          334,736  Issued for cash on                                           exercise of common share                                    incentive rights                       -            4,510  Exercise of common share                                     incentive rights                       -                -  Conversion of restricted                                     share awards                           -                -  Share-based compensation                                     expense                                -           20,070  Share-based compensation                                     capitalized                            -            2,478  Issued pursuant to the                                       dividend reinvestment                                       and stock dividend plans               -           82,892  Exchangeable shares                                          exchanged for common                                        shares                                 -                -  Dividends declared               (224,801)        (224,801) -----------------------------------------------------------                                                             Balance as at December                                       31, 2012                 $      (223,447) $     2,285,889  ----------------------------------------------------------- -----------------------------------------------------------                                                                              BONAVISTA ENERGY CORPORATION                                                                                                                              Supplemental Financial Information                                           Consolidated Statements of Cash Flows                                                                                                                     ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                    Three months ended           Years ended                                           December 31,          December 31,  (thousands)                           2013       2012       2013       2012  ---------------------------------------------------------------------------- (unaudited)                                                                  Cash provided by (used in):                                                  Operating Activities:                                                          Net income                     $   6,667  $  14,442  $  49,505  $  64,202    Adjustments for:                                                               Depletion, depreciation and                                                   amortization                   90,844     90,282    349,285    331,023      Share-based compensation         5,777      7,017     23,868     18,364      Unrealized (gains) losses on                                                  financial instrument                                                         commodity contracts            22,742      2,793     34,426     (8,210)     Gain on disposition of                                                        property, plant and                                                          equipment                     (28,760)   (21,449)   (38,115)   (59,675)     Loss (gain) on disposition                                                    of exploration and                                                           evaluation assets                 (19)       311    (18,143)     5,938      Net finance costs               36,964     18,284     94,709     41,611      Deferred income taxes            1,215      7,822     24,043     26,292    Decommissioning expenditures     (10,539)   (11,410)   (30,143)   (25,530)   Changes in non-cash working                                                   capital items                    (9,870)    (5,206)    (2,830)    13,466  ----------------------------------------------------------------------------                                    115,021    102,886    486,605    407,481  ----------------------------------------------------------------------------                                                                              Financing Activities:                                                          Issuance of senior notes             (49)         -    229,226          -    Issuance of equity, net of                                                    issue costs                           -          -        (99)   331,188    Proceeds on exercise of common                                                share incentive rights              228        355      1,984      4,510    Dividends paid                   (24,480)   (38,323)  (102,022)  (137,898)   Interest paid                    (19,369)   (14,892)   (40,793)   (40,907)   Proceeds from long-term debt      44,057          -    119,791          -    Repayment of long-term debt            -    127,198   (235,970)  (182,329) ----------------------------------------------------------------------------                                        387     74,338    (27,883)   (25,436) ----------------------------------------------------------------------------                                                                              Investing Activities:                                                          Business acquisitions            (29,795)  (155,266)  (102,284)  (155,266)   Exploration and development     (111,596)   (76,937)  (443,829)  (402,090)   Property and other business                                                   acquisitions                     (2,435)    (9,491)   (16,275)   (14,626)   Property dispositions             27,415     45,920     98,029    180,848    Office equipment                  (2,066)      (704)    (6,183)    (3,307)   Changes in non-cash working                                                   capital items                     3,069     19,254     11,820     12,396  ----------------------------------------------------------------------------                                   (115,408)  (177,224)  (458,722)  (382,045) ---------------------------------------------------------------------------- Change in cash                           -          -          -          -  Cash, beginning of period                -          -          -          -  ---------------------------------------------------------------------------- Cash, end of period              $       -  $       -  $       -  $       -  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------    FORWARD-LOOKING INFORMATION  Forward-Looking Statements - Certain information set forth in this document, including management's assessment of Bonavista's future plans and operations, contains forward-looking statements including; (i) forecasted capital expenditures and plans; (ii) exploration, drilling and development plans, (iii) prospects and drilling inventory and locations; (iv) anticipated production rates; (v) anticipated operating and service costs; (vi) our financial strength; (vii) incremental development opportunities; (viii) reserve life index; (ix) total shareholder return; (x) growth prospects; (xi) asset acquisition and disposition plans; (xii) sources of funding, which are provided to allow investors to better understand our business. By their nature, forward-looking statements are subject to numerous risks and uncertainties; some of which are beyond Bonavista's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, changes in environmental tax and royalty legislation, 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. Bonavista's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements or if any of them do so, what benefits that Bonavista will derive there from. Bonavista disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.   Non-IFRS Measurements - Within this press release, references are made to terms commonly used in the oil and natural gas industry. Management uses "funds from operations" and the "ratio of debt to funds from operations" to analyze operating performance 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 calculation 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. Basic funds from operations per share is calculated based on the weighted average number of common shares outstanding in accordance with International Financial Reporting Standards. Operating netbacks equal production revenue and realized gains or losses on financial instrument commodity contracts, less royalties, transportation and operating expenses calculated on a boe basis. Total boe is calculated by multiplying the daily production by the number of days in the period. Management uses these terms to analyze operating performance and leverage.  Conversion of Natural Gas to Barrels of Equivalent (BOE)  To provide a single unit of production for analytical purposes, natural gas production and reserves volumes are converted mathematically to equivalent barrels of oil (boe). We use the industry-accepted standard conversion of six thousand cubic feet of natural gas to one barrel of oil (6 mcf = 1 bbl). The 6:1 boe ratio is based on an energy equivalency conversion method primarily applicable at the burner tip. It does not represent a value equivalency at the wellhead and is not based on either energy content or current prices. While the boe ratio is useful for comparative measures and observing trends, it does not accurately reflect individual product values and might be misleading, particularly if used in isolation. As well, given that the value ratio, based on the current price of crude oil to natural gas, is significantly different from the 6:1 energy equivalency ratio, using a 6:1 conversion ratio may be misleading as an indication of value. Contacts: Bonavista Energy Corporation 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 www.bonavistaenergy.com