Bonavista Energy Corporation Announces Ansell Area Asset Acquisition and Bought Deal Financing

Bonavista Energy Corporation Announces Ansell Area Asset Acquisition and Bought 
Deal Financing 
FOR: Bonavista Energy Corporation 
JUNE 18, 2014 
Bonavista Energy Corporation Announces Ansell Area Asset Acquisition and Bought
Deal Financing 
CALGARY, ALBERTA--(Marketwired - June 18, 2014) -  
This news release is not an offer to sell or a solicitation of offers to buy
the common shares in the United States. The common shares have not been and
will not be registered under the United States Securities Act of 1933, as
amended and may not be offered or sold in the United States absent registration
or an applicable exemption from registration. 
Bonavista Energy Corporation ("Bonavista" or the "Company")
(TSX:BNP) is pleased to announce that it has entered into an agreement to
acquire certain natural gas weighted assets (the "Acquired Assets")
in the Ansell area of its Deep Basin Core Area (the "Acquisition").
The Acquired Assets mainly comprise of the vendor's 49% working interest
in the Bonavista-operated Wilrich plays plus some minor additional lands in the
immediate area. The Acquisition has an effective date of July 1, 2014 and is
expected to close on or about July 7, 2014 for a cash purchase price of
approximately $141 million before customary closing conditions. The completion
of the Acquisition is subject to customary regulatory approvals. 
Strategic Rationale 
The Acquisition is consistent with Bonavista's asset concentration
strategy by increasing ownership in the Ansell Wilrich play from 51% to 100%.
Bonavista began operations in the Ansell area through a farm-in opportunity in
February 2013, and has drilled seven successful horizontal wells into the
Wilrich formation. Current production of the Acquired Assets is approximately
1,600 boe per day (90% natural gas). The area is characterized by prolific
multi-zone development potential with exposure to the Wilrich, Notikewin and
Falher formations. Bonavista has identified approximately 116 horizontal
drilling locations on the Acquired Assets, reinforced by a three dimensional
seismic program completed during the first quarter of 2014. In addition, there
has been development potential identified in the Viking, Ostracod, Gething and
Second White Specks formations.  
Other highlights of the Acquisition include: 
--  Five years of drilling inventory with type curve economics resulting in 
recycle ratio's ranging between 3.0 and 4.0:1 (single well economics) 
and payouts of between 12 and 18 months using a gas price of $4.00 per 
--  Over the next 18 months Bonavista plans a robust 34 well Wilrich 
development program that is expected to increase production of the 
Acquired Assets to 6,000 boe per day by the end of 2015; 
--  Incremental ownership (49%) in both the 120 mmcf per day pipeline and a 
30 mmcf per day compression and dehydration facility that were 
constructed in the first quarter of 2014 for a total gross cost of 
approximately $33 million. This acquired infrastructure will support our 
expected production growth through 2015; 
--  Current operating costs of approximately $4.90 per boe, with the 
potential to realize further savings; 
--  Bonavista is currently the operator of the Acquired Assets and does not 
require any additional expertise to execute our planned development 
plan; and 
--  Total proved plus probable working interest reserves of 34,635 mboe with 
future development capital of $263.7 million to be deployed across 
31,000 prospective acres. 
Internal Reserves Estimates 
Oil and                         
Natural   natural gas     Total       10% NPV
Acquired Working Interest          gas       liquids       BOE        (BTax) 
(Bcf)       (mbbls)    (mboe)  ($ millions)
Total proved                      77.0         1,259    14,086          80.0
Total proved plus probable       188.5         3,222    34,635         222.1 
(1)  Reserves in this press release represent Bonavista's internal estimate  
of the reserves associated with the Acquired Assets as at July 1, 2014, 
which were prepared by a non-independent qualified reserve evaluator in 
accordance with National Instrument 51-101 ("NI 51-101") and the        
Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook"). Based   
on gross reserves.                                                     
(2)  The estimated net present values disclosed do not represent fair market 
(3)  Based on strip pricing as at June 4th, 2014.                            
Investment Metrics over the next 18 months: 
Based on a $141 million purchase price, coupled with $90 million of capital
spending and $50 million of net operating income over the next 18 months, the
Acquisition will exhibit the following metrics (at strip pricing as at June
4th, 2014): 
--  Cash flow multiple of 3.1 times, incorporating $181 million of net 
--  $36,735 per flowing boe based upon estimated 2015 production volumes of 
4,950 boe per day; 
--  Finding, Development and Acquisition Cost (including future development 
capital) ("FD&A costs") of $10.25 per boe on a proved plus probable 
basis; and 
--  Current netbacks of $23.00 per boe, equating to a 2.2:1 recycle ratio 
based on the FD&A costs. 
Impact on 2014 Outlook 
In conjunction with the Acquisition, Bonavista's Board of Directors has
approved an increase in the 2014 capital budget. The revised 2014 capital
budget anticipates spending between $580 and $600 million, inclusive of the
Acquisition, to drill between 100 and 115 net wells resulting in an average
annual production of between 76,000 and 78,000 boe per day, representing a 5%
increase over our 2013 annual production. As a result of the Acquisition,
capital spending will concentrate in the Ansell area in the fourth quarter of
2014 with the intention to allocate a significant portion of the 2015 capital
budget to Wilrich development in Ansell. This will result in 2014 exit
production for Bonavista ranging between 84,000 and 86,000 boe per day which
translates to growth in annual exit volumes in excess of 12%. The revised 2014
capital program is aligned with our business plan to consistently deliver a
balance of profitable growth and sustainable income to our shareholders. 
In conjunction with the Acquisition, Bonavista has entered into an agreement to
sell, on a bought deal basis, 12,100,000 common shares at a price of $16.60 per
common share (the "Offering") for gross proceeds of approximately of
$201 million, to a syndicate of underwriters led by CIBC and including RBC
Capital Markets, Scotiabank, TD Securities Inc., BMO Capital Markets, National
Bank Financial Inc., Peters & Co. Limited, AltaCorp Capital Inc., and
FirstEnergy Capital Corp. (collectively, the "Underwriters").
Bonavista has also granted the Underwriters an over-allotment option to
purchase, on the same terms, up to an additional 1,210,000 common shares. This
option is exercisable by the Underwriters, in whole or in part, at any time for
a period of 30 days following closing. The maximum gross proceeds raised under
the Offering will be approximately $221 million should the over-allotment
option be exercised in full.  
Completion of the Offering is subject to certain conditions including normal
regulatory and stock exchange approvals. The Common Shares will be offered in
all provinces of Canada, except Quebec, by way of a short form prospectus. The
closing of the Offering is expected to occur on or about July 10, 2014.  
CIBC is acting as financial advisor to Bonavista with respect to the Acquired
Forward Looking Statements and Other Advisories 
In the interest of providing shareholders and potential investors with
information regarding Bonavista, including management's assessment of
future plans and operations, certain statements in this press release are
"forward-looking information" within the meaning of applicable
Canadian securities legislation ("forward-looking statements"). In
some cases, forward-looking statements can be identified by terminology such as
"anticipate", "believe", "continue",
"could", "estimate", "expect",
"forecast", "intend", "may",
"objective", "ongoing", "outlook",
"potential", "project", "plan",
"should", "target", "would", "will" or
similar words suggesting future outcomes, events or performance. The
forward-looking statements contained in this press release speak only as of the
date thereof and are expressly qualified by this cautionary statement. 
Specifically, this press release contains forward-looking statements relating
to but not limited to: our plans and other aspects of our anticipated future
operations, management focus, objectives, strategies, financial, operating and
production results and business opportunities, including expected 2014 and 2015
production, product mix, cash flow, operating netbacks, our capital expenditure
program, drilling and development plans and the timing thereof and sources of
funding; expectations regarding the Acquisition and the Offering, including
anticipated timing of completion of the Acquisition and the Offering, and
approvals required for the Acquisition and the Offering; the anticipated
purchase price and payment of the purchase price of the Acquisition, including
the use of proceeds from the Offering; the strategic rationale for the
Acquisition; the anticipated benefits from the Acquisition, including our
belief that the Acquisition is consistent with our asset concentration
strategy; the ability of our existing infrastructure to support expected
production growth through 2015; the multi-zone development potential associated
with the Acquired Assets; anticipated drilling locations and drilling
inventories; type curves, well economics, recovery factors and expected recycle
ratios, the anticipated effect of the Acquisition on Bonavista, including our
business model, strategy, increased capital program and allocation thereof,
development capital requirements and plans, future production, operating costs,
cash flow, netbacks and other financial results. In addition, information and
statements relating to reserves are deemed to be forward-looking statements, as
they involve implied assessment, based on certain estimates and assumptions,
that the reserves described exist in quantities predicted or estimated, and
that the reserves can be profitably produced in the future.  
Cash dividends on our common shares are paid at the discretion of our Board of
Directors and can fluctuate. In establishing the level of cash dividends, the
Board of Directors considers all factors that it deems relevant, including,
without limitation, the outlook for commodity prices, our operational
execution, the amount of funds from operations and capital expenditures and our
prevailing financial circumstances at the time. 
The forward-looking information is based on certain key expectations and
assumptions made by Bonavista's management, including expectations and
assumptions concerning prevailing commodity prices, exchange rates, interest
rates, applicable royalty rates and tax laws; future production rates and
estimates of operating costs; performance of existing and future wells; reserve
and resource volumes; anticipated timing and results of capital expenditures;
the success obtained in drilling new wells; the sufficiency of budgeted capital
expenditures in carrying out planned activities; the timing, location and
extent of future drilling operations; the state of the economy and the
exploration and production business; results of operations; performance;
business prospects and opportunities; the availability and cost of financing,
labor and services; the impact of increasing competition; ability to market oil
and natural gas successfully; Bonavista's ability to access capital, and
obtaining the necessary regulatory approvals, including the approval of the
Toronto Stock Exchange and satisfaction of the other conditions to closing the
Acquisition and the Offering and on the timeframes contemplated. 
Although Bonavista believes that the expectations and assumptions on which such
forward-looking information is based are reasonable, undue reliance should not
be placed on the forward-looking information because Bonavista can give no
assurance that they will prove to be correct. Since forward-looking information
addresses future events and conditions, by its very nature they involve
inherent risks and uncertainties. The Acquisition, the Offering and other
transactions referred to in this press release may not be completed on the
anticipated time frames or at all and Bonavista's actual results,
performance or achievement could differ materially from those expressed in, or
implied by, the forward-looking information and, accordingly, no assurance can
be given that any of the events anticipated by the forward-looking information
will transpire or occur, or if any of them do so, what benefits that Bonavista
will derive therefrom. Management has included the above summary of assumptions
and risks related to forward-looking information provided in this press release
in order to provide securityholders with a more complete perspective on
Bonavista's future operations and such information may not be appropriate
for other purposes.  
This press release contains future-oriented financial information and financial
outlook information (collectively, "FOFI") about Bonavista's
prospective results of operations, cash flows, and components thereof, all of
which are subject to the same assumptions, risk factors, limitations, and
qualifications as set forth in the above paragraphs. FOFI contained in this
press release was made as of the date of this press release and was provided
for the purpose of describing the anticipated effects of the Acquisition and
the Offering on Bonavista's business operations. Bonavista disclaims any
intention or obligation to update or revise any FOFI contained in this
document, whether as a result of new information, future events or otherwise,
unless required pursuant to applicable law. Readers are cautioned that the FOFI
contained in this document should not be used for purposes other than for which
it is disclosed herein. 
Readers are cautioned that the foregoing lists of factors are not exhaustive.
Additional information on these and other factors that could affect
Bonavista's operations or financial results are included in press releases
on file with applicable securities regulatory authorities and may be accessed
through the SEDAR website (  
These forward-looking statements are made as of the date of this press release
and Bonavista disclaims any intent or obligation to update publicly any
forward-looking information, whether as a result of new information, future
events or results or otherwise, other than as required by applicable securities
All of the reserves information contained in this press release have been
calculated and reported using assumptions and methodology guidelines outlined
in accordance with the standards contained in the COGE Handbook, National
Instrument 51-101 and the reserve definitions contained in the Canadian
Securities Administrators Staff Notice 51-324. 
The term "boe" means a barrel of oil equivalent on the basis of 6 Mcf
of natural gas to 1 Bbl of oil. Boe's may be misleading, particularly if
used in isolation. A boe conversation 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. Given the value ratio
based on the current price of crude oil as compared to natural gas is
significantly different from the energy equivalency of 6 Mcf: 1Bbl, utilizing a
conversion ratio at 6 Mcf: 1 Bbl may be misleading as an indication of value. 
Non-GAAP measures  
This press release contains the terms "cash flow" and
"netbacks", which do not have a standardized meaning prescribed by
International Financial Reporting Standards ("IFRS" or,
alternatively, "GAAP") and therefore may not be comparable with the
calculation of similar measures by other companies. Bonavista uses cash flow,
and netbacks to analyze financial and operating performance. Bonavista feels
these benchmarks are key measures of profitability and overall sustainability
for the Company. Each of these terms is commonly used in the oil and gas
industry. Cash flow and netbacks are not intended to represent operating
profits nor should they be viewed as an alternative to cash flow provided by
operating activities, net earnings or other measures of financial performance
calculated in accordance with GAAP. Netbacks equal production revenues and
realized gains and losses on financial instrument commodity contracts, less
royalties, operating and transportation 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. Cash flows are calculated as revenues less royalties,
transportation and operating costs.  
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 while
ensuring financial strength and sustainability.  
Keith A. MacPhail
Executive Chairman
Jason E. Skehar
President & CEO
Glenn A. Hamilton
Senior Vice President & CFO
Bonavista Energy Corporation
1500, 525 - 8th Avenue SW
Calgary, AB T2P 1G1
(403) 213-4300 
INDUSTRY:  Energy and Utilities - Oil and Gas  
-0- Jun/18/2014 21:07 GMT
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