Bonterra Energy Corp. (TSX:BNE) ("Bonterra" or "the Company") is pleased to announce its operating and financial results for the year ended December 31, 2016. The related financial statements and notes, as well as management's discussion and analysis (MD&A) for the year ended December 31, 2016, are available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com and on Bonterra's website at www.bonterraenergy.com.
YEAR IN REVIEW
Bonterra is pleased to report its financial and operational results for the year ended December 31, 2016. The Company continued to realize operational success through 2016 as it focused on projects offering the highest economics while preserving value in a persistently low commodity price environment.
Bonterra continued to realize operational success through 2016 as it focused on projects offering the highest returns while preserving value in a persistently low commodity price environment. The Company's annual production volumes averaged 12,650 BOE per day (70 percent oil and liquids), in line with guidance and on a capital expenditure program that was $40 million, 30 percent lower than the 2015 program. The Company sustained ongoing success in its core Pembina Cardium area throughout 2016 and maintained stable production volumes as a result of its very low corporate decline rate of 18-20 percent, successful drilling program and the implementation of innovative completions techniques across its asset base.
In 2016, Bonterra focused on cost reduction, reducing operating and administrative costs and, bringing the corporate all-in costs to one of the lowest in the sector at $18.98 per BOE, including royalties, operating expenses, administrative expense and interest on debt.
Bonterra realized a further 14 percent reduction in capital levels required for drilling, completions and infrastructure, building on what had been achieved in 2015. By reducing drilling days per well and realizing better cost efficiencies in the field, the Company was able to grow reserves with capital efficiencies of approximately $17,000 per BOE.
Additionally, Bonterra's focus on managing financial flexibility generated free cash after capital spending and dividend distributions to pay down bank debt and reduced net debt to $354 million from $362 million in 2015. Through 2017, the Company will continue to reduce net debt to a level that is less than 2.5 times funds flow during low commodity prices and less than 1.5 times funds flow when oil prices are higher than U.S. $60 West Texas Intermediate (WTI) and Bonterra's realized price for natural gas is CDN $3.50 per MCF.
In the fourth quarter of 2016, the Company experienced production curtailments primarily related to pipeline restrictions and freeze offs causing 380 BOE per day to be shut in. All restricted volumes were produced and stored in inventory and will be included in Q1 2017 production.
In 2016, Bonterra maintained its natural gas production firm service commitments to more than 90 percent which will reduce transportation curtailments associated with interruptible service and preserve access to consistent and reliable infrastructure to move volumes to market.
With stabilizing prices to date in 2017, the Company will continue to review capital spending and dividend levels on a monthly basis so that it can maximize gains on rising oil prices and preserve value if they fall. The current capital budget of $70 million is intended to maintain a balance between funds flow and capital spending plus dividend distributions. Bonterra estimates 2017 annual production will increase five percent and range between 13,000 and 13,500 BOE per day. With commodity price assumptions for 2017 of U.S. $55 WTI, AECO $3.10 per MCF and foreign exchange of CDN/U.S. dollar of $0.74, The Company expects to generate funds flow of approximately $145 million. Assuming dividends are approximately $40 million annually, or a stable $0.10 per share monthly, and approximately $15 million from other sources, Bonterra forecasts that approximately $50 million would be available to reduce outstanding bank debt.
In 2017, the Company will continue pursuing its sustainable growth strategy by minimizing the amount of debt and managing its dividend in a responsible manner. Bonterra will continue to focus on operations efficiencies, financial discipline and delivering optimal returns for shareholders.
Bonterra will continue to be one of the stronger companies in the resource industry by being a low-cost producer, maintaining a low production decline rate and having a large inventory of economic undrilled locations. The future for Bonterra remains positive over the long term as the Company will remain conservatively managed to withstand a challenging commodity price environment.
Bonterra Energy Corp. is a conventional oil and gas corporation with operations in Alberta, Saskatchewan and British Columbia. The shares are listed on The Toronto Stock Exchange under the symbol "BNE".
SOURCE: Bonterra Energy Corp.
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