FINANCIAL & OPERATING HIGHLIGHTS
Production averaged 13,031 BOE per day in Q3 2022, four percent higher than Q3 2021, and averaged 13,548 BOE per day in the first nine months of 2022, a nine percent increase over the comparative period in the prior year, reflecting an active drilling program along with a continued reactivation of wells supported by stronger commodity prices.
Realized oil and gas sales in Q3 2022 increased 38 percent over Q3 2021 to total
Field netbacks1 averaged
Funds flow1 in Q3 2022 totaled
Funds flow1 in excess of capital expenditures ('free funds flow'1) totaled
Capital expenditures in the first nine months of 2022 totaled
Quarter-end bank debt totaled
Bonterra's improved debt profile and increased cash flow facilitated the removal of the term portion of the Company's bank debt, which had a less favorable interest rate grid.
Progress has been made on re-constituting Bonterra's banking syndicate and credit facility, and an update will be provided upon finalization of the new arrangements.
During the first nine months of 2022, Bonterra continued to focus on being a responsible corporate citizen, including efficiently managing its abandonment and reclamation obligations. The Company successfully abandoned 105.9 net wells, 29.0 net pipeline segments and decommissioned 2.0 net battery sites with support from the Alberta Site Rehabilitation Program ('SRP'). Before the end of 2022, a further 41.4 net wells and associated pipelines that have no further economic potential are targeted for abandonment.
'Funds Flow', 'Field Netback', 'Free Funds Flow', 'Net Debt' and 'Net Debt to Twelve-Month Trailing Cash Flow Ratio' are not recognized measures under IFRS. See 'Cautionary Statements' below.
QUARTER IN REVIEW
Bonterra has built significant momentum year-to-date, realizing positive financial and operating results largely driven by production expansion, funds flow growth and meaningful debt repayment. During the first nine months of 2022, the Company executed a successful drilling program, reactivated off-line wells in response to stronger commodity prices, and commissioned a wholly-owned gas plant to alleviate processing capacity limitations, all of which contributed to average production of 13,548 BOE per day for the period. In the third quarter, Bonterra's production averaged 13,031 BOE per day, an increase of four percent over the same period in 2021. The benefit of increased production volumes was enhanced further by continued strength in commodity prices that resulted in strong netbacks, and growing funds flow1 and free funds flow1, which enabled the Company to further improve its balance sheet.
Revenue, Netbacks and Funds Flow
Supported by robust benchmark commodity prices in the third quarter of 2022, the Company's average realized light oil price was
Strong realized pricing also contributed to the generation of
Successful Capital Program
Through the first nine months of 2022, Bonterra continued to execute an active capital program largely directed to the drilling and development of its high-quality, light oil weighted asset base and other incremental growth initiatives. As of
Improved Financial Flexibility
Consistent with Bonterra's previous communications, the Company has maintained a sharp focus on strengthening the balance sheet, the results of which are highlighted by the achievement of a net debt to twelve-month trailing cash flow ratio1 of 1.0 times at quarter end, a significant improvement over 2.8 times recorded at year-end 2021. Net debt1 at
Bonterra's bank facility at quarter end was drawn
OUTLOOK
Bonterra has built significant momentum in the first nine months of 2022, setting the stage for continued positive results and performance to the end of the year and into 2023. Furthermore, the Company remains committed to further decreasing bank debt which supports its goal of restoring a shareholder returns-based business model focused on continued net debt repayment and sustainable dividends.
During the final quarter of 2022, Bonterra anticipates executing the balance of its capital program within a revised 2022 capital expenditure budget range of
Recognizing the volatility of commodity prices through Q2 and Q3 2022 and in the interests of protecting future cash flows, Bonterra has prudently layered in hedges on approximately 30 percent of its expected crude oil and natural gas production to the end of Q3 2023. Through the coming 12 months, Bonterra has secured a WTI price range between
Financial discipline and cost control continue to be priorities as the Company remains committed to the responsible generation of robust funds flow1 and free funds flow1. With ongoing bank debt reduction, Bonterra aims to further strengthen the balance sheet and secure a financially flexible position free from capital allocation constraints, enabling the Company to advance its goal of returning capital to shareholders. Progress has been made regarding the re-constitution of Bonterra's banking syndicate and credit facility, which is scheduled to mature on
Bonterra believes that through continued execution of its focused business strategy and development of its high-quality, oil-weighted asset base, the Company will be ideally positioned to generate positive returns supported by long?term economic and environmental sustainability.
Cautionary Statements
This summarized news release should not be considered a suitable source of information for readers who are unfamiliar with
Non-IFRS and Other Financial Measures
Throughout this release the Company uses the terms 'funds flow', 'free funds flow', 'net debt', 'field netback' and 'cash netback' to analyze operating performance, which are not standardized measures recognized under IFRS and do not have a standardized meaning prescribed by IFRS. These measures are commonly utilized in the oil and gas industry and are considered informative by management, shareholders and analysts. These measures may differ from those made by other companies and accordingly may not be comparable to such measures as reported by other companies.
The Company defines funds flow as funds provided by operations including proceeds from sale of investments and investment income received excluding effects of changes in non-cash working capital items and decommissioning expenditures settled. Free funds flow is defined as funds flow less dividends paid to shareholders, capital and decommissioning expenditures settled. Net debt is defined as long-term subordinated debt and subordinated debentures plus working capital deficiency (current liabilities less current assets). Field netback is defined as revenue and realized risk management contract gain (loss) minus royalties and operating expenses divided by total BOEs for the period. Cash netback is defined as Field netback less interest expense and general and administrative expense divided by total BOEs for the period. Net debt to twelve-month trailing cash flow ratio is defined as net debt at the end of the period divided by cash flow for the trailing twelve months.
Forward Looking Information
Certain statements contained in this release include statements which contain words such as 'anticipate', 'could', 'should', 'expect', 'seek', 'may', 'intend', 'likely', 'will', 'believe' and similar expressions, relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about development, results and events which will or may occur in the future, constitute 'forward-looking information' within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis made by us derived from our experience and perceptions. Forward-looking information in this release includes, but is not limited to: expected cash provided by continuing operations; future asset retirement obligations; future capital expenditures, including the amount and nature thereof; oil and natural gas prices and demand; expansion and other development trends of the oil and gas industry; business strategy and outlook; expansion and growth of our business and operations; and maintenance of existing customer, supplier and partner relationships; supply channels; accounting policies; credit risks; cyber security; climate change; the impact of the COVID-19 pandemic; and other such matters.
All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties, and assumptions are difficult to predict and may affect operations, and may include, without limitation: foreign exchange fluctuations; equipment and labour shortages and inflationary costs; general economic conditions; industry conditions; changes in applicable environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced; the ability of oil and natural gas companies to raise capital or maintain its syndicated bank facility; the effect of weather conditions on operations and facilities; the existence of operating risks; volatility of oil and natural gas prices; oil and gas product supply and demand; risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by us; and other factors, many of which are beyond our control.
Actual results, performance or achievements could differ materially from those expressed in, or implied by, this 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, what benefits will be derived there from. Except as required by law, Bonterra disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
The forward-looking information contained herein is expressly qualified by this cautionary statement.
Frequently recurring terms
Bonterra uses the following frequently recurring terms in this press release: 'WTI' refers to West Texas Intermediate, a grade of light sweet crude oil used as benchmark pricing in
Numerical Amounts
The reporting and the functional currency of the Company is the Canadian dollar.
Contact:
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