Bellamont Exploration Ltd. announces December 31, 2009 year end reserves and
operational update
/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
CALGARY, March 16 /CNW/ - Bellamont Exploration Ltd. (the "Corporation" or "Bellamont") (TSXV:BMX.A) (TSXV:BMX.B) is pleased to provide a summary of its 2009 year end reserves and an update on current operations.
Bellamont intends to file its audited financial statements and related management's discussion and analysis ("MD&A") for the year ended December 31, 2009, with Canadian securities regulatory authorities on the System for Electronic Document Analysis and Retrieval ("SEDAR") on or around April 16, 2010. Readers are cautioned that certain financial estimates contained herein are unaudited.
BELLAMONT 2009 YEAR END HIGHLIGHTS:
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- Finding and development ("F&D") costs of $9.21/Boe on proved plus
probable reserve additions, excluding changes in future development
capital;
- Increased proved plus probable reserves by 95% (16% on a per share
basis) to a total of 5.166 million Boe worth $63.3 million (@
NPV10% before tax);
- Reserve replacement was 669% on proved reserves and 937% on proved
plus probable;
- Working capital deficit of $3.5 million as at December 31, 2009;
- Achieved 100% success rate in drilling 6 wells (4.1 net) resulting
in:
- 5 (3.1 net) oil wells;
- 1 (1.0) net) gas wells;
- Increased average production 73% from 2008 to 820 Boe/d;
- Exited the year with 1,072 Boe/d of production comprising 47% oil and
liquids, resulting in a $25.61 operating netback (December averages);
- Based on $32.3 million of capital spending in 2009, incurred finding,
development and acquisitions ("FD&A") costs on a proved plus probable
basis of:
- $11.49/Boe when excluding changes in future development capital;
- $16.97/Boe when including changes in future development capital;
- Based on a current operating netback of approximately $22.00/Boe,
achieved a recycle ratio of 1.3 on proved plus probable F&D costs
when including changes in future development capital;
- Acquired light oil properties in the core Sinclair and Saddle Hills
areas and in the process, issued 5,080,645 Bellamont Class A shares
issued to the vendor, Storm Exploration Inc.;
- Successfully closed three separate equity financings raising a total
of $20.5 million;
- Shot a 70 square kilometer 3D seismic program covering 16 gross
sections of lands in the Rycroft area.
- Welcomed Mr. Greg Bay and Mr. Stu Clark to its Board of Directors.
Subsequent to year end on February 11, 2010, the Corporation closed a plan of arrangement to acquire Standard Energy Inc. ("Standard"). Bellamont previously announced the acquisition of 4,029 mBoe based on 4,246 mBoe of proved plus probable reserves as at December 31, 2008, as assessed by GLJ Petroleum Consultants ("GLJ") in accordance with National Instrument 51-101 ("NI 51-101"), adjusted for production up to December 31, 2009. Subsequently, GLJ has evaluated the Standard assets and assigned 5,154 mboe on a proved plus probable basis, an increase of 1,125 mBoe (810 mBoe of oil) from the December 31, 2008 evaluation. As a result, Bellamont's realized acquisition cost was $10.26 per Boe. On a pro forma basis, current production based on field estimates is approximately 2,300 Boe/d comprised of 35% oil and liquids.
OIL & GAS RESERVES
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The Corporation's December 31, 2009 reserves were independently evaluated by GLJ in accordance with 51-101. The reserve information presented herein utilizes GLJ's January 1, 2010 price forecast and cost assumptions.
The reserve data provided in this release represents only a portion of the disclosure required under NI 51-101. All of the required disclosure information will be contained in the Corporation's Annual Information Form to be filed with SEDAR before the end of April 2010, which will be accessible electronically at www.sedar.com.
Reserves Summary
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Light and Medium Oil Natural Gas
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Corporate Corporate Corporate Corporate
Gross Net Gross Net
Mbbl(1) Mbbl(2) MMcf(1) MMcf(2)
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PROVED
Producing 1,125 859 4,326 3,613
Developed Non-Producing 74 68 1,237 1,032
Undeveloped 182 166 3,583 3,078
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TOTAL PROVED 1,380 1,093 9,146 7,723
TOTAL PROBABLE 949 698 7,356 6,009
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TOTAL PROVED PLUS PROBABLE(3) 2,329 1,791 16,502 13,733
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Reserves Summary
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Natural Gas Liquids Total Oil Equivalent
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Corporate Corporate Corporate Corporate
Gross Net Gross Net
Mbbl(1) Mbbl(2) Mbbl(1) Mbbl(2)
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PROVED
Producing 30 18 1,876 1,479
Developed Non-Producing 5 3 285 243
Undeveloped 15 9 793 688
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TOTAL PROVED 50 30 2,955 2,410
TOTAL PROBABLE 36 21 2,211 1,720
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TOTAL PROVED PLUS PROBABLE(3) 86 51 5,166 4,130
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Net Present Value of Future Net Revenue of Oil and Gas Reserves
Net Present Values of Future Net Revenue
Before Income Taxes Discounted At (%/year)
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0% 5% 10% 15% 20%
Reserves Category (M$) (M$) (M$) (M$) (M$)
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PROVED
Producing 62,748 45,160 36,207 30,700 26,908
Developed Non-Producing 4,826 3,739 2,964 2,401 1,982
Undeveloped 10,433 5,501 2,482 533 -781
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TOTAL PROVED 78,007 54,400 41,653 33,633 28,109
TOTAL PROBABLE 65,027 34,485 21,629 14,784 10,620
TOTAL PROVED PLUS
PROBABLE(3) 143,034 88,885 63,282 48,418 38,729
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(1) "Corporate Gross" reserves means Bellamont's working interest share
before deduction of royalties and without including any royalty
interests owned by Bellamont
(2) "Corporate Net" reserves means Bellamont's working interest share
after deduction of royalties and including royalty interests owned by
Bellamont
(3) Numbers may not add up due to rounding
Corporate Gross Reserve Reconciliation for 2009
Proved +
Proved Probable Probable
(MBoe) (MBoe) (MBoe)
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December 31, 2008 Opening Balance 1,247 1,407 2,654
Discoveries 13 6 19
Extensions 673 740 1,413
Improved Recovery 127 66 193
Technical Revisions 414 -300 114
Acquisitions Less Dispositions 781 292 1,073
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Production -300 0 -300
December 31, 2009 Closing Balance 2,955 2,211 5,166
2009 FINDING AND DEVELOPMENT COSTS
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NI 51-101 specifies how F&D costs should be calculated if they are to be reported. NI 51-101 requires that the total of the exploration and development costs incurred in the most recent financial year together with the change in future development costs during the most recent financial year be divided by the reserve additions for such year. The costs are to be reported on both a proved and a proved plus probable basis, after eliminating the effects of acquisitions and dispositions. Bellamont has chosen to report its F&D cost using the two following methods: 1) after eliminating the effects of acquisitions and disposition; and 2) including the effect of acquisitions and dispositions ("FD&A"). In addition, we have shown the F&D costs for 2008 and the three year average.
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Three Year Average
2009 2008 (2007-2009)
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Proved Proved Proved
Total Plus Total Plus Total Plus
Proved Probable Proved Probable Proved Probable
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Exploration and
Development
Expenditures
(M$)(1) $16,008 $16,008 $12,737 $12,737 $44,972 $44,972
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Acquisitions
Expenditures(2) $16,302 $16,302 $6,955 $6,955 $27,284 $27,284
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Change in Future
Development
Costs (M$) $15,450 $15,421 $777 $8,344 $17,387 $30,658
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Reserve Additions
(mBoe)(3)
- Exploration and
Development(4) 1,227 1,739 548 1,175 1,906 3,330
- Acquisitions(5) 781 1,073 235 334 1,351 1,932
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Finding and
Development Costs
($/Boe)(6)
- Excluding FDC $13.05 $9.21 $23.24 $10.84 $23.60 $13.51
- Including FDC $25.64 $18.06 $24.66 $17.18 $32.72 $22.70
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Acquisition Costs
($/Boe) $20.87 $15.19 $29.60 $20.82 $20.19 $14.12
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Finding,
Development and
Acquisition Costs
($/Boe)
- Excluding FDC $16.09 $11.49 $25.15 $13.05 $22.18 $13.73
- Including FDC $23.78 $16.97 $26.14 $18.58 $27.52 $19.56
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(1) Exploration and development expenditures exclude capitalized
administration costs
(2) The acquisition expenditures include the purchase price of corporate
acquisitions rather than the amounts allocated to property, plant and
equipment for accounting purposes and exclude acquisition costs
(3) Gross Corporation interest reserves are used in this calculation
(interest reserves before deduction of any royalties and without
including any royalty interests of the Corporation)
(4) Includes Technical Revisions
(5) Includes production from acquisitions during the applicable time
period
(6) Total exploration and development costs incurred in the most recent
financial year and the change during that year in estimated future
development costs generally not reflect the total costs of reserve
additions for that year
PRO-FORMA OIL AND GAS RESERVES
------------------------------
The Corporation also had the Standard reserves as of December 31, 2009 independently evaluated by GLJ in accordance with NI 51-101 utilizing GLJ's January 1, 2010 price forecast and cost assumptions. The following table presents the pro-forma oil and gas reserves of Bellamont and Standard combined.
Reserves Summary
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Light and Medium Oil Natural Gas
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Corporate Corporate Corporate Corporate
Gross Net Gross Net
Mbbl(1) Mbbl(2) MMcf(1) MMcf(2)
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PROVED
Producing 1,332 1,023 9,871 8,512
Developed Non-Producing 134 119 2,098 1,712
Undeveloped 638 546 10,189 8,378
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TOTAL PROVED 2,104 1,688 22,158 18,601
TOTAL PROBABLE 1,421 1,053 14,584 11,438
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TOTAL PROVED PLUS PROBABLE(3) 3,525 2,741 36,743 30,039
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Reserves Summary
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Natural Gas Liquids Total Oil Equivalent
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Corporate Corporate Corporate Corporate
Gross Net Gross Net
Mbbl(1) Mbbl(2) Mbbl(1) Mbbl(2)
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PROVED
Producing 193 116 3,170 2,557
Developed Non-Producing 6 3 490 408
Undeveloped 230 154 2,566 2,097
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TOTAL PROVED 429 273 6,226 5,062
TOTAL PROBABLE 242 145 4,094 3,104
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TOTAL PROVED PLUS PROBABLE(3) 671 418 10,320 8,166
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Net Present Value of Future Net Revenue of Oil and Gas Reserves
Net Present Values of Future Net Revenue
Before Income Taxes Discounted At (%/year)
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0% 5% 10% 15% 20%
Reserves Category (M$) (M$) (M$) (M$) (M$)
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PROVED
Producing 98,457 72,905 58,829 49,825 43,525
Developed Non-Producing 11,051 8,559 6,901 5,740 4,892
Undeveloped 57,866 37,205 25,026 17,280 12,049
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TOTAL PROVED 167,375 118,669 90,757 72,845 60,467
TOTAL PROBABLE 128,482 67,478 41,340 27,790 19,814
TOTAL PROVED PLUS
PROBABLE(3) 295,857 186,147 132,097 100,636 80,281
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(1) "Corporate Gross" reserves means the Corporation's working interest
share before deduction of royalties and without including any royalty
interests owned by Standard
(2) "Corporate Net" reserves means the Corporation's working interest
share after deduction of royalties and including royalty interests
owned by the Corporation
(3) Numbers may not add up due to rounding
PROFORMA NET ASSET VALUE
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The following table provides a calculation of the Corporation's net asset value based on the estimated future net revenue associated with Bellamont and Standard's combined proved plus probable reserves discounted at 10% (before tax) as presented in the December 31, 2009 reserve reports as evaluated by GLJ.
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Value (M$)
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Proved plus probable reserves - discounted at 10%(1) $132,097
Undeveloped land value(2) 6,704
Working capital (deficit) estimate as of February 28, 2010 (13,700)
Net asset value (basic shares outstanding) 125,101
Proceeds from stock options 5,861
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Net asset value (fully diluted) $130,962
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Net asset value per share Class A Share(3) $0.93
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Net asset value per fully diluted Class A Share(4)(5) $0.82
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(1) Utilizes GLJ's January 1, 2010 price forecast.
(2) Internal estimate equivalent to $100 per net corporate acre.
(3) As of the date hereof, there is 140,787,690 Class A shares issued and
outstanding.
(4) Assumes the issuance of additional 9,190,000 Class A shares issued
pursuant to the Corporation's stock option plan.
(5) Assumes conversion of 1,012,000 Class B shares into 10,120,000 Class
A shares on a 10:1 basis. The Class B shares are convertible, at the
option of the Corporation, at any before March 1, 2012; or, if the
Corporation fails to exercise the option to convert the Class A
shares to Class B shares by such time, at the option of the
shareholder after March 1, 2012 and before April 2, 2012. The number
of Class A shares obtained upon conversion of each Class B shares
will be equal to $10.00 divided by the greater of $1.00 and the
current market price for the Class A shares at the time of the
conversion.
OPERATIONAL UPDATE
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The first quarter of 2010 has been the most active in the Corporation's history with 4 drilling rigs active in the Grimshaw, Rycroft, Grande Prairie and Pembina areas.
At Bellamont's Montney oil pool discovery at Grimshaw, the Corporation now has four wells (one vertical and three horizontals) on production at an estimated gross daily rate of 350 Boe/d (305 Boe/d net) comprising 83% oil. The Corporation's first three horizontal wells are producing at an approximate average rate of 110 Boe/d, with the best well averaging approximately 150 Boe/d over its first 60 days of production. The Corporation has also drilled and cased a fourth horizontal well (100% working interest.) as a potential oil well. This well will be completed following spring breakup and is expected to produce comparably with the existing horizontal wells. The Corporation will commence drilling its fifth Montney horizontal well after spring breakup and has plans for an additional 2 horizontal wells (1.8 net) by year end.
At Rycroft, Bellamont has drilled and cased a vertical well (100% working interest) as a potential Montney oil well. This well was drilled to delineate Bellamont's Montney oil pool discovery in the area. Completion of this well is expected after spring breakup. A successful completion of this well would re-enforce the Corporation's interpretation for the potential of a significant Montney oil accumulation on its lands, which could lead to a multiple horizontal well development plan in the future.
At Grande Prairie, the Corporation has drilled and cased a horizontal development well (100% working interest) in its liquids rich Montney natural gas pool. Completion and tie-in of this well is planned to proceed immediately, pending any weather related surface access restrictions. The first three wells in this pool averaged in excess of 2.2 mmcf per producing day over their first three months of production with an average liquids yield of approximately 60 bbls per mmcf, for a total of 425 Boe/d.
At Pembina, the Corporation has drilled and cased a potential Cardium oil well (52% working interest). Completion of this well is expected to be imminent, once again, pending any weather related surface access restrictions. In addition, Bellamont plans to drill its third horizontal Cardium well in the third quarter of 2010 extending the Cardium oil play to its additional 100% WI undeveloped land in 48-05-W5M.
OUTLOOK
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2009 was a transformational year for Bellamont. The Corporation's successful exploitation of its Grimshaw Montney oil discovery via multi-staged fraced horizontal wells, together with the emergence of the Corporation's Fahler natural gas resource play in Valhalla, created significant operating momentum for Bellamont. The core area acquisition of light oil properties in the Sinclair and Saddle Hills from Storm Exploration Inc. built upon the momentum. The Standard acquisition, though completed in early 2010, was an initiative launched mid-way through 2009 and ultimately capped a very successful year for the Corporation.
The recent acquisitions have significantly enhanced the financial capacity of the Corporation while adding high quality oil projects to its inventory. The Corporation is currently producing approximately 2,300 Boe/d (35.0% oil and liquids). The 2010 capital budget is $30 million and 84% weighted towards oil targets. Taking into account natural declines, the Corporation expects to average 2,100 Boe/d in 2010 and exit at 2,350 Boe/d. Based on the oil focus in the 2010 budget, the Corporation expects to increase its current oil and liquids production weighting from 35% currently to in excess of 50% by year end. This would result in an increase of the Corporation's netback from an estimated $22.00/Boe currently to approximately $30.00/Boe by year end (based on a year-end price forecast of $75.00 WTI - US$ and $5.50/mmbtu AECO-C - CDN.$).
As of the end of February, Bellamont's estimated net debt was $13.7 million, well within its $32 million bank line. Bellamont has financial flexibility to pursue acquisition and exploration opportunities. The Corporation intends to maintain its discipline and concentrate on strategic opportunities that are accretive on cash flow, production, and reserves on a per share basis, while maintaining a strong balance sheet.
Bellamont's strategy is to build a low risk reserve, production and cash flow base through acquiring, developing and exploring primarily in the Peace River Arch area of Alberta. Bellamont has a strong technically focused management team that internally generates and develops high quality large resource based prospects. The Company has a drilling inventory of 90 wells. In addition, the Company has compiled an undeveloped land inventory of 102,403 gross acres (67,048 net), of which 79,441 gross acres (56,942 net) is located in the Peace River Arch area of Alberta.
Bellamont is an emerging oil and gas company focused on the acquisition, exploration, development and production of oil and natural gas in western Canada and trades on the TSX Venture Exchange under the symbols "BMX.A" and "BMX.B". The Corporation has 140,787,690 Class A shares and 1,012,000 Class B shares outstanding.
ANNUAL MEETING
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Bellamont's annual shareholder meeting will be held at 3:00 p.m. on June 3, 2010 in the Plaza Room at the Metropolitan Centre, 333 Fourth Avenue S.W., Calgary Alberta.
FORWARD LOOKING STATEMENTS
This press release may contain forward-looking statements including expectations of future production, cash flow and earnings. More particularly, this press release contains statements concerning Bellamont's future production estimates, expansion of oil and gas property interests, exploration and development drilling and capital expenditures. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price, price and exchange rate fluctuation and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Additional information on these and other factors that could affect Bellamont's operations or financial results are included in Bellamont's reports on file with Canadian securities regulatory authorities.
The forward-looking statements or information contained in this news release are made as of the date hereof and Bellamont undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws
Oil and Gas Advisory
This press release contains disclosure expressed as "Boe/d". All oil and natural gas equivalency volumes have been derived using the ratio of six thousand cubic feet of natural gas to one barrel of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. Not for distribution to U.S. newswire services or for dissemination in the United States. Any failure to comply with this restriction may constitute a violation of U.S. securities law.
%SEDAR: 00024373E
For further information: Steve Moran, President and Chief Executive Officer, (403) 802-1355, 200, 1324-17th Avenue S.W., Calgary, Alberta, T2T 5S8, Email: [email protected], www.bellamont.com
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