Bellatrix Exploration Ltd. announces a fourth quarter 2018 operational update with full year average volumes exceeding guidance, and its 2019 capital budget designed to deliver stable corporate production volumes, supported by strong commodity price risk management and market diversification contracts.

2018 Production Volumes Exceed Full Year Average Guidance

Bellatrix drilled and or participated in 5 gross (3.0 net) wells during the fourth quarter including 4 gross (2.99 net) operated Spirit River liquids rich natural gas wells and 1 gross (0.02 net) non-operated Cardium well. Fourth quarter production volumes averaged approximately 35,100 boe/d based on field estimates, contributing to annual average production volumes of approximately 35,600 boe/d, surpassing the high end of Company guidance.  

2019 Capital Budget Designed to Deliver Stable Production Volumes

Bellatrix’s Board of Directors has approved a 2019 capital budget of between $40 to $50 million, designed to maintain average production volumes between 34,000 to 36,000 boe/d. Bellatrix plans to fund the 2019 capital budget primarily through cash flow from operating activities. The capital budget incorporates forward pricing expectations of US$65/bbl WTI, $1.60/GJ AECO, a $1.34 CAD/USD exchange rate, and is underpinned by strong commodity price risk management protection and natural gas market diversification contracts.  

Delivery of the 2019 capital budget will remain flexible throughout the year, focused primarily on profitable development of Bellatrix’s high rate of return investment opportunities. With their long-term infrastructure build out complete, the majority of capital investment will be utilized directly in drilling, completion and production addition activities, with minimal capital required for facilities and infrastructure projects. Delivery of the 2019 budget incorporates the following attributes:

• Reduced Maintenance Capital Requirements. In 2018, Bellatrix continued to make meaningful cost reductions for its average Spirit River well, with all-in well costs reduced to $3.4 million and enhanced productivity with average well performance outperforming expected results by approximately 38% on an IP90 basis. The combination of lower costs and improved results has reduced the number of assumed Spirit River wells to 12 per year (assuming an average 6.0 Bcf performance curve) required to maintain total corporate production volumes in the mid 30 mboe/d range.
• Financial Flexibility. The 2019 capital budget remains flexible, with the potential to accelerate or decelerate capital expenditures throughout the year.
• Continued Cost Suppression Focus. Third quarter 2018 production expenses of $7.71/boe and $23.8 million represent 27% and 23% reductions respectively, compared with fourth quarter 2016 levels. Bellatrix continues to focus on cost suppression activities through ongoing technological and operationally focused initiatives. Bellatrix also remains focused on reducing general and administrative (“G&A”) expenses. Third quarter 2018 gross G&A expenses have been reduced by 17% compared with fourth quarter 2017 G&A expenses with reductions remaining a focus in 2019.
• Optimized Returns. The 2019 drilling program will balance development of Spirit River liquids rich natural gas investment opportunities and higher liquids weighted opportunities in the Cardium play.