CALGARY, Aug. 25, 2011 /CNW/ -- NOT FOR DISTRIBUTION TO U.S.
NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
CALGARY, Aug. 25, 2011 /CNW/ - Bellamont Exploration Ltd. (the
"Corporation" or "Bellamont") (TSXV:BMX.A) (TSXV:BMX.B) is pleased
to provide a summary of its financial and operating results for the
three and six months ended June 30, 2011. SECOND QUARTER 2011
HIGHLIGHTS -- Second quarter funds generated from operations
increased 25 percent to $5.0 million from $4.0 million in the same
period in 2010; -- Increased average production to 2,549 Boe/d in
the second quarter, an increase of 14 percent from the same period
of 2010; -- Increased average oil and liquids production to 1,185
Boe/d in the second quarter, an increase of 27 percent from the
same period of 2010; -- Increased operating netback to $30.28/Boe,
an increase of 37 percent from the same quarter of 2010; --
Incurred $7.0 million of net capital expenditures, the significant
components of which were as follows: o Captured a new light oil
resource play in the Birch Area of British Columbia by closing an
agreement with a private company to acquire a non-producing
property for a purchase price of $3.5 million in cash. The property
has assigned reserves of 0.6 million BOE, with a December 31, 2010
value of $5.7 million (NPV@10%BT)(1); and includes 25 net sections
of lands, with an average working interest of approximately 90
percent; o Acquired 2 sections of land (100 percent working
interest) in Grande Prairie, immediately offsetting Bellamont's
Grande Prairie Montney I pool, for $1.5 million in cash; o Equipped
2 (1.75 net) oil wells that were drilled in the first quarter of
2011; o Completed electrification of the producing pad sites in the
Grimshaw area reducing future operating expenses.
______________________________ (1) Estimated values do not
represent fair market value AREA UPDATES Grimshaw Triassic D
Montney Oil Pool Bellamont has successfully drilled and cased an
additional 2 (2 net) infill horizontal wells at its Triassic D
Montney Oil Pool discovery at Grimshaw (the "Triassic D Pool").
These wells are scheduled to be completed in September and expected
to be brought on production in October. Bellamont forecasts
new wells in this pool to produce at an average initial thirty day
rate of 90 bbl/d. Bellamont is currently producing approximately
420 Boe/d net (90% oil) at Grimshaw from a total of 9 wells (8.75
net), eight of which were drilled horizontally. In the second
quarter, Bellamont's operating netback at Grimshaw was in excess of
$44/Boe. Over the past several months, Bellamont has been
conducting special laboratory work evaluating core from a vertical
pilot well located in the Triassic D Pool. The purpose of
this work is to evaluate the potential for water flood and assist
in estimating the Discovered Petroleum Initially in Place
("DPIIP")(2). The core analysis indicates favorable relative
permeability of the Montney formation at Grimshaw, similar to the
Dixonville Montney C Pool, located approximately 18 miles
northwest. The operator at Dixonville has successfully
implemented a waterflood scheme and is forecasting an ultimate
recovery factor over 23%. Preliminary analysis of the core at
Grimshaw suggests a similar recovery factor to Dixonville is
possible. Bellamont has now initiated a waterflood simulation study
for the purpose of applying for waterflood approval from the Energy
Resources Conservation Board. The latest two infill
horizontal wells drilled by Bellamont were strategically located
for implementing a pilot waterflood. The Corporation expects
waterflood approval should be obtained in early 2012, at which time
the pilot program will be commenced. Waterflooding at
Grimshaw represents material upside to Bellamont as, to date,
Bellamont's reserve evaluators have only assigned a primary
recovery factor of 8.8% of the recognized DPIIP. Bellamont's
analysis of the Grimshaw Montney formation core indicates DPIIP up
to 19.0 million barrels per section (i.e. 640 acres).
Bellamont estimates the wells drilled to date in the Triassic D
Pool have established a DPIIP up to 50 million barrels over 1920
acres of land owned by Bellamont (96% average working
interest). As of December 31, 2010, Bellamont's independent
reserve evaluators have only recognized 10.7 million barrels of
DPIIP located over an area of 1,105 acres of land. Bellamont
expects the information obtained from its core analysis, in
combination with results of the wells drilled to date in 2011, will
lead to recognition by its reserve evaluators of considerably more
DPIIP than is currently contained in the 2010 year end reserve
report. Bellamont has identified another 15 (14.25 net) low risk
development horizontal locations within the currently established
boundary of the Triassic D Pool. In September, Bellamont plans to
drill and core 2 (1.75 net) vertical delineation test wells at
Grimshaw. The purpose of these wells is to expand the known
areal extent of the Triassic D Pool and resultant DPIIP estimate.
These wells are estimated to cost approximately $500 thousand per
well and were identified on the Corporation's interpretation of
three dimensional seismic data. The Corporation believes the
delineation wells could establish the existence of an additional 70
million barrels of DPIIP in the Triassic D Pool. Success in
the delineation program could lead to another 46 (35.5 net)
horizontal locations. The information from the delineation wells is
expected to be fully compiled by the end of September. One of the
delineation wells is being drilled as a test well pursuant to a
Farmin agreement with a third party whereby Bellamont has secured
the right to earn up to an additional 1,280 acres (768 net) of
highly prospective lands. Earning these lands will increase
Bellamont's total acreage on this play to 10,240 acres (8,880net).
Ultimately, Bellamont believes the optimal development of the
Triassic D pool will consist of 8 horizontal wells per section. In
comparison, the Dixonville Montney C pool was developed with up to
16 horizontal wells per section. The Corporation has built a
100% owned centralized battery that will facilitate continued
growth of the property. Bellamont is preparing to license and
drill up to 10 (8.4 net) additional horizontal wells in the six
months following its delineation program.
__________________________________ (2) Discovered Petroleum
Initially in Place ("DPIIP") - is defined in the Canadian Oil and
Gas Evaluation Handbook ("COGEH") as the quantity of hydrocarbons
that are estimated to be in place within a known accumulation.
Original Gas in Place ("OGIP") is a more commonly used industry
term when referring to gas accumulations. DPIIP is divided into
recoverable and unrecoverable portions, with the estimated future
recoverable portion classified as reserves and contingent
resources. There is no certainty that it will be economically
viable or technically feasible to produce any portion of this DPIIP
except for those portions identified as proved or probable
reserves. Grande Prairie Montney In the first six months of 2011
Bellamont has been producing an average of 1,000 Boe/d from six
horizontal wells in its Grande Prairie Montney I pool, despite
being completely shut in for two weeks in May due to a third party
plant turnaround. Bellamont optimized several wells in the
pool in the first half of the year by installing plunger lifts,
resulting in more efficient run times. Notwithstanding
persistently low natural gas prices, Bellamont enjoyed an operating
netback of approximately $24/Boe during this period from these
wells, as a result of high light oil and NGL content of the
production stream (194 bbl/d of 42° API oil and 90 bbl/d of NGL's).
During the second quarter, Bellamont acquired a 100 percent
interest in a section of land immediately offsetting its wells in
the Grande Prairie Montney I pool. Based on three dimensional
seismic and well control, the Corporation's reserve evaluators
estimate the acquired lands contain 1.9 MMboe of DPIIP. This
acquisition increased the Corporation's drilling inventory in the
known boundary of the Montney I pool to 21 (21 net) locations,
based on 8 horizontal wells per section. The Corporation has
commenced licensing 3 (3 net) additional locations, which it
intends to drill over the next 12 to 18 months. The average initial
rate of the horizontal wells in this pool (first 90 days) has been
approximately 500 Boe/d. Bellamont expects this pool to be a
consistent source of production, cash flow and reserve growth for
the next several years. The Corporation has recently drilled and
cased a potential Montney gas well on a new 4 (3.5 net) section
block of lands located 2 miles north of the Montney I pool,
acquired by Bellamont earlier this year. Design of the
completion of this well is pending detailed analysis of core
obtained from the well. New British Columbia Core Area - Light Oil
Resource Potential Early in 2011, Bellamont made a strategic
decision to expand its opportunity portfolio and began building a
land base in a new core area in British Columbia. The
Corporation's mandate was to build a land position in an area where
it could see the potential for repeatable "resource type"
plays. Bellamont has now compiled a land position of 54
sections (43 net) in the Birch and Stoddart areas of British
Columbia. The Corporation's primary target in the Birch and
Stoddart areas is light oil (38° API) in the Baldonnel formation, a
shallow marine dolomitized carbonate reservoir, typically located
at a depth of 1,300 metres. Over the past two years Bellamont has
conducted a detailed study of the Baldonnel formation and believes
that an oil saturated fairway exists between Birch and Stoddart. To
date, the only commercial development of this potential resource
play has been in the Birch and Stoddart areas. Bellamont
believes the answer to unlocking this play on a more regional basis
may be the use of horizontal wells with multistage fracture
stimulations. Bellamont has accumulated 21.75 (16.3net) sections of
lands directly offsetting the Birch Baldonnel "C" Pool (the
"Baldonnel C Pool"). To date, the Baldonnel C Pool has
produced a total of 3.5 million barrels of light (38°API)
oil. This pool was discovered with vertical wells, and then
subsequently developed with short reach (i.e. ~400 metre)
horizontal wells, prior to the development of multi-stage fracing
technology. The average horizontal wells in the Baldonnel C
pool have produced an average initial oil rate of 125 bbl/d and are
expected to produce an average cumulative total of 139 mboe per
well. Recently, the operator of this pool has increased production
by over 700 boe/d by drilling 4 wells and has licensed 8
more. Bellamont believes it can enhance production rates and
recoverable reserves per well by utilizing longer reach (up to
1,000 metres) horizontal wells with multistage fracture
stimulations. Furthermore Bellamont believes it can use this
technology to potentially extend the boundary of the Baldonnel C
Pool. Bellamont has identified 12 (12 net) low risk horizontal
locations on lands located within one mile of the Baldonnel C Pool,
with the potential for another 12 (12 net) horizontal locations if
this pool can be successfully extended. In addition to the
Baldonnel formation, the Birch area is also prospective for liquids
rich (25-35 barrels/mmcf) natural gas in the Montney
formation. Bellamont now has a total of 8 (7.75 net sections)
of Montney rights in this area. Several other operators in
the near vicinity have recently reported success drilling
horizontal wells targeting the Montney formation. In
particular, three horizontal wells have been drilled by other
operators. One well was placed on production at a reported
initial rate of 5.0 mmcf/d. A second well was recently tested
at a reported rate up to 6.3 mmcf/d. The third well is
awaiting completion via multistage fracture stimulations.
Bellamont's has mapped a considerable amount of natural gas over
its lands in this area, based on log characteristics typically
referenced by industry participants in the Montney resource natural
gas play. Accordingly, Bellamont should benefit if this play
continues to be successfully advanced by others. No capital
is currently planned for the Montney formation in this area. In the
Stoddart area, Bellamont has accumulated 12.5 (12.5 net) sections
of lands prospective for Baldonnel oil. In this area, light
oil has been produced from several vertical wells, the best of
which produced at a rate over 70 bbl/d of oil. Collectively,
these wells have produced a cumulative total in excess of 80,000
bbls of light oil. The production profiles from these wells
are very similar to the vertical wells that were first drilled into
the Birch Baldonnel C pool (i.e. prior to its subsequent
development with horizontal wells). As a result, Bellamont
anticipates that development of Stoddart area with horizontal wells
will yield results equivalent to the Birch area. Bellamont is
in the process of securing surface access and licensing its first
horizontal well in Birch, which it expects to be ready to drill in
the fourth quarter. The well's location will be of low
geological risk, as its location is offset between two of the
existing producing Baldonnel oil wells in this area. The
Corporation has a total of 5 (5 net) firm horizontal Baldonnel oil
locations in the Stoddart area with the potential for an additional
18 (18 net) horizontal locations. SALE OF ASSET BACKED COMMERCIAL
PAPER On June 14, 2011, Bellamont closed agreements with two
vendors for the sale of its investment in asset backed commercial
paper ("ABCP"). Gross proceeds totalled $5.22 million,
representing a gain of $0.48 million from the March 31, 2011
carrying value of $4.74 million. The Corporation acquired the
investment in ABCP through the acquisition of Standard Energy Inc.
on February 11, 2010. Funds from the sale of ABCP were
applied against the Corporation's long-term debt related to
investments facility of $5.22 million, after which, the facility
was retired. FINANCIAL AND OPERATING HIGHLIGHTS The Corporation
will file its unaudited interim financial report and related
management's discussion and analysis ("MD&A") for the three and
six months ended June 30, 2011, with Canadian securities regulatory
authorities on SEDAR. Copies of these documents may be
accessed electronically on SEDAR at www.sedar.com or at
www.bellamont.com. Certain selected financial and operational
information for the three and six months ended June 30, 2011 and
2010 are set out below and should be read in conjunction with
Bellamont's interim financial report and MD&A. Three months
ended June Six months ended June 30, 30, 2011 2010 2011 2010
FINANCIAL ($000s, except per share) Petroleum and 13,038 9,512
24,888 17,015 natural gas sales Funds generated 5,035 4,032 10,212
7,426 from operations( (1)) Per Class A and 0.03 0.03 0.07 0.05
Class B share( (2)) Net income/(loss) 1,773 (684) 1,480 (5,972) Per
share basic 0.01 - 0.01 (0.05) and diluted((3)) Net capital 7,066
9,489 16,460 69,495 expenditures((4)) Net debt((1)) 38,603 20,814
38,603 20,814 OPERATING Production Crude Oil (Bbls 1,020 773 1,018
695 per day) Natural gas (Mcf 8,182 9,491 8,466 7,903 per day)
Natural gas 165 160 165 112 liquids (Bbls per day) Total (Boe per
2,549 2,515 2,594 2,125 day) Average realized prices Crude Oil ($
per 94.16 71.08 88.91 73.50 Bbl) Natural gas ($ 4.23 4.15 4.16 4.52
per Mcf) Natural gas 76.31 63.85 71.28 64.10 liquids ($ per Bbl)
Average realized 56.21 41.57 53.01 44.24 price ($ per Boe)
Netbacks((1)) ($ per Boe) Petroleum and 56.21 41.57 53.01 44.24
natural gas sales Royalties (9.62) (5.19) (8.89) (6.50) Production
and (16.31) (14.27) (15.16) (13.76) operating expenses Operating
30.28 22.11 28.96 23.98 netback Undeveloped land holdings Gross
acres 104,493 91,286 104,493 91,286 Net acres 79,530 61,775 79,530
61,775 Average working 76% 68% 76% 68% interest SECURITIES (000s)
Shares outstanding, end of period Class A shares 140,998 140,788
140,998 140,788 Class B shares 1,012 1,012 1,012 1,012 Weighted
average shares Basic ((3)) 140,825 140,788 140,806 127,114
Diluted((3)) 151,924 140,788 151,930 127,114 (1) Funds generated
from operations, Net debt and Netbacks as presented do not have any
standardized meaning prescribed by IFRS and therefore may not be
comparable with the calculation of similar measures for other
entities. Please refer to the Non-IFRS Measures section of the
MD&A for more details. (2) For the three and six month periods
ended June 30, 2010 and June 30, 2011, the Class B shares are
converted at the minimum Class A share price of $1.00 and added to
the Class A shares. Thus, each Class B share converted to 10 Class
A shares for the purpose of funds generated from operations per
share. (3) Included in diluted earnings per share is the effect of
stock options and convertible Class B shares as they were dilutive
for the three and six month periods ended June 30, 2011. For the
three and six month periods ended June 30, 2010 the effect of stock
options and convertible Class B shares were excluded from the
diluted earnings per share as they were anti-dilutive. (4) Total
net capital expenditures, including and acquisitions and
dispositions. OUTLOOK To date in 2011, Bellamont has successfully
broadened its opportunity inventory and now has established four
key core growth areas with a focus on light oil and liquids rich
gas at Grimshaw, Grande Prairie, Birch and Stoddart. The
Corporation's Montney Oil pool development at Grimshaw has been
very successful to date and is ready to be accelerated with success
in the delineation program and implementation of water flood.
Bellamont's prolific Montney I pool in Grande Prairie has been a
solid cash flow generator and should provide production, reserve
and cash flow growth for several years. Finally, the newly
acquired assets in British Columbia have cemented new core areas in
Birch and Stoddart, prospective for repeatable "resource type"
developments for Baldonnel light oil and liquids rich Montney
natural gas. Bellamont is currently producing approximately 2,500
Boe/d (47.0% oil and liquids) with an additional 300 boe/d (180
bbl/d oil) to be added in October from the two new horizontal wells
in Grimshaw and behind pipe volumes. During the course of 2011,
Bellamont reallocated capital to capture 47.5 net sections of
undeveloped land in the Birch, Stoddart and Grande Prairie
areas. To date, $8.4 million has been spent on building its
new core land positions. Bellamont's management believes
redirecting these expenditures has significantly deepened
Bellamont's prospect inventory to a larger potential resource base.
The Corporation has a deep drilling inventory consisting of over
200 drilling locations, only 19 (gross) of which are booked in the
2010 year end reserve report. Seventy five percent of the
Corporation's drilling inventory target light oil and are lower
risk and developmental in nature. The drilling inventory will
provide Bellamont with a solid platform for growth over the next
several years. The company plans to announce an updated capital
program and guidance later in the third quarter which will be based
on the results of the delineation program at Grimshaw and a
detailed review of the newly acquired lands. 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 and British Columbia. Bellamont
has a strong technically focused management team that internally
generates and develops high quality large resource based prospects.
Bellamont is an 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 140,997,699
Class A shares and 1,012,000 Class B shares outstanding. FORWARD
LOOKING STATEMENTS This press release may contain forward-looking
statements including expectations of future production, cash flow,
recycle ratios, netbacks 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. Discovered Petroleum Initially in Place ("DPIIP") - Is
defined in the Canadian Oil and Gas Evaluation Handbook ("COGEH")
as the quantity of hydrocarbons that are estimated to be in place
within a known accumulation. Original Gas in Place ("OGIP") is a
more commonly used industry term when referring to gas
accumulations. DPIIP is divided into recoverable and unrecoverable
portions, with the estimated future recoverable portion classified
as reserves and contingent resources. There is no certainty that it
will be economically viable or technically feasible to produce any
portion of this DPIIP except for those portions identified as
proved or probable reserves. 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. To view this news release in HTML
formatting, please use the following URL:
http://www.newswire.ca/en/releases/archive/August2011/25/c6125.html
p Steve Moran, President and Chief Executive Officer, (403)
802-1355; orbr/ Tavis Carlson, Vice President Finance and Chief
Financial Officer, (403) 802-0117br/ 1208, 250- 2supnd/sup Street
S.W. Calgary, Alberta T2P 0C1br/ Email: a
href="mailto:info@bellamont.com"info@bellamont.com/abr/ a
href="http://www.bellamont.com"www.bellamont.com/a /p
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