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Bellatrix Cuts 2015 Capex, But Will Finish Gas Plant Work

Calgary-based Bellatrix Exploration Ltd. cut its capital expenditures (capex) budget for 2015 by 25% and said it will focus on completing infrastructure projects and drilling in liquids-rich shale plays in Canada, citing the collapse of world oil prices.

The company said it had achieved its exit rate production guidance for 2014.

On Monday, Bellatrix said it was reducing its capex budget for 2015 to $300 million, down from $400 million. The company said it would direct its focus to two areas:

  • Completion of the first phase of construction of the 100 MMcf/d O'Chiese Nees-Ohpawganu'ck deep-cut gas plant, located in the Alder Flats area of west central Alberta; and
  • Drilling in the Spirit River (Notikewin/Falher) area, where liquids-rich natural gas wells have a high rate of return and production can be processed through the new gas plant.

Bellatrix said its drilling program targeting the Cardium formation would be reduced to focus on expiring leases and commitment wells until world oil prices recover.

The O'Chiese Nees-Ohpawganu'ck gas plant remains on schedule and on budget for a start-up in July, the company said, adding that the facility’s completion will allow it to boost its net production to about 65,000 boe/d.

Bellatrix said about 35% of the capex budget would go toward completing the first phase of O'Chiese Nees-Ohpawganu'ck, while 4% of the budget would be spent on land acquisition and seismic testing. The remaining 61% of the budget would be devoted to drilling costs.

"The $100 million, or 25% reduction, in the 2015 capital budget from our previously announced expectation reflects a reduced drilling budget and a deferral of the timing of construction [for the second phase of the gas plant],” Bellatrix said. “Based on [our] forecast capacity requirements, the on-stream date of [the second phase] can be deferred until 4Q2016 -- from the original on-stream date of 2Q2016 -- with no change in capital cost, which will then allow the company access to approximately 80,000 boe/d of processing capacity.”

Bellatrix also said it was reducing its average production guidance range for 2015 to 47,000-48,000 boe/d (70% natural gas, 30% natural gas liquids). The company recently completed and placed into service the first segment of its Twin Rivers pipeline, adding additional capacity. A “booster compressor” on the pipeline’s north lateral is on schedule to be in service on Dec. 22.

“These initiatives, combined with our Q4 drilling program, have enabled us to achieve our to 2014 exit rate production guidance of 47,000-49,000 boe/d,” Bellatrix said. Its exploration unit is focused on oil and gas reserves in the Canadian provinces of Alberta, British Columbia and Saskatchewan.

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