(BXE : TSX : $4.67)
Bellatrix has entered into a joint venture (JV) agreement with an unnamed South Korea-based company, to accelerate development of company’s extensive undeveloped Cardium land holdings in westcentral Alberta. Under the terms of the agreement, the JV partner will contribute 50%, or $150 million, to a $300-million JV to participate in an expected 83 Cardium well program.
Under the agreement, the JV partner will earn 33% of Bellatrix’s working interest in the Cardium well program until payout (being recovery of the JV Partner’s capital investment plus an 8% return on investment) on the total program, which is expected to occur prior to a maximum of seven years, reverting to a 20% working interest after payout. The effective date of the agreement is April 1, 2013 but with the ability of the JV Partner to elect to invest in the wells drilled between January 1 up to April 30, 2013.
Certain conditions precedent are expected to be satisfied or waived by April 22, 2013 which is expected to enable closing to occur on or before April 30, 2013. Bellatrix will be required to provide a guarantee of the return of the JV partner’s capital investment of up to $30 million if not recovered within seven years. As a result of the JV, Bellatrix’s net capital expenditure plan for 2013 is expected to increase from the previously announced $180 million level to between $230-240 million not including JV Partner capital. Based on the timing of proposed expenditures,
downtime from anticipated plant turnarounds, completion of anticipated infrastructure and normal production declines, execution of the increased 2013 capital expenditure plan is anticipated to provide average daily production of 24,000 to 25,000 boe/d.
The company is anticipating a 2013 exit rate of 30,000 to 31,000 boe/d. Bellatrix’s second long reach horizontal well (50% WI) drilled in Q4/12 has been placed on production at the following rates for IP30 rate of 944 boe/d (25% gas and 75% liquids).