2013 production volumes estimated at the top end of annual guidance;
2014 production volumes forecast to range between 23,000 and 25,000 Boe/d;
Super-Section pad drilling successful and on plan for first production in March
DENVER, January 6, 2014 - Bonanza Creek Energy, Inc. (BCEI) today announced 2014 guidance for production volumes of between 23,000 and 25,000 Boe/d, a 44% to 56% increase over the top end of 2013 guidance of 16,000 Boe/d.
As previously announced, the Company`s capital budget for 2014 is estimated to range between $575 million and $625 million, of which approximately 90% is classified as development drilling and completion capital, while the remainder is allocated to Super-Section completion operations, infrastructure projects in the Wattenberg Field, exploration in North Park Basin, and other miscellaneous capital.
Michael R. Starzer, Bonanza Creek`s President and Chief Executive Officer, commented, "Bonanza Creek continues to deliver solid operating results and value for our shareholders as the Company develops its deep reserve inventory. I am pleased with the consistent results, driven by Bonanza Creek`s operating team, which capitalize on economic returns in the Wattenberg Field that are among the most attractive in the United States. Favorable results from testing multiple horizons and extended reach laterals in Wattenberg and 5-acre spacing in Arkansas have been incorporated into the 2014 capital program. In 2014, we forecast to achieve top quartile production growth while maintaining our strong balance sheet and incorporating key learnings from the Super-Section test and extended reach drilling program. Bonanza Creek is well positioned to execute the next phase of development demonstrating the Company`s high growth and value creation trajectory for our owners."
The planned 2014 capital budget assumes an average of four operated drilling rigs in the Wattenberg Field and two operated drilling rigs in the Mid-Continent region for the full year.
In the Rocky Mountain region, the Company expects to invest approximately $460 million to drill 121 gross (95.3 net) and complete 122 gross (100.0 net) operated wells, including the 15 well Super-Section drilled in 2013. The Company plans to spend an additional $25 million to participate in 19 gross (5.6 net) non-operated wells in the Wattenberg Field and another approximately $30 million on infrastructure projects, primarily to improve gas gathering systems and reduce line pressures, and two exploration wells in North Park Basin. The 2014 program will incorporate numerous downspacing and stacked laterals from multi-well pads and is predominantly focused on the Niobrara B Bench, however the Company is transitioning the Niobrara C Bench and Codell to full development mode by drilling nearly 30% of the program in those target zones. The Company`s new catalyst efforts will now include the Niobrara A Bench, increased delineation of the Codell formation moving east on the Company`s acreage position, and continued implementation of medium and extended reach laterals. Based on the favorable results associated with the extended reach drilling program to date, the Company plans to drill six medium reach (7,500 ft.) laterals and four extended reach (9,000 ft.) laterals in 2014, an increase from two extended reach laterals in 2013 and one in 2012.
In the Mid-Continent region, Bonanza Creek expects to invest approximately $80 million to drill and complete 34 gross (28.0 net) operated wells at 10-acre spacing and 10 gross (8.3 net) operated wells at 5-acre spacing in the Dorcheat-Macedonia field, four gross (3.8 net) wells in the McKamie Patton field and perform 103 gross (82.1 net) pay additions. The 5-acre pilot testing in the Dorcheat-Macedonia field has been favorable; therefore the Company plans to further test full-field applicability in 2014. Infrastructure projects and salt-water disposal wells account for an additional $4.5 million of planned capital.
Super-Section Update and Impact to First Quarter 2014 Production Volumes
During fourth quarter the Company finished its scheduled 2013 completion program with the tie-in to sales of 14 gross (12.3 net) horizontal wells in the Wattenberg Field and 10 gross (7.2 net) vertical wells in southern Arkansas. Meanwhile, the Company`s three operated drilling rigs in the Wattenberg Field began drilling the 15 well Super-Section from three pads in October and successfully concluded drilling operations in December. Completion operations for the Super-Section will begin in mid-January with first significant production from these 15 wells beginning in March. Following its 14 gross horizontal completions in fourth quarter, the Company does not anticipate new horizontal wells to be completed and connected to sales in the Wattenberg Field until March 2014. The Company forecasts that production volumes for first quarter 2014 will be in the range of 19,000 to 20,000 Boe/d and forecasts production will accelerate beginning in second quarter 2014 with well completions scheduled through the remainder of the year.
The Super-Section test will provide the Company with significant data to determine the optimal well configuration for horizontal laterals in the Niobrara and Codell to maximize return on investment. This test will incorporate 40-acre spacing in both the Niobrara B Bench and Niobrara C Bench and 80-acre spacing in the Codell formation. Key learnings from the Super-Section test will be applicable in areas utilizing either a standard length or extended reach horizontal development program.
2014 Financial and Operating Guidance
The Company is issuing the following guidance for 2014:
|Average production (Boe/d)||23,000 - 25,000|
|Operating costs and expenses (per Boe):|
|Lease operating||$||8.00 - 8.60|
|Cash general and administrative||$||6.25 - 7.00|
|Production taxes (% of pre-hedge realizations):||%||6.5 - 7.0|
|Capital expenditures (in millions):||$||575 - 625|
Since October 2013 the DJ Basin has experienced a widening in crude oil price differentials relative to the West Texas Intermediate (WTI) benchmark. Flooding impacts and seasonal refinery maintenance have contributed to the change in price realizations. In the near term, the Company advises that DJ Basin differentials are likely to be wider than historical norms.
The capital budget is subject to a number of factors, including economic conditions and commodity prices, and the Company has the flexibility to reduce or augment the budget as appropriate.
Hedging Update (as of January 6, 2014):
|Type||Avg. Volume (per day)||Avg. Floor||Avg. Ceiling||Short Floor Price||Fixed Price|
January 2014 Conference Participation
Members of management will present at the Goldman Sachs Energy Conference in Miami, Florida on January 8, the BMO Unconventional Resource Conference in New York on January 14 and at the Credit Suisse Energy Summit in Vail, Colorado on February 12. The presentations used for these events may be accessed from the Bonanza Creek website.
About Bonanza Creek Energy, Inc.
Bonanza Creek Energy, Inc. is an independent energy company engaged in oil and natural gas exploration and production in the United States. The Company`s assets and operations are concentrated primarily in the Wattenberg Field in Colorado and in the oily Cotton Valley trend in southern Arkansas. The Company`s common shares are listed for trading on the New York Stock Exchange under the ticker symbol BCEI. For more information about the company, please visit www.bonanzacrk.com.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of management regarding the Company`s expected capital budget, capital expenditures, drilling program, drilling locations, drilling results, guidance, production, production rates, operating costs and expenses, development program, testing and recompletion activities and market perception of the Company. These statements are based on certain assumptions made by the Company based on management`s experience, perception of historical trends and technical analyses, current conditions, anticipated future developments and other factors believed to be appropriate and reasonable by management. When used in this press release, the words "will," "potential," "believe," "estimate," "intend," "expect," "may," "should," "anticipate," "could," "plan," "predict," "project," "forecast," "profile," "model" or their negatives, other similar expressions or the statements that include those words, are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Further information on such assumptions, risks and uncertainties is available in the Company`s SEC filings. We refer you to the discussion of risk factors in Part I, Item 1A-"Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities Exchange Commission on March 15, 2013. The Company`s SEC filings are available on the Company`s website at www.bonanzacrk.com and on the SEC`s website at www.sec.gov. All of the forward-looking statements made in this press release are qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, including guidance, and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
For further information, please contact:
Mr. Ryan Zorn
Vice President - Finance
Mr. James Masters
Investor Relations Manager
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The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Bonanza Creek Energy, Inc. via GlobeNewswire