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DELIVERING LONG TERM VALUE FOR SHAREHOLDERS
CORPORATE PRESENTATION
TSX: BXE
November 3, 2014
NYSE: BXE
ADVISORIES
FORWARD LOOKING STATEMENTS: In the interest of providing Bellatrix’s shareholders and potential investors with information regarding Bellatrix, including management’s assessment of Bellatrix’s future plans and operations, certain statements made by the presenter and contained in these presentation
materials (collectively, this “presentation”) are forward looking statements or information within the meaning of applicable securities legislation, collectively referred to herein as “forward looking statements”. The forward-looking statements contained in this presentation speak only as of the date of this presentation
and are expressly qualified by this cautionary statement. orward looking statements in this presentation include, but are not limited to: management's intended strategy including its intent to be a drill bit driven growth oriented company, to focus on profit, to be a low cost finder and operator, to target accretive
acquisitions, to maintain a strong balance sheet, to employ modern technology coupled with innovation, the intent to continue peer leading per share growth, the intent to maintain industry leading operations metrics, the intent to maintain and grow leading land position in the Deep Basin, the intent to ensure
corporate sustainability by funding capital spending through funds flow from operations, the intent to target net debt to funds flow of approximately <1.5x, the intent to pursue a proactive commodity price risk management program to mitigate downside risk while providing upside exposure, the intent to term out
revolver debt to increase liquidity and financial flexibility, the intent to continue to explore accretive joint venture opportunities to maximize value of Bellatrix’s portfolio, the intent to consider other merger and acquisition opportunities and tuck-in acquisitions, the intent to review opportunities to optimally reinvest
capital to support 15% annual production per share growth, the intent to continue reviewing strategy to ensure Bellatrix is positioned to maximize long term value, the belief that current processing capacity is expected to be greatly enhanced by the construction of owned and operated gas infrastructure, the belief
that the new gas plant will complement Bellatrix’s attractive portfolio of existing plant capacity and the intent to target 15% annual production per share growth; the timing of completion, costs of commissioning and capacities of the new gas plant being built; the expected details and amounts of Bellatrix's 2014
capital budget; the expected economics and resultant improvements in revenue from the new gas plant; the expectation that the Cardium will remain a key focus area for Bellatrix; the belief that the Notikewin/Falher provides significant upside for Bellatrix; the intent that the joint ventures will accelerate growth and
development of Bellatrix's core Cardium and Notikewin/Falher assets; the belief that the Duvernay provides significant option value for Bellatrix; the plans to drill one horizontal well in the lower belly river channel in 2015; management's assessment of future plans and operations; drilling plans and the timing thereof;
commodity price risk management strategies; estimated average and exit production rates and the oil and liquids percentage of such production; estimates of commodity prices and exchange rates; drilling inventory and costs and time to develop; and expected 2014 operating costs, cash from operations, cash per
share and exit debt levels. Estimated 2014 cash from operations, cash per share and 2014 year end debt levels may constitute financial outlooks under applicable securities laws and were approved by management on October 14, 2014. The information which may be considered financial outlooks have been
included herein to provide readers with an understanding of the anticipated funds available to Bellatrix to fund its operations and readers are cautioned that the information may not be appropriate for other purposes. Forward-looking statements necessarily involve risks, including, without limitation, risks associated
with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect
assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, actual results from wells to be drilled may not be similar to the results from previous wells drilled or the expected type curves, and delays resulting from or inability to obtain required regulatory approvals and ability to
access sufficient capital from internal and external sources. Events or circumstances may cause actual results to differ materially from those predicted, as a result of the risk factors set out and other known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Bellatrix. In
addition, forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect and which have been used to develop such statements and information in order to provide shareholders
with a more complete perspective on Bellatrix's future operations. Such information may prove to be incorrect and readers are cautioned that the information may not be appropriate for other purposes. Although Bellatrix believes that the expectations reflected in such forward-looking statements or information are
reasonable, undue reliance should not be placed on forward-looking statements because Bellatrix can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: the
impact of increasing competition; the general stability of the economic and political environment in which Bellatrix operates; the timely receipt of any required regulatory approvals; the ability of Bellatrix to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of
the operator of the projects which Bellatrix has an interest in to operate the field in a safe, efficient and effective manner; the ability of Bellatrix to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition,
development of exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of Bellatrix to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental
matters in the jurisdictions in which Bellatrix operates; and the ability of Bellatrix to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. As a consequence, actual results may differ materially from
those anticipated in the forward-looking statements. Additional information on these and other factors that could affect Bellatrix's operations and financial results are included in reports on file with Canadian securities regulatory authorities and the U.S. Securities Exchange Commission ("SEC") and may be
accessed through the SEDAR website (www.sedar.com), through the SEC website (www.sec.gov), and at Bellatrix's website (www.bellatrixexploration.com). Furthermore, the forward-looking statements contained herein are made as at the date hereof and Bellatrix does not undertake any obligation to update
publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
NON-GAAP MEASURES: This presentation contains the term "cash from operations" which should not be considered an alternative to, or more meaningful than "cash flow from operating activities" as determined in accordance with Canadian GAAP as an indicator of Bellatrix's performance. Therefore reference to
cash from operations or cash from operations per share may not be comparable with the calculation of similar measures for other entities. Management uses cash from operations to analyze operating performance and leverage and considers cash from operations to be a key measure as it demonstrates Bellatrix's
ability to generate the cash necessary to fund future capital investments and to repay debt. This presentation also used the term Adjusted EBITDA, a non-GAAP measure calculated as net profit (loss) before financing expense, income tax expense and depletion and depreciation. Adjusted EBITDA also excludes
impairment losses (reversals) on property plant and equipment, unrealized losses (gains) on commodity contracts, gains on corporate and property acquisitions, losses (gains) on property dispositions and swaps, share-based compensation, certain transaction costs including reorganization costs and losses on the
redemption/repurchase of debentures. By eliminating these items, management believes the result is a useful measure across time in evaluating Bellatrix’s fundamental core operating performance. Management also uses Adjusted EBITDA to manage our business, including in preparing our annual operating
budget and financial projections. Management believes that Adjusted EBITDA is also useful to investors since similar measures are frequently used by securities analysts, rating agencies, investors and other interested parties in their evaluation of companies in similar industries. As indicated, Adjusted EBITDA
does not include interest expense on borrowed money, depreciation, depletion and amortization expense on capital assets or the payment of income taxes, which are all necessary elements of our operations. Adjusted EBITDA does not account for these and other expenses and therefore its utility as a measure of
our operating performance has material limitations. As a result of these limitations, management does not view Adjusted EBITDA in isolation and also uses other measurements, such as net profit (loss) and revenues, to measure operating performance. The reconciliation between cash flow from operating activities
and funds flow from operations (Bellatrix calculates funds flow from operations in the same manner as cash from operations) can be found in Bellatrix's Management's Discussion and Analysis. Cash from operations per share is calculated using the weighted average number of shares for the period.
FD&A COSTS: This presentation includes calculations of finding, development and acquisition ("FD&A") costs for the year ended December 31, 2013. National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101") requires that written disclosure of finding and development costs to be
calculated in accordance with Section 5.15 of NI 51-101 which does not include the reserves additions associated with acquisitions or the costs of acquisitions in the calculation. The calculations of FD&A in this presentation include the reserves additions associated with acquisitions and the costs of acquisitions as
Bellatrix believes that including the effect of acquisitions provides useful information to investors. FD&A costs for the year ended December 31, 2013 and 2012 are $9.67/boe and $6.95/ proved plus probable boe respectively and the average FD&A for the last three completed years is $9.01/ proved plus probable
boe. The finding and developments costs calculated in accordance with Section 5.15 of NI 51-101 for the years ended December 31, 2013 and 2012 are $10.67/proved boe ($9.65/proved plus probable boe) and $11.73/proved boe ($7.31/proved plus probable boe), respectively, and the average finding and
development costs for the last three completed years is $11.47/proved boe ($8.86/proved plus probable boe). The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total
finding and development costs related to reserve additions for that year.
BOE PRESENTATION The term barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 mcf/bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value. All boe conversions
in this presentation are derived from converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil.
INITIAL PRODUCTION RATES: Initial production rates disclosed herein may not be indicative of long-term performance or ultimate recovery. Such rates are not determinative of the future production rates of such wells and do not reflect how the production from such wells will decline thereafter. While encouraging,
readers are cautioned not to place reliance on such rates in calculating the aggregate production for Bellatrix. A pressure transient analysis or well‐test interpretation has not been carried out in respect of all wells. Accordingly, Bellatrix cautions that the test results should be considered to be preliminary.
ESTIMATED ULTIMATE RECOVERY (EUR): In this presentation, estimated ultimate recovery represents the estimated ultimate recovery associated with the type curves presented which are based on the assumptions used by Sproule Associates Limited to estimate Bellatrix's proved plus probable reserves per
well as evaluated effective December 31, 2013 based on forecast prices and costs. There is no certainty that such Bellatrix will ultimately recover such volumes from the wells it drills.
ANALOGOUS INFORMATION: Certain information in this presentation may constitute "analogous information" as defined in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”), including, but not limited to, the reservoir data, production rates of industry wells, cumulative
production information, and economics information relating to the areas in which Bellatrix has an interest. Such information has been obtained from government sources, regulatory agencies or other industry participants. Management of Bellatrix believes the information is relevant as it helps to define the reservoir
characteristics and the reserves and production potential in which Bellatrix holds an interest. Such information has not been prepared in accordance with NI 51-101. Bellatrix is also unable to confirm that the analogous information was prepared by a qualified reserves evaluator or auditor. Such information is not an
estimate of the resources attributable to lands held or to be held by Bellatrix and there is no certainty that the reservoir data, resource estimates, production and decline rates and economics information for the lands held by Bellatrix will be similar to the information presented herein. The reader is cautioned that the
data relied upon by Bellatrix may be in error and/or may prove not be analogous to the lands be held by Bellatrix.
CURRENCY: All dollar amounts in this presentation are Canadian dollars unless otherwise identified.
DRILLING LOCATIONS: This presentation discloses drilling locations in three categories: (i) proved locations; (ii) probable locations; and (iii) unbooked locations. Proved locations and probable locations are sometimes collectively referred to as “booked locations”, are derived from Bellatrix’s most recent
independent reserves evaluation and account for drilling locations that have associated proved + probable reserves or probable-only reserves, as applicable. Unbooked locations are internal estimates based on Bellatrix’s acreage outside of evaluated areas and an assumption as to the number of wells that can be
drilled per section based on industry practice and internal review. Unbooked locations have not been risked, and do not have attributed reserves or resources.
RESERVES INFORMATION: Unless indicated otherwise, reserve estimates and related future net revenue and other reserves information is derived from Bellatrix’s independent reserve report prepared by Sproule Associates Limited as at December 31, 2013 using forecast prices and costs. Land acreage
information is as available at June 30, 2014.
FINANCIAL INFORMATION: Unless otherwise stated, financial information is based upon Bellatrix’s 2014 second quarter report for the three and six months ended June 30, 2014. Last twelve month (“LTM”) financial information is at June 30, 2014 and reflects only the activity of Angle Energy Ltd. post-acquisition
on December 11, 2013.
2
Bellatrix Corporate Presentation
BELLATRIX STRATEGY
Drill bit driven growth
oriented company
Employ modern
technology coupled
with innovation
Focus on profit
Bellatrix
Low cost finder and
operator
Strong balance sheet
Target accretive
acquisitions
3
Bellatrix Corporate Presentation
BELLATRIX AT A GLANCE
Overview and Footprint
o Bellatrix (TSX / NYSE:BXE) is a growth-oriented
oil and gas company with a large, concentrated
land base in West Central Alberta
o Asset portfolio provides exposure to highly
economic resource plays:
• Cardium: potential to add substantial
reserves, production and long term
economic value for our shareholders
•
Notikewin/Falher: boasts abundant, liquidsrich natural gas with compelling economics
•
Duvernay: upside exposure to liquids-rich
shale gas play
•
Emerging Plays: Rock Creek, Basal Belly
River, Lower Belly River, Second White Specs,
Lower Mannville
Key Stats
o Market cap: ~$1.4 billion
(at Sept 30, 2014)
o 1P reserves1: 124 MMboe
− 36% oil + liquids
− BT NPV10: $1,433 MM
− 240 booked locations1
− 44% proved developed
o 2P reserves1: 212 MMboe
− 37% oil + liquids
− BT NPV10: $2,090 MM
− 373 booked locations1
− 26% proved developed
o Undeveloped Land: 395,237 net acres
o 2014 Production guidance
− Average: 38,500 boe/d
− Exit: 45,000 – 47,000 boe/d
− 33% oil + liquids
o ~$1.4 billion in tax pools
o Capital structure
− Basic Common shares: 191 mm
− Fully Diluted shares: 200 mm
− D&O ownership: ~9% (fully diluted)
1
4
Per Sproule Associates Limited reserves report as at December 31, 2013
Bellatrix Corporate Presentation
BELLATRIX STRATEGIC PRIORITIES
Operational
Excellence and
Portfolio Quality
o
o
o
Continue peer leading per share growth trajectory (reserves, production, cash flow, etc.)
Maintain industry leading operations metrics (FD&A, RLI, Recycle ratios, etc.)
Maintain and grow leading land position in the Deep Basin
Strong Flexible
Financial Position
o
o
o
o
Ensure corporate sustainability by funding capital spending through funds flow from operations
Target net debt to funds flow of approximately <1.5x
Proactive commodity price risk management program to mitigate downside risk while providing upside exposure
Potential to term out revolver debt to increase liquidity and financial flexibility
Optimize Capital
Structure and
Valuation
o
o
o
o
Continue to explore accretive JV opportunities to maximize value of Bellatrix’s portfolio
Consider other M&A opportunities and tuck-in acquisitions
Review opportunities to optimally reinvest capital to support sustained annual production per share growth
Continue reviewing strategy to ensure Bellatrix is positioned to maximize long term value
o
Current processing capacity to be greatly enhanced by the construction of owned and operated gas infrastructure
−
Phase I – 110 mmcf/d gas plant under construction to be commissioned by July 2015
−
Phase II – 110 mmcf/d gas plant to be commissioned by Q2/2016
New plant will complement Bellatrix’s attractive portfolio of existing plant capacity
Secure Firm Access
to Processing
Capacity
o
Exploit Highly
Attractive Portfolio
of Development
Opportunities
1
5
o
Provide annual production per share growth from:
−
1,8481 low risk development locations in highly economic plays (Cardium, Notikewin/Falher)
−
Extensive undeveloped land base of 395,237 net acres
Includes 373 proved plus probable locations from the Sproule reserves report effective December 31, 2013 and 1,476 unbooked locations
Bellatrix Corporate Presentation
PROVEN TRACK RECORD OF PRODUCTION
AND RESERVES GROWTH
Historical Production (boe/d)
220
200
Natural Gas
180
140
2,877
2,550
5,549
5,969
7,414
2009
2010
2011
4,540
10,969
24,198
60
40
15,340
20
0
2012
2013
YTD 2014
67.4
42.4
25.8
16.5
28%
29%
2009
CAGR – Compounded Annual Growth Rate
6
Bellatrix Corporate Presentation
41.8 37%
24.8 40%
38%
37%
2010
2011
33%
36%
55.2
36%
Proved
8,519
80
5,717
Proved
0
8,426
100
6,489
P+P
10,000
103.7
Proved
11,954
120
Proved
16,686
124.1
P+P
21,829
20,000
37%
160
2012
P+P
12,222
30,000
211.5
Oil and Liquids
Proved
36,420
P+P
Oil and Liquids
P+P
Natural Gas
40,000
Historical Reserves (MMboe)
2013
LOW COST OPERATOR
Operating Expenses / boe (1)
$18.00
Recycle Ratio (2)
Median
$15.00
$12.00
$9.00
7.0x
P+P
6.0x
Proved
5.0x
P+P Median
4.0x
Proved Median
3.0x
$6.00
2.0x
$3.00
1.0x
$0.00
0.0x
BXE
BXE
G&A / boe (1)
$4.00
FD&A Costs / boe (3)
Median
$30.00
P+P
Proved
P+P Median
Proved Median
$25.00
$3.00
$20.00
$2.00
$15.00
$10.00
$1.00
$5.00
$0.00
$0.00
n.a.
BXE
Source: Public disclosure or calculated where unavailable
Note: Peer set includes select Canadian listed companies with gas weighting >50% and with an enterprise value between ~$1bn and ~$10bn
(1) As at June 30, 2014 (Q2 average)
(2) Full year 2013 Field Netback (excl. hedging) / 2013 FD&A (excl. change in FDC).
(3) Full year 2013 (incl. change in FDC)
7
Bellatrix Corporate Presentation
BXE
PEER LEADING HISTORICAL RESULTS
Peer Leading Results...
… Have Driven Strong Share Price Performance4
Cash Flow per share Growth (2010-2013)1, 2
130%
74%
100%
0%
62%
S&P/TSX Composite Index
15%
$400
(10%) (21%)
(30%) (42%)
(52%)
(50%)
(100%)
Production per share Growth
150%
124%
103%
50%
0%
(67%)
(2010-2013)2
Peers
75%
71%
44%
BXE
100%
31%
25%
(6%)
(50%)
(14%) (21%)
(55%)
(100%)
277%
0%
103%
BXE
100%
2,129%
300%
200%
$200
Peers
390%
400%
$300
$100
P+P Reserves per share Growth (2010-2013)3
500%
Bellatrix Exploration Ltd.
S&P/TSX Energy Index
50%
BXE
50%
$500
Peers
Value of a $100 Investment
150%
93%
81%
29%
25%
18%
$0
Dec-09
1%
Dec-10
Dec-11
Dec-12
Dec-13
(2%)
(100%)
Note: Peer group includes companies with gas weighting >50% and enterprise value between ~$1bn and ~$10bn, excluding those not in existence for the entire 2010-2013 period
1 Cash flow per share is a Non-GAAP Measure. See “Non-GAAP Measures” in the Advisories section of this presentation
2 Per share growth from 2010 to 2013 (based on weighted average fully diluted shares outstanding)
3 Per share growth from January 1, 2010 to December 31, 2013 (based on basic shares outstanding)
4 Total returns shown to October 8, 2014
8
Bellatrix Corporate Presentation
BELLATRIX COMPARES FAVORABLY TO ITS PEERS
Total Debt / LTM Un-Adjusted EBITDA
5.0x
4.9x
Median
4.0x
3.0x
2.5x
2.2x
2.0x
1.7x
1.6x
1.6x
1.5x
1.5x
1.2x
1.1x
1.0x
1.1x
0.5x
0.0x
0.0x
BXE
Total Debt / Shareholders’ Equity
Median
1.2x
1.0x
0.8x
0.9x
0.9x
0.7x
0.6x
0.4x
0.6x
0.5x
0.4x
0.4x
0.3x
0.2x
0.2x
0.0x
BXE
Source: Public disclosure
Note: Peer set includes select Canadian listed companies with gas weighting >50% and with an enterprise value between ~$1bn and ~$10bn.
Total debt defined as: long term debt plus other long-term interest bearing items
9
Bellatrix Corporate Presentation
0.2x
0.2x
0.1x
0.0x
PROVEN TRACK RECORD OF FINANCIAL
GROWTH
Historical Financial Metrics
$750
Revenue ($mm)
$631.8
$500
$250
$109.0
$117.7
2009
2010
$291.9
$202.3
$219.3
2011
2012
2013
YTD 2014
$8.73
$8.74
$7.96
2012
2013
YTD 2014
$0
$20
$15
Operating Costs ($/boe)
$14.64
(2)
-11% CAGR (1)
$12.21
$11.53
$10
$5
$0
2009
$400
2010
2011
Adjusted EBITDA ($mm)
$314.5
$300
$200
$100
$48.7
$58.8
2009
2010
$99.8
$119.3
$154.6
2011
2012
2013
$0
Represents compound annual growth rate (“CAGR”)
June 30, 2014 annualized
3 Adjusted EBITDA is a Non-GAAP Measure. See “Non-GAAP Measures” in the Advisories section of this presentation
1
2
10 Bellatrix Corporate Presentation
YTD 2014
(2)
GROWING BELLATRIX
2014 ESTIMATED NET BXE CAPITAL BUDGET (+/- $530 MM)
Facilities
37%
5%
3%
Drilling and Completions
55%
(+/- $770 Million Gross including JV Partner Capital)
11 Bellatrix Corporate Presentation
Land and Seismic
Tuck-in Acquisitions
INFRASTRUCTURE OVERVIEW
Existing Infrastructure Access:
o Infrastructure gives Bellatrix control of
Strategic Infrastructure Ownership
production and growth
o Ferrier Infrastructure assets include:
• 10 plants with capacity >1,250 mmcf/d
•
Working interest or operatorship in 2
major gas processing facilities, 3 major
compressor stations (constructing 4th),
and 2 oil batteries (constructing 3rd)
Planned Bellatrix Gas Plants:
o Phase I - 110 mmcf/d capacity (in service July
2015 – Cost +/- $90 MM)
Compressor Station
Battery
Planned pipeline
o Phase II - 110 mmcf/d capacity (in service Q2/
Pipeline
Working Interest Facility
Third party Facility
o C3+ Recovery 99%
Planned BXE Gas Plant
2016 – Cost +/- $97 MM)
o C4+ Recovery 100%
Strategic advantage from owned infrastructure – lowered costs and guaranteed access
12 Bellatrix Corporate Presentation
INFRASTRUCTURE ECONOMICS SUMMARY
Third Party Facilities (1)
Price
Bellatrix Facilities (1)
Combined Facilities (2)
Yield
Sales
Revenue
$000s
Bbl/MMcf
Yield
Sales
Revenue
$000s
Bbl/MMcf
Yield
Sales
Revenue
Bbl/MMcf
$000s
Dry Gas
$4.50/Mcf
-
232 MMcf/d (3)
$1,047
-
221 MMcf/d (3)
$992.3
-
227 MMcf/d (3)
$1,020
Ethane
$12.00/bbl
4
980 bbl/d
$11.8
22
5,390 bbl/d
$64.7
13
3,185 bbl/d
$38.2
Propane
$35.00/bbl
10
2,450 bbl/d
$85.8
28
6,860 bbl/d
$240.1
18
4,410 bbl/d
$154.4
Butane
$65.00/bbl
6
1,470 bbl/d
$95.6
9
2,205 bbl/d
$143.3
8
1,960 bbl/d
$127.4
Condensate
$100.00/bbl
25
6,125 bbl/d
$612.5
28
6,860 bbl/d
$686.0
27
6,615 bbl/d
$661.5
Revenue
Total
$1,853
Total
$2,126
Total
$2,001
per Mcf
$7.56
per Mcf
$8.68
per Mcf
$8.17
per Mcf
($0.56)
per Mcf
($0.20)
per Mcf
($0.38)
Op Costs
Operating Cost Profile
Current
$7.75/boe
Gas Plant I - 2015
$7.05/boe
Gas Plant II - 2016
$6.10/boe
BXE-owned facilities result in a 18% revenue increase and 64% decrease in op. costs
Based on 245 MMcf/d gas going into facility
Combined facilities assumes 50% of Bellatrix gas processed through existing third party facilities, and 50% processed through the Bellatrix deep cut facility
3 ~10% shrinkage on 245 MMcf/d through BXE facility, 5% shrinkage through third party facility, and 7.5% shrinkage through third party and BXE facility
1
2
13 Bellatrix Corporate Presentation
Focused Asset Base
14 Bellatrix Corporate Presentation
OPERATING AREAS (WEST CENTRAL AB)
Ferrier
Production (boe/d):
Land1 (net acres):
P+P Locations:
Unbooked locations:
Proved Reserves (mboe):
P+P Reserves (mboe):
Proved BT NPV10 ($MM):
P+P BT NPV10 ($MM):
West Central Alberta
27,543
38,062
172
641
76,027
125,206
$784
$1,168
Willesden Green
Production (boe/d):
Land1 (net acres):
P+P Locations:
Unbooked locations:
Proved Reserves (mboe):
P+P Reserves (mboe):
Proved BT NPV10 ($MM):
P+P BT NPV10 ($MM):
2,084
4,692
21
168
4,690
7,548
$54
$76
1
1,847
6,742
38
182
8,036
11,787
$148
$185
Net undeveloped acreage
15 Bellatrix Corporate Presentation
Production (boe/d):
Land1 (net acres):
P+P Locations:
Unbooked locations:
Proved Reserves (mboe):
P+P Reserves (mboe):
Proved BT NPV10 ($MM):
P+P BT NPV10 ($MM):
4,138
36,088
35
19
11,264
19,907
$142
$210
Harmattan
Alberta
Greater Pembina
Production (boe/d):
Land1 (net acres):
P+P Locations:
Unbooked locations:
Proved Reserves (mboe):
P+P Reserves (mboe):
Proved BT NPV10 ($MM):
P+P BT NPV10 ($MM):
Strachan
Production (boe/d):
Land1 (net acres):
P+P Locations:
Unbooked locations:
Proved Reserves (mboe):
P+P Reserves (mboe):
Proved BT NPV10 ($MM):
P+P BT NPV10 ($MM):
Other
Edmonton
WCA
Calgary
Production (boe/d):
Land1 (net acres):
P+P Locations:
Unbooked locations:
Proved Reserves (mboe):
P+P Reserves (mboe):
Proved BT NPV10 ($MM):
P+P BT NPV10 ($MM):
4,698
69,479
98
260
21,280
42,604
$260
$386
1,108
178,265
8
210
2,814
4,431
$46
$65
INVENTORY SUMMARY
Acreage
Drilling locations1
Net dev.
sections
Net undev.
sections
Total
Proved
locations
Probable
locations
Unbooked
locations
Total locations
Ferrier
46
59
105
119
53
643
815
Willesden Green
26
7
33
15
6
168
189
Greater Pembina
50
11
61
25
7
176
208
Strachan
23
56
79
22
13
19
54
Harmattan
53
109
162
52
46
260
358
Other
250
375
625
6
8
210
224
Total
448
617
1,065
139
133
1,476
1,848
Area
1
Numbers may not add due to rounding
16 Bellatrix Corporate Presentation
CARDIUM LIGHT OIL RESOURCE PLAY
o BXE Cardium Sections
— 453 Gross
— 338 Net
o BXE Drilling Inventory
— 163 proved
— 76 probable
— 524 unbooked
o Planned wells for 2014
— 88 Gross
— 51.67 Net
o Lease Operate Expense < $8.00/boe
Cardium Resource Play Summary
o Largest accumulation of light oil in the WCSB
o Approximately 20,000 square miles
o Approximately 1.8 Billion bbls produced to date
o Currently producing 135,000 bbl/d & 1.10 bcf/d
Cardium Marine Sand Distribution
Cardium Oil and Gas Fields
BXE land
Edson
Pembina
Ferrier
Alberta
Strachan
Edmonton
WCA
Calgary
Harmattan
Cardium remains a key focus area for Bellatrix
17 Bellatrix Corporate Presentation
CARDIUM INDUSTRY LAND SUMMARY
Net Cardium Sections
Source: As publically available from Company disclosure, geoSCOUT and industry research
Note: Land positions are approximates based on company disclosure and are not adjusted for prospectivity; data as at May 15, 2014
18 Bellatrix Corporate Presentation
CARDIUM TYPE CURVES
EUR
341 Mboe / 64% oil + liq
IP30
582 boe/d
Capex
$3.75 MM
IRR
Average Production (boe/d)
Cardium Type Curves1
Ferrier / Strachan High Gas/Oil Ratio
(GOR) Type Curve1
142%
BT NPV10
$6.1 MM
Payout
0.9 years
Ferrier Gas Type Curve1
EUR
511 Mboe / 23% oil + liq
700
600
500
400
300
200
IP30
824 boe/d
100
$3.75 MM
0
100%
BT NPV10
$4.0 MM
Payout
0.9 years
Pricing assumption
2014
2015
2016
2017
LT
1
0
1
2
3
4
5
6
Producing Years
Ferrier / Strachan High GOR
Wellhead
(C$/mcf)
$3.86
$3.85
$3.86
$4.79
$5.56
8
9
10
Ferrier Gas
300%
200%
100%
0%
Gas: Type Curve $3.00/mmBTU
Oil Type Curve: $60/bbl
Based on economics used in Sproule Associates Limited reserves report as at December 31, 2013
19 Bellatrix Corporate Presentation
7
IRR vs. Commodity price
IRR (%)
Wellhead
(C$/bbl)
$90.00
$86.78
$87.22
$99.32
$102.05
Ferrier Gas
800
Capex
IRR
Ferrier / Strachan High GOR
900
Gas: Type Curve $4.50/mmBTU
Oil Type Curve: $90/bbl
Gas: Type Curve $6.00/mmBTU
Oil Type Curve: $120/bbl
NOTIKEWIN / FALHER LIQUIDS RICH GAS
o BXE Land Sections
— 265 Gross1
— 147 Net1
o BXE Drilling Inventory
— 39 proved
— 17 probable
— 331 unbooked
o Planned wells for 2014
— 45 Gross
— 21.49 Net
o Regional Stacked Mannville Channels deposited in
broad valleys
o 95 BXE and industry Notikewin/Falher gas wells
average IP 9.7 MMcfe/d
o 2 mile Hz produced an estimated 5.0 Bcf gas with 166
mbbl liquids in first year
o 14 out of 15 best gas wells in Spirit River zone in 2013
Notikewin/Falher provides significant upside for Bellatrix
1
Greater Pembina including Angle Strachan but excluding Angle Harmattan & Davey
20 Bellatrix Corporate Presentation
NOTIKEWIN / FALHER TYPE CURVES
Notikewin / Falher Type Curves1
EUR
1,413 Mboe / 19% oil + liq.
IP30
2,234 boe/d
Capex
2,500
Average Production (boe/d)
7.5 Bcf Type Curve1
$4.3 MM
IRR
>500%
BT NPV10
$15.2 MM
Payout
0.4 years
5 Bcf Type Curve1
EUR
929 Mboe / 19% oil + liq.
IP30
1,250 boe/d
Capex
1,500
1,000
500
0
228%
$9.3 MM
Payout
0.6 years
Pricing assumption
Wellhead (C$/mcf)
$4.50
$4.49
$4.50
$5.43
$5.47
2014
2015
2016
2017
LT
1
2
0
1
2
4
5
Producing Years
6
7
8
7.5 Bcf Type Curve
5.0 Bcf Type Curve
2
>500%
500%
400%
300%
200%
100%
0%
Gas: $3.00/mmBTU
Based on economics used in Sproule Associates Limited reserves report as at December 31, 2013
IRR above 500% cannot be determined accurately and is presented by common convention as “>500%”
21 Bellatrix Corporate Presentation
3
IRR vs. Commodity price
IRR (%)
BT NPV10
5.0 Bcf Type Curve
2,000
$4.3 MM
IRR
7.5 Bcf Type Curve
Gas: $4.50/mmBTU
Gas: $6.00/mmBTU
9
NOTIKEWIN / FALHER GEOLOGY SUMMARY
o
Broad, thick, extensive sand rich valleys
o
Avg thickness 25-40m
o
Minimal risk in development of pools
o
2 to 3 stacked channels per section
o
2-6 wells per pad
o
3 wells per zone to fully develop a section
o
+/- 2400 m depth
o
Currently drilling 1 mile laterals: 3 megabores drilled
o
17 frac stages / well
o
34 fracs in a 2 mile megabore
o
Porosity 6-18%; permeability 1-3 mD
o
IP rates at 4.0 to 25.0 MMcf/d
o
Open and closed fracture systems evident in rock core
and to a lesser degree in rock cuttings
22 Bellatrix Corporate Presentation
JOINT VENTURE STRATEGY
o To accelerate the growth and development of its core Cardium and
Notikewin/Falher assets, Bellatrix has entered into a number of joint venture
partnerships
o These joint ventures have been structured to provide $673 million in
development cost funding
Summary of Joint Ventures
Grafton JV (GJV) – $305 MM
o
o
o
o
Effective Date: July 1,
2013 – June 21, 2016
o
Wells: 72 net wells
BXE / Partner
Contribution: $55 MM /
$250 MM
Daewoo/Devonian JV –
$200 MM
Troika JV (TJV) – $240 MM
Effective Date: January 1,
2013 – December 31,
2014
o
o
Wells: 63 gross wells
o
Ferrier
Ferrier, Brazeau
BXE / Partner
Contribution: $120 MM /
$120 MM
23 Bellatrix Corporate Presentation
o
o
o
o
Effective Date: July 1,
2013
CNOR JV - $500 MM
(Grafton managed co.)
O’Chiese Partnership
o
o
Wells: 70 gross wells
3 JVs with 5 year Terms
o
Dates of March 1, 2011,
December 1, 2011, and
January 1, 2013
Effective Date: September
29, 2014
o
Funds expected to be
spent from 2016-2018
o
BXE / Partner
Contribution: $250 MM /
$250 MM
o
Development plans/areas
to be determined by
management committee
BXE / Partner
Contribution: $100 MM /
$100 MM
o
Drill commitments of 3, 10
and 2 wells per year
Ferrier, Willesden Green
o
52 sections of total land
across partnership
COMPELLING INVESTMENT OPPORTUNITY
o
Highly experienced and knowledgeable management team with a long history and proven track
record of creating value
o
Peer-leading results and operating metrics driving peer-leading share price performance
o
Top-tier asset base with an inventory of drill-ready locations poised to deliver strong organic
growth
o
Prudent business management strategy focused on mitigating risks and growing per share
metrics
o
Near-term growth catalysts expected to drive future share price performance
24 Bellatrix Corporate Presentation
ANALYST COVERAGE
Analyst
Firm
Jeremy McCrea
AltaCorp Capital
Jim Byrne
BMO Capital Markets
Yassen Bogoev
Canaccord Genuity
Adam Gill
CIBC
Garett Ursu
Cormark Securities Inc.
Brian Kristjansen
Dundee Capital
Grant Daunheimer
GMP Securities
Chris Feltin
Macquarie Capital
Dan Payne
National Bank Financial
Jeff Grampp
Northland Capital Markets
Ken Lin
Paradigm Capital
Cameron Bean
Scotia Capital
Juan Jarrah
TD Securities Inc
Dan Grager
Peters & Co. Limited
25 Bellatrix Corporate Presentation
CORPORATE INFORMATION
BOARD OF DIRECTORS
W.C. (Mickey) Dunn
Chairman
Doug N. Baker, FCA
Murray L. Cobbe
John H. Cuthbertson, QC
Melvin M. Hawkrigg, BA, FCA, LLD (Hon.)
Robert A. Johnson, P.Geol.
Keith E. Macdonald, CA
Raymond G. Smith, P. Eng.
Murray B. Todd, B.Sc., P. Eng.
OFFICERS
Raymond G. Smith, P.Eng.
President & CEO
Edward J. Brown, C.A.
Executive Vice President, Finance & CFO
Brent A. Eshleman, P.Eng.
Executive Vice President & COO
Charles R. Kraus, Esq.
Vice President, General Counsel & Corporate
Secretary
Steve G. Toth, CFA
Vice President, Investor Relations
BANKERS
National Bank of Canada
Alberta Treasury Branches
HSBC Bank Canada
Canadian Imperial Bank of Commerce
The Bank of Nova Scotia
Bank of Montreal
The Toronto Dominion Bank
Union Bank, Canada Branch
Wells Fargo Bank N.A., Canadian Branch
Corporation Canada
EVALUATION ENGINEERS
Sproule Associates Limited
REGISTRAR & TRANSFER AGENT
Computershare Trust Company of Canada
LEGAL COUNSEL
Burnet, Duckworth & Palmer LLP
Keith S. Turnbull, B.Sc., CA
AUDITORS
KPMG LLP
EXCHANGE LISTING
The Toronto Stock Exchange - BXE
The New York Stock Exchange - BXE
26 Bellatrix Corporate Presentation
Emerging
Plays
27 Bellatrix Corporate Presentation
LOWER MANNVILLE: LIQUIDS-RICH GAS PLAY
o Drill locations
o
o
o
o
GR
Porosity
identified across
three play types
31 horizontal
Ellerslie wells
drilled by
Angle/BXE at
Harmattan to date
Drilling Inventory:
— 23 proved
— 53 probable
— 52 unbooked
Liquids-rich gas
plays
Liquids yields up to
205 bbl/MMcf
(sales) in the
Harmattan area
Schematic Log
28 Bellatrix Corporate Presentation
DUVERNAY UNCONVENTIONAL RESOURCE
o BXE Land Sections
— 130 Gross1
— 129 Net1
o BXE Drilling Inventory
— 415 unbooked
o +95 Duvernay wells licensed in Greater
o
o
o
o
Ferrier and Edson
18 wells currently on production
BXE 09-24 HZ highest recorded IP3 at 3.7
MMcf/d; 0.75 Bcf cumulative since brought
on production
Reported offset NGL yields of 70-150
Bbls/MMcf
Highly over-pressured at 15.8 kPa/m
Duvernay provides significant option value for Bellatrix
1
Excludes Davey. Davey is an additional 80 gross (80 net) sections
29 Bellatrix Corporate Presentation
SECOND WHITE SPECKS: TIGHT OIL RESOURCE
o
o
o
o
o
o
o
o
o
o
o
Laterally continuous fairway: >6000sq miles
Thick: 75-225m
Over-pressured: 9-14KPA/m
Thermally mature for oil: Tmax 435-455ºC
High Organic Content (TOC): 1.5-4wt%
Existing vertical production
15 industry HZ’s drilled
12 with published oil/condensate production
Gross: 308 sections net
Net: 247 sections net
On-going technical work
30 Bellatrix Corporate Presentation
BELLY RIVER: REGIONAL OIL & GAS PLAY
o Significant oil
production in the
Basal Belly River
from extensive
marine shoreface
deposits
o Gas & oil production
from lower to upper
Belly River fluvial
channel deposits
31 Bellatrix Corporate Presentation
LOWER BELLY RIVER CHANNEL PLAY: FERRIER
o Multiple, stacked channel trends
o Multi-well horizontal program
needed to fully exploit the channel
trends
o 1 horizontal planned for 2015
o 34 vertical Belly River gas/oil wells
32 Bellatrix Corporate Presentation
Vertical Belly River Producer
BASAL BELLY RIVER: NORBUCK
o Horizontal development of BXE Basal
BLRV unit
o Laterally extensive tight shoreface
deposits
o 89.9% WI across unit
o 5 horizontal well inventory
Pembina Norbuck Basal Belly River Unit
33 Bellatrix Corporate Presentation
ROCK CREEK: WILLESDEN GREEN
o Laterally extensive tight marine
o
o
o
o
sandstone
10 horizontal well inventory
33 BXE gross sections
55% average BXE WI
Numerous vertical industry
producers
Core Area
34 Bellatrix Corporate Presentation
Firm Access to
Processing Capacity
35 Bellatrix Corporate Presentation
BELLATRIX CONNECTED PLANT CAPACITIES
36 Bellatrix Corporate Presentation
BELLATRIX FACILITY YIELDS
o
Bellatrix Deep Cut Facilities (Phase I & II)
Raw Gas (MMcf/d)
Shrinkage
Sales Gas
o
245
10%
220
NGL Yields1
Current Third Party
Facilities
Bbl/MMcf
Bellatrix Facilities
Bbl/MMcf
Combined Facilities (2)
Bbl/MMcf
Ethane (C2)
4
22
13
Propane (C3)
10
28
18
Butane (C4)
6
9
8
Condensate (C5+)
25
28
27
Total NGL’s
45
87
66
Note:
1 Yields assume a current and future mix of Cardium, Notikewin & Falher wells
2 Combined facilities assumes 50% of Bellatrix gas processed through existing third party facilities, and 50% processed through the Bellatrix deep cut facility
37 Bellatrix Corporate Presentation
Strategic
Joint Ventures
38 Bellatrix Corporate Presentation
GRAFTON JV 1
$244 MM Initial Joint Venture June 21, 2013
with $61 MM Extension Election April 9, 2014
o
o
o
o
o
o
58 Net Notikewin/Falher and Cardium
horizontal wells in initial program
14 Net Mannville wells in extension
BXE contribution - $55 MM
Grafton contribution - $250 MM
Effective July 1, 2013 – June 21, 2016
JV Partner earning terms:
o
o
o
o
Pay 82% to earn 54% before payout
Reversion to 33% after payout
Payout: $250MM @ 8% IRR
One time election to convert 33% WI to 17.5%
gross overriding royalty on pre-JV BXE working
interest
39 Bellatrix Corporate Presentation
TROIKA JV
$240 MM Joint Venture
o 63 Gross Cardium horizontal wells
o BXE contribution - $120 MM
o Effective January 1, 2013 – December 31,
2014.
o 20 additional Cardium wells planned in
2013; 43 Cardium Hz wells in 2014
JV Partner earning terms:
o Pay 50% to earn 35% before payout
o Reverting to 25% after payout
o Payout: $ 120 MM + 15% IRR
40 Bellatrix Corporate Presentation
1920, 800 – 5th Avenue SW
Calgary, Alberta Canada T2P 3T6
Tel: (403) 266-8670
Fax: (403) 264-8163
www.bellatrixexploration.com
41 Bellatrix Corporate Presentation