January 20, 2019

Bonterra Energy Corp (BNE)

 

 

Bonterra Energy Corp (BNE) is one of Canada’s better run energy companies.  It is headquartered out of Calgary, Alberta and has a proven history within the industry.  Bonterra is tightly focussed on their Cardium horizontal drilling operations, and have found that this strategy has rewarded their shareholders with substantial returns over the past couple of years and represents the best value going forward.  Bonterra’s developed and undeveloped assets are concentrated in the central Alberta Pembina field.  The company is in great financial shape with well over $400 million in tax pools.  This gives Bonterra (BNE) a long tax horizon (past 2016 by their estimates) which will free up cash flow for efficient capital expenditures, and most importantly for strong dividend payouts.  Bonterra Energy has targeted properties that are high-quality and low risk.  They are currently operating at 84% of total productions and consequently have a conservative view on capital expenditures.  Bonterra (BNE) spent about $60 million in maintenance and expenditures in 2011, with the majority of the capital funds going towards developing the halo area of the Pembina Cardium, the Willesden Green fields and the main pool of the Pembina Cardium field.  Bonterra’s most recent estimates indicate that they have an approximate average drilling life of 15 years and that this supports the sustainable growth model they have put forward.

 

Going into 2012, Bonterra (BNE) has announced a projected 10% growth rate and $65 million in capital expenditures.  It’s recent Board of Directors press release stated that they will continue to pursued a strategy centred on sustainable and efficient growth which focuses on the further development of their horizontal drilling techniques.  The Cardium light oil properties will continue to be focused on, and a multi-well program within the region is already underway that includes multi-stage frac wells.  All new 2012 wells are expected to be multi-frac wells.  Bonterra (BNE) has 33 wells planned, with 21 targeting the main pool of the Pembina Cardium.  The 2012 target production level is 7,000 boe/per day (2011’s rate was 6,800 boe/per day), and 2012 plans are for the company’s production to be 73 percent light oil and 27 percent natural gas by year end.  Most attractively, Bonterra has dedicated 50-65% of its current cash flow to dividend payouts, and has already established plans to increase the dividend providing that crude oil prices remain strong, or if demand increases.

 

Bonterra (BNE) recently closed at $51.71 per share.  This is close to the middle of its 52-week trading range that seen a high of $63.50 and a low of 39.02.  The company has a massive market capitalization of just over $1 billion.  Its annual dividend of $3.12 gives the company a current dividend yield of 6%.  While the current share price is slightly high for my tastes, I like Bonterra’s conservative growth structure, and their focus on horizontal drilling.  Their concentration on this high-value technique is a great advantage.  I really like the company going forward.

 

Bonterra Energy Corp (BNE) Graph:

TSE BNE

Bonterra Energy Corp (BNE) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
BNEBonterra Energy Corp56.75.593.990.070904361.36310737.50002