Stock Picks: Bellatrix Exploration (TSE:BXE)

Bellatrix Exploration is a growth oriented exploration and production company based in Calgary, Alberta, Canada. Bellatrix is powered by a diverse asset base, focused on sustainable growth both in its people and in its properties. Bellatrix has a significant multi-year drilling inventory of locations in Alberta, Saskatchewan and British Columbia.

Quick Facts (Q3 2010):

Average Production: 9,119 boe/d, 74% natural gas

O/S: 108.5 MM FD (management ownership 14.2%)

Debt: $77.1 MM

Land: 230k net undeveloped acres

Q3 Highlights

Q3/10 Average Production: +19% Q-Q.

Q3/10 Cash Flow: +54% Q-Q.

Net Debt: -5% Q-Q.

Outlook (updated November 17, 2010)

Even though Bellatrix reported a net Loss of $8.6 MM for Q3, it was an improvement over Q2′s $10.8 MM loss. Bellatrix is executing their plans superbly, they are currently producing 10,500 boe/d (66% gas) having exceeded their 2010 exit guidance of 10k boe/d back in September.  For 2011 production is expected to average 11,500-12,000 boe/d with an exit rate of 12,000 – 12,500 boe/d, an amazing 20-25% increase year over year.

I reiterate my opinion that by Q1 2011 BXE should be on solid ground as they unlock the value of their Cardium (oil) and Notikewin (liquid rich gas) plays. Bellatrix expects to drill 8 gross (4.80 net) Cardium horizontal wells and 1 gross (.50 net) horizontal wells in the Notikewin formation in Q4 of 2010.

BXE also expects to start 2011 with a strong program with 4 rigs contracted to drill 12 (8.4 net) Cardium oil and 5 (2.65 net) Notikewin gas wells. The company reported in its latest news release that 40% of its oil production in 2011has been hedged at a minimum of $85.30/bbl.  On the other hand, they have no hedges on their natural gas production which could hurt them if the price of gas decides to set new lows in the coming months.

Unfortunately, I am currently not holding any shares of BXE but if the price dips in the short term, I might pick up some. This is one pretty girl with 76 net sections of Cardium land providing 312 HZ drilling locations. In my opinion, this company is another takeover candidate; it’s a matter of when not if.


I was not paid any fees to feature this stock. I am just sharing my research. Please do your own due diligence before buying or selling any security