Bellatrix Exploration Ltd. Announces First Quarter 2019 Financial and Operating Results

CALGARY, Alberta, May 15, 2019 (GLOBE NEWSWIRE) -- Bellatrix Exploration Ltd. (“Bellatrix”, "we", "us", "our" or the “Company”) (TSX: BXE) announces its financial and operating results for the three months ended March 31, 2019.  This press release contains forward-looking statements.  Please refer to our cautionary language on forward-looking statements and the other matters set forth at the end of this press release and the beginning of the Management’s Discussion and Analysis (the “MD&A”) for the three months ended March 31, 2019 and 2018. Bellatrix's unaudited interim condensed financial statements and notes, and the MD&A for the three months ended March 31, 2019 and 2018 are available on our website at www.bxe.com, and are filed on SEDAR at www.sedar.com.

⁽¹⁾ Basic weighted average shares for the three months ended March 31, 2019 were 80,909,225 (2018: 49,378,026). In computing weighted average diluted profit (loss) per share, weighted average diluted cash flow from operating activities per share, and weighted average diluted adjusted funds flow per share for the three months ended March 31, 2019, a total of nil (2018: nil) common shares were added to the denominator as a consequence of applying the treasury stock method to the Company’s outstanding share options, a total of nil (2018: nil) common shares issuable on conversion of the Company's outstanding 6.75% convertible unsecured subordinated debentures (the "Convertible Debentures") were added to the denominator, and a total of nil (2018: nil) common shares issuable on exercise of the Company's outstanding warrants were added to the denominator for the three month period resulting in diluted weighted average common shares outstanding of 80,909,225 (2018: 49,378,026).

⁽²⁾ The terms “adjusted funds flow”, “adjusted funds flow per share”, “total net debt”, “adjusted working capital deficiency”, "operating netbacks", and "total capital expenditures - net" do not have standard meanings under generally accepted accounting principles (“GAAP”). Refer to "Non-GAAP measures" disclosed at the end of this Press Release.

⁽³⁾ See "Barrels of Oil Equivalent" at the end of this Press Release.

⁽⁴⁾ The Company has entered into various commodity price risk management contracts which are considered to be economic hedges.  Per unit metrics after risk management include only the realized portion of gains or losses on commodity contracts.  The Company does not apply hedge accounting to these contracts.  As such, these contracts are revalued to fair value at the end of each reporting date.  This results in recognition of unrealized gains or losses over the term of these contracts which is reflected each reporting period until these contracts are settled, at which time realized gains or losses are recorded.  These unrealized gains or losses on commodity contracts are not included for purposes of per unit metrics calculations disclosed.

⁽⁵⁾ Fully diluted common shares outstanding for the three months ended March 31, 2019 were 91,122,802 (2018: 57,099,598). This includes 952,532 (2018: 1,548,732) of share options outstanding, 6,172,840 (2018: 6,172,840) of shares issuable on conversion of the Convertible Debentures, and 3,088,205 (2018: nil) of warrants outstanding. Shares issuable on conversion of the Convertible Debentures are calculated by dividing the $50 million principal amount of the Convertible Debentures by the conversion price of $8.10 per share.

⁽⁶⁾ TSX and Other includes the trading statistics for the Toronto Stock Exchange (“TSX”) and other Canadian trading markets.

⁽⁷⁾ Bellatrix voluntarily delisted the Company's common shares from the New York Stock Exchange (the "NYSE") effective February 12, 2019. On May 8, 2019, Bellatrix filed a Form 15F with the United States Securities and Exchange Commission to voluntarily terminate the registration of its securities and its reporting obligations under Section 13(a) and Section 15(d) of the United States Securities Exchange Act of 1934, as amended ("Exchange Act"). Bellatrix’s Exchange Act reporting obligations were immediately suspended upon filing the Form 15F. The termination of Bellatrix’s registration and of its reporting obligations under Section 13(a) and Section 15(d) of the Exchange Act is expected to be effective 90 days after filing. Bellatrix will continue to comply with its Canadian continuous disclosure obligations and its common shares will continue to trade on the TSX.

FINANCIAL & OPERATIONAL HIGHLIGHTS

Bellatrix’s first quarter results were marked by strong operational performance including robust well productivity and continued reductions in operating expenditures.  First quarter 2019 performance included the following operational and financial achievements:

• Production volumes in the first quarter of 2019 averaged 36,991 boe/d (71% natural gas weighted). Average production volumes in the first three months of 2019 represented 6% outperformance compared with the mid-point of Bellatrix’s 2019 full year daily average production guidance range (34,000 to 36,000 boe/d).
• Production expenses in the first quarter of 2019 averaged $5.83/boe, compared with fourth quarter 2018 production expenses of $6.59/boe. First quarter production expenditures of $5.83/boe decreased by $1.67/boe from full year 2018 average production expenditures of $7.50/boe, of which $1.52/boe of lease payments for certain processing and infrastructure fees which were previously recognized as production expenses, are now classified as repayments of lease obligations and finance expense following the Company's adoption of IFRS 16 Leases ("IFRS 16").
• Total net debt at March 31, 2019 of $448.3 million was relatively unchanged from the December 31, 2018 total net debt balance of $443.3 million. At March 31, 2019, borrowings under our syndicated revolving credit facilities (the "Credit Facilities") were $46.8, million providing for approximately $48.2 million of undrawn capacity (approximately 50% undrawn) against total commitments of $95 million, before deducting outstanding letters of credit of $13.6 million that reduce the amount otherwise available to be drawn on the Credit Facilities.
• On March 29, 2019, Bellatrix announced a proposed Recapitalization Transaction (defined below) designed to improve and strengthen the Company's overall financial position.  The Recapitalization Transaction, among other things, would reduce the Company's total outstanding debt by approximately $110 million (approximately 23%), reduce annual cash interest payments by over $12 million annually until December 31, 2021, and address the Company's debt maturities such that the Company would have no maturity dates in respect of any non-revolving debt until 2023.

Bellatrix delivered strong operational performance in the first three months of 2019 relative to 2019 annual guidance expectations as summarized below:

⁽¹⁾ 2019 Annual guidance metrics represent the mid-point of the previously set guidance range (January 15, 2019) where applicable.

⁽²⁾ Excludes corporate asset additions and property acquisitions and dispositions.

FIRST QUARTER 2019 OPERATIONAL ACTIVITIES AND PERFORMANCE

Drilling and completion activities planned for the first half of 2019 are weighted heavily to the first quarter as a result of the seasonal spring break up period that curtails activity in the second quarter.  During the first quarter, Bellatrix drilled five gross (5.0 net) operated wells, including four Spirit River wells and one Cardium well.  The four Spirit River wells were brought on-stream throughout the first quarter of 2019, and the Cardium well was drilled late in the first quarter and brought on-stream in April.  The Company's first quarter 2019 Spirit River drilling program has delivered the following initial production rates:

• 102/04-02-045-11W5 Spirit River well (100% working interest) well IP90: 5.9 MMcf/d
• 100/01-13-044-10W5 Spirit River well (100% working interest) well IP35: 10.5 MMcf/d
• 102/04-35-044-10W5 Spirit River well (100% working interest) well IP50: 7.5 MMcf/d
• 103/02-35-044-10W5 Spirit River well (100% working interest) well IP50: 7.9 MMcf/d

Total natural gas liquid ("NGL") recoveries (including plant condensate) at the Bellatrix O'Chiese Nees-Ohpawganu'ck deep-cut plant at Alder Flats (the "Alder Flats Plant") have increased in the first quarter of 2019, with NGL sales yields of approximately 68 bbl/MMcf, up approximately from first quarter 2018 total sales yields of approximately 54 bbl/MMcf. In the three months ended March 31, 2019, crude oil, condensate and NGL natural production declines were offset by approximately 18% increase in liquid recoveries due to the commissioning of Phase 2 of the Alder Flats Plant in March 2018. Exploration and development capital expenditures invested during the first quarter were $20.5 million. The Company’s capital expenditure plans remain in line with the current annual guidance range of $40 to $50 million for 2019. 

REDUCED SUSTAINING CAPITAL

Bellatrix continues to focus on improving capital efficiencies from its invested capital through the combination of reduced capital costs and improved well performance.  During the first quarter of 2019, all five operated wells were drilled off existing pad sites.  The ability to utilize existing above ground infrastructure, access roads, and gathering systems provides a competitive advantage for the Company as it seeks to maximize long term returns from its development program.  All-in average Spirit River well costs (drill, complete, equip and tie-in) in the first quarter of 2019 have averaged approximately $3.4 million, consistent with the cost performance achieved in 2018. Average well performance from the Company's 2019 Spirit River well program to date have outperformed expected results by approximately 15% on an IP45 basis. Bellatrix has systematically reduced overall sustaining capital requirements for our business over the past two years, including a reduction in the number of wells required to maintain average corporate production volumes.  Based on an assumed average 6.0 Bcf performance curve, the Company requires only 10 to 12 wells per year to maintain corporate production volumes in the mid 30,000 boe/d range.

With the completion of Phase 2 of the Alder Flats Plant in 2018, our long-term infrastructure build out is complete. Bellatrix expects the majority of future capital investment to be utilized directly in drilling, completion and production addition activities, with minimal capital required for facilities and infrastructure projects over the near term.  Management expects that the Company's existing facilities and processing capacity provide the capability to grow production volumes beyond 60,000 boe/d, with minimal future facility related capital.

COMMODITY PRICE RISK MANAGEMENT PROTECTION AND MARKET DIVERSIFICATION INITIATIVES

Bellatrix maintains strong commodity price risk management and market diversification coverage through 2020 which is expected to reduce the impact of commodity price volatility on our business. Bellatrix has approximately 62 MMcf/d of natural gas volumes hedged in the last nine months of 2019, at an average fixed price of approximately $1.77/mcf, representing approximately 50% of 2019 daily average natural gas volumes (based on the mid-point of 2019 full year daily average production guidance). Bellatrix has diversified its natural gas price exposure through physical sales contracts that give the Company exposure to the Dawn, Chicago, and Malin natural gas pricing hubs. This long-term diversification strategy reduces Bellatrix’s exposure to AECO pricing on approximately 50% of the Company’s natural gas volumes.

In combination, market diversification sales and fixed price hedges cover approximately 50% to 60% of natural gas volumes through October 2020 (based on the mid-point of 2019 full year daily average production guidance).  A summary of Bellatrix’s commodity price risk management contracts as at March 31, 2019 include:

⁽¹⁾ Prices for natural gas fixed price swap contracts assume a conversion of $/GJ to $/mcf based on an average corporate heat content rate of 40.0Mj/m3.

⁽²⁾ Net Canadian equivalent price is calculated as the US$ fixed price, less the contracted differential, adjusted to Canadian dollars at an assumed exchange rate of $1.33 USD/CAD.

In summary, Bellatrix’s market diversification contracts include a total of 75,000 MMbtu/d of market exposure as follows:

PROPOSED RECAPITALIZATION TRANSACTION

As announced on March 29, 2019, following Bellatrix’s strategic review efforts, the Company advanced a series of proposed transactions (collectively, the “Recapitalization Transaction”), which would on implementation, among other things, (i) reduce the Company’s total outstanding debt by approximately $110 million (approximately 23%), (ii) reduce annual cash interest payments by over $12 million annually until December 31, 2021, (iii) address certain debt maturities such that the Company would have no maturity dates in respect of any non-revolving debt until 2023; and (iv) improve and strengthen the Company’s overall financial position.

In the event the Recapitalization Transaction is not completed, the Company will need to evaluate all of its options and alternatives related to any future court proceedings or other alternatives to address key liquidity and debt leverage matters which exist today. The value available to stakeholders may be significantly less if the Recapitalization Transaction is not completed and there is a risk that any proceeds available for distribution to stakeholders under other alternatives would be paid in priority to the lenders under the Company's Credit Facilities, the holders of the second lien notes due 2023 ("Second Lien Notes"), the holders of the 8.5% senior unsecured notes due May 15, 2020 (the "Senior Notes"), other general creditors, and the holders of the Convertible Debentures, with the remaining proceeds, if any, paid to the Company's shareholders. There is significant risk that there may be no recovery of any kind, or amount available for, those parties which are lower in the priority waterfall in such circumstances.

Management of Bellatrix and the Board of Directors urge you to give serious attention to the Recapitalization Transaction and to support it in person or by proxy at the applicable meeting(s) to be held on May 23, 2019. We hope that we will receive your support. We encourage you to vote on the matters set out in the Information Circular dated April 18, 2019 by following the voting instructions set out therein by the applicable deadline. We thank you for your continued support of Bellatrix.

Any questions or requests for further information regarding voting at the security holders meetings should be directed to Kingsdale Advisors (Bellatrix’s proxy and information agent) at 1-866-229-8874 or 416-867-2272, or by email at contactus@kingsdaleadvisors.com.

OPERATIONAL AND FINANCIAL SUMMARY

• Production volumes in the first quarter of 2019 averaged 36,991 boe/d (71% natural gas weighted), up from fourth quarter 2018 volumes of 35,001 boe/d, reflecting the Company’s first quarter capital program and well performance.  Production volumes in the first quarter 2019 exceeded the high end of Bellatrix’s full year average production guidance range (34,000 to 36,000 boe/d).   
• Adjusted funds flow generated in the three months ended March 31, 2019 was $21.2 million ($0.26 per basic and diluted share) compared to $15.5 million ($0.21 per basic and diluted share) generated in the fourth quarter of 2018.
• Exploration and development capital expenditures were $20.5 million in the first quarter of 2019, down 15% compared with first quarter of 2018 capital expenditures of $24.2 million.  The majority of first quarter of 2019 capital expenditures were allocated to drilling, completion and equipping activity.
• Bellatrix’s borrowings under its Credit Facilities were $46.8 million, and total net debt was $448.3 million at March 31, 2019.  At March 31, 2019, Bellatrix had approximately $48.2 million of undrawn capacity (approximately 50% undrawn) against total commitments of $95 million, before deducting outstanding letters of credit of $13.6 million that reduce the amount otherwise available to be drawn on the Credit Facilities.
• For the quarter ended March 31, 2019, Bellatrix’s Senior Debt to EBITDA (as defined in the MD&A) ratio was 3.17 times, below the financial covenant of 5.0 times as permitted by the agreement governing the Credit Facilities and Bellatrix's First Lien Debt to EBITDA (as defined in the MD&A) ratio was 1.35 times, below the financial covenant of 3.0 times as permitted by the agreement governing the Credit Facilities.
• Total revenue was $68.5 million for the first quarter of 2019, up 20% compared to $56.9 million in the fourth quarter of 2018, as higher oil and natural gas prices and increased sales volumes more than offset lower NGL prices over the comparative periods. 
• The corporate royalty rate in the three months ended March 31, 2019 averaged 12% of sales (after transportation), comparable with the 11% average rate in the fourth quarter of 2018. 
• Production expenses in the first quarter of 2019 averaged $5.83/boe compared with fourth quarter 2018 production expenses of $6.59/boe.  First quarter production expenditures of $5.83/boe decreased by $1.67/boe from full year 2018 average production expenditures of $7.50/boe, of which $1.52/boe of lease payments for certain processing and infrastructure fees were previously recognized as production expenses are now classified as repayments of lease obligations and finance expense following the Company's adoption of IFRS 16.
• Our corporate operating netback (including risk management) realized for the three months ended March 31, 2019 was $11.07/boe, up 12% compared with $9.90/boe realized in the fourth quarter of 2018. This change reflects lower realized hedging gains mitigated by higher average commodity sales prices and volumes over the comparable periods.   
• Net general and administrative (“G&A”) expenses (after capitalized costs and recoveries) for the three months ended March 31, 2019 were $5.1 million ($1.52/boe) compared with the $7.9 million ($2.46/boe) reported in the fourth quarter of 2018.
• Bellatrix recorded a net loss for the three months ended March 31, 2019 of $19.1 million compared to a net loss of $89.8 million for the three months ended December 31, 2018. The decrease in loss period over period is primarily due to the reversal of the deferred tax asset in the fourth quarter of 2018 which resulted in deferred tax expense, with no comparable expense in the first quarter of 2019.
• As at March 31, 2019, Bellatrix had approximately 131,021 net undeveloped acres of land principally in Alberta.
• As at March 31, 2019, Bellatrix had approximately $1.4 billion in tax pools available for deduction against future income.
• Bellatrix maintained a strong Liability Management Rating of 9.03 in Alberta versus an industry average of 4.87 as at April 6, 2019.

OUTLOOK & 2019 CORPORATE GUIDANCE

First quarter 2019 average production volumes of 36,991 boe/d are above the high end of the 2019 full year average daily production guidance range and within management expectations given the front end weighted capital program.  Bellatrix is reiterating its full year 2019 guidance metrics as outlined below.

⁽¹⁾ Excludes property acquisitions and dispositions.

Bellatrix Exploration Ltd. is a publicly traded Western Canadian based growth oriented oil and gas company engaged in the exploration for, and the acquisition, development and production of oil and natural gas reserves, with highly concentrated operations in west central Alberta, principally focused on profitable development of the Spirit River liquids rich natural gas play.

Common shares of Bellatrix trade on the Toronto Stock Exchange under the symbol "BXE".

NON-GAAP MEASURES

Throughout this press release, the Company uses terms that are commonly used in the oil and natural gas industry, but do not have a standardized meaning presented by International Financial Reporting Standards ("IFRS") and therefore may not be comparable to the calculations of similar measures for other entities. Management believes that the presentation of these non-GAAP measures provide useful information to investors and shareholders as the measures provide increased transparency and the ability to better analyze performance against prior periods on a comparable basis.

Operating netbacks are calculated by subtracting royalties, transportation, and operating expenses from total revenue. Management believes this measure is a useful supplemental measure of the amount of total revenue received after transportation, royalties and operating expenses. Total capital expenditures - net includes the cash impact of capital expenditures and property dispositions, as well as the non-cash capital impacts of corporate acquisitions, property acquisitions, adjustments to the Company's decommissioning liabilities, and share based compensation.

This press release contains the term "adjusted funds flow" which should not be considered an alternative to, or more meaningful than "cash flow from operating activities" as determined in accordance with GAAP as an indicator of the Company's performance. Therefore reference to adjusted funds flow or adjusted funds flow per share may not be comparable with the calculation of similar measures for other entities. Management uses adjusted funds flow to analyze operating performance and leverage and considers adjusted funds flow to be a key measure as it demonstrates the Company's ability to generate the cash necessary to fund future capital investments and to repay debt. Adjusted funds flow is calculated as cash flow from operating activities, excluding decommissioning costs incurred and changes in non-cash working capital incurred. The reconciliation between cash flow from operating activities and adjusted funds flow can be found in the MD&A. Adjusted funds flow per share is calculated using the weighted average number of shares for the period.

This press release also contains the terms "total net debt" and "adjusted working capital deficiency", which also are not recognized measures under GAAP. Therefore reference to total net debt and adjusted working capital deficiency, may not be comparable with the calculation of similar measures for other entities. The Company's calculation of total net debt excludes other deferred liabilities, deferred capital obligations, long-term risk management contract liabilities, lease obligations and other, and decommissioning liabilities. Total net debt includes the adjusted working capital deficiency, Second Lien Notes, Senior Notes, Convertible Debentures (liability component), and Credit Facilities. The adjusted working capital deficiency is calculated as net working capital deficiency excluding current risk management contract assets and liabilities, Credit Facilities, current portion of other deferred liabilities and current portion of decommissioning liabilities. Management believes these measures are useful supplementary measures of the total amount of current and long-term debt.

These measures have been described and presented in this press release in order to provide shareholders and potential investors with additional information regarding Bellatrix's liquidity and its ability to generate funds to finance its operations. For additional information about these non-GAAP measures, including reconciliations to the most directly comparable GAAP terms, see our MD&A.

FORWARD LOOKING STATEMENTS

Certain information contained in this press release may contain forward looking statements within the meaning of applicable securities laws. The use of any of the words "position", "continue", "opportunity", "expect", "plan", "maintain", "estimate", "assume", "target", "believe" "forecast", "intend", "strategy", "anticipate", "enhance" and similar expressions are intended to identify forward-looking statements. More particularly and without limitation, this document contains forward-looking statements concerning management's assessment of future plans, the Company's 2019 capital expenditure plans, expectations that utilizing existing above ground infrastructure, access roads, and gathering systems provide a competitive advantage for the Company as it serves to maximize long term returns from its development program, expectations as to the number of wells required to be drilled annually to maintain corporate production volumes in the mid 30,000 boe/d range, expectations that improved well performance will result in lower sustaining capital requirements for Bellatrix’s business, expectation of production performance for present and future wells drilled by the Company, the timing of the Company's registration and reporting obligations under the Exchange Act, expectations that the Company commodity price risk management and market diversification coverage through 2020 will reduce the impact of commodity price volatility on our business, the expectation of the percentage of production hedged or subject to other market diversification strategies, expectations that the Company will be able to direct the majority of its future capital to drilling, completion and production addition activities with minimal capital required for facilities and infrastructure projects over the near term, expectations that the Company’s existing facilities and processing capacity will provide the capability to grow production volumes beyond 60,000 boe/d, expectations regarding the proposed Recapitalization Transaction, including the Company's ability to complete it and the benefits expected therefore and expectation regarding the implications if the Recapitalization Transaction is not completed. To the extent that any forward-looking information contained herein constitute a financial outlook, they were approved by management on May 15, 2019 and are 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 and dispositions, delays resulting from or inability to obtain required regulatory approvals, the risk that the Company will not received all necessary approvals required to complete the Recapitalization Transaction, the risk that the Recapitalization Transaction will not be completed on the timing or terms expected or at all, actions taken by the Company's lenders that reduce the Company's available credit 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 the Company 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 the Company 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 the Company operates; the timely receipt of any required regulatory approvals; the ability of the Company 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 the Company has an interest in to operate the field in a safe, efficient and effective manner; the ability of the Company 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 the Company 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 the Company operates; and the ability of the Company 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, including under the heading "Risk Factors" in the Company's annual information form for the year ended December 31, 2018, on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) and at Bellatrix's website (www.bxe.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.

BARRELS OF OIL EQUIVALENT

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. All boe conversions in this press release are derived from converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil. 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.

INITIAL RATES OF PRODUCTION

References in this press release to initial production or "IP" rates associated with certain wells are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company. The Company cautions that such production rates should be considered to be preliminary.

For further information, please contact:

Steve Toth, CFA, Vice President, Investor Relations & Corporate Development (403) 750-1270

Bellatrix Exploration Ltd.
1920, 800 – 5th Avenue SW
Calgary, Alberta, Canada T2P 3T6
Phone: (403) 266-8670
Fax: (403) 264-8163
www.bxe.com