Bonanza Creek Energy, Inc. (NYSE:BCEI) (“Bonanza Creek” or the “Company”) today updated its 2020 operating plan due to the unprecedented drop in commodity prices.
Consistent with the Company’s focus on economic returns, financial strength, and operational flexibility, Bonanza Creek is significantly reducing planned development activity in 2020.
- The Company’s operated drilling rig will finish the final well on its current pad this week and then be released
- Ongoing completion activities involving the two final XRL wells of an 8-well pad will be finished within two weeks and the pad will be brought online later this year. Further completion activities will be suspended
Absent additional development activity, the Company expects to exit 2020 with no debt and 4Q 2020 production that is approximately flat with 4Q 2019. Should commodity prices recover, and the economic returns justify their completion, the Company can quickly restart development activity with the completion of two pads in late 2020 that should maintain flat production into 2Q 2021.
- Full Year 2020 production is expected to be 24.0 - 25.0 MBoe/d
- Total 2020 annual capital expenditures are expected to be $80 - $100 million excluding the completion of the two aforementioned pads in late 2020
- Outside-operated activities in French Lake are now expected to start in 2021
- A flat 2020 production profile, together with reduced capex and 2020 hedge revenue, is expected to generate significant free cash in 2020
- The Company currently has $80 million drawn on its credit facility, and its leverage ratio (net debt / last-twelve-months’ Adjusted EBITDAX) was 0.3x as of 12/31/19
- The Company plans to use 2020 free cash flow to reduce the amount drawn on its credit facility, and exit 2020 with a lower leverage ratio
- The Company has approximately 90% of its 2020 oil production hedged with an average floor price of approximately $50 per barrel
- The Company will continue to work aggressively to optimize its base production and reduce cash costs related to G&A and operating expenses