Bellamont Exploration Ltd. Releases Third Quarter 2011 Financial and Operating Results and Announces a New Montney Oil Pool D...

    




 NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN  THE UNITED STATES 

 CALGARY, Nov. 24, 2011 /CNW/ - Bellamont Exploration Ltd. (the  "Corporation" or "Bellamont")   is pleased to  provide a summary of its financial and operating results for the three  and nine months ended September 30, 2011 and announces a new Montney  oil pool discovery and an acquisition in its core Grimshaw area.  The  Corporation also provides an update herein with respect to its  estimated oil and gas reserves. 

 THIRD QUARTER 2011 HIGHLIGHTS  




        --  Third quarter funds generated from operations increased 27
            percent to $4.9 million from $3.8 million in the same period in
            2010;
        --  Production of 2,411 Boe/d, of which included 1,129 bbl/d oil
            and natural gas liquids, an increase of 14 percent for oil and
            natural gas liquids from the same period of 2010;
        --  Increased operating netback to $27.76/Boe, an increase of 39
            percent from the same quarter of 2010;
        --  Incurred $7.6 million of exploration and development
            expenditures, the significant components were as follows:
            o Drilled, completed and began equipping 2 (2 net) horizontal
              oil wells in its Grimshaw area, both of which commenced
              production in October with combined average production of 170
              Boe per day (97 percent crude oil);
            o Drilled an exploratory well at Grande Prairie which is
              currently being evaluated for completion;
            o Commenced drilling on 2 (1.75 net) delineation wells in the
              Grimshaw area at the end of the quarter;
        --  Disposed of a non-core property located in the Sinclair area of
            Alberta for $7.1 million (excluding statements of adjustments).
            The property produced approximately 77 Boe per day (67 percent
            oil) and had proved plus probable reserves (as of December 31,
            2010) of 380 mboe (76 percent oil);
        --  Reduced working capital deficit by $4.8 million from the second
            quarter of 2011 to $34.2 million.




 GRIMSHAW AREA UPDATE 

 New Montney Oil Pool Discovery at Grimshaw 

 Bellamont recently drilled two vertical wells (1.75 net) at Grimshaw to  delineate the western portion of the Grimshaw Triassic "D" pool (the  "Triassic D Pool"). The Corporation is pleased to report the  delineation program has resulted in a new Montney oil pool discovery.   In addition, both of the vertical delineation wells encountered the  same Montney reservoir sand producing in the Triassic D Pool (the  "Montney D sand"). Bellamont completed and tested the Montney D sand in  one of the wells, which resulted in trace amounts of oil together with  formation water.  The second well has yet to be tested in the Montney D  sand. 

 The new pool discovery well was completed with a single 5 tonne fracture  stimulation.  During the 26 hours of swabbing, the well tested an  average of 140 bbl/d of 29° API oil with less than a 10% water cut at  the end of the test.  This production test result is similar to  Bellamont's original vertical well discovery in the Triassic D Pool.   The Corporation has initiated the process of tying the well in to its  100% owned oil battery with production expected in the first quarter of  2012 at an initial rate of approximately 60 bbl/d. 

 Based on the Corporation's interpretation of three dimensional seismic  over its lands, Bellamont believes the new Montney oil pool has the  potential of being similar in size and scope as the Triassic D pool.   Currently, Bellamont is producing approximately 535 Boe/d (490 bbl/d  oil) from the Triassic D Pool from 11 wells (10 horizontal wells and  one vertical).  Bellamont expects to develop the new pool with  multi-stage fraced horizontal wells in a similar manner as the Triassic  D Pool. 

 The delineation wells results have reinforced the Corporation's  confidence in its ability to image reservoir quality Montney sand on  its three dimensional seismic. Based on the recent delineation  drilling, core analysis and reservoir modeling, the Corporation now  estimates its land at Grimshaw contains approximately 110 million  barrels of Discovered Petroleum Initially in Place(1) ("DPIIP") in the Montney formation. In total, when combining the  existing Triassic D Pool and the new pool discovery, Bellamont  estimates it has 52 (52 net) horizontal drilling locations at Grimshaw,  all of which are supported by three dimensional seismic. 

 __________________________ (1)  Discovered Petroleum Initially in Place ("DPIIP") - is defined in the  Canadian Oil and Gas Evaluation Handbook ("COGEH") as the quantity of  hydrocarbons that are estimated to be in place within a known  accumulation. Original Gas in Place ("OGIP") is a more commonly used  industry term when referring to gas accumulations. DPIIP is divided  into recoverable and unrecoverable portions, with the estimated future  recoverable portion classified as reserves and contingent resources.  There is no certainty that it will be economically viable or  technically feasible to produce any portion of this DPIIP except for  those portions identified as proved or probable reserves.  A recovery  project cannot be defined for this volume of DPIIP at this time, and as  such it cannot be further sub-categorized. 

  

 Grimshaw Area Acquisition  

 Bellamont has entered into an agreement to acquire a minority partner's  interest in the Grimshaw area.  The acquired asset consists of 13 gross  sections (5.2 net) of land and includes a 25% working interest in two  joint Montney oil wells.  Following closing of the acquisition,  Bellamont will have a 100% working interest in 17 contiguous sections  of lands at Grimshaw. 

 Reservoir Simulation at Grimshaw 

 Bellamont recently undertook a reservoir simulation study of the  Triassic D Pool with Epic, a Division of Baker Hughes Canada, an  independent reservoir engineering firm.  The study supports a 10.5%  primary recovery factor based on eight horizontal wells per section,  and a 19% secondary recovery factor possible under water flood.   Bellamont has applied for regulatory approval to initiate a pilot  waterflood project in 2012. 

 RESERVES UPDATE 

 Bellamont has recently undertaken a preliminary review of its oil and  gas reserves with its independent evaluator, GLJ Petroleum Consultants  Ltd.  The evaluation was conducted effective as of December 31, 2011,  utilizing GLJ's October 1, 2011 price forecasts (hereinafter called the  "Preliminary Report(2)").  The Preliminary Report indicates total proved reserves of 6,912  Mboe (48.6% oil and natural gas liquids) with a net present value of  future net revenue of $106.3 million (@NPVBT10%) and total proved plus  probable reserves of 15,006 Mboe (45% oil and natural gas liquids) with  a net present value of future net revenue of $190.7 million  (@NPVBT10%).  These findings represent a 30% increase in total  corporate proved plus probable reserves and a 26% increase of net  present value of future net revenue (@ BT10%) over 2010. 

 __________________________________ (2)  The Preliminary Report has not been formally accepted by the  Corporation's Reserves Committee, and is subject to revisions pursuant  to the evaluation to be undertaken following year end 2011.  The net  present value of future net revenue attributable to the Corporation's  reserves is stated without provision for interest costs and general and  administrative costs, but after providing for estimated royalties,  production costs, development costs, other income, future capital  expenditures, and well abandonment costs for only those wells assigned  reserves by GLJ.  It should not be assumed that the undiscounted or  discounted net present value of future net revenue attributable to the  Corporation's reserves estimated by GLJ represent the fair market value  of those reserves.  The recovery and reserve estimates of our crude  oil, NGL and natural gas reserves provided herein are estimates only  and there is no guarantee that the estimated reserves will be  recovered.  Actual reserves may be greater than or less than the  estimates provided herein. 

  

 FINANCIAL AND OPERATING HIGHLIGHTS  

 The Corporation will file its unaudited interim financial report and  related management's discussion and analysis ("MD&A") for the three and  nine months ended September 30, 2011, with Canadian securities  regulatory authorities on SEDAR.  Copies of these documents may be  accessed electronically on SEDAR at www.sedar.com or at www.bellamont.com.  Certain selected financial and operational information for the three  and nine months ended September 30, 2011 and 2010 are set out below and  should be read in conjunction with Bellamont's interim financial report  and MD&A. 





                                                           

                                   Three Months Ended     Nine Months Ended
                                     September 30,          September 30,

                                      2011       2010        2011      2010

    FINANCIAL($000s, except                                                
    per share)

    Petroleum and natural gas       11,344      9,696      36,232    26,711
    sales

    Funds generated from             4,921      3,861      15,133    11,286
    operations(1)

      Per Class A and Class B         0.03       0.03        0.10      0.08
      share(2)

    Net income/(loss)                1,280      (615)       2,760   (6,588)

      Per share basic and             0.01          -        0.02    (0.05)
      diluted(3)

    Net capital expenditures           556      9,613      17,016    79,108
    (4)

    Net debt(1)                     34,447     32,787      34,447    32,787

    OPERATING                                                              

    Production                                                             

      Crude Oil (Bbls per day)         962        837         999       743

      Natural gas (Mcf per           7,693      9,554       8,205     8,459
      day)

      Natural gas liquids              167        157         166       127
      (Bbls per day)

      Total (Boe per day)            2,411      2,586       2,532     2,280

    Average realized prices                                                

      Crude Oil ($ per Bbl)          83.98      71.68       87.31     72.81

      Natural gas ($ per Mcf)         4.02       3.84        4.12      4.26

      Natural gas liquids ($         69.82      55.61       70.79     60.57
      per Bbl)

      Average realized price         51.15      40.76       52.41     42.91
      ($ per Boe)

    Netbacks(1) ($ per Boe)                                                

      Petroleum and natural          51.15      40.76       52.41     42.91
      gas sales

      Royalties                     (9.65)     (5.79)      (9.13)    (6.23)

      Operating and                (13.74)    (14.96)     (14.71)   (14.22)
      Transportation expenses

      Operating netback              27.76      20.01       28.57     22.46

    Undeveloped land holdings                                              

      Gross acres                  101,453     81,094     101,453    81,094

      Net acres                     76,562     56,454      76,562    56,454

      Average working interest         75%        70%         75%       70%

    SECURITIES(000s)                                                       

    Shares outstanding, end of                                             
    period

      Class A shares               140,998    140,788     140,998   140,788

      Class B shares                 1,012      1,012       1,012     1,012

    Weighted average shares                                                

      Basic                        140,998    140,788     140,871   131,722

      Diluted(3)                   151,738    140,788     151,923   131,722






  





    (1)  Funds generated from operations, Net debt and Netbacks as
         presented do not have any standardized meaning prescribed by GAAP
         and therefore may not be comparable with the calculation of
         similar measures for other entities.  Please refer to the Non-GAAP
         Measures section of the MD&A for more details.

    (2)  For the three and nine month periods ended September 30, 2010 and
         September 30, 2011, respectively, the Class B shares are converted
         at the minimum Class A share price of $1.00 and added to the Class
         A shares.  Thus, each Class B share converted to 10 Class A shares
         for the purpose of funds generated from operations per share.

    (3)  For the three and six months ended September 30, 2011, Bellamont
         included in the weighted average outstanding shares the effect of
         Class A share options and convertible Class B shares as they were
         dilutive. For the three and nine months ended September 30, 2011,
         the Class B shares were converted at the minimum Class A share
         price of $1.00.  Thus, each Class B share was converted to 10
         Class A shares for the diluted share calculation. For the three
         and nine months ended September 30, 2010 the effect of Class A
         share options and convertible Class B shares were excluded from
         the weighted average outstanding shares as they were
         anti-dilutive.

    (4)  Total net capital expenditures, including acquisitions and
         dispositions.






  

 OUTLOOK   

 Throughout fiscal 2011, the Corporation focused its capital initiatives  primarily on delineating its oil resource at Grimshaw, consolidating  its land positions at both Grande Prairie and Grimshaw and building its  new core areas in an oil prone area of British Columbia.  That resulted  in the Corporation redirecting $7.7 million of the 2011 capital budget  that originally targeted low risk development drilling at Grande  Prairie and Saddle Hills.  To maintain its balance sheet strength,  Bellamont disposed of two non-core area properties for net proceeds of  $9.6 million.  Bellamont estimates its net capital expenditures (i.e.  after proceeds from dispositions) for 2011 will be $24.0 million, which  included $7.8 million of acquisitions.  Bellamont expects to produce an  average of 2,450 boe/d (46% oil and liquids) for the year, resulting in  funds generated from operations of approximately $20.0 million, an  increase of 27% per share over 2010.  The Corporation is projecting net  debt of $36 million at year end 2011, an increase of $3.3 million over  2010.  Bellamont recently renewed its $57.0 million credit facility  with its lender. 

 The Corporation's 2011 capital strategy has resulted in a significant  increase in the Corporation's reserves and corresponding net asset  value.  Based on the net present value of future net revenues of the  Corporation's proved plus probable reserves calculated at NPVBT10% (as  set out in the Preliminary Report), forecasted year end net debt, and  an internal estimate of undeveloped land at $100 per acre, Bellamont  now estimates its net present value to be $1.05 per fully diluted share(3). This represents a 30% increase in Bellamont's net asset value per  share estimated at year end 2010 

 Due to the unfavorable pricing of natural gas relative to oil, Bellamont  has focused the majority of its 2011 drilling program on its high  netback Grimshaw oil property and deferred drilling additional high  rate, development wells at its more gas prone Montney oil pool at  Grande Prairie. This has contributed to a lower exit production rate  than originally forecast. Notwithstanding, Bellamont has benefitted  from oil's increasingly favorable commodity pricing.  For the first  nine months of 2011, Bellamont has realized an operating netback of  $28.57/boe, an increase of 27% over the same period in 2010.  Bellamont's current netback is approximately $30/Boe. 

 Bellamont's new Montney oil pool discovery at Grimshaw adds to an  already deep inventory of oil and liquids rich projects. Bellamont  estimates it has over 140 net drilling locations specifically targeting  oil and intends to continue focusing on these projects into 2012.  For  the remainder of the 2011, Bellamont expects to drill two more  horizontal oil wells at Grimshaw. Completion of these two wells is not  expected until the first quarter of 2012, with production forecasted  for February.  The Corporation expects to undertake a robust drilling  program in 2012 and plans to provide budget guidance early in the new  year.  The Corporation has secured, or is in the process of securing,  drilling licenses for another ten wells at Grimshaw (Montney oil), two  wells at Stoddart, British Columbia (Baldonnel oil) and three wells at  Grande Prairie (Montney oil and liquids rich natural gas). 

 Bellamont's strategy is to build a low risk reserve, production and cash  flow base through acquiring, developing and exploring primarily in the  Peace River Arch area of Alberta and British Columbia.  Bellamont has a  strong technically focused management team that internally generates  and develops high quality large resource based prospects. 

 Bellamont is an oil and gas company focused on the acquisition,  exploration, development and production of oil and natural gas in  western Canada and trades on the TSX Venture Exchange under the symbols  "BMX.A" and "BMX.B".  The Corporation has 140,997,699 Class A shares  and 1,012,000 Class B shares outstanding. 

 ________________________________ (3) It should not be assumed that the undiscounted or discounted net  present value of future net revenue attributable to the Corporation's  reserves estimated by GLJ represent the fair market value of those  reserves nor does the internal estimate for undeveloped land represent  fair market value of those undeveloped lands. 

  

 FORWARD LOOKING STATEMENTS 

 This press release may contain forward-looking statements including  expectations of future production, reserves, cash flow, netbacks and  earnings. More particularly, this press release contains statements  concerning Bellamont's future production estimates, expansion of oil  and gas property interests, exploration and development drilling and  capital expenditures. These statements are based on current  expectations that involve a number of risks and uncertainties, which  could cause actual results to differ from those anticipated.  These  risks include, but are not limited to: the risks associated with the  oil and gas industry (e.g. operational risks in development,  exploration and production; delays or changes in plans with respect to  exploration or development projects or capital expenditures; the  uncertainty of reserve estimates; the uncertainty of estimates and  projections relating to production, costs and expenses, and health,  safety and environmental risks), commodity price, price and exchange  rate fluctuation and uncertainties resulting from potential delays or  changes in plans with respect to exploration or development projects or  capital expenditures.  Additional information on these and other  factors that could affect Bellamont's operations or financial results  are included in Bellamont's reports on file with Canadian securities  regulatory authorities. 

 The forward-looking statements or information contained in this news  release are made as of the date hereof and Bellamont undertakes no  obligation to update publicly or revise any forward-looking statements  or information, whether as a result of new information, future events  or otherwise, unless so required by applicable securities laws. 

 OIL AND GAS ADVISORY 

 This press release contains disclosure expressed as "Boe/d". All oil and  natural gas equivalency volumes have been derived using the ratio of  six thousand cubic feet of natural gas to one barrel of oil.  Equivalency measures may be misleading, particularly if used in  isolation. A conversion ratio of six thousand cubic feet of natural gas  to one barrel of oil is based on an energy equivalency conversion  method primarily applicable at the burner tip and does not represent a  value equivalency at the well head. 

 Discovered Petroleum Initially in Place ("DPIIP") - Is defined in the  Canadian Oil and Gas Evaluation Handbook ("COGEH") as the quantity of  hydrocarbons that are estimated to be in place within a known  accumulation. Original Gas in Place ("OGIP") is a more commonly used  industry term when referring to gas accumulations. DPIIP is divided  into recoverable and unrecoverable portions, with the estimated future  recoverable portion classified as reserves and contingent resources.  There is no certainty that it will be economically viable or  technically feasible to produce any portion of this DPIIP except for  those portions identified as proved or probable reserves.  A recovery  project cannot be defined for this volume of DPIIP at this time, and as  such it cannot be further sub-categorized 

 The TSX Venture Exchange has not reviewed and does not accept  responsibility for the adequacy or accuracy of this release. Not for  distribution to U.S. newswire services or for dissemination in the  United States.  Any failure to comply with this restriction may  constitute a violation of U.S. securities law. 

Bellamont Exploration Ltd.


CONTACT:  Steve Moran, President and Chief Executive Officer, [phone]; orTavis Carlson, Vice President Finance and Chief Financial Officer,(403) 802-01171208, 250- 2nd Street S.W. Calgary, Alberta T2P 0C1Email: [e-mail] 


    

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