CALGARY, ALBERTA -- (Marketwire) -- 01/09/13 -- Bonavista Energy Corporation (TSX: BNP) ("Bonavista") announces that its Board of Directors has approved a reduction in the monthly dividend from $0.12 per share to $0.07 per share, beginning with the payment due February 15, 2013 to common shareholders of record on January 31, 2013, with an ex-dividend date of January 29, 2013.
Despite encouraging signs of recovery in the fall of 2012, North American natural gas fundamentals have deteriorated significantly since that point. Driven by widespread technological success in the development of natural gas from unconventional reservoirs, the price curve for North American natural gas has shifted materially lower over the past two years. To compound this natural gas supply imbalance, a similar phenomenon has been evolving with the supply of natural gas liquids and crude oil. Unfortunately, producers in western Canada have been exposed to unusually high differential pricing for their product resulting from insufficient export alternatives. The western Canadian oil and gas business will continue to experience excessive pressure throughout 2013 until structural adjustments are realized.
Forward commodity prices are below a level that provides adequate cash flow to sustain our prior monthly dividend, capitalize on our numerous opportunities, and maintain a strong balance sheet. Notwithstanding the implementation of several initiatives to preserve our prior dividend throughout 2012, current forward commodity prices do not allow for these activities to continue under our "dividend plus growth" business model. The long-term goal of this business model remains intact with a commitment to generate an attractive return for our shareholders through a sustainable balance between dividends and corporate growth.
To deliver on this model, Bonavista embarked upon a strategy five years ago to assemble a concentrated portfolio of assets in highly prospective, multi-zone areas that will create maximum value for our shareholders. The approach was to extract incremental value by enhancing both capital and operating efficiencies through control of operations, consolidation and the development of low-risk, scalable opportunities. We have validated our commitment to this strategy over the past twelve months illustrated by acquiring two synergistic assets in our Deep Basin area, and by divesting of numerous non-core properties that were unable to compete for capital allocation. This acquisition and divestiture activity, coupled with our concentrated exploration and development efforts will result in the allocation of greater than 90% of the 2013 capital budget in two areas: the Deep Basin and West Central areas of Alberta. Complementing this focused acquisition and development activity, Bonavista will continue to optimize its asset portfolio and is currently in the process of marketing additional non-core assets for sale with a bidding process due in February 2013.
Today, Bonavista's asset base and drilling inventory is of the highest quality it's been since inception of the company. We have improved the capital efficiency of our key development plays and we continue to find ways to add discipline to our cost structure. Most importantly, we have an experienced, entrepreneurial team driven by profitability and results.
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