Faced with "risk-adverse" South Korean investors, Calgary-based mid-size producer Bellatrix Exploration abandoned a C$300 million (US$289 million) joint-venture but is confident it can have a new partnership in place within two months, Bellatrix CEO Ray Smith said Tuesday.
The "next time we make an announcement [on a deal] it will be closed," he told analysts during a conference call.
Smith returned Monday from a week in Korea when he said Bellatrix expected the JV with an unnamed Korean company to accelerate development of a Cardium light oil resource play in Alberta would close, or at worst need a 30-day extension from the May 31 deadline.
Instead, he found that the Korean investor, which has been described by Bellatrix as a private investment fund, turned edgy and was not prepared to move forward.
Smith said his impression is that "nobody [in Korea] wants to risk a mistake because that would cost them their job."
He said the Korean company conducted two independent engineering assessments of the Cardium prospect and both reports showed "more aggressive [growth] curves" than three separate reports commissioned by Bellatrix.
When the closing conditions were not met by the May 31 deadline, Bellatrix "decided to end the process," and seek deals with other interested parties in Korea and North America, Smith said.
He said Bellatrix's priority is to accelerate growth of what he described as a 40-year land inventory on terms that match those of the original JV agreement.
The proposal was announced in January and would have seen the partners contribute equally to drill 83 wells over two years in Canada's largest light oil formation.
Established in late 2009, Bellatrix produced 19,343 barrels of oil equivalent/d in the first quarter, up about 3,440 boe/d from a year earlier, in Alberta, Saskatchewan and British Columbia. It is currently averaging 22,500 boe/d and expects to exit 2013 at about 32,000 boe/d. The company attributes most of its growth to the Cardium and Notikewin plays in Alberta.
Smith said the company is waiting to bring three more Cardium wells onstream, anticipating output of 1,500-2,000 b/d per well, and still expects capital spending of about C$230 million in 2013.
