A day after Bellatrix Exploration Ltd. announced its $300-million joint venture deal with a South Korean firm had been thwarted, the company says it has potential new partners in the wings and could announce another deal within weeks.
“We’ve been working on not only this joint venture but on others in an effort to continue to grow the company,” chief executive officer Raymond Smith said in a conference call Tuesday.
“But we won’t announce any more intentions even though we’re told they’re 100 per cent. The next time we make an announcement it will be closed. And we will be firing the rigs up that day.”
Mr. Smith said news that the South Korean investment firm joint venture won’t go ahead will bring the company’s 2013 expenditure plans back down to about $200-million, from the $230-million to $240-million planned for when the deal was first announced last January.
“We will not change our guidance for the next month or so while we look at where we are with these different deals,” Mr. Smith said. “And then we’ll put out some new guidance, if necessary, to the marketplace. But right now we still feel with what’s going on we have a good opportunity to make those numbers.”
On Monday, Bellatrix said its joint venture deal with an unnamed South Korean firm to develop light oil plays in west-central Alberta was off, as the other company was not able to meet the closing conditions by the May 31 deadline.
Shares of Bellatrix dropped in the hours following the news. However, on Tuesday the stock was up almost 6 per cent on the Toronto Stock Exchange, closing at $5.40 a share – near its close last Friday.
Mr. Smith said if new joint venture deals come to fruition, they will be announced within two months.
In an interview, Bellatrix executive vice-president Brent Eshleman gave the backstory, saying state-run Korea Trade Insurance Corp. (or K-sure) originally had said it would back the deal. But the new South Korean government’s changes to the upper echelons of the corporation, which operates export and import insurance programs, changed the parameters of the deal – raising the risk for the unnamed South Korean fund.
“They’re not used to that,” Mr. Eshleman said. “So the fund is trying to wrap their head around that.”
Mr. Eshleman said the unnamed Seoul firm in the original deal is welcome to waive their conditions and sign a new deal, but “we’re not waiting around anymore.”