Bonterra Energy's 2025 Budget: Maximizing Free Funds Flow and Debt Repayment

Bonterra Energy Corp. (TSX: BNE) has recently announced its 2025 preliminary budget and operations update, outlining a strategic plan to maximize free funds flow and accelerate debt repayment. As an investor, I'm always on the lookout for companies that prioritize financial stability and sustainable growth. Let's dive into Bonterra's plans and explore how they align with my investment values.



Bonterra's 2025 budget is designed to generate meaningful free funds flow by focusing on the most economic projects in the Cardium and strategically investing in the further development of the Charlie Lake play. The company aims to maintain production levels of 14,600 to 14,800 BOE per day, weighted approximately 52-54 percent to oil and liquids. Funds flow is expected to range between $108 million to $112 million, with free funds flow of approximately $32 million, generating a 26% free funds flow yield.



Bonterra's capital expenditure range for 2025 is $65 million to $75 million, fully funded by internally generated funds flow. The allocation of planned capital expenditures is expected to be approximately 60 percent towards the Charlie Lake core area, 25 percent towards the Cardium core area, and 15 percent to infrastructure and facilities improvements, and land. This strategic allocation aims to maximize free funds flow in the prevailing commodity price environment while prudently developing Bonterra's high-quality, oil-weighted asset base.

To mitigate risk and add stability during periods of market volatility, Bonterra has put in place hedges on approximately 34 percent of its expected crude oil and 22 percent of its natural gas production, both net of royalties, through the third quarter of 2025. The company expects to layer on additional hedges representing approximately 8 percent of natural gas production net of royalties through the third quarter of 2025, by the end of 2024. Through the next nine months, Bonterra has secured WTI prices between $60.00 USD to $86.35 USD per bbl on approximately 1,828 bbls per day, and natural gas prices between $1.75 to $3.30 per GJ on approximately 9,121 GJ per day.

Bonterra's hedging strategy is designed to enable the company to responsibly manage the pace of capital deployment and prioritize capital efficiencies in allocating capital. With the focus of debt repayment driven through free funds flow allocation in 2025, Bonterra plans to regularly review the budget and may elect to adjust the amount and timing of capital spending depending on the prevailing commodity price environment.

As an investor, I appreciate Bonterra's commitment to maximizing free funds flow and prioritizing debt repayment. Their strategic allocation of capital expenditures, hedging strategy, and focus on prudently developing their high-quality asset base align with my investment values of stability, predictability, and consistent growth. While Bonterra may not be the most exciting or flashy investment, their steady performance and commitment to financial discipline make them an attractive option for a balanced portfolio.

In conclusion, Bonterra Energy's 2025 preliminary budget demonstrates the company's commitment to maximizing free funds flow and accelerating debt repayment. Their strategic allocation of capital expenditures, hedging strategy, and focus on prudently developing their high-quality asset base make them an attractive investment option for those seeking stability, predictability, and consistent growth. As an investor, I will continue to monitor Bonterra's progress and consider adding them to my portfolio as they work towards implementing a sustainable return of capital to shareholders.