Bellatrix Exploration Update

Bellatrix Exploration (BXE-TSX):

Updating estimates following close of equity financing; maintaining
BUY rating but lowering target price:
Investment Highlights: We are updating our estimates following the close of its equity offering whereby BXE
issued a total of 18.17 million shares for gross proceeds of $172.6 million. Given only a modest increase in
capital spending guidance, the transaction was modestly dilutive on CF and NAV. Despite the lack of a
perceived use of proceeds for the financing, we maintain a high degree of confidence in management
that it has the right focus on effectively deploying this capital to the ultimate benefit of shareholders.
One interviewee told me better be sooner than later to maintain some investor confidence.
Deal modestly dilutive: 4% on NAV and 5% on 2015 CFPS. The equity issue was neutral to base (2P) NAV
but 4% dilutive to risked NAV given only limited acceleration of CAPEX spending. Furthermore, we estimate
~5% dilution to our 2014/2015 CFPS estimates.
Use of proceeds: Management has demonstrated a clear strategy of consolidation & infrastructure control within its core west central focus area and we suspect it could have one or more potential acquisition opportunities
on its radar. We maintain confidence that management will ensure a potential transaction
would be accretive for shareholders.
Potential catalysts for the stock include:

1) construction of its 110 MMcf/d gas plant in Alder
Flats;

2) results from a number of formation and
technology tests in 2014 and;

3) potential A&D and

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