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2018 CORPORATE
RESPONSIB IL ITY
REPORT
Responsible DevelopmentEnhancing Value
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Contents
Welcome .....................................................................................................................................................................1
President’s Message ...................................................................................................................................................2
About Bellatrix ............................................................................................................................................................3
Company Overview .....................................................................................................................................................4
Governance .................................................................................................................................................................7
Health & Safety ...........................................................................................................................................................8
Community & Stakeholder Engagement ................................................................................................................. 21
GRI Content Reference Index ................................................................................................................................... 26
Advisories and Forward Looking Information ......................................................................................................... 28
Welcome
At Bellatrix Exploration Ltd. (“Bellatrix”, the “Company”, “our” or “we”), creating value is the Company’s common goal. We achieve value through a culture of focused innovation.
We are dedicated to achieving industry leading economic results in an environmentally responsible, compliant, and safe manner.
This report is intended to communicate to our stakeholders our values, initiatives and results.
The metrics presented in this report are focused on the 2014, 2015, 2016 and 2017 operational years and are based primarily on the methodology found in the Canadian Association of Petroleum Producer’s Responsible Canadian Energy Program and reported utilizing the Global Reporting Initiative (“GRI”) Standards to guide the development of this report.
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President’s Message
Bellatrix Exploration Ltd. has built a strong strategic vision anchored by three pillars that provide the foundation for long term profitable growth, which include a high-quality asset base in one of the most profitable natural gas plays in North America, underpinned by strategic infrastructure ownership and control, and supported by ample takeaway capacity.
Bellatrix’s strategic vision is based on three values: relationships, culture, and transparency, with culture being the anchor in the middle. The Bellatrix culture is at the center of everything we accomplish, and the key to our successful culture is through our people and their commitment to
building long-term value for our shareholders in combination with support for the economic and social well-being of the communities that we work in.
Bellatrix’s engagement with stakeholders including the government and regulatory bodies, indigenous groups, shareholders, landowners, communities, contractors, suppliers and employees is key to our business. The best decision making incorporates considerations for multiple stakeholders and we respect the contributions of these parties. Our goal is to create positive, lasting impacts in the communities and areas in which we invest.
Bellatrix believes that successful communities are built on strong economic activity, employment and community involvement. Bellatrix contributes to its local communities in each of these areas. We also contribute to broader economies by paying taxes and royalties, providing employment, and supporting economic activity by engaging in supplier contracts. Bellatrix’s approach is to hire locally when possible and aims to use local suppliers when appropriate in our operations, hiring regional construction, transportation and service vendors. Bellatrix is committed to conducting business in a way that endorses ethical behavior and thoughtful governance. I am pleased to present Bellatrix’s 2018 Corporate Responsibility Report. Bellatrix prides itself on its operational and financial transparency, and our Corporate Responsibility Report is an extension of our ongoing commitment to enhanced disclosure and stakeholder engagement. This Corporate Responsibility Report is directed to all internal and external stakeholders and is designed to provide context around our corporate responsibility initiatives, including how the Company’s efforts relate to the broader economic, environmental, and social conditions in which we operate.
In closing, I want to thank our stakeholders and partners for their continued strong support and ongoing engagement as the Company strives to enhance long term sustainable value for all stakeholders.
Brent Eshleman President & CEO
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About Bellatrix
Bellatrix is a Calgary, Alberta based intermediate energy producer focused on exploration and development of light oil and liquids-rich natural gas opportnities in the Western Canadian Sedimentary Basin. Corporate Strategy The Company’s strategy is to create sustainable and profitable per share growth in reserves, production, and cash flow. To accomplish this, Bellatrix pursues a balanced growth strategy, incorporating active development and exploration drilling, and focused acquisitions, while maintaining a flexible financial position. Highly Concentrated & Focused Operations Bellatrix has established a large concentrated land base in west central Alberta, Canada. We maintain a large inventory of high impact liquids rich natural gas drilling locations in the Spirit River formation and higher liquids weighted opportunities in the Cardium formation that provide a balanced opportunity set of both natural gas and oil weighted investment prospects. Intermediate Sized Producer Production volumes in 2017 averaged 36,872 boe/d weighted 75% to natural gas, 17% to natural gas liquids (“NGLs”) and 8% weighted to crude oil and condensate. At December 31, 2017 Bellatrix had a market capitalization of approximately $105 million and an enterprise value of $525 million. Common shares of Bellatrix trade on the Toronto Stock Exchange and the New York Stock Exchange under the symbol “BXE”.
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Company Overview
Bellatrix has built a strong business anchored by three pillars that provide the foundation for long term profitable growth:
High Quality Assets and Acreage
Bellatrix is positioned for long term development of our large asset base. The core foundational assets for the Company reside in a proven area known as the Deep Basin located in west central Alberta, known for its exceptional geologic and hydrocarbon bearing characteristics. Bellatrix maintains a dominant core acreage position along the Deep Basin fairway with decades of development ready opportunities anchored by our large inventory of net identified Spirit River and Cardium well locations. Infrastructure Ownership and Control
Infrastructure ownership, operatorship and control create significant barriers to competition within our core area thus ensuring operational flexibility and reliability to profitably process our production volumes and extract maximum value from each product stream. Since 2013, Bellatrix has invested approximately $350 million in strategic infrastructure assets within our core west central Alberta area providing above ground control of the region and creating significant barriers to industry competition. Takeaway Capacity and Market Egress
The third pillar that provides a key competitive advantage and underpins the Company's long term strategy is ensuring ample takeaway capacity and market egress for our production volumes. Bellatrix maintains several long term firm transportation agreements, ensuring market egress for current and forecast production at multiple receipt points on the Nova Gas Transmission Ltd. system. Bellatrix established itself on November 1, 2009 when the Company was formed pursuant to a plan of arrangement. Bellatrix has grown significantly since inception, growing average annual production volumes from 8,519 boe/d in 2010 to 36,872 boe/d in 2017.
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As at December 31, 2017 Bellatrix did not have any material subsidiaries.
Bellatrix's principal, head office and registered office is located at 1920, 800 – 5th Avenue S.W., Calgary, Alberta T2P 3T6.
About this Report
Bellatrix’s Corporate Responsibility Report is intended for all internal and external stakeholders. This Corporate Responsibility Report is designed to provide context around our corporate responsibility initiatives, including how the Company’s efforts relate to the broader economic, environmental, and social conditions in which we operate. We publish a full-length sustainability report on an annual basis.
235,330 36,872
$525MM $249MM
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Unless otherwise stated, this report covers the reporting periods of calendar years 2014 through to 2017. The terms “BXE”, “Bellatrix”, “our”, “we”, “us”, “the company”, “organization” and “the Corporation”, refer to Bellatrix Exploration Ltd. Financial data is stated in Canadian dollars and environmental data is stated in metric units. For further details on Bellatrix’s financial performance, please refer to the audited consolidated financial statements and Management’s Discussion and Analysis. This report contains forward-looking information as to Bellatrix’s internal projections, expectations or beliefs relating to future events or future performance. For more details, read our forward-looking statements on page 28.
Defining Report Content The metrics presented in this report are based primarily on the methodology found in the Canadian Association of Petroleum Producer’s Responsible Canadian Energy Program and reported utilizing the Global Reporting Initiative (“GRI”) Standards which provides the framework for this report. The report contains some GRI standard disclosures but does not fulfill the requirements to be “in accordance” with the GRI Standards. The GRI index is included on page 26 and indicates where specific disclosures are addressed within the report.
In defining the report content, Bellatrix engaged several departmental groups, including executives, to broadly define key stakeholder groups and identify relevant topics to be discussed and presented herein. We anticipate that ongoing dialogue with key stakeholders over the coming years will foster broadened report content and provide enhanced disclosure and stakeholder engagement into the future. Our material topics have been relatively consistent year after year.
Material Topics Material topics were discussed and agreed to by a joint internal committee of key departmental groups that were considered of high importance and relevance to key stakeholder groups. As part of our Corporate Responsibility Report, we have elected to focus efforts on identification and discussion of material topics with analysis on materiality and boundary impacts to be addressed in future reports. Material aspects identified and discussed in this report include:
• Governance o Regulatory Compliance Assurance
• Health & Safety • Environment
o Air and Greenhouse Gas (“GHG”) Emissions o Water Management o Land Reclamation
• People & Culture • Community & Stakeholder Engagement
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Governance
Bellatrix is committed to safe, compliant, and environmentally responsible operations for the benefit of employees, contractors, shareholders, and the communities we operate in. To demonstrate this commitment, Bellatrix’s Board of Directors has established a Committee tasked with overseeing matters related to safety, environment, regulatory and stakeholder engagement. There are several functions within the Company that contribute to various aspects of sustainability.
Bellatrix has also established corporate policies, standards and practices to empower our team to achieve the highest standards and ensure safe, compliant and environmentally conscious operations. Some examples of these policies and standards include:
Whistleblower Policy Code of Business Conduct & Ethics Worker’s Right to Know and Refuse Policy Safety Policy Training Policy Donation Policy Environmental Policy Fit for Duty Policy
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Bellatrix has an anonymous Confidence Line in place that allows reporting of any contraventions of the Bellatrix’s Code of Business Conduct and Ethics Policy including any environment, safety or regulatory infractions.
Regulatory Compliance Assurance
Compliance assurance represents an ongoing process through the integration of procedures with the Company’s internal management systems and business practices. Examples include the Pipeline Integrity Management System and the Environment, Safety and Regulatory (“ESR”) Field Based Inspection Program, both designed to ensure standards are maintained and to proactively identify and correct deficiencies.
In 2017, thirty-eight inspections were conducted at our operations by the Alberta Energy Regulator (“AER”) The inspection total has decreased from the previous year’s total which demonstrates a growing confidence in Bellatrix from the AER. The smaller number of total inspections demonstrates that the identified compliance items did not lead to follow-up inspections.
In addition to external compliance inspections, Bellatrix is committed to using proactive compliance programs. Bellatrix continued executing the internal compliance inspection program to ensure that our staff and contractors take an active role in identifying and correcting compliance concerns before external agencies are involved. The program saw 635 inspections completed in 2017 and plays a critical role in improving regulatory, safety and environmental protection standards at Bellatrix.
It is our goal to continue improving our compliance average each year and meet or exceed industry average. We will strive to achieve this by meeting targets to complete a minimum of 430 internal inspections and focusing on being proactive on findings.
Asset Integrity
Bellatrix takes the long-term safe operation of assets seriously. In 2017 Bellatrix initiated a Pipeline Integrity Committee. The foundation of Bellatrix’s Pipeline Integrity Committee is a proactive risk-based approach to prevent pipeline failures and incidents. The committee provides overall guidance and strategies to assess and mange each pipeline. Programs include inspections, evaluations, monitoring and mitigation strategies to protect people, the environment and the integrity of our assets. This multidiscipline committee ensures these pipeline integrity strategies are achieved and tracked. The committee also ensures compliance with regulations and drives improvement through goal setting, tracking and results measurement. Through program audits and incident investigation, we implement lessons learned and best practices for continuous program enhancement.
Shawn Woodford, C.E.T Director, ESR
“Regardless of the challenges our industry continues to face, I am proud of the accomplishments we have made over the years to improve our ESR performance and culture. The vision is to have zero injuries and zero incidents on all fronts and with continued support from our leadership, employees, contractors and service providers, we are well on our way.”
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One key goal established by the pipeline committee recently was its management of water crossing pipelines. This water crossing program identifies pipelines under waterbodies and applies a risk ranking so we can prioritize inspection of pipelines. This program is designed to assess for new risks and hazards on an annual basis. In short, it’s about keeping the pipeline safe for life. Everything is done to ensure pipelines are designed, built and operated in a safe, reliable and sustainable manner.
Health & Safety
Employee and contractor safety, along with the safety of the residents in the communities in which we operate, is fundamental at Bellatrix. Bellatrix strives to continuously improve our health and safety performance, create a culture of proactive workplace health and safety and reduce the risk and costs associated with workplace incidents.
Bellatrix maintains a pro-active safety culture by focusing on leading indicators to identity hazards before they lead to incidents. Bellatrix follows the Certificate of Recognition (“COR”) health and safety management
system by Energy Safety Canada. Bellatrix has built its Safety Management System (“HSMS”) using the COR framework from the ground up through participation of all staff including the Joint Health and Safety Committee. HSMS practices are rolled out at monthly safety meetings and audited for implementation.
Complyworks is used to prequalify all onsite vendors. Bellatrix requires its service providers to have an COR in place. All potential contractors must go through a prequalification program including an audited safety management program. The Company’s safety culture must also be adopted by all contractors to work with us.
Globally recognized safety leadership training is mandatory for all our key personnel. To ensure our staff have the skills they need to manage safety, Bellatrix has a system in place to measure and track all workers’ competency and skills training. Competency assessment are tracked in our Competency Management Data System (“CMDS”) along with all ESR practices and Site-Specific Procedures. Basic tickets are paid for by the Company and tracked (H2S Alive, WHMIS, eGSO, Standard First Aid, Ground Disturbance Supervisor, Confined Space Entry, Fall Arrest Training). Bellatrix also sponsors several technical training courses.
Anthony Singleton, CRSP Manager, Health and Safety
“We are striving to become an industry leader by employing leading-edge tools and training for our staff. We are also on our way to having some of the best safety metrics amongst our peers. Our goal is to remain a workplace where you would be proud to send a friend or family member to work and feel that they are in safe hands.”
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Industrial hygiene assessments, audiometric testing, fit testing, comprehensive site-specific procedures and a personal protective equipment program ensure that our staff are aware of the long-term health hazards and the associated controls required for all locations and tasks. Low staff turnover ensures that we have an experienced and dedicated group of core people to train, mentor and supervise all work.
Bellatrix is an industry leader in injury management through prevention, and championing return to work programs which allow us to minimize the average cost and days lost year over year. Bellatrix’s short-term goal through 2019, is to strive to have one of the lowest possible WCB premium rates in our industry category by actively managing these programs. In 1.2 million hours worked, Bellatrix has not had an employee recordable injury.
BXE modified work claims in the last 5 years (source OHS Alberta).
BXE has a stringent hazard identification program which includes: permitting of all on site work, mandatory job safety analysis, ongoing spot checks, regular inspections and hazard identification reporting. A state of the art incident data management system, including a mobile application allows for instantaneous incident, near miss, and hazard ID reporting. This system allows us to track and trend leading and lagging indicators as well as assign corrective actions targeting the root causes of incidents to prevent any reoccurrence.
Bellatrix has a corporate emergency response plan in place for all possible emergency situations and crews complete regular training. All staff are required to have incident command system 100 (“ICS 100”) training completed as a minimum. Corporate Emergency Response Plans (ERP), Emergency Response Assistance Plans (ERAP) and an incident management practice allow us to respond appropriately to all incidents.
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Environment
At Bellatrix, protecting the environment through sound environmental management is central to the success of our business. Our staff manages the environmental aspects of our operations spanning across multiple disciplines including water planning, waste handling, release management, remediation, air and greenhouse gas emissions, and reclamation.
Greenhouse Gas (“GHG”) Emissions
The use of fuel gas for equipment operations represents the largest component of greenhouse gas emissions at Bellatrix followed by fugitive emissions, vent and emissions from flaring. Since 2014, Bellatrix has significantly reduced emissions from vent and flare sources due primarily to infrastructure construction, new well activity levels and in some cases, divestments which are not taken into account to recalculate previously displayed data.
GHGs calculations include CO2, CH4 and N2O and are represented on a 100-year global warming potential as an equivalent of CO2 (IPCC report).
Bellatrix is actively working to plan for compliance with new methane regulations and NOx regulations. We have developed a multi-disciplinary Corporate Emissions Team to assess early action in preparing for compliance but also to become more efficient in our operations. This Team approach has enabled the evaluation of several new technologies and pilot studies to continue to reduce emissions.
Bellatrix is proud to report our GHG emissions intensity is significantly lower than the national industry average. The National Inventory Report published by Environment Canada in April 2018, shows the average 2016 emissions intensity for the Natural Gas Production and Processing industry in Canada was 0.043 tonnes CO2e/BOE. Bellatrix is well below this at a direct and indirect GHG emissions intensity of 0.026 tonnes CO2e/BOE in 2017.
In addition to regular operations, unintentional losses of process gas through faulty, loose and damaged
0.02440.02480.02520.02560.02600.02640.02680.02720.0276
2014 2015 2016 2017Tonn
es C
O2e
/BO
E
GHG Emissions Intensity
Direct GHG Emissions Intensity
Direct & Indirect GHG Emission Intensity
-
100
200
300
400
500
600
2014 2015 2016 2017
mm
Ton
nes C
O2e
Direct GHG Emissions Profile
Flaring Emissions
Venting Emissions
Fugitive Emissions
Fuel Gas Combustion
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mechanical connections or seals may occur (fugitive emissions). To manage these leaks as required under AER Directive 060, Bellatrix maintains a fugitive emissions management program that primarily utilizes an infrared camera to detect leaking components. From 2014 to 2017, the Company has completed 76 full facility inspections and identified 609 repairable leaks. The majority of these leaks involved connection type components that did not require a facility shut down to be repaired and resulted in immediate economic and environmental benefit once resolved.
Water Management
As a corporation, Bellatrix interacts with water in multiple ways, from use in drilling and completions operations to watering gravel lease roads to reduce dust for safety and stakeholder convenience. Water is withdrawn from several sources, mainly groundwater, but also rain-fed borrow pits and streams/creeks/rivers. In some cases, Bellatrix also purchases heated, recycled water for our completions operations to prevent our make-up water and equipment from freezing during winter months. In recent years, we have significantly reduced water withdrawal from major fish bearing rivers and lakes. This change reduces direct impact to water users downstream of withdrawal locations in the watershed. Instead of surface water sources, Bellatrix has focused
0
50
100
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400
2014 2015 2016 2017
Cumulative FEMP Inspections and # of Leaks Repaired
# of Leaks Repaired # of Inspections
0 50 100 150 200 250 300
2014
2015
2016
2017
Water Withdrawal by Source (megaliters)
Surface Water Ground Water
Produced Water Third Party Recycled Water
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on utilizing groundwater. Under AER and Alberta Environment and Parks (“AEP”) guidance, groundwater authorizations require extensive aquifer testing and hydrogeological assessments prior to any large volume withdrawals. Conservative estimates are used during the assessments to determine a sustainable diversion rate that will allow all groundwater users to access the aquifer in the future.
Bellatrix does not operate in any areas that are deemed to be water stressed; however, there are several areas where nearby stakeholders (landowners and residents) have expressed concerns about their own domestic water supplies. To ensure that there are no negative effects to nearby water supplies, Bellatrix conducts pre-drilling domestic water well tests on domestic aquifers to obtain baseline quality and quantity information.
Bellatrix has two types of fresh water discharges: dust control and excess fresh water pump-off. Both activities are regulated under provincial and industry standards. Since dust control water is applied to low and mid-grade gravel roads, this water will eventually infiltrate back to the groundwater cycle through gravity. Excess fresh water pump-offs primarily travel overland and eventually end up in a surface waterbody. There are no water bodies or related habitats that are significantly affected by water discharges and/or runoffs from Bellatrix. Additionally, there is no treatment prior to discharge but we do check chlorides, sulfates, nitrates, sodium, EC, pH, SAR prior to pump-offs.
Water Discharge and Total Consumption
2014 2015 2016 2017 megaliters
Water Discharge by Destination
Surface Water 5.4 5.4 8.7 9.6 Groundwater Not Avail 12.5 1.8 9.3
Total Water Discharge
All Destinations (Freshwater)
5.4 17.9 10.5 18.9
Total Water Consumption
Withdrawal – Excess Water Pump Offs
269.2 85.0 72.7 103.7
In 2015, Bellatrix formed an internal multi-disciplinary water planning group. The group reviews new operations locations and creates a unique plan for sourcing including alternative (non-fresh) water options. The goals and targets set out by the water planning group are supported by senior management. Bellatrix is committed to reducing reliance on fresh water sources and recycling waste water sources (e.g., flowback water generated after well hydraulic fracturing). Reduced drilling programs have resulted in logistical challenges in recycling hydraulic fracturing flowback water (see graph). Timing and location of our hydraulic fracturing programs are key in being able to re-use and recycle non-fresh water. Industry percentages taken from the AER water use performance report.
0%1%2%3%4%5%6%7%8%9%
2014 2015 2016 2017
Flowback Recycled as Percentage of Water Sourced
for Hydraulic Fracturing
BXE Flowback Recycle % Industry %
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Waste Management
Solid and liquid wastes are sent to AER and AEP approved disposal facilities. Some waste streams can be re-used and recycled, such as oily rags, while others can be re-refined and used again, such as used lubricating oils. Recent advancements in drilling technologies and support equipment have helped to reduce the amount of waste that is sent to disposal facilities. One of our suppliers is now able to separate the invert fluid from our drill cuttings which can be re-used as a drilling fluid. Cleaned cuttings are sent to landfill. No hazardous wastes were transported, imported, exported or treated in the reporting period.
In addition to the solid wastes, Bellatrix disposed of 82,540 m3 of non-hazardous liquid wastes in 2017 (e.g., produced water to 3rd party disposal facilities for deep well injection). While our activity levels make it challenging to reuse this waste stream as completions water, we are actively working with operators in our area to determine other potential recycling alternatives.
Product Releases
Releases of produced water, liquid hydrocarbon or other deleterious substances can have an immediate and potentially long term negative consequence on human and wildlife health, fresh water, air, soils, and vegetation. Release prevention through engineered controls and preventative maintenance is the first defense, but recovery and remediation is occasionally necessary to manage releases.
Bellatrix has clear processes and systems in place for release response, reporting, and recovery/remedial activities. Through the tracking and analyzing of data, there have been opportunities for improvement and implementation of new tools, procedures, and preventative measures. As a result, Bellatrix noted an increase in the total number of releases in 2017 by 31% compared to 2016 due to a higher awareness of internal reporting.
0
10,000
20,000
30,000
40,000
50,000
60,000
2014 2015 2016 2017
Met
ric T
onne
s
Non-Hazardous Solid Waste by Destination
Landfill Recovery (inc. Energy Recovery) Recycling Reuse
0
5
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15
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25
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35
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2014 2015 2016 2017
Num
ber o
f Rel
ease
s
Volu
me
(m3 )
Reportable Releases
Total Volume (m3) Number of Reportable Releases
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However, the number of regulatory reportable releases in the same period was significantly reduced by 21% with total spill volume decreasing by 73%. These metrics show increasing reporting and awareness results in addressing small impacts before they become more significant.
Bellatrix has no material spills that have resulted in significant adverse effects. By initiating and treating impacts through an in-situ remediation program, we removed the need for a large soil excavation and landfill disposal. This low-impact program has removed the potential for off-site contamination and enabled continued operations by utilizing a chemical oxidation process to neutralize light-end hydrocarbon contaminates that could potentially permeate into the soil and groundwater.
Land Reclamation
Land reclamation is the process of returning disturbed land to equivalent land capability. The land reclamation process can take anywhere from 2 to 20 years, depending on a wide range of factors. Bellatrix recognizes the importance of reducing our footprint on the land and is committed to reclaiming and returning the land to stakeholders.
In 2017, Bellatrix has received reclamation closure on 27 wellsites, representing 93 acres of reclaimed land in Alberta and Saskatchewan. Reclamation closure is obtained by following the criteria and methods outlined by the regulator in each province. Reclamation closure applications are prepared by third party consultants and are reviewed by the regulators for compliance before they are approved. Reclamation plans in 2018 and 2019 will continue to progress towards our five-year target of 75 reclamation certificates (by the end of 2020). Ongoing reclamation work is spread across Alberta, B.C. and Saskatchewan, on public lands, freehold lands and First Nation lands.
Jaime Graham M.Sc., P.Ag. Manager, Environment
“Our commitment to strong environmental performance and stewardship is shown through long range planning and a key focus on continual improvement driven through multi-disciplinary working groups.”
189 194154
128
6374
89 139
1314
0
50
100
150
200
250
300
2014 2015 2016 2017
Abandoned Wells by Reclamation Phase
Reclamation Certificates ReceivedActive Reclamation or MonitoringReclamation Deferred
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Licensee Liability
Alberta uses a comparison of a licensee’s deemed assets to its deemed liabilities to assess the licensee’s financial ability to properly address suspension, abandonment, and reclamation of its assets. Licensees whose liabilities outweigh their assets are required to post a security deposit with the AER and face additional restrictions and scrutiny during the acquisition and divestment process. Bellatrix has a strong LMR rating which gives us flexibility in developing our business.
To further mitigate the risk of unfunded wells and facilities, licensees are required to contribute to an Orphan Levy fund set up to help cover costs of abandonment and reclamation associated with defunct operators. The Orphan Levy has increased from $15 million to $45 million in the past three years as the inventory of orphan wells and facilities has grown.
The increase in orphan wells and facilities, along with the Redwater Decision, which allowed receivers of insolvent oil and gas companies to disclaim unprofitable assets, have increased the scrutiny on liability management. The Government of Alberta has undertaken a review of liability management in the province and the AER will be implementing decisions from that review. Other programs, such as Area Based Closure, are being developed to encourage industry to pursue closure of inactive assets in an efficient manner. Bellatrix intends to participate in the Area Based Closure program in 2019 and continues to work to reduce our liability in anticipation of potential changes.
0
4
8
12
16
20
24
28
AER
Calc
ulat
ed L
MR
Peer Group LMR Comparison
January 2018 LMR Average Industry LMR
* indicates security on hand withthe AER
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People & Culture
A single star in the sky is beautiful on its own merit, and however dazzling that star may be, it is only capable of being a bright shining star. However, when that star is sighted together with its fellow stars, it takes on a new meaning and a new context. That star now belongs to a myth, a legend, a mighty tale rich with folklore and heroism. Gamma Orionis (also known as Bellatrix) is the 25th brightest star in the sky. By all scientific accounts, it is a spectral standard star made of common hydrogen. But when viewed as part of the constellation Orion, it instantly becomes part of one of the most prominent and well-known constellations visible in the night sky. Orion the hunter. Orion the hero. Orion’s belt. Orion’s narrative is thick with legendary tales of walking on water and armed with an unbreakable club of solid bronze. As stars come together to form a constellation, they become part of a larger story.
Each employee at Bellatrix embodies the STAR values: Safety Teamwork Accountability Results
We believe that every employee at Bellatrix is a star with their own unique talents and skills. But when we work together as a team, we are greater than just the sum of our parts.
The Bellatrix community of employees and staff members form part of a larger story, rife with its own myths and legends. Our culture is the result of each individual feeling empowered to innovate, hold each other accountable, and to ensure transparency and excellence in everything we do. Our responsibility it to create value for our stakeholders and achieve results.
Rosa Kubin Manager, Human Resources Bellatrix Exploration Ltd. “We believe that every employee at Bellatrix is a star with their own unique talents and skills. But when we work together as a team, we are greater than just the sum of our parts”.
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Talent Management
Not only has Bellatrix always been committed to hiring qualified, diverse and innovative individuals, we also seek out the following traits in each new employee we hire: compassion, resourcefulness, and humor. We select successful candidates based on their merits and abilities, but we also place a lot of importance on hiring people with the right attitude and aptitude.
Bellatrix’s permanent employee base at the end of 2017 was 169, relatively unchanged from 2016. This year we focused on retaining full-time staff and converting existing consultants and contractors into permanent employees. Bellatrix has realized many advantages of maintaining a dedicated and committed workforce: business knowledge remains in-house, the ability to plan future projects with more clarity and certainty, and the intangible sense of a growing loyalty between staff members and management.
The following chart illustrates our gender diversity of permanent employee at a few different levels within the organization over the last three years: Non-Management Employees, Management and the Senior Leadership team.
Employee Fast Facts at a Glance: • 169 Employees • 67% of employees worked in the
Calgary head office; 33% worked in the field locations and field offices
• The average age of a Bellatrix employee is 43
• Ages of employees range from 19 to 72 years old
• No employees under collective bargaining agreements.
• 44% of all employees are female; 56% are male
• 77.9% of our total workforce are permanent employees and 22.1% are contractors
• Average voluntary turnover rate in 2017 was 0.8%
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Sustainable Workforce
Bellatrix invests in its people. Not just with money, but with tailored programs that provide development opportunities, growth and leadership potential, family & community support and work-life balance. This investment has paid off, as Bellatrix has reaped the benefits of a productive workforce, and it shows in our results.
To ensure that each employee is reaching their peak potential, Bellatrix has a formal performance review program in place, which includes goal setting and goal review, and is conducted annually at the end of the performance year. Non-executive employees participate in the Employee Performance Plan (“EPP”) and executives are measured against the corporate and departmental goals outlined in our Annual Incentive Plan (“AIP”).
Compensation & Benefits
Bellatrix strives to provide a competitive compensation and benefits package, not only in the form of base salary, but also short term and long-term incentives, and providing opportunities for equity and share ownership in the Company. We use a third-party compensation survey to ensure our total compensation package is not only competitive, but that we offer the right mix of cash, benefits, incentives and perks.
Wellness
Bellatrix continues to place a lot of emphasis on the wellness of its employees. We offer many programs and services, such as ergonomics assessments, in-house seminars on various wellness topics, social networking opportunities, company events, the use of a health care spending account for wellness programs and activities. The company also provides peace of mind in safeguarding employee livelihoods and protecting the financial and emotional well-being of the employee’s families by providing disability, critical illness and life insurance benefits, and access to an employee and family assistance program.
66%
34%
64%
36%
84%
16%
64%
36%
61%
39%
68%
32%
54%
46% 53
%
47%
83%
17%
0%
20%
40%
60%
80%
100%
Males Females Males Females Males Females
Non-Management Employees Management Team Senior Leadership
2015 2016 2017
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With a renewed focus on mental health in the workplace and breaking down the stigmas of mental illness, the company acknowledges the importance of mental health awareness, and encourages employees to use their benefits and health care spending accounts not just for traditional counselling, but alternative therapies for mental health such as massage therapy, float therapy, yoga classes and meditation classes.
Employee Engagement Bellatrix maintains a very low voluntary turnover rate, and it has continued to drop. In 2017 our voluntary turnover rate was 0.80%, which is a sharp decline from our already very low turnover rates from 2016 (1.85%) and 2015 (1.83%). This demonstrates our great ability to retain our talented people.
Bellatrix also utilizes a number of tools to measure engagement. One of the formal tools used is an employee engagement survey. Bellatrix conducts surveys a minimum of once annually, with planned pulse surveys intermittently when required. Bellatrix also strongly encourages an open dialogue between employees, management and executives.
Work/Life Balance
Promoting work/life balance is more about actions than words. Bellatrix takes employee wellbeing into consideration when designing it’s time away from work programs, health and wellness programs and by creating meaningful opportunities for social engagement in the workplace. The Bellatrix culture fosters an environment of hard work and dedication to the job. However, behind each of our employees there is a network of friends, family, and community that make each individual unique. Each employee brings a different set of skills and strengths to the table, and we recognize that most of these abilities and talents are cultured and developed outside of the work environment. In order for an employee to ‘give it their all’ in the workplace, they also need to be fully supported in their personal lives. To encourage a well-rounded work/life balance, Bellatrix provides a progressive mix of vacation, flex and personal days as well as offering specialty programs, such as personal leaves, sabbaticals, part time opportunities, time off for volunteering, and in some cases, telecommuting when possible.
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Community & Stakeholder Engagement
Bellatrix recognizes our responsibility to make leading decisions based on renewable values conducive to Canadian society as a whole. Bellatrix makes both financial and non-financial contributions to communities and ecosystems in close proximity to its operations, in addition to contributions made to charitable organizations and youth programs.
Bellatrix’s community investment programs are strategically aligned to promote environmental stewardship, education, health and environmental initiatives. The average budget over the course of the last five years exceeded $150,000 per year. Bellatrix’s Corporate Donation Committee congregates monthly and reviews many worthy organizations that have requested support. The Committee considers the following when making a decision:
Proximity to operations Alignment with our corporate values (education, health and environment) Involvement of Bellatrix’s employees
Bellatrix employees are more than their corporate achievements. Many employees choose to give back to their communities, donating their money and time to support local charities. Bellatrix encourages employees to endorse their favorite charities through our employee matching program; whereby the Company will match up to $1,000 of employee donations to charitable entities, provided the charitable entity does not have any political affiliations or agendas.
Bellatrix has partnered with various organizations to provide multi-year commitments for funding special projects in an effort to aid these organizations in creating lasting change and long-term results. Bellatrix believes that wildlife in our operating area are important stakeholders too and so this year we have partnered with the Alberta Wilderness Association on the global mission to help conserve wilderness and protect the environment that we all share.
Moreover, Bellatrix offers a scholarship program for children of employees. This scholarship program provides grants for post-secondary education and learning.
Bellatrix has looked at other creative ways to give back to our community during these challenging economic times. For example, Bellatrix has donated its office space including meeting rooms for the use of non-profit organizations, implemented an in-office recycling program that donates all proceeds of refundable containers to KidSport, a charity that provides support to children by removing financial barriers that prevent them from participating in organized sports. Bellatrix has also completed an audit of its consumable items switching several products to those which are more environmentally responsible.
Bellatrix facilitates volunteer programs to help foster a culture of volunteerism. One way we contribute is by facilitating volunteer opportunities for employees to get involved in their communities like at the Calgary Drop-in
Shauna Mason, MBA, ACIS Manager, Corporate Affairs “Giving back to the communities in which we operate fosters collaboration and a sustainable future.”
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and Rehab Centre. We also arrange for social events in Calgary, which, along with building fellowship amongst employees, all have a charitable component for employees and the company to donate to a variety of worthwhile causes.
Stakeholder Engagement
Bellatrix is committed to the belief that our success is directly related to the relationships we have built and continue to build with our stakeholders. Since 2017, the Bellatrix Community Relations team has redefined and enhanced our engagement strategy. Our focus is to create and foster strong community relationships guided by the principles of transparency, integrity and collaboration. We achieve this through continued open dialogue with all stakeholders. Our business units encourage the participation of those impacted by our developments early in the planning stages, so we can address any questions or concerns in a timely and proactive manner. This engagement has been critical to ensuring Bellatrix meets its operational goals on time and within budget.
Bellatrix’s maintains operations on lands traditionally used by indigenous groups. We acknowledge the spiritual and cultural importance of these areas and continue to collaborate with our indigenous neighbors as we plan and execute our developments.
“Bellatrix’s culture starts with its people. The key to our success is our people”.
Angie Clarke Director, Surface Land “Coming together is a beginning; keeping together is progress; working together is success.” – Henry Ford
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Bellatrix believes that stakeholder engagement is essential in achieving business success and sustainability. There are many different stakeholder groups, identified as those individuals and parties who have either a direct or indirect interest in Bellatrix. The table below summarizes the different stakeholders and our engagement:
STAKEHOLDER GROUPS ENGAGEMENT INDIGENOUS • Regular communication and consultation with First Nations Peoples
• Partnering with local First Nations Peoples owned service companies • Creation of employment opportunities • Community and education grant funding
LANDOWNERS AND LOCAL COMMUNITIES
• Support of local initiatives through financial and charitable donations • Participation in community open houses and events • Volunteering for school programs requiring site tours and visits to
facilities EMPLOYEES & CONTRACTORS
• Anonymous suggestion box & whistleblower confidential service • Company breakfasts with executive presentations • Regular town hall meetings • Lunch ‘n’ learns with various topics from health and wellness to financial
planning SHAREHOLDERS / INVESTORS • Annual General Meeting
• Quarterly conference calls and internet webcasts • Participation in conferences and roadshows • Communication through Annual Report, Management Proxy Circular,
Annual Information Form, news releases and website ENVIRONMENTAL ORGANIZATIONS
• Participation in fluid release response exercises and general meetings • Support of environmental initiatives and airshed membership through
financial donations and volunteering GOVERNMENT AND REGULATORY BODIES
• Regular communication with various levels of government and regulatory bodies
• Participation in voluntary initiatives to improve industry performance • Member of the Canadian Society of Unconventional Resources (CSUR)
regulatory sub-committee BUSINESS AND INDUSTRY PARTNERS
• Active member of the Canadian Society of Unconventional Resources • Active participation in voluntary environmental studies requiring data
collection at our facilities • Active member of the Clearwater Mutual Aide Cooperative, Pembina
Area Operators Group, West Central Stakeholders Group, Rimbey Regional Synergy Group, Calgary Community Investment Council and Canada Action
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Performance Summary Table
Unit 2014 2015 2016 2017 Regulatory Compliance Assurance
Internal Inspections Number/yr - - 28 635 External Regulatory Inspections Number/yr 111 101 31 38
Health & Safety
Lost time injury frequency – Employee LTI /200,000 hr 0.49 0.00 0.00 0.00 Lost time injury frequency – Contractor LTI /200,000 hr 0.26 0.11 0.54 0.21 Lost time injury frequency – Combined LTI /200,000 hr 0.29 0.09 0.37 0.16 Recordable incident frequency – Employee
RI /200,000 hr 2.43 1.33 0.00 0.00
Recordable incident frequency – Contractor
RI /200,000 hr 0.91 0.22 1.63 0.85
Recordable incident frequency – Combined
RI /200,000 hr 1.08 0.37 1.12 0.63
Fatalities – Employee and Contractor Number/yr 0 0 0 0 Environment
Direct GHG Emissions CO2e/yr 468,733 519,456 468,161 411,918 Indirect GHG Emissions CO2e/yr 9,855 12,876 13,134 10,319 Direct GHG Intensity CO2e/BOE 0.0267 0.0255 0.0262 0.0258 Flared Gas e3m3/yr 20,367 7,172 5,099 4,331 Vented Gas e3m3/yr 2,385 2,002 1,111 364.2 Oxides of Nitrogen (NOx) tonnes 2,206 3,351 2,360 2,567 Carbon Monoxide (CO) tonnes 3,437 4,473 3,313 3,052 Volatile Organic Compounds (VOCs) tonnes 1,486 1,269 945 591 Total Particulate Matter (PMTotal) tonnes 61.9 30.8 25.1 22.5 Direct Energy Consumption GJ 4,262,303 4,645,199 4,784,367 4,471,373 Direct Energy Intensity GJ/BOE 0.243 0.228 0.268 0.28 Fresh Water Withdrawal m3/yr 236,500 89,882 73,103 117,300 Non-fresh Water Withdrawal m3/yr 19,250 12,751 10,057 5,300 Frac Flowback Generated m3/yr 89,443 24,142 14,082 16,808 Frac Flowback Recycled m3/yr 19,250 12,287 1,889 171 Solid Wastes Generated tonnes 59,000 26,217 14,842 21,151 Liquid Wastes Generated m3 177,000 141,357 98,284 82,540 Abandoned Wells Number of wells 252 268 243 267 Active Reclamation Ongoing Number of wells 36 37 61 100 Reclamation Certificates Received Count 0 0 13 14 Alberta Licensee Liability Rating AER rating 7.89 6.93 10.64 10.86 Reportable Releases Count 29 30 14 11 Total Volume of Reportable Releases m3 75.6 79.1 51.3 13.8
Workforce
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Female Permanent Employees Percent 33 34 36 44 Female Management Percent 30 36 39 47 Female Senior Leadership Percent 16 18 32 17 Voluntary Turnover Percent 18.6 1.8 1.9 0.09 Full-Time Employee Workforce Count 201 187 161 169 Part-Time Employee Workforce Count 0 1 0 7 Full-Time Contractor & Temporary Workforce
Count 133 94 53 48
Communities
Scholarship Awards CAD 108,470 49,274 0 75,993 Community Investment CAD 420,000 200,000 40,000 70,000
Economic
Average Daily Sales Volumes BOE/d 38,065 41,441 35,677 36,872 Revenues CAD$000s 583,467 333,318 227,874 235,330 Royalties - Percent of Sales (after transportation)
Percent 18 11 9 11
Total Net Capital Expenditures CAD$000s 770,865 152,804 (246,194) 65,084 Production Expense CAD/BOE 8.64 7.86 8.70 8.31 General & Administrative Expense CAD/BOE 1.83 1.55 1.53 2.18 Adjusted Net Profit (Loss) CAD$000s 158,533 (53,244) (26,668) (91,363)
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GRI Content Reference Index
Bellatrix has reviewed and utilized the Global Reporting Initiative (“GRI”) Standards to provide a framework for report content.
This Corporate Responsibility Report contains the Standard Disclosures within the GRI guidelines but does not fulfill all required topics to be in accordance with GRI reporting guidelines. The content index below includes “in accordance – core” measures which are referenced by page number as included or “n/a” as not available within this report. Additional information on the GRI Sustainability Reporting Guidelines can be found at www.globalreporting.org.
GRI Indicator
Description Page
Organizational Profile & Strategy 102-1 Company name 1 102-2 Primary brands, products and services 3 102-3 Headquarter location 5 102-4 Location of operations 3 102-5 Nature of ownership and legal form 2017 AIF 102-6 Markets served 3 102-7 Scale of the Company, employees, operations, revenues 5, 19
2017 Annual Report 102-8 Employee numbers 18 102-10 Significant changes during the reporting year 2017 Annual Report 102-14 CEO Message 2 102-15 Key impacts, risks and opportunities 4 Governance and Ethics 102-16 Values, principles and norms of behaviour 2, 4 102-17 Understanding and reporting unethical behaviour 7, 23 102-18 Governance structure 2018 Management
Proxy Circular 102-22 Composition of board 2017 AIF 102-23 Chair of board 2018 Management
Proxy Circular 102-24 Selecting board members 2018 Management
Proxy Circular 102-25 Conflicts of interest 2018 Management
Proxy Circular 102-28 Board performance evaluation 2018 Management
Proxy Circular 102-29 Board role in managing sustainability and impacts 2018 Management
Proxy Circular
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GRI Indicator
Description Page
102-35 Remuneration policies 2018 Management Proxy Circular
102-36 Process for determining executive pay 2018 Management Proxy Circular
102-37 Stakeholder involvement in remuneration 2018 Management Proxy Circular
Stakeholder engagement 102-40 List of stakeholder groups 23, 24 102-42 Identifying and selecting stakeholders 22, 23 102-43 Approach to stakeholder engagement 22-24 102-44 Key topics and concerns raised 2, 6 102-46 Defining report and content and topic boundaries 5, 6 102-47 List of material topics 6 102-48 Restatements of information 25, 26 102-50 Reporting period 5 102-52 Reporting cycle 5 102-53 Contact point for questions regarding the report 31 102-54 Claims of reporting in accordance with the GRI Standards 6 102-55 GRI content index 26-28 Economic 201-1 Direct economic value generated 2 Environment 302-1 Energy consumption 25 302-3 Energy intensity 25 303-1 Water withdrawal by source 25 303-3 Water recycled and reused 12, 25 303-4 Water discharged 13 303-5 Water consumption 13 304-3 Habitats protected or restored 15, 25 305-1 Direct GHG emissions 11, 25 305-2 Indirect energy GHG emissions 25 305-4 GHG emission intensity 11, 25 305-5 Reduction of GHG emissions 25 305-7 NOx, SOX and other air emissions 25 306-1 Water discharge by quality and destination 13 306-2 Waste by type and disposal method 14 306-3 Significant spills, number and volume 15, 26 306-4 Transport and hazardous waste 14 Health and Safety 403-1 Occupational Health and Safety Management System 9 403-2 Hazard identification, risk assessment and incident investigation 9, 10
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403-3 Occupational health services 9, 10 403-4 Worker participation, consultation and communication on health &
safety 9
403-5 Worker training and occupational health and safety 9, 10 403-7 Prevention and mitigation of occupational health and safety 10 403-10 Work-related ill health 10 Social 401-1 Employee turnover 25 404-2 Skill Upgrading programs 9, 19 405-1 Gender diversity of employees 18, 19
Advisories and Forward Looking Information
FORWARD LOOKING STATEMENTS
In the interest of providing Bellatrix’s shareholders with information regarding Bellatrix, certain statements made in. This document contain forward-looking statements or information within the meaning of applicable securities legislation, collectively referred to herein as “forward looking statements”. The forward looking statements contained in this report speak only as of the date of this report and are expressly qualified by this cautionary statement. The forward looking statements and information in this report are based on a number of factors and assumptions which may prove to be incorrect and such statements and information have been used to provide shareholders with a more complete perspective. Readers are cautioned that the information may not be appropriate for other purposes. Additional information on these and other factors that could affect Bellatrix's operations and financial results are included in reports on file with Canadian and United States securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), through the SEC website (www.sec.gov), and at Bellatrix's website (www.bxe.com). Furthermore, the forward-looking statements contained herein are made as at the date hereof and Bellatrix does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
NON-GAAP MEASURES
Throughout this report. Bellatrix uses terms that are commonly used in the oil and gas industry but do not have a standardized meaning presented by International Financial Reporting Standards (“IFRS”) and therefore may not be comparable to the calculation of similar measures for other entities. Management believes that the presentation of these non-GAAP measures provide useful information to investors and shareholders as the measures provide increased transparency and the ability to better analyze performance against prior periods on a comparable basis.
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BOE PRESENTATION
The term barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 mcf/ 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value. All boe conversions in this report are derived from converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil.
CURRENCY
All dollar amounts in this presentation are Canadian dollars unless otherwise identified.
FINANCIAL INFORMATION
Unless otherwise stated, financial information is based upon Bellatrix’s audited consolidated financial statements for the years ended December 31, 2017, 2016, 2015 and 2014.
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Bellatrix Exploration Ltd. 1920, 800 – 5th Avenue SW
Calgary, Alberta Canada T2P 3T6 Tel: (403) 266-8670 Fax: (403) 264-8163
www.bxe.com
Contact: Steve Toth, CFA Vice President, Investor Relations & Corporate Development
