CALGARY, ALBERTA--(Marketwire - Nov. 6, 2008) - Bonavista Energy Trust (TSX:BNP.UN) is pleased to report to unitholders its interim consolidated financial and operating results for the three and nine months ended September 30, 2008.
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Highlights
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Three months Nine months
ended September 30, ended September 30,
2008 2007 2008 2007
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Financial
($ thousands, except per unit)
Production revenues 354,667 219,885 1,102,609 668,985
Funds from operations (1) 173,091 120,382 512,135 375,005
Per unit (1) (2) 1.48 1.14 4.54 3.57
Distributions declared 84,859 76,972 246,716 230,265
Per unit 0.90 0.90 2.70 2.70
Percentage of funds from
operations (1) 49% 64% 48% 61%
Net income 207,594 58,990 309,174 154,556
Per unit (2) 1.77 0.56 2.74 1.47
Total assets 2,488,447 2,188,154
Long-term debt, including
working capital deficiency 648,572 690,093
Long-term debt, net of
adjusted working capital (3) 635,785 683,121
Unitholders' equity 1,361,847 1,072,264
Capital expenditures:
Exploitation and development 89,847 50,889 245,278 209,220
Acquisitions, net 2,743 98,311 176,888 99,121
Weighted average outstanding
equivalent trust units:
(thousands) (2)
Basic 117,032 105,983 112,889 105,132
Diluted 119,439 108,405 115,313 107,729
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Operating
(boe conversion - 6:1 basis)
Production:
Natural gas (mmcf/day) 177 171 176 171
Oil and liquids (bbls/day) 23,912 24,938 23,860 23,784
Total oil equivalent
(boe/day) 53,473 53,382 53,157 52,328
Product prices: (4)
Natural gas ($/mcf) 8.21 5.86 8.56 7.02
Oil and liquids ($/bbl) 80.31 56.36 76.82 53.12
Operating expenses ($/boe) 9.56 8.51 9.30 8.44
General and administrative
expenses ($/boe) 0.73 0.71 0.73 0.68
Cash costs ($/boe) (5) 11.72 11.15 11.86 10.82
Operating netback ($/boe) (6) 37.34 27.16 37.73 28.63
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NOTES:
(1) Management uses funds from operations to analyze operating performance,
distribution coverage and leverage. Funds from operations as presented
do not have any standardized meaning prescribed by Canadian GAAP and
therefore it may not be comparable with the calculations of similar
measures for other entities. Funds from operations as presented is not
intended to represent operating cash flow or operating profits for the
period nor should it be viewed as an alternative to cash flow from
operating activities, net income or other measures of financial
performance calculated in accordance with Canadian GAAP. All references
to funds from operations throughout this report are based on cash flow
from operating activities before changes in non-cash working capital and
asset retirement expenditures. Funds from operations per unit is
calculated based on the weighted average number of units outstanding
consistent with the calculation of net income per unit.
(2) Basic per unit calculations include exchangeable shares which are
convertible into trust units on certain terms and conditions.
(3) Long-term debt, net of adjusted working capital excludes unrealized
losses on financial instruments and its related tax impact.
(4) Product prices include realized gains or losses on financial
instruments.
(5) Cash costs equal the total of operating, general and administrative, and
financing expenses.
(6) Operating netback equals production revenues including realized gains or
losses on financial instruments, less royalties, transportation and
operating expenses, calculated on a boe basis.
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Three months ended
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Trust Unit Trading September 30, June 30, March 31, December 31,
Statistics 2008 2008 2008 2007
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($ per unit, except volume)
High 37.65 37.64 31.35 31.85
Low 25.01 28.96 24.24 24.14
Close 26.29 37.45 29.85 28.50
Average Daily Volume - Units 273,074 329,638 231,949 275,892
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MESSAGE TO UNITHOLDERS
Bonavista Energy Trust ("Bonavista" or the "Trust") is pleased to report to its unitholders (the "Unitholders") its consolidated financial and operating results for the three and nine months ended September 30, 2008. Bonavista has continued on its course of generating profitable results since commencing operations as an energy trust in July 2003. The continued execution of Bonavista's proven strategies in the third quarter of 2008 are a testament to the validity and effectiveness of an operationally and technically focused energy trust. The third quarter results for 2008 are also highlighted by an active drilling program, which has led to continued success in several of our key areas. Bonavista plans to spend approximately $475 million in 2008 on its conventional drilling and acquisition programs, drilling approximately 210 wells, and forecasts production of approximately 53,500 boe per day. In addition, in 2008 Bonavista plans to invest up to $15 million in both resource land purchases and the application of new technology towards longer term resource play development. Bonavista is well positioned for the future given our significant financial flexibility and opportunity rich land base within the Western Canadian Sedimentary Basin.
Other significant 2008 accomplishments for Bonavista include:
- Operationally, production volumes averaged 53,473 boe per day during the third quarter of 2008. Production volumes averaged 53,157 boe per day for the nine months ended September 30, 2008 a 2% increase compared to the 52,328 boe per day for the same period in 2007;
- Maintained an active capital program during the third quarter of 2008. In the quarter, Bonavista invested $89.8 million in exploitation and development activities by drilling 74 wells with an overall 95% success rate. In addition, Bonavista spent $2.7 million on net acquisitions within our core regions. For the nine months ended September 30, 2008, Bonavista invested $245.3 million in exploitation and development activities, drilling 171 wells with an overall 94% success rate and completed 15 core area acquisitions for $176.9 million;
- Drilled 23 successful horizontal wells, year to date, on the highly prospective, light oil Bakken trend in our Southeast Saskatchewan area resulting in production reaching 1,400 bbls per day from 17 completed and producing wells. In addition to our Bakken resource initiatives, we have identified additional resource plays to pursue in the coming months using horizontal drilling and multi-stage fracture stimulation technology;
- On January 14, 2008 Bonavista completed a $169.0 million acquisition of producing and undeveloped oil and natural gas properties (61% natural gas weighted) in the greater Willesden Green area. This acquisition further complemented the property acquisition that we completed in the third quarter of 2007 and our pre-existing assets in this area where we have recently experienced tremendous success utilizing new technology. We now have a concentrated position in this area with current production of approximately 5,800 boe per day and numerous exploitation and optimization opportunities to pursue in the future;
- Continued to actively participate at crown land sales and freehold purchases, investing $22.1 million in land activity, further enhancing our future drilling prospect inventory to more than three years;
- Generated funds from operations of $173.1 million ($1.48 per unit) in the third quarter of 2008 and $512.1 million ($4.54 per unit) for the nine months ended September 30, 2008. Of the total funds from operations generated in the respective periods, Bonavista distributed 49% of these funds in the third quarter and 48% of these funds for the nine months ended September 30, 2008 back to Unitholders with the remaining funds reinvested in the business to continue growing our production base;
- Continued to record strong profitability in both the third quarter and the nine months ended September 30, 2008 with a strong average return on equity of 31% and 32% respectively, and a strong net income to funds from operations ratio in both periods of 57%. The above ratios reflect net income adjusted to negate the after tax impact of the unrealized gains and losses on financial instruments;
- As a result of weaker commodity prices and recent global market events, Bonavista currently has an attractive cash-on-cash yield of 17%. In addition, since inception as a Trust, Bonavista has delivered cumulative distributions of $1.4 billion or $18.21 per trust unit. These cumulative distributions are in excess of our initial closing trading price of $15.85 on the day we became an energy trust on July 2, 2003;
- On April 29, 2008 Bonavista completed a $214.0 million equity financing which improves financial flexibility to pursue future growth opportunities through expansions in our drilling and acquisitions programs. Current third quarter annualized funds from operations stands at a ratio of 0.9:1 compared to the quarter end debt level; and
- On August 25, 2008, Bonavista extended its financial covenant-based $1.0 billion syndicated bank loan facility to August 10, 2011. This facility also includes an accordion feature providing that at any time during the term, on participation of any existing or additional lenders, we can increase the facility by $250 million.
Strengths of Bonavista Energy Trust
Since restructuring into an energy trust in July 2003, Bonavista has maintained a high level of investment activity on its asset base, growing production by over 50% since that time. This activity stems from the operational and technical focus of our Trust and the ability to generate economic prospects on our asset base within the Western Canadian Sedimentary Basin. Our experienced and consistent technical teams have a solid understanding of our assets and possess the necessary discipline and commitment to deliver profitable results to our Unitholders for the long term. We actively participate in undeveloped land acquisitions through Crown land sales, property purchases or farm-in opportunities, which have all continued to add to our already extensive low-risk drilling inventory. This has led to low cost reserve additions, lengthening of our reserve life index, an increase in the quality and quantity of our drilling inventory and a growing production base. Our production base is balanced 53% in favour of natural gas and 47% towards oil and liquids and is geographically focused within select medium depth, multi-zone regions in Alberta, Saskatchewan and British Columbia. This asset base has a low operating cost structure resulting in attractive operating netbacks. In addition, these high working interest assets are predominantly operated by Bonavista, ensuring that operating and capital cost efficiencies are maintained and that Bonavista controls the pace of its operations.
Bonavista is also pleased to announce the following senior management appointments with Mr. Jason Skehar, our current Vice President, Production promoted to President and Chief Operating Officer, Mr. Johannes Thiessen our current Vice President, Exploration promoted to Senior Vice President, Exploration and Mr. Thomas Mullane our current Vice President, Engineering promoted to Senior Vice President, Engineering. Each of Messrs. Skehar, Thiessen, and Mullane are long serving employees of Bonavista who have contributed significantly to our success. Mr. Keith MacPhail will remain fully engaged in the company's activities and continue to provide leadership to Bonavista in his role as Chairman and Chief Executive Officer.
Our team brings a successful track record of executing low to medium risk development programs, including both asset and corporate acquisitions, along with a record of sound financial management. Unitholders benefit from a fully internalized, industry leading cost structure, which results in one of the lowest per unit overhead costs in the energy trust industry. Our management team and Board of Directors possess extensive experience in oil and natural gas operations, corporate governance and financial management. Directors, management and employees also own approximately 17% of the Trust, resulting in a close alignment of interests with all Unitholders.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Management's discussion and analysis ("MD&A") of the financial condition and results of operations should be read in conjunction with Bonavista Energy Trust's ("Bonavista" or the "Trust") audited consolidated financial statements and MD&A for the year ended December 31, 2007. The following MD&A of the financial condition and results of operations was prepared at, and is dated November 6, 2008. Our audited consolidated financial statements, Annual Report, and other disclosure documents for 2007 are available through our filings on SEDAR at www.sedar.com or can be obtained from Bonavista's website at www.bonavistaenergy.com.
Basis of Presentation - The financial data presented below has been prepared in accordance with Canadian Generally Accepted Accounting Principles ("GAAP"). The reporting and the measurement currency is the Canadian dollar. For the purpose of calculating unit costs, natural gas is converted to a barrel of oil equivalent ("boe") using six thousand cubic feet of natural gas equal to one barrel of oil unless otherwise stated. A boe may be misleading, particularly if used in isolation. A boe conversion of 6 Mcf to one barrel is based on an energy equivalent conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Forward-Looking Statements - Certain information set forth in this document, including management's assessment of Bonavista's future plans and operations, contains forward-looking statements including; (i) forecasted capital expenditures; (ii) exploration, drilling and development plans; (iii) anticipated production rates; (iv) expected royalty rate; (v) annualized debt to funds from operations; (vi) funds from operations, (vii) anticipated operating costs; (viii) expected service agreement fees and (ix) interest expense per boe, which are provided to allow investors to better understand our business. By their nature, forward-looking statements are subject to numerous risks and uncertainties; some of which are beyond Bonavista's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, changes in environmental tax and royalty legislation, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Bonavista's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements or if any of them do so, what benefits that Bonavista will derive therefrom. Bonavista disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Investors are also cautioned that cash-on-cash yield represents a blend of return of an investor's initial investment and a return on investors' initial investment and is not comparable to traditional yield on debt instruments where investors are entitled to full return of the principal amount of debt on maturity in addition to a return on investment through interest payments.
Non-GAAP Measurements - Within Management's discussion and analysis, references are made to terms commonly used in the oil and natural gas industry. Management uses "funds from operations" and the "ratio of debt to funds from operations" to analyze operating performance and leverage. Funds from operations as presented does not have any standardized meaning prescribed by Canadian GAAP and therefore it may not be comparable with the calculation of similar measures for other entities. Funds from operations as presented is not intended to represent operating cash flow or operating profits for the period nor should it be viewed as an alternative to cash flow from operating activities, net income or other measures of financial performance calculated in accordance with Canadian GAAP. All references to funds from operations throughout this report are based on cash flow from operating activities before changes in non-cash working capital and abandonment expenditures. Funds from operations per unit is calculated based on the weighted average number of trust units outstanding consistent with the calculation of net income per unit. Operating netbacks equal production revenue and realized gains or losses on financial instruments, less royalties, transportation and operating expenses calculated on a boe basis. Total boe is calculated by multiplying the daily production by the number of days in the period. Management uses these terms to analyze operating performance and leverage.
Operations - Bonavista's exploitation and development program for the first nine months of 2008 led to the drilling of 171 wells in our four core regions with an overall success rate of 94%. This program resulted in 64 natural gas wells, 97 oil wells and 10 dry holes. Bonavista continues to pursue deeper, higher impact drilling opportunities particularly in the Bakken play in our Southeast Saskatchewan area and Lower Mannville sands in our Central region in Alberta, where we have experienced excellent success and attractive finding and development costs over the past couple of years. These activities have also continued to lengthen our reserve life index and the predictability in our overall production base. In addition to the exploitation and development program, Bonavista executed 15 complementary acquisitions in its core regions during the first nine months of 2008.
Production - For the third quarter of 2008, production remained relatively unchanged at 53,473 boe per day when compared to 53,382 boe per day for the same period in 2007. Natural gas production increased 4% to 177 mmcf per day in the third quarter of 2008 from 171 mmcf per day for the same period a year ago, while total oil and liquids production decreased 4% to 23,912 bbls per day in the third quarter of 2008 (comprised of 17,237 bbls per day of light and medium oil and 6,675 bbls per day of heavy oil) from 24,938 bbls per day (comprised of 16,967 bbls per day of light and medium oil and 7,971 bbls per day of heavy oil) for the same period in 2007. Our current production is approximately 54,500 boe per day consisting of 53% natural gas, 34% light and medium oil and 13% heavy oil. Production for the nine months ended September 30, 2008, increased 2% to 53,157 boe per day when compared to 52,328 boe per day for the same period in 2007. Natural gas production increased 3% to 176 mmcf per day in the first nine months of 2008 from 171 mmcf per day for the same period a year ago, while total oil and liquids production increased slightly to 23,860 bbls per day in the first nine months of 2008 (comprised of 17,212 bbls per day of light and medium oil and 6,648 bbls per day of heavy oil) from 23,784 bbls per day (comprised of 16,372 bbls per day of light and medium oil and 7,412 bbls per day of heavy oil) for the same period in 2007. Bonavista's diversified commodity investment approach minimizes our dependence on any one product. We anticipate production volumes in 2008 to average approximately 53,500 boe per day.
Production revenues - Production revenues for the third quarter of 2008 increased by 61% to $354.7 million when compared to $219.9 million in the third quarter of 2007, primarily due to higher average commodity prices. In the third quarter of 2008, natural gas prices increased 47% to $8.33 per mcf, when compared to $5.68 per mcf realized in the same period in 2007. The average oil and liquids price increased to $99.48 per bbl (comprised of $99.92 per bbl for light and medium oil and $98.35 per bbl for heavy oil) in the third quarter of 2008 from $56.97 per bbl (comprised of $61.28 per bbl for light and medium oil and $47.80 per bbl for heavy oil) for the same period in 2007. Production revenues, for the nine months ended September 30, 2008 increased by 51% to $1,012.6 million when compared to $669.0 million for the same period a year ago due to higher average commodity prices and increased production volumes. For the nine month period ended September 30, 2008, natural gas prices increased 24% to $8.62 per mcf, compared to $6.94 per mcf realized in the same period in 2007. The average oil and liquids price increased 73% to $91.43 per bbl (comprised of $93.19 per bbl for light and medium oil and $86.87 per bbl for heavy oil) for the nine month period ended September 30, 2008 from $52.99 per bbl (comprised of $57.18 per bbl for light and medium oil and $43.73 per bbl for heavy oil) for the same period in 2007.
The following table highlights Bonavista's realized commodity pricing for the three and nine months ended September 30:
Three months Nine months
ended September 30, ended September 30,
2008 2007 2008 2007
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Natural gas ($/mcf):
Production revenues $ 8.33 $ 5.68 $ 8.62 $ 6.94
Realized gains (losses) on
financial instruments (0.12) 0.18 (0.06) 0.08
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8.21 5.86 8.56 7.02
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Light and medium oil ($/bbl):
Production revenues 99.92 61.28 93.19 57.18
Realized gains (losses) on
financial instruments (18.65) (1.01) (14.85) 0.14
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81.27 60.27 78.34 57.32
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Heavy oil ($/bbl):
Production revenues 98.35 47.80 86.87 43.73
Realized gains (losses) on
financial instruments (20.50) 0.23 (14.00) 0.10
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$ 77.85 $ 48.03 $ 72.87 $ 43.83
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Commodity price risk management - As part of our financial management strategy, Bonavista has adopted a disciplined commodity price risk management program. The purpose of this program is to stabilize funds from operations against volatile commodity prices and protect acquisition economics. Bonavista's Board of Directors has approved a commodity price risk management limit of 60% of forecast production, net of royalties, primarily using costless collars. Our strategy of using costless collars limits Bonavista's exposure to downturns in commodity prices, while allowing for participation in commodity price increases.
In the third quarter of 2008, our risk management program on financial instruments resulted in a net gain of $110.4 million, consisting of a realized loss of $44.1 million and an unrealized gain of $154.5 million. The realized loss of $44.1 million consisted of a $1.9 million loss on natural gas commodity derivative contracts and a $42.2 million loss on crude oil commodity derivative contracts. For the nine months ended September 30, 2008, our risk management program on financial instruments resulted in a net loss of $71.6 million consisting of a realized loss of $98.4 million and an unrealized gain of $26.8 million. The realized loss of $98.4 million consisted of a $2.8 million loss on natural gas commodity derivative contracts and a $95.6 million loss on crude oil commodity derivative contracts. A summary of commodity price risk management contracts in place as at September 30, 2008 is included in note 7 of the consolidated financial statements.
Royalties - For the three months ended September 30, 2008, royalties increased 96% to $69.7 million from $35.5 million for the same period a year ago, largely attributed to an increase in commodity prices and increased heavy oil royalties resulting from the payout of two oilsands royalty projects. In addition, royalties as a percentage of revenue (including realized gains and losses on financial instruments) for the third quarter of 2008 increased to 22.4% compared to 16.1% in 2007 for similar reasons discussed above and the result of realized losses on financial instruments. For the three months ended September 30, 2008, royalties by product as a percentage of revenues (including realized gains and losses on financial instruments) were 23.1% for natural gas, 20.7% for light and medium oil and 25.3% for heavy oil. In the third quarter of 2007, royalties by product as a percentage of revenue (including realized gains and losses on financial instruments) were 15.4% for natural gas, 16.6% for light and medium oil and 16.1% for heavy oil. For the nine months ended September 30, 2008, royalties also increased significantly by 77% to $200.2 million from $112.8 million for the same period a year ago, for similar reasons discussed above. In addition, royalties as a percentage of revenue (including realized gains and losses on financial instruments) for the nine month period also increased from 16.7% in 2007 to 21.9% in 2008, for the same reasons as discussed above. For the nine months ended September 30, 2008, royalties by product as a percentage of revenue (including realized gains and losses on financial instruments) were 22.5% for natural gas, 20.8% for light and medium oil and 22.9% for heavy oil. For the nine months ended September 30, 2007, royalties by product as a percentage of revenues (including realized gains and losses on financial instruments) were 17.4% for natural gas, 16.5% for light and medium oil and 15.1% for heavy oil.
On October 25, 2007, the Alberta Government announced the New Royalty Framework ("NRF") which is proposed to take effect on January 1, 2009. The proposed NRF includes new royalty formulas for conventional oil and natural gas that will operate on sliding scales that are determined by commodity prices and well productivity. The Government of Alberta, on April 10, 2008, provided some further clarification on the NRF and introduced two new royalty programs related to the development of deep oil and natural gas reserves. The Trust has reviewed the information that is currently available and has determined that the impact of these changes may increase our existing average corporate royalty rate up to 5%, based on benchmark pricing as at September 30, 2008.
Operating expenses - Operating expenses for the third quarter of 2008 increased 13% to $47.1 million compared to $41.8 million for the same period a year ago. Operating costs increased primarily due to the continuation of industry wide operating cost pressures, primarily driven by higher fuel, power, trucking, chemical and labour costs. These factors resulted in average per unit operating costs increasing by 12% for the three months ended September 30, 2008, to $9.56 per boe from $8.51 per boe in the comparable period of 2007. Operating costs by product for the third quarter of 2008 were $1.37 per mcf for natural gas, $10.18 per bbl for light and medium oil and $13.93 per bbl for heavy oil compared to $1.17 per mcf for natural gas, $9.19 per bbl for light and medium oil and $12.39 per bbl for heavy oil for the same period in 2007. For the nine months ended September 30, 2008 operating expenses increased 12% to $135.5 million compared to $120.5 million for the same period a year ago. The increase in operating costs are for similar reasons noted above. Average per unit operating costs increased 10% for the nine months ended September 30, 2008, to $9.30 per boe from $8.44 per boe in the comparable period of 2007. Operating costs by product for the first nine months of 2008 were $1.32 per mcf for natural gas, $9.95 per bbl for light and medium oil and $13.56 per bbl for heavy oil compared to $1.18 per mcf for natural gas, $9.11 per bbl for light and medium oil and $12.23 per bbl for heavy oil for the same period in 2007. Notwithstanding these cost increases, Bonavista continues to experience one of the lowest operating costs of any producer in the energy trust sector and remains optimistic that the recent upward trend in operating costs will subside in 2009.
Transportation expenses - For the three months ended September 30, 2008, transportation expenses decreased 5% to $10.1 million ($2.06 per boe) when compared to $10.6 million ($2.16 per boe) for the same period last year. The 5% decrease in transportation expenses on a per boe basis was primarily due to a decrease in natural gas transportation costs because of the expiry of certain firm export service obligations. For similar reasons, transportation costs for the nine months ended September 30, 2008 decreased 6% to $29.2 million ($2.00 per boe) compared to $31.0 million ($2.17 per boe) for the same period a year ago. Transportation expenses by product for the third quarter of 2008 were $0.39 per mcf for natural gas, $0.85 per bbl for light and medium oil and $3.86 per bbl for heavy oil compared to $0.44 per mcf for natural gas, $0.87 per bbl for light and medium oil and $3.14 per bbl for heavy oil for the third quarter of 2007. For the first nine months of 2008 transportation expenses by product were $0.39 per mcf for natural gas, $0.85 per bbl for light and medium oil and $3.50 per bbl for heavy oil compared to $0.44 per mcf for natural gas, $0.94 per bbl for light and medium oil and $3.17 per bbl for heavy oil for the same period a year ago.
General and administrative expenses - General and administrative expenses, after overhead recoveries, increased 4% to $3.6 million for the three months ended September 30, 2008 from $3.5 million in the same period in 2007 and increased 9% to $10.6 million for the nine months ended September 30, 2008 from $9.7 million in the same period in 2007. On a per boe basis, general and administrative expenses increased 3% for the three months ended September 30, 2008 to $0.73 per boe from $0.71 per boe in the same period in 2007 and increased 7% for the nine months ended September 30, 2008 to $0.73 per boe from $0.68 per boe in the same period in 2007. These increases are largely due to the higher staffing levels required to manage our operations and increasing cost pressures currently experienced throughout our industry. In addition, through the services agreement with NuVista Energy Ltd., ("NuVista") Bonavista provides certain administrative activities. The fee charged under this agreement was $330,000 for the three months ended September 30, 2008 as compared to $360,000 in the same period in 2007 and $1.1 million for the nine months ended September 30, 2008 as compared to $1.0 million for the same period in 2007. The fees charged to NuVista through the services agreement will decrease in the following quarter as most administrative services provided to NuVista will cease to exist as of November 1, 2008. In connection with its Trust Unit Incentive Rights Plan, Bonavista also recorded a unit-based compensation charge of $1.6 million and $6.4 million for the three and nine months ended September 30, 2008 respectively, compared to $1.7 million and $4.5 million for the same periods in 2007.
Financing expenses - Financing expenses, which include interest expense on long-term debt and convertible debentures, decreased 27% to $7.0 million for the three months ended September 30, 2008, from $9.5 million for the same period in 2007 and on a boe basis, decreased 27% to $1.42 per boe for the three months ended September 30, 2008 from $1.94 per boe for the same period in 2007. This decrease in financing expenses is primarily due to the proceeds received from a $214.0 million equity financing used to reduce long-term debt. For the nine months ended September 30, 2008, financing expenses increased 10% to $26.8 million from $24.3 million for the same period in 2007 and on a boe basis increased 8% to $1.84 per boe for the nine months ended September 30, 2008 from $1.70 per boe in the same period in 2007. This increase is due to increased average debt levels used to fund Bonavista's capital program. During the third quarter of 2008, Bonavista paid cash interest of $6.4 million compared to $9.0 million in 2007. For the nine months ended September 30, 2008, Bonavista paid cash interest of $26.5 million compared to $24.1 million for the same period in 2007.
Depreciation, depletion and accretion expenses - Depreciation, depletion and accretion expenses increased 13% to $67.9 million for the three months ended September 30, 2008 from $60.1 million in the same period of 2007. For the nine months ended September 30, 2008 depreciation, depletion and accretion expenses also increased 15% to $197.3 million from $172.1 million.
