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Bellatrix Exploration Ltd. Announces First Quarter 2013 Financial Results

May 8, 2013

TSX, NYSE MKT: BXE

CALGARY, May 8, 2013 /PRNewswire/ – Bellatrix Exploration Ltd. (“Bellatrix” or
the “Company”) (TSX, NYSE MKT: BXE) announces its financial and
operating results for the three months ended March 31, 2013.

Forward-Looking Statements
This press release, including the report to shareholders, contains
forward-looking statements.  Please refer to our cautionary language on
forward-looking statements and the other matters set forth at the
beginning of the management’s discussion and analysis (the “MD&A”)
attached to this press release.


    HIGHLIGHTS

                                              Three months ended March 31,

                                                     2013             2012

    FINANCIAL(unaudited)                                                  

    (CDN$000s except share and per
    share amounts)                                                        

    Revenue (before royalties and
    risk management (1))                           65,543           58,191

    Funds flow from operations (2)                 37,545           29,194

      Per basic share (6)                           $0.35            $0.27

      Per diluted share (6)                         $0.32            $0.25

    Cash flow from operating
    activities                                     35,527           24,056

      Per basic share (6)                           $0.33            $0.22

      Per diluted share (6)                         $0.30            $0.21

    Net profit before certain
    non-cash items (5)                             13,598            6,090

      Per basic share (6)                           $0.13            $0.06

      Per diluted share (6)                         $0.12            $0.06

    Net profit                                      4,561            9,172

      Per basic share (6)                           $0.04            $0.09

      Per diluted share (6)                         $0.04            $0.08

    Exploration and development                    91,459           74,061

    Corporate and property
    acquisitions                                      150               70

    Capital expenditures - cash                    91,609           74,131

    Property dispositions - cash                        5            (300)

    Non-cash items                                    787            (154)

    Total capital expenditures - net               92,401           73,677

    Long-term debt                                150,827           96,760

    Convertible debentures (7)                     51,105           49,464

    Adjusted working capital
    deficiency(3)                                  43,488           18,276

    Total net debt (3)                            245,420          164,500

    Total assets                                  759,775          645,648

    Shareholders' equity                          386,750          358,910

    OPERATING                                 Three months ended March 31,

                                                     2013             2012

    Average daily sales volumes                                           

      Crude oil, condensate and NGLs (bbls/d)       5,983            6,123

      Natural gas                     (mcf/d)      80,158           58,659

      Total oil equivalent            (boe/d)      19,343           15,900

    Average prices                                                        

      Light crude oil and condensate  ($/bbl)       92.11            90.03

      NGLs (excluding condensate)     ($/bbl)       42.30            53.97

      Heavy oil                       ($/bbl)       53.69            75.93

      Crude oil, condensate and NGLs  ($/bbl)       73.60            81.24

      Crude oil, condensate and NGLs                73.44            75.96
      (including risk management
      (1))                            ($/bbl)

      Natural gas                     ($/mcf)        3.50             2.32

      Natural gas (including risk                    4.42             2.32
      management(1))                  ($/mcf)

      Total oil equivalent            ($/boe)       37.28            39.86

      Total oil equivalent                          41.02            37.83
      (including risk management(1))  ($/boe)

    Statistics                                                            

      Operating netback (4)           ($/boe)       21.03            24.95

      Operating netback (4)                         24.77            22.92
      (including risk management(1))  ($/boe)

      Transportation                  ($/boe)        0.83             1.14

      Production expenses             ($/boe)        8.65             9.20

      General & administrative        ($/boe)        2.06             1.91

      Royalties as a % of sales                       19%              12%
      after transportation                   

    COMMON SHARES                                                         

    Common shares outstanding                 107,919,329      107,463,313

    Share options outstanding                   9,293,228        7,929,247

    Shares issuable on conversion of
    convertible debentures (7)                  9,821,429        9,821,429

    Diluted common shares
    outstanding                               127,033,986      125,213,989

    Diluted weighted average shares
    - net profit (6)                          110,725,084      119,267,434

    Diluted weighted average shares
    - funds flow from                                                     

    operations and cash flow from
    operating activities (2) (6)              120,546,513      119,267,434

    SHARE TRADING STATISTICS                                              

    TSX and Other(8)(CDN$, except
    volumes) based on intra-day
    trading                                                               

    High                                             6.70             5.67

    Low                                              4.03             4.36

    Close                                            6.54             5.26

    Average daily volume                          674,726          864,560

    NYSE MKT(9)(US$, except volumes)
    based on intra-day trading                                            

    High                                             6.60                -

    Low                                              4.10                -

    Close                                            6.43                -

    Average daily volume                           67,190                -

    (1)The Company has entered into various commodity price risk management
    contracts which are considered to be economic hedges.  Per unit metrics
    after risk management include only the realized portion of gains or
    losses on commodity contracts.

    The Company does not apply hedge accounting to these contracts.  As
    such, these contracts are revalued to fair value at the end of each
    reporting date.  This results in recognition of unrealized gains or
    losses over the term of these contracts which is reflected each
    reporting period until these contracts are settled, at which time
    realized gains or losses are recorded.  These unrealized gains or
    losses on commodity contracts are not included for purposes of per unit
    metrics calculations disclosed.

    (2)The highlights section contains the term "funds flow from
    operations" which should not be considered an alternative to, or more
    meaningful than cash flow from operating activities as determined in
    accordance with generally accepted accounting principles ("GAAP") as an
    indicator of the Company's performance. Therefore reference to the
    additional GAAP measures of funds flow from operations, or funds flow
    from operations per share may not be comparable with the calculation of
    similar measures for other entities. Management uses funds flow from
    operations to analyze operating performance and leverage and considers
    funds flow from operations to be a key measure as it demonstrates the
    Company's ability to generate the cash necessary to fund future capital
    investments and to repay debt.  The reconciliation between cash flow
    from operating activities and funds flow from operations can be found
    in the MD&A.  Funds flow from operations per share is calculated using
    the weighted average number of common shares for the period.

    (3)Net debt and total net debt are considered additional GAAP
    measures.  The Company's calculation of total net debt includes the
    liability component of convertible debentures and excludes deferred
    liabilities, long-term commodity contract liabilities, decommissioning
    liabilities, long-term finance lease obligations and the deferred tax
    liability.  Net debt and total net debt include the net working capital
    deficiency (excess) before short-term commodity contract assets and
    liabilities and current finance lease obligations.  Net debt also
    excludes the liability component of convertible debentures. A
    reconciliation between total liabilities under GAAP and total net debt
    and net debt as calculated by the Company is found in the MD&A.

    (4)Operating netbacks is considered a non-GAAP term.  Operating
    netbacks are calculated by subtracting royalties, transportation, and
    operating costs from revenues before other income.

    (5)Net profit before certain non-cash items is considered a non-GAAP
    term. Net profit before certain non-cash items is calculated as net
    profit per the Consolidated Statement of Comprehensive Income,
    excluding the unrealized gain or loss on commodity contracts, and gain
    or loss on property dispositions and swaps, net of the deferred tax
    impact on these adjustments. The Company's reconciliation between net
    profit and net profit before certain non-cash items is found in the
    MD&A.

    (6)Basic weighted average shares for the three months ended March 31,
    2013 were 107,882,027 (2012: 107,426,094).

    In computing weighted average diluted earnings per share for the three
    months ended March 31, 2013, a total of 2,843,057 (2012: 2,019,911)
    common shares were added to the denominator as a consequence of
    applying the treasury stock method to the Company's outstanding share
    options as they were dilutive, and a total of 9,821,429 (2012:
    9,821,429)  common shares issuable on conversion of convertible
    debentures were excluded from the denominator as they were not
    dilutive, resulting in diluted weighted average shares of 110,725,084
    (2012: 109,446,005).

    In computing weighted average diluted net profit before certain
    non-cash items per share for the three months ended March 31, 2013, a
    total of 2,843,057 common shares were added to the denominator as a
    consequence of applying the treasury stock method to the Company's
    outstanding share options as they were dilutive, and a total of
    9,821,429 common shares issuable on conversion of convertible
    debentures were also added to the denominator as they were dilutive,
    resulting in diluted weighted average shares of 120,546,513.

    In computing weighted average diluted net profit before certain
    non-cash items per share for the three months ended March 31, 2012, a
    total of 2,019,911 common shares were added to the denominator as a
    consequence of applying the treasury stock method to the Company's
    outstanding share options as they were dilutive, and a total of
    9,821,429 common shares issuable on conversion of convertible
    debentures were excluded from the denominator as they were not
    dilutive, resulting in diluted weighted average shares of 109,446,005.

    In computing weighted average diluted cash flow from operating
    activities and funds flow from operations per share for the three
    months ended March 31, 2013, a total of 2,843,057 (2012: 2,019,911)
    common shares were added to the denominator as a consequence of
    applying the treasury stock method to the Company's outstanding share
    options and a total of 9,821,429 (2012: 9,821,429) common shares
    issuable on conversion of convertible debentures were also added to the
    denominator as they were dilutive, resulting in diluted weighted
    average common shares of 120,546,513 (2012: 119,267,434).  As a
    consequence, a total of $0.8 million (2012: $0.8 million) for interest
    and accretion expense (net of income tax effect) was added to the
    numerator.

    (7)Shares issuable on conversion of convertible debentures are
    calculated by dividing the $55.0 million principal amount of the
    convertible debentures by the conversion price of $5.60 per share.

    (8)TSX and Other includes the trading statistics for the Toronto Stock
    Exchange and other Canadian trading markets.

    (9)The Company's common shares commenced trading on the NYSE MKT on
    September 24, 2012.

REPORT TO SHAREHOLDERS

Bellatrix reports another strong quarter benchmarked by burgeoning
production to average 19,343 boe/d exiting the first quarter at 23,000
boe/d, posting $4.6 million in earnings with $37.5 million in funds
flow while maintaining a 100% success rate drilling and/or
participating in 21 gross wells in the Cardium, Notikewin and Falher
formations of West Central Alberta.  The Company preserves the
advantage of being a low cost operator and oil and gas finder by
controlling infrastructure and operating in a concentrated area.  In
our area of operations, Bellatrix has technologically advanced a
substantive inventory of drill ready high IRR, low risk resource
locations in the Cardium, Notikewin and Falher stratigraphic trapped
reservoirs which have proven to be repeatable, predictable and
profitable.

In an effort to fast-track corporate growth, in the first quarter, the
Company successfully drilled and completed the first long-reach
horizontal well in the Spirit River Falher section in the Alder Flats
area and entered into a Joint Venture Agreement with a Seoul Korea
based company (“JV Partner”) to accelerate the development of the
Company’s large inventory of high IRR opportunities (692 net locations
in the Cardium formation) in West Central Alberta. Under the terms of
the agreement, the JV Partner will contribute 50%, or CDN$150 million,
to a $300 million joint venture (the “Joint Venture”) to participate in
an expected 83 Cardium well program.  Under the agreement, the JV
Partner will earn 33% of Bellatrix’s working interest in the Cardium
well program until payout (being recovery of the JV Partner’s capital
investment plus an 8% return on investment) on the total program, which
is expected to occur prior to a maximum of 7 years, reverting to a 20%
working interest after payout.  Bellatrix will be required to provide a
guarantee of the return of the JV Partner’s capital investment of up to
$30 million if not recovered within 7 years.  In April 2013, the JV
Partner requested and was granted a one month extension to the closing,
which is now anticipated to occur on or before May 31, 2013.

Effective April 30, 2013, Bellatrix’s banking syndicate has approved
increasing the borrowing base from $220 million to $255 million through
to November 30, 2013 and extend the revolving period of the credit
facility from June 25, 2013 to June 24, 2014.

Operational highlights for the quarter ended March 31, 2013 include:

        --  During the first quarter of 2013, Bellatrix posted a 100%
            success rate drilling and/or participating in 21 gross (17.08
            net) wells, resulting in 18 gross (14.98 net) Cardium oil
            wells, and 3 gross (2.10 net) Notikewin/Falher liquids-rich gas
            wells.

        --  On March 11, 2013, the Company announced the successful
            drilling and completion of a 100% working interest long reach
            horizontal well in the Spirit River Falher interval.  After the
            first 50 days of production the well has recovered 1.1 Bcf of
            gas with 38,500 barrels of natural gas liquids.  Currently the
            well is flowing at a restricted rate of 20 mmcf/d with 700
            boe/d of liquids.

        --  During Q1 2013 the Company operated 15 gross Cardium wells of
            the 18 gross wells reported.  Three of the wells are waiting on
            completion. The following average initial production ("IP")
            rates for the first 7 days ("IP7"), for the first 15 days
            ("IP15"), and for the first 30 days ("IP30") were achieved on
            the remaining producing wells:

                  Time      # of wells     Boe/d

                  IP 7      12             671

                  IP 15     12             655

                  IP 30     10             627
        --  Q1 2013 sales volumes averaged 19,343 boe/d (weighted 31% to
            oil, condensate and NGLs and 69% to natural gas).  These sales
            volumes were negatively impacted by approximately 560 boe/d due
            to multiple unscheduled third-party operated processing plant
            outages.  This represents a 22% increase from the first quarter
            2012 average sales volumes of 15,900 boe/d and a 3% increase
            from fourth quarter 2012 average sales volumes of 18,763 boe/d.

        --  During the month of April, 2013, field production averaged
            approximately 22,425 boe/d weighted 31% to oil and liquids and
            69% to natural gas with an April 2013 exit rate of 24,000
            boe/d.

        --  In the first quarter of 2013, the Company spent $91.6 million
            on capital projects, including $19.2 million capital spent on
            major infrastructure projects, compared to $74.1 million during
            the first quarter of 2012.

        --  Net of expiries, additions and conversions of undeveloped land
            to developed land as at March 31, 2013, Bellatrix had
            approximately 311,392 gross, 205,113 net undeveloped acres of
            land, representing an average 66% working interest, in Alberta,
            British Columbia and Saskatchewan.

        --  During the first quarter of 2013, the Company doubled the
            capacity at the 9-3 Compressor Station built to process gas and
            liquids from the Ferrier area from 3,300 HP to 6,600 HP.
            Bellatrix also constructed 26 km of 12" diameter high pressure
            pipeline to facilitate moving up to 150 mmcf/d of gas and
            associated liquids from the Brazeau and Ferrier areas to an
            underutilized third-party operated deep cut gas plant in the
            Minnehik/Buck Lake Area of West Central Alberta.
            Additionally, the Company constructed a total of 13.2 km of
            dual 10" diameter gathering pipelines and 8.2 km of dual 8"
            diameter gathering pipelines.

Financial highlights for the quarter ended March 31, 2013 include:

        --  Q1 2013 revenue was $65.5 million, 13% higher than the $58.2
            million recorded in Q1 2012.  The increase in revenues between
            the periods was primarily due to increased natural gas and NGL
            sales volumes and higher natural gas, light oil and condensate
            prices between the periods, partially offset by reduced crude
            oil and condensate sales volumes and reduced NGL and heavy
            crude oil prices experienced in the first quarter of 2013.

        --  Funds flow from operations for Q1 2013 was $37.5 million ($0.35
            per basic share), up 25% from $29.9 million ($0.28 per basic
            share) in Q4 2012 and up 28% from $29.2 million ($0.27 per
            basic share) in Q1 2012.

        --  For the three months ended March 31, 2013, net profit before
            unrealized gain (loss) on commodity contracts and gain (loss)
            on property dispositions and swaps, net of associated deferred
            tax impacts, was $13.6 million, compared to $6.1 million in the
            2012 first quarter.

        --  The net profit for Q1 2013 was $4.6 million after unrealized
            gain (loss) on commodity contracts and gain (loss) on property
            dispositions and swaps, net of associated deferred tax impacts,
            compared to $9.2 million in Q1 2012.

        --  Crude oil, condensate and NGLs produced 61% of petroleum and
            natural gas sales revenue for the three months ended March 31,
            2013.

        --  Production expenses for Q1 2013 were $8.65/boe ($15.1 million),
            compared to $9.20/boe ($13.3 million) for Q1 2012.  The
            decrease was the result of increased production volumes in
            areas with lower production expenses, increasing production
            volumes, as well as reduced processing fees in certain areas
            and continued field optimization projects.

        --  Operating netbacks after including risk management for Q1 2013
            were $24.77/boe, up from $22.92/boe in Q1 2012.  Operating
            netbacks before risk management for Q1 2013 were $21.03/boe,
            down from $24.95/boe in Q1 2012 and up from $19.20/boe in Q4
            2012.  The decreased netback per boe for Q1 2013 compared to Q1
            2012 was primarily the result of lower NGL prices (excluding
            condensate) and slightly higher royalties, partially offset by
            increased light oil and condensate and natural gas prices, as
            well as lower production and transportation expenses.  The Q1
            2013 netback per boe reflects increased overall commodity
            prices and slightly reduced production expenses, partially
            offset by slightly increased royalty expenses compared to Q4
            2012.

        --  G&A expenses for Q1 2013 increased to $2.06/boe ($3.6 million),
            compared to $1.91/boe ($2.8 million) for Q1 2012.

        --  As at March 31, 2013, Bellatrix had $69.2 million undrawn on
            its total $220 million credit facility (increased to $255
            million effective April 30, 2013).

        --  Total net debt as of March 31, 2013 was $245.4 million,
            including the liability component of convertible debentures.

COMMODITY PRICE RISK MANAGEMENT

As of May 7, 2013, the Company has entered into the following commodity
price risk management arrangements:


      Type           Period      Volume    Price Floor Price Ceiling Index

      Crude oil  January 1, 1,500 bbl/d $        94.50 $       94.50   WTI
      fixed (1)     2013 to                        CDN           CDN
                   Dec. 31,
                       2013

      Crude oil     January 3,000 bbl/d              - $      105.00   WTI
      call       1, 2014 to                                       US
      option       Dec. 31,
                       2014

      Natural      April 1, 20,000 GJ/d $         3.05 $              AECO
      gas fixed     2013 to                        CDN      3.05 CDN
                   Oct. 31,
                       2013

      Natural      April 1, 10,000 GJ/d $        3.095 $       3.095  AECO
      gas fixed     2013 to                        CDN           CDN
                   Oct. 31,
                       2013

      Natural       Feb. 1, 10,000 GJ/d $         3.05 $              AECO
      gas fixed     2013 to                        CDN      3.05 CDN
                   Dec. 31,
                       2013

      Natural      April 1, 15,000 GJ/d $         3.05 $        3.05  AECO
      gas fixed     2013 to                        CDN           CDN
                   June 30,
                       2014

    (1) A call has been placed on 3,000 bbl/d at $105 US/bbl for the
    calendar year 2014.

OUTLOOK

In the first quarter of 2013, the Company undertook important facilities
and infrastructure upgrades that we expect will position Bellatrix to
handle and process the excess volumes of oil and gas anticipated as a
result of the accelerated growth projected in the last half of 2013 and
facilitates Bellatrix’s industry leading “on time production model”.   In addition, the Company reversed the long historical trend of
inactivity experienced during spring break-up by pre-maturing large
drilling pads in Q1, which facilitated engaging three rigs throughout
Q2 2013 thereby safeguarding continued growth momentum.

The Company has approximately 1,093 net remaining locations ($4.3
billion in future drilling capital requirements at current average
costs) on our two core propitious resource plays to fuel Bellatrix’s
future growth.  Given a timely close to the Korean Joint Venture, the
Company plans to double the rig count to 7 – 8 drilling rigs throughout
the second half of 2013.

A total capital program of $365 million is anticipated for 2013, including the capital expected to be invested
by the JV Partner.  Based on the timing of proposed expenditures,
downtime for scheduled and unscheduled plant turnarounds, completion of
required infrastructure, and normal production declines, execution of
the 2013 capital expenditure plan is expected to provide average daily
production of approximately 24,000 boe/d to 25,000 boe/d, and an exit
rate of approximately 30,000 boe/d to 31,000 boe/d.

The engine of Bellatrix’s “growth model” is achieving a higher rate of return on capital investments in this
extended volatile commodity price environment by utilizing state of the
art drilling and completion technology

As always, the Company’s priority is to bring together the technical,
operational and financial talent required to create long term value growth for our shareholders.

Raymond G. Smith, P. Eng.
President and CEO
May 7, 2013

Note:

Bellatrix’s annual meeting is scheduled for 3:00 pm on May 22, 2013 in
the Devonian Room at the Calgary Petroleum Club.

MANAGEMENT’S DISCUSSION AND ANALYSIS

May 7, 2013 – The following Management’s Discussion and Analysis of
financial results (“MD&A”) as provided by the management of Bellatrix
Exploration Ltd. (“Bellatrix” or the “Company”) should be read in
conjunction with the unaudited interim consolidated financial
statements of the Company for the three months ended March 31, 2013,
and the audited consolidated financial statements of the Company for
the years ended December 31, 2012 and 2011, and the related
Management’s Discussion and Analysis of financial results as disclosure
which is unchanged from such Management’s Discussion and Analysis may
not be repeated herein.  This commentary is based on information
available to, and is dated as of, May 7, 2013. The financial data
presented is in Canadian dollars, except where indicated otherwise. 

CONVERSION:  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/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.

INITIAL PRODUCTION RATES:  Initial production rates disclosed herein may
not necessarily be indicative of long-term performance or ultimate
recovery.

ADDITIONAL GAAP MEASURES:  This Management’s Discussion and Analysis and
the accompanying report to shareholders and financial statements
contain the term “funds flow from operations” which should not be
considered an alternative to, or more meaningful than “cash flow from
operating activities” as determined in accordance with generally
accepted accounting principles (“GAAP”) as an indicator of the
Company’s performance. Therefore reference to funds flow from
operations or funds flow from operations per share may not be
comparable with the calculation of similar measures for other entities.
Management uses funds flow from operations to analyze operating
performance and leverage and considers funds flow from operations to be
a key measure as it demonstrates the Company’s ability to generate the
cash necessary to fund future capital investments and to repay debt. 
The reconciliation between cash flow from operating activities and
funds flow from operations can be found in this Management’s Discussion
and Analysis.  Funds flow from operations per share is calculated using
the weighted average number of shares for the period.

This Management’s Discussion and Analysis and the accompanying report to
shareholders and financial statements also contain the term total net
debt and net debt. Total net debt is calculated as long-term debt plus
the liability component of the convertible debentures and the net
working capital deficiency (excess) before short-term commodity
contract assets and liabilities and current finance lease obligations.
Net debt is calculated as long-term debt plus the net working capital
deficiency (excess) before short-term commodity contract assets and
liabilities and current finance lease obligations.  Management believes
these measures are useful supplementary measures of the total amount of
current and long-term debt.

NON-GAAP MEASURES: This Management’s Discussion and Analysis and the
accompanying report to shareholders also contains other terms such as
net profit before certain non-cash items and operating netbacks, which
are not recognized measures under GAAP.  Net profit before certain
non-cash items is calculated as net profit per the Consolidated
Statement of Comprehensive Income, excluding the net unrealized gain or
loss on commodity contracts, and gain or loss on property dispositions
and swaps net of the deferred tax impact on these adjustments.
Operating netbacks are calculated by subtracting royalties,
transportation, and operating expenses from revenues before other
income.  Management believes these measures are useful supplemental
measures of firstly, the amount of net profit before certain non-cash
items, and secondly, the amount of revenues received after
transportation, royalties and operating expenses.  Readers are
cautioned, however, that these measures should not be construed as an
alternative to net income determined in accordance with GAAP as
measures of performance. Bellatrix’s method of calculating these
measures may differ from other entities, and accordingly, may not be
comparable to measures used by other companies.

Additional information relating to the Company, including the
Bellatrix’s Annual Information Form, is available on SEDAR at
www.sedar.com.

FORWARD LOOKING STATEMENTS:  Certain information contained herein and in
the accompanying report to shareholders may contain forward looking
statements including management’s assessment of future plans and
operations, drilling plans and the timing thereof, commodity price risk
management strategies, 2013 capital expenditure budget, the nature of
expenditures and the method of financing thereof, expected 2013 average
production and exit rate, anticipated liquidity of the Company and
various matters that may impact such liquidity, expected 2013 operating
expenses and general and administrative expenses, expected costs to
satisfy drilling commitments and method of funding drilling
commitments, commodity prices and expected volatility thereof,
estimated amount and timing of incurring decommissioning liabilities,
plans to utilize pad drilling and effect thereof, timing of closing of
joint venture agreement and the expected number of wells to be drilled
thereunder and the effects thereof may constitute forward-looking
statements under applicable securities laws. Forward-looking statements
necessarily involve risks including, without limitation, risks
associated with oil and gas exploration, development, exploitation,
production, marketing and transportation, loss of markets, volatility
of commodity prices, currency fluctuations, risks related to
satisfaction of conditions precedent to closing of joint venture
agreement, imprecision of reserve estimates, environmental risks,
competition from other producers, inability to retain drilling rigs and
other services, incorrect assessment of the value of acquisitions,
failure to realize the anticipated benefits of acquisitions, delays
resulting from or inability to obtain required regulatory approvals and
ability to access sufficient capital from internal and external
sources.  Events or circumstances may cause actual results to differ
materially from those predicted, as a result of the risk factors set
out and other known and unknown risks, uncertainties, and other
factors, many of which are beyond the control of Bellatrix. In
addition, forward-looking statements or information are based on a
number of factors and assumptions which have been used to develop such
statements and information but which may prove to be incorrect and
which have been used to develop such statements and information in
order to provide shareholders with a more complete perspective on
Bellatrix’s future operations.  Such information may prove to be
incorrect and readers are cautioned that the information may not be
appropriate for other purposes.  Although the Company believes that the
expectations reflected in such forward-looking statements or
information are reasonable, undue reliance should not be placed on
forward-looking statements because the Company can give no assurance
that such expectations will prove to be correct.  In addition to other
factors and assumptions which may be identified herein, assumptions
have been made regarding, among other things: the impact of increasing
competition; the general stability of the economic and political
environment in which the Company operates; the timely receipt of any
required regulatory approvals; the ability of the Company to obtain
qualified staff, equipment and services in a timely and cost efficient
manner; drilling results; the ability of the operator of the projects
which the Company has an interest in to operate the field in a safe,
efficient and effective manner; the ability of the Company to obtain
financing on acceptable terms; field production rates and decline
rates; the ability to replace and expand oil and natural gas reserves
through acquisition, development of exploration; the timing and costs
of pipeline, storage and facility construction and expansion and the
ability of the Company to secure adequate product transportation;
future commodity prices; currency, exchange and interest rates; the
regulatory framework regarding royalties, taxes and environmental
matters in the jurisdictions in which the Company operates; and the
ability of the Company to successfully market its oil and natural gas
products.  Readers are cautioned that the foregoing list is not
exhaustive of all factors and assumptions which have been used.  As a
consequence, actual results may differ materially from those
anticipated in the forward-looking statements.  Additional information
on these and other factors that could effect Bellatrix’s operations and
financial results are included in reports on file with Canadian and US
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.bellatrixexploration.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.

The reader is further cautioned that the preparation of financial
statements in accordance with GAAP requires management to make certain
judgments and estimates that affect the reported amounts of assets,
liabilities, revenues and expenses.  Estimating reserves is also
critical to several accounting estimates and requires judgments and
decisions based upon available geological, geophysical, engineering and
economic data.  These estimates may change, having either a negative or
positive effect on net earnings as further information becomes
available, and as the economic environment changes.

Overview and Description of the Business

Bellatrix Exploration Ltd. (“Bellatrix” or the “Company”) is a western
Canadian based growth oriented oil and gas company engaged in the
exploration for, and the acquisition, development and production of oil
and natural gas reserves in the provinces of Alberta, British Columbia
and Saskatchewan.

Bellatrix’s common shares and convertible debentures are listed on the
Toronto Stock Exchange under the symbols BXE and BXE.DB.A,
respectively, and the common shares of Bellatrix trade on the NYSE MKT
under the symbol BXE.

Cardium Joint Venture

In January 2013, Bellatrix entered into a joint venture agreement with a
Seoul Korea based company (“JV Partner”), to accelerate development of
Bellatrix’s extensive undeveloped Cardium land holdings in West Central
Alberta.  Under the terms of the agreement, the JV Partner will
contribute 50%, or CDN$150 million, to a $300 million joint venture
(the “Joint Venture”) to participate in an expected 83 Cardium well
program.  Under the agreement, the JV Partner will earn 33% of
Bellatrix’s working interest in the Cardium well program until payout
(being recovery of the JV Partner’s capital investment plus an 8%
return on investment) on the total program, which is expected to occur
prior to a maximum of 7 years, reverting to a 20% working interest
after payout.  Closing is subject to certain conditions.  In April
2013, the JV Partner requested and has been granted a one-month
extension to the closing, which is now anticipated to occur on or
before May 31, 2013.  Bellatrix will be required to provide a guarantee
of the return of the JV Partner’s capital investment of up to $30
million if not recovered within 7 years. This agreement is anticipated
to be accounted for as a joint operation under International Financial
Reporting Standards (“IFRS”).

First Quarter 2013 Financial and Operational Results

Sales Volumes

Sales volumes for the three months ended March 31, 2013 averaged 19,343
boe/d compared to 15,900 boe/d for the same period in 2012,
representing a 22% increase.  Total crude oil, condensate and NGLs
averaged approximately 31% of sales volumes for the first quarter of
2013, compared to 39% of sales volumes in the 2012 first quarter. First
quarter 2013 average production volumes were negatively impacted by
approximately 560 boe/d due to unscheduled processing plant outages in
West Central Alberta. The Company’s current production capability is
approximately 24,000 boe/d. The increase in sales was primarily a
result of an increased capital program year-over-year and the
associated drilling success achieved in the Cardium and Notikewin
resource plays.  Capital expenditures for the three months ended March
31, 2013 were $91.6 million, compared to $74.1 million for the first
quarter of 2012.

During the month of April, 2013, field production averaged approximately
22,425 boe/d weighted 31% oil and liquids and 69% natural gas with an
April 2013 exit rate of approximately 24,000 boe/d.


    Sales Volumes

                                             Three months ended March 31,

                                               2013                  2012

    Light oil and condensate    (bbls/d)      3,714                 4,466

    NGLs (excluding condensate) (bbls/d)      2,072                 1,386

    Heavy oil                   (bbls/d)        197                   271

    Total crude oil, condensate (bbls/d)      5,983                 6,123
    and NGLs

    Natural gas                 (mcf/d)      80,158                58,660

    Total boe/d                   (6:1)      19,343                15,900

In the first quarter of 2013, Bellatrix posted a 100% success rate
drilling and/or participating in 21 gross (17.08 net) wells, resulting
in 18 gross (14.98 net) Cardium oil wells, and 3 gross (2.10 net)
Notikewin/Falher liquids-rich gas wells.

By comparison, Bellatrix drilled or participated in 13 gross (10.72 net)
wells during the 2012 first quarter, which included 10 gross (8.22 net)
Cardium light oil horizontal wells, 1 gross (1 net) Duvernay natural
gas horizontal well, 1 gross (0.5 net) Notikewin natural gas horizontal
well, and 1 gross (1 net) Cardium natural gas horizontal well.

For the three months ended March 31, 2013, crude oil, condensate and NGL
sales volumes decreased by approximately 2%, averaging 5,983 bbl/d
compared to 6,123 bbl/d in the first quarter of 2012. For the three
months ended March 31, 2013, sales volumes for crude oil, condensate
and NGLs averaged approximately 31% of total sales volumes compared to
approximately 39% of total sales volumes in the 2012 first quarter. The
reduction in liquids weighting between the periods was a result of
bringing on several other high-productivity gas wells throughout the
2012 year and 2013 first quarter.

Sales of natural gas averaged 80.2 Mmcf/d for the three months ended
March 31, 2013, compared to 58.7 Mmcf/d in the same period in 2012, an
increase of approximately 37%. The weighting towards natural gas sales
volumes averaged approximately 69% for the three months ended March 31,
2013, compared to 61% in the 2012 first quarter.

For the remainder of 2013, Bellatrix intends to utilize pad drilling,
involving the drilling of multiple horizontal wells from single surface
locations, to enhance resource development efficiency, minimize the
Company’s environmental footprint, and improve cost and on-stream
efficiencies. An initial capital expenditure budget of between $230 to
$240 million has been set for fiscal 2013.  Including the capital
expected to be invested by the JV Partner, a total capital program of
$365 million is anticipated for 2013.  Based on the timing of proposed
expenditures, downtime for scheduled and unscheduled plant turnarounds,
completion of required infrastructure, timing of closing of the Korean
Joint Venture, and normal production declines, execution of the 2013
capital expenditure plan is anticipated to provide average daily
production of approximately 24,000 to 25,000 boe/d and an exit rate of
approximately 30,000 boe/d to 31,000 boe/d.

Commodity Prices


    Average Commodity Prices

                                               Three months ended March 31,

                                                 2013   2012       % Change

    Average exchange rate (US$/Cdn$)           0.9917 0.9986            (1)

    Crude oil:                                                             

    WTI (US$/bbl)                               94.36 103.03            (8)

    Edmonton par - light oil ($/bbl)            88.65  92.81            (4)

    Bow River - medium/heavy oil ($/bbl)        64.35  83.17           (23)

    Hardisty Heavy - heavy oil ($/bbl)          50.18  72.35           (31)

    Bellatrix's average prices ($/bbl)                                     

      Light crude oil and condensate            92.11  90.03              2

      NGLs (excluding condensate)               42.30  53.97           (22)

      Heavy crude oil                           53.69  75.93           (29)

      Total crude oil and NGLs                  73.60  81.24            (9)

      Total crude oil and NGLs                  73.44  75.96            (3)
      (including risk management (1))

    Natural gas:                                                           

    NYMEX (US$/mmbtu)                            3.48   2.50             39

    AECO daily index (CDN$/mcf)                  3.20   2.15             49

    AECO monthly index (CDN$/mcf)                3.08   2.52             22

    Bellatrix's average price ($/mcf)            3.50   2.32             51

    Bellatrix's average price (including         4.42   2.32             91
    risk management (1)) ($/mcf)

    (1) Per unit metrics including risk management include realized gains
    or losses on commodity contracts and exclude unrealized gains or losses
    on commodity contracts.

For light oil and condensate, Bellatrix recorded an average $92.11/bbl
before commodity price risk management contracts during the three
months ended March 31, 2013, 2% higher than the average price received
in the comparative 2012 period.  In comparison, the Edmonton par price
decreased by 4% over the same period.  The average WTI crude oil
benchmark price decreased by 8% in the three months ended March 31,
2013 compared to the first quarter of 2012. The average US$/CDN$
foreign exchange rate was 0.9917 for the three months ended March 31,
2013, a decrease of 1% compared to an average rate of 0.9986 in the
2012 first quarter.

For NGLs (excluding condensate), Bellatrix recorded an average
$42.30/bbl during the three months ended March 31, 2013, a 22% decrease
from the $53.97/bbl received in the comparative period in 2012. The
decrease in NGL pricing between the 2013 and 2012 periods is largely
attributable to changes in NGL market supply conditions between the
periods.

For heavy crude oil, Bellatrix received an average price before
commodity risk management contracts of $53.69/bbl in the first quarter
of 2013, a decrease of 29% from the average price of $75.93/bbl
realized in the first quarter of 2012. In comparison, the Bow River
reference price decreased by 23%, and the Hardisty Heavy reference
price decreased by 31% between the 2013 and 2012 periods.   The
majority of Bellatrix’s heavy crude oil density ranges between 11 and
16 degrees API, consistent with the Hardisty Heavy reference price.

Bellatrix’s natural gas sales are priced with reference to the daily or
monthly AECO indices. Bellatrix’s natural gas sold has a higher heat
content than the industry average, which results in slightly higher
prices per mcf than the daily AECO index.  During the 2013 first
quarter, the AECO daily reference price increased by 49%, and the AECO
monthly reference price increased by approximately 22% compared to the
first quarter of 2012. Bellatrix’s natural gas average sales price
before commodity price risk management contracts for the three months
ended March 31, 2013 increased by 51% to $3.50/mcf compared to
$2.32/mcf in the first quarter of 2012. The greater increase in
Bellatrix’s realized natural gas prices compared to the daily AECO
index between the periods was primarily due to the weighting of
additional sales volumes realized at increasing prices between the 2013
and 2012 periods.  Bellatrix’s natural gas average price after
including commodity price risk management contracts for the three
months ended March 31, 2013 was $4.42/mcf, compared to $2.32/mcf for
the three months ended March 31, 2012.

Revenue

Revenue before other income, royalties and commodity price risk
management contracts for the three months ended March 31, 2013 was
$64.9 million, 12% higher than the $57.7 million realized in the first
quarter of 2012. The increase in revenues between the periods was
primarily due to increased natural gas and NGL sales volumes, and
higher natural gas, light oil and condensate prices between the
periods, partially offset by reduced crude oil and condensate sales
volumes, and reduced NGL and heavy crude oil prices experienced in the
first quarter of 2013.

Revenue before other income, royalties and commodity price risk
management contracts for crude oil and NGLs for the three months ended
March 31, 2013 decreased by 12% from the 2012 first quarter, as a
result of lower crude oil sales volumes and reduced NGL and heavy crude
oil prices, partially offset by increased NGL sales volumes, and
slightly higher light oil and condensate prices when compared to the
first quarter of 2012.   In the three months ended March 31, 2013,
total crude oil, condensate and NGL revenues contributed 61% of total
revenue (before other) compared to 78% in the 2012 first quarter. 
Light crude oil, condensate and NGL revenues in the three months ended
March 31, 2013 comprised 98% of total crude oil, condensate and NGL
revenues (before other) for the period, compared to 96% in the first
quarter of 2012.

Natural gas revenue before other income, royalties and commodity price
risk management contracts for the three months ended March 31, 2013
increased by approximately 104% compared to the 2012 first quarter as a
result of an approximate 37% increase in sales volumes in conjunction
with a 51% increase in realized gas prices before risk management
between the periods.


                                           Three months ended March 31,

    ($000s)                                  2013                  2012

    Light crude oil and condensate         30,789                36,593

    NGLs (excluding condensate)             7,889                 6,807

    Heavy oil                                 952                 1,871

    Crude oil and NGLs                     39,630                45,271

    Natural gas                            25,278                12,408

    Total revenue before other             64,908                57,679

    Other (1)                                 635                   512

    Total revenue before royalties and
    risk management                        65,543                58,191

    (1)Other revenue primarily consists of processing and other third party
    income.

Commodity Price Risk Management

The Company has a formal commodity price risk management policy which
permits management to use specified price risk management strategies
including fixed price contracts, collars and the purchase of floor
price options and other derivative financial instruments and physical
delivery sales contracts to reduce the impact of price volatility for a
maximum of eighteen months beyond the transaction date. The program is
designed to provide price protection on a portion of the Company’s
future production in the event of adverse commodity price movement,
while retaining significant exposure to upside price movements. By
doing this, the Company seeks to provide a measure of stability to
funds flow from operations, as well as to ensure Bellatrix realizes
positive economic returns from its capital development and acquisition
activities.  The Company plans to continue its commodity price risk
management strategies focusing on maintaining sufficient cash flow to
fund Bellatrix’s capital expenditure program.  Any remaining production
is realized at market prices.

A summary of the financial commodity price risk management volumes and
average prices by quarter currently outstanding as of May 7, 2013 is
shown in the following tables:

Natural gas 


    Average Volumes (GJ/d)                               

                                        Q2 2013 Q3 2013 Q4 2013

    Fixed                                55,000  55,000  35,109

                                Q1 2014 Q2 2014 Q3 2014 Q4 2014

    Fixed                        15,000  15,000       -       -

    Average Price ($/GJ AECO C)                          

                                        Q2 2013 Q3 2013 Q4 2013

    Fixed                                  3.06    3.06    3.05

                                Q1 2014 Q2 2014 Q3 2014 Q4 2014

    Fixed                          3.05    3.05       -       -

Crude oil and liquids      


    Average Volumes (bbls/d)                                       

                                                  Q2 2013 Q3 2013 Q4 2013

    Fixed                                           1,500   1,500   1,500

                                          Q1 2014 Q2 2014 Q3 2014 Q4 2014

    Call option                             3,000   3,000   3,000   3,000

    Average Price ($/bbl WTI)                                      

                                                  Q2 2013 Q3 2013 Q4 2013

    Fixed price (CDN$/bbl)                          94.50   94.50   94.50

                                          Q1 2014 Q2 2014 Q3 2014 Q4 2014

    Call option (ceiling price) (US$/bbl)  105.00  105.00  105.00  105.00

As of March 31, 2013, the fair value of Bellatrix’s outstanding
commodity contracts is a net unrealized liability of $12.1 million as
reflected in the financial statements.  The fair value or
mark-to-market value of these contracts is based on the estimated
amount that would have been received or paid to settle the contracts as
at March 31, 2013 and will be different from what will eventually be
realized.  Changes in the fair value of the commodity contracts are
recognized in the Consolidated Statements of Comprehensive Income
within the financial statements.

The following is a summary of the gain (loss) on commodity contracts for
the three months ended March 31, 2013 and 2012 as reflected in the
Condensed Consolidated Statements of Comprehensive Income in the
financial statements:


    Commodity contracts                                                   

                                               Crude Oil  Natural     2013
    ($000s)                                    & Liquids      Gas    Total

    Realized cash gain (loss) on contracts (1)      (89)    6,591    6,502

    Unrealized gain (loss) on contracts (2)        2,007 (14,306) (12,299)

    Total gain (loss) on commodity contracts       1,918  (7,715)  (5,797)

    Commodity contracts                                                   

                                               Crude Oil  Natural     2012
    ($000s)                                    & Liquids      Gas    Total

    Realized cash loss on contracts              (2,945)        -  (2,945)

    Unrealized gain (loss) on contracts (2)      (6,749)   11,617    4,868

    Total gain (loss) on commodity contracts     (9,694)   11,617    1,923

    (1)In January 2013, the Company crystalized and realized $6.5 million
    in cash proceeds by resetting the fixed prices on natural gas
    commodity price risk management contracts for the period from April 1,
    2013 through to October 31, 2013.

    (2)Unrealized gain (loss) on commodity contracts represents non-cash
    adjustments for changes in the fair value of these contracts  during
    the period.

Royalties

For the three months ended March 31, 2013, total royalties were $11.8
million compared to $6.6 million incurred in the first quarter of
2012.  Overall royalties as a percentage of revenue (after
transportation costs) in the first quarter of 2013 were 19%, compared
with 12% in the 2012 first quarter.

Certain light oil wells are now incurring higher royalty rates as they
come off the initial royalty incentive rates.  The Company’s minor
heavy oil properties, principally consisting of the Frog Lake Alberta
assets, are also subject to high crown royalty rates. The Company’s
royalty percentage for natural gas royalties has increased as certain
wells are now coming off initial royalty incentive rates and other
wells are drilled on Ferrier lands with higher combined Indian Oil and
Gas Canada (“IOGC”) and GORR royalty rates.   Natural gas royalties and
total royalties recognized in the first quarter of 2012 were reduced by
$2.6 million and $3.0 million, respectively, in adjustments relating to
prior period estimates, primarily for Ferrier area wells paying IOGC
royalties with royalty incentive programs.  Excluding these
adjustments, the average natural gas and overall corporate royalty rate
percentages for the first quarter of 2012 would be 8% and 17%,
respectively.


    Royalties by Commodity Type                   Three months ended March
                                                                       31,

    ($000s, except where noted)                     2013              2012

    Light crude oil, condensate and NGLs           8,273             7,724

      $/bbl                                        15.89             14.50

      Average light crude oil, condensate and                           18
      NGLs royalty rate (%)                           22

    Heavy Oil                                        428               599

      $/bbl                                        24.14             24.30

      Average heavy oil royalty rate (%)              47                32

    Natural Gas                                    3,084           (1,710)

      $/mcf                                         0.43            (0.32)

      Average natural gas royalty rate (%)            13              (15)

    Total                                         11,785             6,613

    $/boe                                           6.77              4.57

    Average total royalty rate (%)                    19                12

    Royalties, by Type

                                                  Three months ended March
                                                                       31,

    ($000s)                                         2013              2012

    Crown royalties                                3,102             2,642

    Indian Oil and Gas Canada royalties            2,720             (345)

    Freehold & GORR                                5,963             4,316

    Total
                                                  11,785             6,613

    Expenses

                                                  Three months ended March
                                                                       31,

    ($000s)                                         2013              2012

    Production                                    15,058            13,306

    Transportation                                 1,445             1,658

    General and administrative                     3,586             2,761

    Interest and financing charges(1)              3,044             2,102

    Share-based compensation                       1,450               793

    (1) Does not include financing charges in relation to the Company's
    accretion of decommissioning liabilities.

    Expenses per boe

                                                  Three months ended March
                                                                       31,

    ($ per boe)                                     2013              2012

    Production                                      8.65              9.20

    Transportation                                  0.83              1.14

    General and administrative                      2.06              1.91

    Interest and financing charges                  1.75              1.45

    Share-based compensation                        0.83              0.55

Production Expenses

For the three months ended March 31, 2013, production expenses totaled
$15.1 million ($8.65/boe), compared to $13.3 million ($9.20/boe) in the
first quarter of 2012.  For the three months ended March 31, 2013,
production expenses increased overall, while decreasing on a per boe
basis when compared to the 2012 first quarter.  The decrease in
production expenses on a boe basis in the first quarter of 2013 was
primarily due to increased production in areas with lower production
expenses, as well as reduced processing fees in certain areas and
continued field optimization projects.

Bellatrix is targeting operating costs of approximately $73.6 million
($8.00/boe) in the 2013 year, which is a reduction from the $8.73/boe
operating costs incurred for the 2012 year.  This is based upon
assumptions of estimated 2013 average production of approximately
24,000 boe/d to 25,000 boe/d, continued field optimization work and
planned capital expenditures in producing areas which are anticipated
to have lower operating costs.


    Production Expenses, by Commodity Type

                                                  Three months ended March
                                                                       31,

    ($000s, except where noted)                     2013              2012

    Light crude oil, condensate and NGLs           6,837             4,535

    $/bbl                                          13.13              8.51

    Heavy oil                                        290               421

    $/bbl                                          16.36             17.09

    Natural gas                                    7,931             8,350

    $/mcf                                           1.10              1.56

    Total                                         15,058            13,306

    $/boe                                           8.65              9.20

    Total                                         15,058            13,306

    Processing and other third party income        (635)             (512)
    (1)

    Total after deducting processing and          14,423            12,794
    other third party income

    $/boe                                           8.28              8.84

    (1) Processing and other third party income is included within
    petroleum and natural gas sales on the Consolidated Statements of
    Comprehensive Income.

Transportation

Transportation expenses for the three months ended March 31, 2013 were
$1.4 million ($0.83/boe), compared to $1.7 million ($1.14/boe) in the
first quarter of 2012. The decrease in overall and per boe costs
between the periods is reflective of a higher volume of oil production
being shipped through pipelines rather than through trucking at a
higher cost, as well as reduced gas transportation fees.

Operating Netback


    Field Operating Netback - Corporate (before risk management)

                                For the three months ended March 31,

    ($/boe)                       2013                          2012

    Sales                        37.28                         39.86

    Transportation              (0.83)                        (1.14)

    Royalties                   (6.77)                        (4.57)

    Production expense          (8.65)                        (9.20)

    Field operating netback      21.03                         24.95

For the three months ended March 31, 2013, the corporate field operating
netback (before commodity price risk management contracts) was
$21.03/boe compared to $24.95/boe in the first quarter of 2012.  The
reduced netback was primarily the result of lower NGL and heavy crude
oil prices, as well as increased royalty expenses, offset partially by
increased light oil and condensate, and natural gas prices, as well as
lower production and transportation expenses.  After including
commodity price risk management contracts, the corporate field
operating netback for the first quarter of 2013 was $24.77/boe compared
to $22.92/boe in the 2012 first quarter. Per unit metrics including
risk management include realized gains or losses on commodity contracts
and exclude unrealized gains or losses on commodity contracts.


    Field Operating Netback - Crude Oil, Condensate and NGLs (before
    risk management)

                                        Three months ended March 31,

    ($/bbl)                        2013                         2012

    Sales                         73.60                        81.24

    Transportation               (0.93)                       (1.45)

    Royalties                   (16.16)                      (14.94)

    Production expense          (13.24)                       (8.89)

    Field operating netback       43.27                        55.96

Field operating netback for crude oil, condensate and NGLs averaged
$43.27/bbl for the three months ended March 31, 2013, a decrease of 23%
from $55.96/bbl realized in the first quarter of 2012. In the first
quarter of 2013, Bellatrix’s combined crude oil and NGLs average price
(before risk management) decreased by approximately 9% compared to the
same period in 2012.  The commodity price decrease in conjunction with
increases in royalties and production expenses was partially offset by
reductions in transportation expenses, resulting in the overall
decrease to the field operating netback for crude oil, condensate and
NGLs.  After including commodity price risk management contracts, field
operating netback for crude oil and NGLs for the three months ended
March 31, 2013 decreased to $43.11/boe compared to $50.68/boe in the
first quarter of 2012.


    Field Operating Netback - Natural Gas (before risk management)

                                      Three months ended March 31,

    ($/mcf)                        2013                       2012

    Sales                          3.50                       2.32

    Transportation               (0.13)                     (0.16)

    Royalties                    (0.43)                       0.32

    Production expense           (1.10)                     (1.56)

    Field operating netback        1.84                       0.92

Field operating netback for natural gas in the three months ended March
31, 2013 increased by 100% to $1.84/mcf, compared to $0.92/mcf realized
in the first quarter of 2012, reflecting increased natural gas prices,
reduced production expenses, and slightly lower transportation
expenses, offset somewhat by increased royalty expenses.  After
including commodity price risk management contracts, field operating
netback for natural gas for the three months ended March 31, 2013
increased to $2.76/mcf, which compared to $0.92/mcf in the 2012 first
quarter.

General and Administrative

General and administrative (“G&A”) expenses (after capitalized G&A and
recoveries) for the three months ended March 31, 2013 were $3.6 million
($2.06/boe), compared to $2.8 million ($1.91/boe) for the first quarter
of 2012.  G&A expenses in the 2013 first quarter were higher in
comparison to the same period in 2012, which is reflective of higher
compensation costs, offset partially by higher capitalized G&A and
recoveries.   On a boe basis, G&A for the three months ended March 31,
2013 increased by approximately 8% when compared to the 2012 first
quarter. The increase was primarily as a result of higher overall costs
not fully offset by higher average sales volumes in the first quarter
of 2013.

For 2013, the Company is anticipating G&A expenses after capitalization
to be approximately $23.0 million ($2.50/boe) based on estimated 2013
average production volumes of approximately 24,000 boe/d to 25,000
boe/d.


    General and Administrative Expenses

                                       Three months ended March 31,

    ($000s, except where noted)           2013                 2012

    Gross expenses                       6,166                4,878

    Capitalized                        (1,152)              (1,042)

    Recoveries                         (1,428)              (1,075)

    G&A expenses                         3,586                2,761

    G&A expenses, per unit ($/boe)        2.06                 1.91

Interest and Financing Charges

Bellatrix recorded $3.0 million ($1.75/boe) of interest and financing
charges related to bank debt and its debentures for the three months
ended March 31, 2013, compared to $2.1 million ($1.45/boe) in the first
quarter of 2012. The overall increase in interest and financing charges
between the periods was primarily due to greater interest and accretion
charges in relation to the Company’s outstanding debentures in
conjunction with higher interest charges related to the Company’s
long-term debt as the Company carried a higher average debt balance in
the first quarter of 2013 compared to the 2012 first quarter. 
Bellatrix’s total net debt at March 31, 2013 of $245.4 million includes
the $51.1 million liability portion of its $55 million principal amount
of 4.75% convertible unsecured subordinated debentures (the “4.75%
Debentures”), $150.8 million of bank debt and the net balance of the
working capital deficiency. The 4.75% Debentures have a maturity date
of April 30, 2015.


    Interest and Financing Charges (1)

                                              Three months ended March 31,

    ($000s, except where noted)                  2013                 2012

    Interest and financing charges              3,044                2,102

    Interest and financing charges ($/boe)       1.75                 1.45

    (1)Does not include financing charges in relation to the Company's
    unwinding of decommissioning liabilities

    Debt to Funds Flow from Operations Ratio                              

                                              Three months ended March 31,

    ($000s, except where noted)                  2013                 2012

    Shareholders' equity                      386,750              358,910

    Long-term debt                            150,827               96,760

    Convertible debentures (liability
    component)                                 51,105               49,464

    Working capital deficiency (2)             43,488               18,276

    Total net debt (2) at period end          245,420              164,500

    Debt to funds flow from operations(1)
    ratio (annualized)(3)                                                 

    Funds flow from operations (1)
    (annualized)                              150,180              116,776

    Total net debt (2) at period end          245,420              164,500

    Total net debt to periods funds flow from operations ratio

    (annualized) (3)                             1.6x                 1.4x

    Net debt (2)(excluding convertible debentures) at

    period end                                194,315              115,036

    Net debt to periods funds flow from operations

    ratio (annualized) (3)                       1.3x                 1.0x

    Debt to funds flow from operations (1)
    ratio (trailing)(4)                                                   

    Funds flow from operations (1) (trailing)
    (4)                                       119,389              106,507

    Total net debt (2)to funds flow from
    operations (trailing)(4)                     2.1x                 1.5x

    Net debt (2)(excluding convertible debentures) to funds flow

    from operations for the period               1.6x                 1.1x

    (1) As detailed previously in this Management's Discussion and
    Analysis, funds flow from operations is a term that does not have any
    standardized meaning under GAAP.  Funds flow from operations is
    calculated as cash flow from operating activities, less decommissioning
    costs incurred and changes in non-cash working capital incurred.  Refer
    to the reconciliation of cash flow from operating activities to funds
    flow from operations appearing elsewhere herein.

    (2)Net debt and total net debt are considered additional GAAP
    measures.  The Company's calculation of total net debt includes the
    liability component of convertible debentures and excludes deferred
    liabilities, long-term commodity contract liabilities, decommissioning
    liabilities, long-term finance lease obligation and the deferred tax
    liability.  Net debt and total net debt include the net working capital
    deficiency (excess) before short-term commodity contract assets and
    liabilities and current finance lease obligation.  Net debt also
    excludes the liability component of convertible debentures.   Total net
    debt and net debt are additional GAAP measures; refer to the following
    reconciliation of total liabilities to total net debt and net debt.

    (3)Total net debt and net debt to periods funds flow from operations
    ratio (annualized) is calculated based upon first quarter funds flow
    from operations annualized.

    (4)Trailing periods funds flow from operations ratio annualized is
    based on the twelve-month periods ended March 31, 2013 and March 31,
    2012.


    Reconciliation of Total Liabilities to Total Net Debt and Net Debt

                                                         As at March 31,

    ($000s)                                                2013     2012

    Total liabilities per financial statements          373,025  286,738

      Current liabilities included within working     (110,055) (84,391)
      capital calculation 

      Commodity contract liability                      (2,999)  (6,963)

      Decommissioning liabilities                      (44,497) (44,655)

      Finance lease obligation                         (12,776)  (4,505)

      Deferred Taxes                                      (766)        -

    Working Capital                                                     

      Current assets                                   (56,000) (66,819)

      Current liabilities                               110,055   84,391

      Current portion of finance lease                  (1,441)    (495)

      Net commodity contract asset (liability)          (9,126)    1,199

                                                         43,488   18,276

    Total net debt                                      245,420  164,500

      Convertible debentures                           (51,105) (49,464)

    Net debt                                            194,315  115,036

Share-Based Compensation

Non-cash share-based compensation expense for the three months ended
March 31, 2013 was $1.5 million compared to $0.8 million in the same
period in 2012. The overall increase in non-cash share-based
compensation expense between the periods is primarily a result of
greater Deferred Share Unit Plan expenses of $0.9 million (2012: $0.1
million) which reflected increases to the Company’s share trading price
during the period, and lower capitalized share-based compensation of
$0.4 million (2012: $0.5 million), offset partially by a lower expense
for the Company’s outstanding share options of $1.0 million (2012: $1.2
million).

Depletion and Depreciation

Depletion and depreciation expense for the three months ended March 31,
2013 was $17.1 million ($9.82/boe), compared to $19.5 million
($13.45/boe) recognized in the first quarter of 2012.  The decrease in
depletion and depreciation expense between the periods, on a per boe
basis, was primarily a result of an increase in the reserve base used
for the depletion calculation, partially offset by a higher cost base
and increased future development costs.

For the three months ended March 31, 2013 Bellatrix has included a total
of $456.2 million (2012: $348.2 million) for future development costs
in the depletion calculation and excluded from the depletion
calculation a total of $37.9 million (2012: $35.1 million) for
estimated salvage.

Depletion and Depreciation


                                    Three months ended March 31,

    ($000s, except where noted)       2013                  2012

    Depletion and Depreciation      17,090                19,462

    Per unit ($/boe)                  9.82                 13.45

Impairment of Assets

In accordance with IFRS, the Company calculates an impairment test when
there are indicators of impairment.  The impairment test is performed
at the asset or cash generating unit (“CGU”) level.  IAS 36 -
“Impairment of Assets” (“IAS 36″) is a one-step process for testing and
measuring impairment of assets.  Under IAS 36, the asset or CGU’s
carrying value is compared to the higher of: value-in-use and fair
value less costs to sell.  Value-in-use is defined as the present value
of the future cash flows expected to be derived from the asset or CGU.

As at March 31, 2013, Bellatrix reviewed and determined there were no
impairment indicators requiring an impairment test to be performed.

When performed, the impairment test is based upon the higher of
value-in-use and estimated fair market values for the Company’s
properties, including but not limited to an updated external reserve
engineering report. This report incorporates a full evaluation of
reserves on an annual basis or internal reserve updates at quarterly
periods, and the latest commodity pricing deck.  Estimating reserves is
very complex, requiring many judgments based on available geological,
geophysical, engineering and economic data.  Changes in these judgments
could have a material impact on the estimated reserves.  These
estimates may change, having either a negative or positive effect on
net earnings as further information becomes available and as the
economic environment changes.

Income Taxes

Deferred income taxes arise from differences between the accounting and
tax basis of the Company’s assets and liabilities.  For the three
months ended March 31, 2013, the Company recognized a deferred income
tax expense of $1.8 million compared to $3.3 million in the first
quarter of 2012.

At March 31, 2013, the Company had a total deferred tax liability
balance of $0.8 million.

At March 31, 2013, Bellatrix had approximately $638 million in tax pools
available for deduction against future income as follows:


    ($000s)                                         Rate %    2013    2012

    Intangible resource pools:                                            

      Canadian exploration expenses                    100  56,200  47,600

      Canadian development expenses                     30 424,300 384,400

      Canadian oil and gas property expenses            10  41,400  25,100

      Foreign resource expenses                         10     700     800

    Attributed Canadian Royalty Income       (Alberta) 100  16,100  16,100

    Undepreciated capital cost (1)                  6 - 55  87,600  72,000

    Non-capital losses (expire through 2027)           100  10,000  10,000

    Financing costs                                20 S.L.   2,000   3,300

                                                           638,300 559,300

    (1) Approximately $83 million of undepreciated capital cost pools are
    class 41, which is claimed at a 25% rate.

Cash Flow from Operating Activities, Funds Flow from Operations and Net
Profit

As detailed previously in this MD&A, funds flow from operations is a
term that does not have any standardized meaning under GAAP.  Funds
flow from operations is calculated as cash flow from operating
activities before decommissioning costs incurred and changes in
non-cash working capital incurred.


    Reconciliation of Cash Flow from Operating Activities and Funds Flow
    from Operations

                                             Three months ended March 31,

    ($000s)                                    2013                  2012

    Cash flow from operating activities      35,527                24,056

    Decommissioning costs incurred              279                   177

    Change in non-cash working capital        1,739                 4,961

    Funds flow from operations               37,543                29,194

Bellatrix’s cash flow from operating activities of $35.5 million ($0.33
per basic share and $0.30 per diluted share) for the three months ended
March 31, 2013 increased approximately 47% from the $24.1 million
($0.22 per basic share and $0.21 per diluted share) generated in the
first quarter of 2012.  Bellatrix generated funds flow from operations
of $37.5 million ($0.35 per basic share and $0.33 per diluted share)
for the three months ended March 31, 2013, an increase of 28% from
$29.2 million ($0.27 per basic share and $0.25 per diluted share) for
the 2012 first quarter.

The increase in funds flow from operations between the first quarter of
2013 and the first quarter of 2012 was principally due to higher
overall funds from operating netbacks, and a total net realized gain on
the Company’s commodity risk management contracts compared to a loss in
the 2012 first quarter, offset partially by increased financing
expenses and higher general and administrative expenses in the 2013
first quarter compared to the same period in 2012.

Bellatrix maintains a commodity price risk management program to provide
a measure of stability to funds flow from operations.  Unrealized
mark-to-market gains or losses are non-cash adjustments to the current
fair market value of the contract over its entire term and are included
in the calculation of net profit.

As previously noted in this MD&A, net profit before certain non-cash
items is a non-GAAP measure. A reconciliation between this measure and
net loss per the Consolidated Statement of Comprehensive Income is
provided below.

For the three months ended March 31, 2013, net profit before certain
non-cash items, net of associated deferred tax impacts, was $13.6
million compared to $6.1 million in the first quarter of 2012.


    Reconciliation of Net Profit to Net Profit Before Certain Non-Cash
    Items

                                               Three months ended March 31,

    ($000s)                                       2013                 2012

    Net profit per financial statements          4,561                9,172

    Items subject to reversal                                              

      Unrealized (gain) loss on commodity       12,299              (4,868)
      contracts

      Loss (gain) on property dispositions and   (250)                  759
      swaps

      Deferred tax impact of above items       (3,012)                1,027

    Net profit before certain non-cash items    13,598                6,090

A net profit of $4.6 million ($0.04 per basic share and $0.04 per
diluted share) was recognized for the three months ended March 31,
2013, compared to a net profit of $9.2 million ($0.09 per basic share
and $0.08 per diluted share) in the first quarter of 2012.  The lower
net profit recorded in the three months ended March 31, 2013 compared
to the 2012 first quarter was primarily a consequence of a net
unrealized loss on commodity contracts in the 2013 period compared to a
gain in the 2012 period and higher stock-based compensation expenses,
offset somewhat by higher cash flows as noted above, a net realized
gain on commodity contracts in the 2013 period compared to a loss in
the 2012 period, a reduced future income tax expense, and lower
depletion and depreciation expense.

Cash Flow from Operating Activities, Funds Flow from Operations and Net
Profit


                                        Three months ended March 31,

    ($000s, except per share amounts)     2013                  2012

    Cash flow from operating activities 35,527                24,056

      Basic   ($/share)                   0.33                  0.22

      Diluted ($/share)                   0.30                  0.21

    Funds flow from operations          37,545                29,194

      Basic   ($/share)                   0.35                  0.27

      Diluted ($/share)                   0.32                  0.25

    Net  profit                          4,561                 9,172

      Basic   ($/share)                   0.04                  0.09

      Diluted ($/share)                   0.04                  0.08

Capital Expenditures

Bellatrix invested $91.6 million in capital expenditures during the
three months ended March 31, 2013, compared to $74.1 million in the
first quarter of 2012.


    Capital Expenditures

                                              Three months ended March 31,

    ($000s)                                     2013                  2012

    Lease acquisitions and retention           5,606                 2,989

    Geological and geophysical                    23                  (41)

    Drilling and completion costs             76,362                62,170

    Facilities and equipment                   9,468                 8,943

        Exploration and development (1)       91,459                74,061

    Corporate (2)                                150                    70

        Total capital expenditures - cash     91,609                74,131

    Property dispositions - cash                   5                 (300)

        Total net capital expenditures - cash 91,614                73,831

    Other - non-cash (3)                         787                 (154)

      Total net capital expenditures          92,401                73,677

      (1)    Excludes capitalized costs related to decommissioning
             liabilities expenditures incurred during the period.

      (2)    Corporate includes office furniture, fixtures and equipment.

      (3)    Other includes non-cash adjustments for the current period's
             decommissioning liabilities and share based compensation.

In the first quarter of 2013, Bellatrix posted a 100% success rate
drilling and/or participating in 21 gross (17.08 net) wells, resulting
in 18 gross (14.98 net) Cardium oil wells, and 3 gross (2.10 net)
Notikewin/Falher liquids-rich gas wells.

By comparison, Bellatrix drilled or participated in 13 gross (10.72 net)
wells during the 2012 first quarter, which included 10 gross (8.22 net)
Cardium light oil horizontal wells, 1 gross (1 net) Duvernay natural
gas horizontal well, 1 gross (0.5 net) Notikewin natural gas horizontal
well, and 1 gross (1 net) Cardium natural gas horizontal well.

During the first quarter of 2013, the Company doubled the capacity at
the 9-3 Compressor Station built to process gas and liquids from the
Ferrier area from 3,300 HP to 6,600 HP.  Bellatrix also constructed 26
km of 12″ diameter high pressure pipeline to facilitate moving up to
150 mmcf/d of gas and associated liquids from the Brazeau and Ferrier
areas to an underutilized third party operated deep cut gas plant in
the Minnehik/Buck Lake Area of West Central Alberta.   Additionally,
the Company constructed a total of 13.2 km of dual 10″ diameter
gathering pipelines and 8.2 km of dual 8″ diameter gathering pipelines.

The $91.6 million capital program for the three months ended March 31,
2013 was financed from funds flow from operations and bank debt.

Based on the current economic conditions and Bellatrix’s operating
forecast for 2013, the Company budgets a capital program between $230
to $240 million funded from the Company’s cash flows and to the extent
necessary, bank indebtedness.  Including the capital expected to be
invested by the JV Partner, a total capital program of $365 million is
anticipated for 2013.  The 2013 capital budget is expected to be
directed primarily towards horizontal drilling and completions
activities in the Cardium and Notikewin areas.

Decommissioning Liabilities

At March 31, 2013, Bellatrix has recorded decommissioning liabilities of
$44.5 million, compared to $43.9 million at December 31, 2012, for
future abandonment and reclamation of the Company’s properties.  For
the three months ended March 31, 2013, decommissioning liabilities
increased by a net $0.6 million as a result of $0.7 million incurred on
property acquisitions and development activities and $0.2 million as a
result of charges for the unwinding of the discount rates used for
assessing liability fair values, offset by a $0.2 million decrease for
changes in estimates, and a $0.1 million decrease for liabilities
settled during the period.  The $0.2 million decrease as a result of
changes in estimates is primarily due to a discount rate variation at
March 31, 2013 compared to December 31, 2012, in addition to other
abandonment liability revisions.

Liquidity and Capital Resources

As an oil and gas business, Bellatrix has a declining asset base and
therefore relies on ongoing development and acquisitions to replace
production and add additional reserves. Future oil and natural gas
production and reserves are highly dependent on the success of
exploiting the Company’s existing asset base and in acquiring
additional reserves. To the extent Bellatrix is successful or
unsuccessful in these activities, cash flow could be increased or
reduced.

Bellatrix is focused on growing oil and natural gas production from its
diversified portfolio of existing and emerging resource plays in
Western Canada.  Bellatrix remains highly focused on key business
objectives of maintaining financial strength and optimizing capital
investments – attained through a disciplined approach to capital
spending, a flexible investment program and financial stewardship.
Natural gas prices are primarily driven by North American supply and
demand, with weather being the key factor in the short term.  Bellatrix
believes that natural gas represents an abundant, secure, long-term
supply of energy to meet North American needs.  Bellatrix’s results are
affected by external market and risk factors, such as fluctuations in
the prices of crude oil and natural gas, movements in foreign currency
exchange rates and inflationary pressures on service costs. Market
conditions have resulted in Bellatrix experiencing primarily downward
trends in crude oil pricing and recent increases in natural gas
pricing.

Liquidity risk is the risk that Bellatrix will not be able to meet its
financial obligations as they become due. Bellatrix actively manages
its liquidity through daily and longer-term cash, debt and equity
management strategies.  Such strategies encompass, among other factors:
having adequate sources of financing available through its bank credit
facilities, estimating future cash generated from operations based on
reasonable production and pricing assumptions, analysis of economic
risk management opportunities, and maintaining sufficient cash flows
for compliance with operating debt covenants.  Bellatrix is fully
compliant with all of its operating debt covenants.

Bellatrix generally relies on operating cash flows and its credit
facilities to fund capital requirements and provide liquidity.  Future
liquidity depends primarily on cash flow generated from operations,
existing credit facilities and the ability to access debt and equity
markets.  From time to time, the Company accesses capital markets to
meet its additional financing needs and to maintain flexibility in
funding its capital programs.  There can be no assurance that future
debt or equity financing, or cash generated by operations will be
available or sufficient to meet these requirements or for other
corporate purposes or, if debt or equity financing is available, that
it will be on terms acceptable to Bellatrix.

Credit risk is the risk of financial loss to Bellatrix if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from Bellatrix’s trade receivables
from joint venture partners, petroleum and natural gas marketers, and
financial derivative counterparties.

A substantial portion of Bellatrix’s accounts receivable are with
customers and joint interest partners in the petroleum and natural gas
industry and are subject to normal industry credit risks.  Bellatrix
sells substantially all of its production to six primary purchasers
under standard industry sale and payment terms.  The most significant
60 day exposure to a single counterparty is currently approximately
$17.6 million.  Purchasers of Bellatrix’s natural gas, crude oil and
natural gas liquids are subject to a periodic internal credit review to
minimize the risk of non-payment. Bellatrix has continued to closely
monitor and reassess the creditworthiness of its counterparties,
including financial institutions. This has resulted in Bellatrix
reducing or mitigating its exposures to certain counterparties where it
is deemed warranted and permitted under contractual terms.

Bellatrix may be exposed to third party credit risk through its
contractual arrangements with its current or future joint venture
partners, marketers of its petroleum and natural gas production,
derivative counterparties and other parties.  In the event such
entities fail to meet their contractual obligations to Bellatrix, such
failures may have a material adverse effect on the Company’s business,
financial condition, results of operations and prospects.  In addition,
poor credit conditions in the industry and of joint venture partners
may impact a joint venture partner’s willingness to participate in
Bellatrix’s ongoing capital program, potentially delaying the program
and the results of such program until Bellatrix finds a suitable
alternative partner.

Total net debt levels of $245.4 million at March 31, 2013 have increased
by $55.8 million from $189.6 million at December 31, 2012, primarily as
a consequence of an increase in a working capital deficiency and bank
debt as the Company executed its 2013 capital program. Total net debt
includes the liability component of the 4.75% Debentures and excludes
unrealized commodity contract assets and liabilities, deferred taxes,
finance lease obligations, deferred liabilities and decommissioning
liabilities.

Funds flow from operations represents 41% of the funding requirements
for Bellatrix’s capital expenditures for the three months ended March
31, 2013.

As of March 31, 2013, the Company’s credit facilities consisted of a $25
million demand operating facility provided by a Canadian bank and a
$195 million extendible revolving term credit facility provided by two
Canadian banks and a Canadian financial institution.  Amounts borrowed
under the credit facility bear interest at a floating rate based on the
applicable Canadian prime rate, U.S. base rate, the LIBOR margin rate,
or the bankers’ acceptance stamping fee, plus between 1.00% and 3.50%,
depending on the type of borrowing and the Company’s debt to cash flow
ratio.  The credit facilities are secured by a $400 million debenture
containing a first ranking charge and security interest.  Bellatrix has
provided a negative pledge and undertaking to provide fixed charges
over its properties in certain circumstances.  A standby fee is charged
of between 0.50% and 0.875% on the undrawn portion of the credit
facilities, depending on the Company’s debt to cash flow ratio.

Effective April 30, 2013, the banking syndicate has approved to increase
the borrowing base from $220 million to $255 million through to
November 30, 2013.  The new credit facilities consist of a $45 million
demand operating facility provided by a Canadian bank, and a $210
million extendible revolving term credit facility provided by two
Canadian banks and a Canadian institution.  The revolving period of the
credit facility was extended from June 25, 2013 to June 24, 2014.

The revolving period for the revolving term credit facility will end on
June 24, 2014, unless extended for a further 364  day period.  Should
the facility not be extended it will convert to a non-revolving term
facility with the full amount outstanding due 366 days after the last
day of the revolving period of June 24, 2014.  The borrowing base will
be subject to re-determination on May 31 and November 30 in each year
prior to maturity, with the next semi-annual redetermination occurring
on November 30, 2013.

As at March 31, 2013, approximately $69.2 million or 31% of unused and
available bank credit under its then existing credit facilities was
available to fund Bellatrix’s ongoing capital spending and operational
requirements.

Bellatrix currently has commitments associated with its credit
facilities outlined above and the commitments outlined under the
“Commitments” section.  Bellatrix continually monitors its capital
spending program in light of the recent volatility with respect to
commodity prices and Canadian dollar exchange rates with the aim of
ensuring the Company will be able to meet future anticipated
obligations incurred from normal ongoing operations with funds flow
from operations and draws on Bellatrix’s credit facility, as
necessary.  Bellatrix has the ability to fund its 2013 capital program
of $230 to $240 million by utilizing cash flow, and to the extent
necessary, bank indebtedness.

As at April 30, 2013, Bellatrix had outstanding a total of 9,259,895
options exercisable at an average exercise price of $3.45 per share,
$55.0 million principal amount of 4.75% Debentures convertible into
common shares (at a conversion price of $5.60 per share) and
107,919,329 common shares.

Commitments

As at March 31, 2013, Bellatrix committed to drill 2 gross (1.17 net)
wells pursuant to farm-in agreements.   Bellatrix expects to satisfy
these drilling commitments at an estimated cost of approximately $3.8
million.

In addition, Bellatrix entered into two joint operation agreements
during the 2011 year and an additional joint operation agreement during
2012. The agreements include a minimum commitment for the Company to
drill a specified number of wells each year over the term of the
individual agreements. The details of these agreements are provided in
the table below:


    Joint Operation Agreement       Feb. 1, 2011 Aug. 4, 2011 Dec. 14, 2012

    Agreement Term                  2011 to 2015 2011 to 2016  2014 to 2018

    Minimum wells per year (gross              3      5 to 10             2
    and net)

    Minimum total wells (gross and            15           40            10
    net)

    Estimated total cost ($000s)           $52.5       $140.0         $35.0

    Remaining wells to drill at                4           28            10
    March 31, 2013

    Remaining estimated total cost         $14.0        $98.0         $35.0
    ($000s)

The Company has the following liabilities as at March 31, 2013:


                                                                  More than
    Liabilities($000s)     Total     < 1 Year 1-3 Years 4-5 Years   5 years

    Accounts payable
    and accrued
    liabilities (1)    $  99,488  $    99,488 $       - $       - $       -

    Long-term debt -
    principal (2)        150,827            -   150,827         -         -

    Convertible
    debentures -
    principal             55,000            -    55,000         -         -

    Convertible
    debentures -
    interest (3)           5,440        2,613     2,827         -         -

    Commodity contract
    liability             12,125        9,126     2,999         -         -

    Decommissioning
    liabilities (4)       44,497            -     7,452     6,381    30,664

    Finance lease
    obligation            14,217        1,441     3,105     3,074     6,597

    Total              $ 381,594 $    112,668 $ 222,210 $   9,455 $  37,261

    (1)  Includes $1.1 million of accrued coupon interest payable in
         relation to the 4.75% Debentures and $0.3 million of accrued
         interest payable in relation to the credit facilities is included
         in Accounts Payable and Accrued Liabilities.

    (2)  Bank debt is based on a revolving term which is reviewed annually
         and converts to a 366 day non-revolving facility if not renewed.
         Interest due on the bank credit facility is calculated based upon
         floating rates.

    (3)  The 4.75% Debentures outstanding at March 31, 2013 bear interest
         at a coupon rate of 4.75%, which currently requires total annual
         interest payments of $2.6 million.

    (4)  Amounts represent the inflated, discounted future abandonment and
         reclamation expenditures anticipated to be incurred over the life
         of the Company's properties (between 2014 and 2053).

Bellatrix will also have drilling commitments associated with its
recently announced joint venture agreement in January, 2013 with a
South Korean based company. Closing of this agreement is expected to
occur on or before May 31, 2013.  Refer to the details discussed
earlier herein.

Off-Balance Sheet Arrangements

The Company has certain fixed-term lease agreements, including primarily
office space leases, which were entered into in the normal course of
operations.  All leases have been treated as operating leases whereby
the lease payments are included in operating expenses or G&A expenses
depending on the nature of the lease.  The lease agreements do not
currently provide for early termination.  No asset or liability value
has been assigned to these leases in the balance sheet as of March 31,
2013.

Business Prospects and 2013 Year Outlook

Bellatrix continues to develop its core assets and conduct exploration
programs utilizing its large inventory of geological prospects.  As at
March 31, 2013, Bellatrix has approximately 205,113 net undeveloped
acres and approximately 1,093 net remaining locations ($4.3 billion in
future drilling capital requirements at current average costs) on the
Company’s two core propitious resource plays to fuel Bellatrix’s future
growth.  

As a result of the recently announced joint venture with a Seoul Korea
based company, Bellatrix’s 2013 capital expenditure budget has been
increased to between $230 and $240 million.  A total capital program of
$365 million is anticipated when including the capital expected to be
invested by the joint venture partner.  Based on the timing of proposed
expenditures, downtime for scheduled and unscheduled plant turnarounds,
completion of required infrastructure, and normal production declines,
execution of the 2013 capital expenditure plan is expected to provide
average daily production of approximately 24,000 boe/d to 25,000 boe/d,
and an exit rate of approximately 30,000 boe/d to 31,000 boe/d.

The Company has initiated the 2013 program by instituting drilling of
multiple horizontal wells from single surface locations.  Pad drilling
enhances the opportunity to efficiently develop the resource while
minimizing the environmental footprint and improving our cost and
on-stream efficiencies.  Pad drilling also facilitates drilling through
the spring breakup months of Q2.  Given a timely close to the Korean
Joint Venture, the Company plans to double the rig count to 7 – 8
drilling rigs throughout the second half of 2013.

Business Risks and Uncertainties

The reader is advised that Bellatrix continues to be subject to various
types of business risks and uncertainties as described in the Company’s
Management Discussion and Analysis for the year ended December 31,
2012, and the Company’s Annual Information Form for the year ended
December 31, 2012.

Critical Accounting Estimates and Accounting Policies

The reader is advised that the critical accounting estimates, policies,
and practices described in the Company’s Management Discussion and
Analysis for the year ended December 31, 2012 continue to be critical
in determining Bellatrix’s unaudited financial results as of March 31,
2013. There were no changes in accounting policies during the three
months ended March 31, 2013, except as noted in the Company’s March 31,
2013 Financial Statements.

A summary of future accounting pronouncements is found in the Company’s
Management Discussion and Analysis for the year ended December 31,
2012, available at www.sedar.com or as part of the Company’s annual report on Form 40-F for the year
ended December 31, 2012, which may be found at www.sec.gov.

Legal, Environmental Remediation and Other Contingent Matters

The Company is involved in various claims and litigation arising in the
normal course of business.  While the outcome of these matters is
uncertain and there can be no assurance that such matters will be
resolved in the Company’s favor, the Company does not currently believe
that the outcome of adverse decisions in any pending or threatened
proceeding related to these and other matters or any amount which it
may be required to pay by reason thereof would have a material adverse
impact on its financial position or results of operations.

The Company reviews legal, environmental remediation and other
contingent matters to both determine whether a loss is probable based
on judgment and interpretation of laws and regulations and determine
that the loss can reasonably be estimated.  When the loss is
determined, it is charged to earnings.  The Company’s management
monitor known and potential contingent matters and makes appropriate
provisions by charges to earnings when warranted by the circumstances.

With the above risks and uncertainties the reader is cautioned that
future events and results may vary substantially from that which
Bellatrix currently foresees.

Controls and Procedures

Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have
designed, or caused to be designed under their supervision, disclosure
controls and procedures to provide reasonable assurance that: (i)
material information relating to the Company is made known to the
Company’s Chief Executive Officer and Chief Financial Officer by
others, particularly during the period in which the annual and interim
filings are being prepared; and (ii) information required to be
disclosed by the Company in its annual filings, interim filings or
other reports filed or submitted by it under securities legislation is
recorded, processed, summarized and reported within the time period
specified in securities legislation.

Internal Control over Financial Reporting

The Company’s Chief Executive Officer and Chief Financial Officer have
designed, or caused to be designed under their supervision, internal
control over financial reporting to provide reasonable assurance
regarding the reliability of the Company’s financial reporting and the
preparation of financial statements for external purposes in accordance
with GAAP.

The Company is required to disclose herein any change in the Company’s
internal control over financial reporting that occurred during the
period beginning on January 1, 2013 and ended on March 31, 2013 that
has materially affected, or is reasonably likely to materially affect,
the Company’s internal control over financial reporting.  No material
changes in the Company’s internal control over financial reporting were
identified during such period that has materially affected, or are
reasonably likely to materially affect, the Company’s internal control
over financial reporting.

It should be noted that a control system, including the Company’s
disclosure and internal controls and procedures, no matter how well
conceived, can provide only reasonable, but not absolute, assurance
that the objectives of the control system will be met and it should not
be expected that the disclosure and internal controls and procedures
will prevent all errors or fraud.

Sensitivity Analysis

The table below shows sensitivities to funds flow from operations as a
result of product price, exchange rate, and interest rate changes. 
This is based on actual average prices received for the first quarter
of 2013 and average production volumes of 19,343 boe/d during that
period, as well as the same level of debt outstanding at March 31,
2013.  Diluted weighted average shares are based upon the first quarter
of 2013.  These sensitivities are approximations only, and not
necessarily valid under other significantly different production levels
or product mixes. Commodity price risk management activities can
significantly affect these sensitivities.  Changes in any of these
parameters will affect funds flow as shown in the table below:


                               Funds Flow from Operations  Funds Flow  from
                                                      (1)     Operations(1)

                                             (annualized) Per Diluted Share

    Sensitivity Analysis                          ($000s)               ($)

    Change of US $1/bbl WTI                         1,700              0.01

    Change of $0.10/ mcf                            2,500              0.02

    Change of US $0.01 CDN/ US                      1,200              0.01
    exchange rate

    Change in prime of 1%                           1,500              0.01

    (1)The term "funds flow from operations" should not be considered an
    alternative to, or more meaningful than cash flow from operating
    activities as determined in accordance with GAAP as an indicator of the
    Company's performance. Therefore reference to additional GAAP measures
    of diluted funds flow from operations or funds flow from operations per
    share may not be comparable with the calculation of similar measures
    for other entities. Management uses funds flow from operations to
    analyze operating performance and leverage and considers funds flow
    from operations to be a key measure as it demonstrates the Company's
    ability to generate the cash necessary to fund future capital
    investments and to repay debt.  The reconciliation between cash flow
    from operating activities and funds flow from operations can be found
    elsewhere herein.  Funds flow from operations per share is calculated
    using the weighted average number of common shares for the period.

Selected Quarterly Consolidated Information

The following table sets forth selected consolidated financial
information of the Company for the quarters in 2013, 2012, and 2011.


    2013 - Quarter ended (unaudited)

    ($000s, except per share amounts)    March 31                          

    Revenues before royalties and risk
    management                             65,543                          

    Cash flow from operating
    activities                             35,527                          

    Cash flow from operating
    activities per share                                                   

      Basic                                 $0.33                          

      Diluted                               $0.30                          

    Funds flow from operations (1)         37,545                          

    Funds flow from operations per
    share (1)                                                              

      Basic                                 $0.35                          

      Diluted                               $0.32                          

    Net profit                              4,561                          

    Net profit per share                                                   

      Basic                                 $0.04                          

      Diluted                               $0.04                          

    Net capital expenditures (cash)        91,614                          

    2012 - Quarter ended (unaudited)

    ($000s, except per share amounts)    March 31 June 30 Sept. 30  Dec. 31

    Revenues before royalties and risk
    management                             58,191  50,714   48,126   62,283

    Cash flow from operating
    activities                             24,056  28,458   24,807   32,007

    Cash flow from operating
    activities per share                                                   

      Basic                                 $0.22   $0.24    $0.23    $0.30

      Diluted                               $0.21   $0.22    $0.22    $0.28

    Funds flow from operations (1)         29,194  25,366   26,613   29,865

    Funds flow from operations per
    share (1)                                                              

      Basic                                 $0.27   $0.24    $0.25    $0.28

      Diluted                               $0.25   $0.22    $0.23    $0.26

    Net profit (loss)                       9,172   9,963    (615)    9,251

    Net profit (loss) per share                                            

      Basic                                 $0.09   $0.09  ($0.01)    $0.09

      Diluted                               $0.08   $0.09  ($0.01)    $0.08

    Net capital expenditures (cash)        73,831  16,284   35,515   64,383

    2011 - Quarter ended (unaudited)

    ($000s, except per share amounts)    March 31 June 30 Sept. 30  Dec. 31

    Revenues before royalties and risk
    management                             40,535  53,444   49,145   59,194

    Cash flow from operating
    activities                             15,718  23,825   28,023   30,626

    Cash flow from operating
    activities per share                                          

      Basic                                 $0.16   $0.23    $0.26    $0.28

      Diluted                               $0.15   $0.22    $0.24    $0.26

    Funds flow from operations (1)         17,027  23,126   23,964   30,120

    Funds flow from operations per
    share (1)                                                              

      Basic                                 $0.17   $0.22    $0.22    $0.28

      Diluted                               $0.16   $0.21    $0.21    $0.26

    Net profit (loss)                     (5,487)  12,315      820 (13,597)

    Net profit (loss) per share                                            

      Basic                               ($0.06)   $0.12    $0.01  ($0.13)

      Diluted                             ($0.06)   $0.11    $0.01  ($0.13)

    Net capital expenditures (cash)        59,247  28,784   40,087   47,240

    (1)Refer to "Additional GAAP Measures" in respect of the term "funds
    flow from operations" and "funds flow from operations per share".


    BELLATRIX EXPLORATION LTD.

    CONDENSED CONSOLIDATED BALANCE SHEETS
    As at March 31, 2013 and December 31, 2012 

    (unaudited, expressed in Canadian dollars) 

    ($000s)                                                                                   2013      2012

    ASSETS                                                                                                  

    Current assets                                                                                          

      Accounts receivable (note 12)                                                      $  48,908 $  40,792

      Deposits and prepaid expenses                                                          7,092     4,136

      Commodity contract asset (note 12)                                                         -     7,519

                                                                                            56,000    52,447

    Exploration and evaluation assets (note 3)                                              40,593    38,177

    Property, plant and equipment (note 4)                                                 663,182   589,759

    Deferred taxes (note 8)                                                                      -     1,038

    Total assets                                                                         $ 759,775 $ 681,421

    LIABILITIES                                                                                             

    Current liabilities                                                                                     

      Accounts payable and accrued liabilities                                              99,488 $  50,771
                                                                                         $

      Current portion of finance lease obligation                                            1,441     1,425

      Commodity contract liability (note 12)                                                 9,126     1,131

                                                                                           110,055    53,327

    Commodity contract liability (note 12)                                                   2,999     6,214

    Long-term debt (note 5)                                                                150,827   133,047

    Convertible debentures                                                                  51,105    50,687

    Finance lease obligation                                                                12,776    13,131

    Decommissioning liabilities                                                             44,497    43,909

    Deferred taxes (note 8)                                                                    766         -

    Total liabilities                                                                      373,025   300,315

    SHAREHOLDERS' EQUITY                                                                                    

      Shareholders' capital                                                                371,850   371,576

      Equity component of convertible debentures                                             4,378     4,378

      Contributed surplus                                                                   38,093    37,284

      Deficit                                                                             (27,571)  (32,132)

    Total shareholders' equity                                                             386,750   381,106

    Total liabilities and shareholders' equity                                           $ 759,775 $ 681,421

    COMMITMENTS (note 11)

    SUBSEQUENT EVENT (note 14)

    See accompanying notes to the condensed consolidated financial statements.

 


    BELLATRIX EXPLORATION LTD.

    CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

    For the three months ended March 31,

    (unaudited, expressed in Canadian dollars)

    ($000s)                                               2013       2012

    REVENUES                                                             

      Petroleum and natural gas sales                $  64,908 $   57,679

      Other income                                         635        512

      Royalties                                       (11,785)    (6,613)

      Total revenues                                    53,758     51,578

       Realized gain (loss) on commodity contracts       6,502    (2,945)

       Unrealized gain (loss) on commodity contracts  (12,299)      4,868

                                                        47,961     53,501

    EXPENSES                                                             

      Production                                        15,058     13,306

      Transportation                                     1,445      1,658

      General and administrative                         3,586      2,761

      Share-based compensation (note 6)                  1,450        793

      Depletion and depreciation (note 4)               17,090     19,462

      Loss (gain) on property dispositions and swaps     (250)        759

                                                        38,379     38,739

    NET PROFIT BEFORE FINANCE AND TAXES                  9,582     14,762

      Finance expenses (note 9)                          3,217      2,291

    NET PROFIT BEFORE TAXES                              6,365     12,471

    TAXES                                                                

      Deferred tax expense (note 8)                      1,804      3,299

    NET PROFIT AND COMPREHENSIVE INCOME                  4,561      9,172

    Net profit per share (note 10)                                       

      Basic                                           $   0.04 $     0.09

      Diluted                                         $   0.04 $     0.08

    See accompanying notes to the condensed consolidated financial
    statements.

 


    BELLATRIX EXPLORATION LTD. 

    CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY 

    For the three months ended March 31,

    (unaudited, expressed in Canadian dollars)

    ($000s)                                             2013         2012

    SHAREHOLDERS' CAPITAL  

      Common shares

        Balance, beginning of period            $    371,576 $    370,048

        Issued on exercise of share options              191          168

        Contributed surplus transferred on                83           47
        exercised options 

        Balance, end of period                       371,850      370,263

    EQUITY COMPONENT OF CONVERTIBLE DEBENTURES

        Balance, beginning and end of period           4,378        4,378

    CONTRIBUTED SURPLUS(note 6)  

        Balance, beginning of period                  37,284       33,882

        Share-based compensation expense                 975        1,178

        Adjustment of share-based compensation
        expense    

          for forfeitures of unvested share             (83)         (13)
          options 

        Transfer to share capital for exercised         (83)         (47)
        options 

        Balance, end of period                        38,093       35,000

    DEFICIT 

          Balance, beginning of period              (32,132)     (59,903)

          Net profit                                   4,561        9,172

          Balance, end of period                    (27,571)     (50,731)

    TOTAL SHAREHOLDERS' EQUITY                   $   386,750  $   358,910

    See accompanying notes to the condensed consolidated financial
    statements.

 


    BELLATRIX EXPLORATION LTD. 

    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    For the three months ended March 31, 

    (unaudited, expressed in Canadian dollars) 

    ($000s)                                               2013        2012

    Cash provided by (used in):                                           

    CASH FLOW FROM OPERATING ACTIVITIES                                   

    Net profit                                       $   4,561     $ 9,172

    Adjustments for:                                                      

       Depletion and depreciation                       17,090      19,462

       Finance expenses (note 9)                           591         577

       Share-based compensation (note 6)                 1,450         793

       Unrealized (gain) loss on commodity              12,299     (4,868)
       contracts

       Loss (gain) on property dispositions and          (250)         759
       swaps

       Deferred tax expense (note 8)                     1,804       3,299

                                                        37,545      29,194

       Decommissioning costs incurred                    (279)       (177)

       Change in non-cash working capital (note 7)     (1,739)     (4,961)

                                                        35,527      24,056

    CASH FLOW FROM (USED IN) FINANCING ACTIVITIES    

       Issuance of share capital                           191         168

       Advances from loans and borrowings              171,030     136,388

       Repayment of loans and borrowings             (153,250)    (96,329)

       Obligations under finance lease                   (339)       (117)

                                                        17,632      40,110

       Change in non-cash working capital (note 7)         716         588

                                                        18,348      40,698

    CASH FLOW FROM (USED IN) INVESTING ACTIVITIES    

       Expenditure on exploration and evaluation       (5,692)     (2,948)
       assets

       Additions to property, plant and equipment     (85,917)    (71,183)

       Proceeds on sale of property, plant and             (5)         300
       equipment

                                                      (91,614)    (73,831)

       Change in non-cash working capital (note 7)      37,739       9,077

                                                      (53,875)    (64,754)

       Change in cash                                        -           -

       Cash, beginning of period                             -           -

       Cash, end of period                           $       -     $    - 

    Cash paid:                                                            

       Interest                                      $   1,318     $   792

       Taxes                                                 -           -

    See accompanying notes to the condensed consolidated financial
    statements.

 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, expressed in Canadian dollars)


    1. CORPORATE INFORMATION

       Bellatrix Exploration Ltd. (the "Company" or "Bellatrix") is a
       growth oriented, public exploration and production company.

    2. BASIS OF PREPARATION

       a. Statement of compliance

          These condensed consolidated financial statements ("interim
          financial statements") were authorized by the Board of Directors
          on May 7, 2013.  The Company prepared these interim financial
          statements in accordance with IAS 34 Interim Financial
          Reporting.  The interim financial statements do not include all
          information and disclosures normally provided in annual financial
          statements and should be read in conjunction with the Company's
          2012 audited annual financial statements, available at
          www.sedar.com.  The Company
          has prepared these interim financial statements using the same
          accounting policies and critical accounting estimates applied in
          the 2012 audited annual financial statements, except as noted
          below.

       b. Change in accounting policies

          On January 1, 2013, the Company adopted new standards with
          respect to consolidations (IFRS 10), joint arrangements (IFRS
          11), disclosure of interests in other entities (IFRS 12), fair
          value measurements (IFRS 13), and amendments to financial
          instrument disclosures (IFRS 7).  The adoption of these standards
          had no impact on the amounts recorded in the consolidated
          financial statements as at January 1, 2013 or on the comparative
          periods.

       c. Basis of measurement

          The condensed consolidated financial statements are presented in
          Canadian dollars, the Company's functional currency, and have
          been prepared on the historical cost basis except for derivative
          financial instruments and liabilities for cash-settled
          share-based payment arrangements measured at fair value.  The
          condensed consolidated financial statements have, in management's
          opinion, been properly prepared using careful judgment and
          reasonable limits of materiality. These condensed consolidated
          financial statements are prepared within the framework of the
          same significant accounting policies, critical judgments,
          accounting estimates, accounting policies and methods of
          computation as the consolidated financial statements for the
          fiscal year ended December 31, 2012. The condensed consolidated
          financial statement note disclosures do not include all of those
          required by IFRS applicable for annual financial statements.
          Accordingly, the condensed consolidated financial statements
          should be read in conjunction with the consolidated financial
          statements and notes thereto as at and for the year ended
          December 31, 2012.

    3. EXPLORATION AND EVALUATION ASSETS

     ($000s)  

    Cost                                               

    Balance, December 31, 2011                 $ 33,089

    Additions                                    17,118

    Transfer to oil and natural gas properties (10,301)

    Disposals(1)                                (1,729)

    Balance, December 31, 2012                   38,177

    Additions                                     5,879

    Transfer to oil and natural gas properties  (3,463)

    Balance, March 31, 2013                    $ 40,593

    (1) Disposals include swaps.


    4. PROPERTY, PLANT AND EQUIPMENT

    ($000s)                                                           

                                      Oil and        Office
                                  natural gas furniture and
                                   properties     equipment      Total

    Cost                                                              

    Balance, December 31, 2011    $   657,315 $       2,503 $  659,818

    Additions                         194,442           299    194,741

    Transfer from exploration and
    evaluation assets                  10,301             -     10,301

    Disposals(1)                     (10,950)             -   (10,950)

    Balance, December 31, 2012        851,108         2,802    853,910

    Additions                          86,911           139     87,050

    Transfer from exploration and
    evaluation assets                   3,463             -      3,463

    Balance, March 31, 2013       $   941,482 $       2,941 $  944,423

    Accumulated Depletion, Depreciation and Impairment losses  

    Balance, December 31, 2011    $   174,250 $       1,267 $  175,517

    Charge for time period             75,466           254     75,720

    Impairment loss                    14,760            60     14,820

    Disposals(1)                      (1,906)             -    (1,906)

    Balance, December 31, 2012    $   262,570 $       1,581 $  264,151

    Charge for time period             17,028            62     17,090

    Balance, March 31, 2013       $   279,598 $       1,643 $  281,241

    (1) Disposals include swaps.                                      

    Carrying amounts                                                  

    At December 31, 2012          $   588,538 $       1,221 $  589,759

    At March 31, 2013             $   661,884 $       1,298 $  663,182

Bellatrix has included $456.2 million (2012: $384.2 million) for future
development costs and excluded $37.9 million (2012: $35.1 million) for
estimated salvage from the depletion calculation for the three months
ended March 31, 2013.

For the three months ended March 31, 2013, the Company capitalized $1.2
million (2012: $1.0 million) of general and administrative expenses,
and $0.4 million (2012: $0.5 million) of share-based compensation
expense directly related to exploration and development activities.

Bellatrix’s credit facilities are secured against all of the assets of
the Corporation by a $400 million debenture containing a first ranking
floating charge and security interest.  The Corporation has provided a
negative pledge and undertaking to provide fixed charges over major
petroleum and natural gas reserves in certain circumstances.


    5. LONG-TERM DEBT

    ($000s)                         March 31, 2013   December 31, 2012

    Operating facility              $       15,827   $           4,047

    Revolving term facility                135,000             129,000

    Balance, end of period          $      150,827   $         133,047

As of March 31, 2013, the Company’s credit facilities consisted of a $25
million demand operating facility provided by a Canadian bank and a
$195 million extendible revolving term credit facility provided by two
Canadian banks and a Canadian financial institution.

Effective April 30, 2013, the banking syndicate has approved to increase
the borrowing base from $220 million to $255 million through to
November 30, 2013.  The new credit facilities consist of a $45 million
demand operating facility provided by a Canadian bank, and a $210
million extendible revolving term credit facility provided by two
Canadian banks and a Canadian institution.  The revolving period of the
credit facility was extended from June 25, 2013 to June 24, 2014.

The revolving period for the revolving term credit facility will end on
June 24, 2014, unless extended for a further 364  day period.  Should
the facility not be extended it will convert to a non-revolving term
facility with the full amount outstanding due 366 days after the last
day of the revolving period of June 24, 2014.  The borrowing base will
be subject to re-determination on May 31 and November 30 in each year
prior to maturity, with the next semi-annual redetermination occurring
on November 30, 2013.

As at March 31, 2013, the Company had outstanding letters of credit
totaling $0.8 million that reduce the amount otherwise available to be
drawn on the syndicated facility.

As at March 31, 2013, the Company had approximately $69.2 million, or
31% of unused and available bank credit under its then existing credit
facilities. Bellatrix was fully compliant with all of its operating
debt covenants.


    6. SHARE-BASED COMPENSATION PLANS

       a. Share Option Plan

          During the three months ended March 31, 2013, Bellatrix granted
          nil (2012: 25,000) share options, and recorded share-based
          compensation of $0.9 million (2012: $1.2 million) related to its
          outstanding share options, net of forfeitures of $0.1 million
          (2012: $0.01 million), of which $0.4 million (2012: $0.5 million)
          was capitalized to property, plant and equipment.  In addition,
          $0.9 million (2012: $0.1 million) (note 6 b.) was expensed in
          relation to the Director's Deferred Share Unit Plan, resulting in
          total net share-based compensation of $1.4 million recognized as
          an expense for the first quarter of 2013 (2012: $0.8 million).

          The fair values of all share options granted are estimated on the
          date of grant using the Black-Scholes option-pricing model.  No
          options were granted during the three months ended March 31,
          2013.

          The weighted average trading price of the common shares on the
          TSX for the three months ended March 31, 2013 was $5.37 (2012:
          $5.13).

          The following tables summarize information regarding Bellatrix's
          Share Option Plan:

            Share Options Continuity                                 

                                         Weighted Average
                                           Exercise Price      Number

            Balance, December 31, 2012           $   3.46   9,420,451

            Granted                                     -           -

            Exercised                            $   3.77    (50,555)

            Forfeited and cancelled              $   4.19    (76,668)

            Balance, March 31, 2013              $   3.45   9,293,228


            As of March 31, 2013, a total of 10,791,933 share options were
            reserved, leaving an additional 1,498,705 available for future grants.

            Share Options Outstanding, March 31, 2013

                               Outstanding                          Exercisable

                                                   Weighted
                                     Weighted       Average
                                At    Average     Remaining          At           

              Exercise   March, 31   Exercise   Contractual   March 31,   Exercise
              Price           2013      Price          Life        2013      Price

            $   0.65 -                   $                                    $
              $  1.45      680,726       1.02           1.1     680,726       1.02

            $   1.46 -                   $                                    $
              $  1.99    1,177,449       1.65           1.0   1,177,449       1.65

            $   2.00 -                   $                                    $
              $  3.36    1,403,719       2.41           2.0     970,385       2.08

            $   3.37 -                   $                                    $
              $  3.84    1,545,000       3.42           4.0      84,665       3.70

            $   3.85 -                   $                                    $
              $  4.72    2,211,001       3.95           2.5   1,132,314       3.90

            $   4.73 -                   $                                    $
              $  5.50    2,275,333       5.28           3.3     733,974       5.26

            $   0.65 -                   $                                    $
              $  5.50    9,293,228       3.45           2.6   4,779,513       2.77


    b. Deferred Share Unit Plan

       During the three months ended March 31, 2013, the Company granted
       2,164 (2012: 2,627) DSUs, and had 410,688 DSUs outstanding as at
       March 31, 2013 (2012: 161,853).  For the three months ended March
       31, 2013, Bellatrix recorded approximately $0.8 million (2012: $0.1
       million) of share based compensation expense and had a liability
       balance of $2.7 million (2012: $0.9 million) relating to the
       Company's outstanding DSUs.


    7. SUPPLEMENTAL CASH FLOW INFORMATION

    Change in Non-cash Working Capital

      ($000s)                               Three months ended March 31,

                                                    2013            2012

    Changes in non-cash working capital
    items:

      Accounts receivable                   $    (8,116)    $    (1,005)

      Deposits and prepaid expenses              (2,956)         (2,270)

      Accounts payable and accrued                47,788           7,979
      liabilities

                                              $   36,716     $     4,704

    Changes related to:                                                 

      Operating activities                  $    (1,739)    $    (4,961)

      Financing activities                           716             588

      Investing activities                        37,739           9,077

                                              $   36,716     $     4,704

    8. INCOME TAXES

       Bellatrix is a corporation as defined under the Income Tax Act
       (Canada) and is subject to Canadian federal and provincial taxes.
       Bellatrix is subject to provincial taxes in Alberta, British
       Columbia and Saskatchewan as the Company operates in those
       jurisdictions.

       Deferred taxes reflect the tax effects of differences between the
       carrying amounts of assets and liabilities for financial reporting
       purposes and the amounts reported for tax purposes.  As at March 31,
       2013, Bellatrix had approximately $638 million in tax pools
       available for deduction against future income.  Included in this tax
       basis are estimated non-capital loss carry forwards of approximately
       $10 million that expire in years through 2027.


    9. FINANCE INCOME AND EXPENSES

                                            Three months ended March 31,

    ($000s)                                       2013              2012

    Finance expense                                                     

      Interest on long-term debt            $    1,982        $    1,063

      Interest on convertible debentures           644               651

      Accretion on convertible debentures          418               388

      Accretion on decommissioning                 173               189
      liabilities

                                                   591               577

    Finance expense                         $    3,217        $    2,291


    10. PER SHARE AMOUNTS

    The calculation of basic earnings per share for the three months
    ended March 31, 2013 was based on a net profit of $4.6 million (2012:
    $9.2 million).

                                             Three months ended March 31,

                                                    2013             2012

    Basic common shares outstanding          107,919,329      107,463,313

    Dilutive effect of:                                                  

       Share options outstanding               9,293,228        7,929,247

       Shares issuable for convertible
       debentures                              9,821,429        9,821,429

    Fully diluted common shares
    outstanding                              127,033,986      125,213,989

    Weighted average shares outstanding      107,882,027      107,426,094

    Dilutive effect of share options and
    convertible
    debentures (1)                             2,843,057       11,841,340

    Diluted weighted average shares
    outstanding                              110,725,084      119,267,434

    (1) For the three months ended March 31, 2013, a total of 2,843,057
        share options were included in the calculation as they were
        dilutive, and 9,821,429 common shares issuable pursuant to the
        conversion of the 4.75% Debentures were excluded from the
        calculation as they were not dilutive.  

        For the three months ended March 31, 2012, a total of 2,019,911
        share options and 9,821,429 common shares issuable pursuant to the
        conversion of the 4.75% Debentures were included in the calculation
        as they were dilutive.  As a consequence, a total of $0.8 million
        for interest and accretion expense (net of income tax effect) was
        added to the numerator.


    11. COMMITMENTS

        As at March 31, 2013, Bellatrix committed to drill 2 gross (1.17
        net) wells pursuant to farm-in agreements.   Bellatrix expects to
        satisfy these drilling commitments at an estimated cost of
        approximately $3.8 million.

        In addition, Bellatrix entered into two joint operation agreements
        during the 2011 year and an additional joint operation agreement
        during 2012. The agreements include a minimum commitment for the
        Company to drill a specified number of wells each year over the
        term of the individual agreements. The details of these agreements
        are provided in the table below:

            Joint Operation     Feb. 1, 2011   Aug. 4, 2011   Dec. 14, 2012
            Agreement

            Agreement Term      2011 to 2015   2011 to 2016    2014 to 2018

            Minimum wells                  3        5 to 10               2
            per year (gross
            and net)

            Minimum total                 15             40              10
            wells (gross
            and net)

            Estimated total            $52.5         $140.0           $35.0
            cost  ($000s)

            Remaining wells                4             28              10
            to drill at
            March 31, 2013

            Remaining                  $14.0          $98.0           $35.0
            estimated total
            cost ($000s)


    12.     FINANCIAL RISK MANAGEMENT

    a.      Credit risk

            As at March 31, 2013, accounts receivable was comprised of the
            following:

                                    Not past due
                                   (less than 90    Past due (90
            Aging ($000s)                  days)   days or more)      Total

            Joint venture and
            other trade accounts
            receivable                     5,828           2,147      7,975

            Amounts due from
            government agencies              560             659      1,219

            Revenue and other
            accruals                      33,059           4,985     38,044

            Cash call receivables              -              21         21

            Plant revenue
            allocation receivable              -           2,855      2,855

            Less:  Allowance for
            doubtful accounts                  -         (1,206)    (1,206)

            Total accounts
            receivable                    39,447           9,461     48,908

            Less:                                                          

            Accounts payable due
            to same partners                   -            (16)       (16)

            Subsequent receipts to
            April 30, 2013              (18,592)           (170)   (18,762)

                                          20,855           9,275     30,130


            Amounts due from government agencies include GST and royalty
            adjustments.  Plant revenue allocation receivable includes
            amounts under dispute over plant revenue allocations, net of
            expenses, from an operator.  The Company has commenced legal
            action for collection of these amounts.  Accounts payable due
            to same partners includes amounts which may be available for
            offset against certain receivables.

            Cash calls receivables consist of advances paid to joint
            interest partners for capital projects.

            The carrying amount of accounts receivable and derivative
            assets represents the maximum credit exposure.

    b.      Liquidity risk

            The following are the contractual maturities of liabilities as
            at March 31, 2013:

                  Liabilities                                             4-5   More than
                  ($000s)             Total    < 1 Year   1-3 Years     Years     5 years

                  Accounts
                  payable and
                  accrued
                  liabilities (1) $  99,488   $  99,488   $       -   $     -   $       -

                  Long-term debt
                  - principal (2)   150,827           -     150,827         -           -

                  Convertible
                  debentures -
                  principal          55,000           -      55,000         -           -

                  Convertible
                  debentures -
                  interest (3)        5,440       2,613       2,827         -           -

                  Commodity
                  contract
                  liability          12,125       9,126       2,999         -           -

                  Decommissioning
                  liabilities (4)    44,497           -       7,452     6,381      30,664

                  Finance lease
                  obligation         14,217       1,441       3,105     3,074       6,597

                   Total          $ 381,594   $ 112,668   $ 222,210   $ 9,455    $ 37,261


              (1)  Includes $1.1 million of accrued coupon interest payable
                   in relation to the 4.75% Debentures and $0.3 million of
                   accrued interest payable in relation to the credit
                   facilities is included in Accounts Payable and Accrued
                   Liabilities.

              (2)  Bank debt is based on a revolving term which is reviewed
                   annually and converts to a 366 day non-revolving
                   facility if not renewed.  Interest due on the bank
                   credit facility is calculated based upon floating rates.

              (3)  The 4.75% Debentures outstanding at March 31, 2013 bear
                   interest at a coupon rate of 4.75%, which currently
                   requires total annual interest payments of $2.6 million.

              (4)  Amounts represent the inflated, discounted future
                   abandonment and reclamation expenditures anticipated to
                   be incurred over the life of the Company's properties
                   (between 2014 and 2053).


            c.     Commodity Price Risk

            The Company utilizes both financial derivatives and physical
            delivery sales contracts to manage commodity price risks. All
            such transactions are conducted in accordance with the
            commodity price risk management policy that has been approved
            by the Board of Directors.

            As at March 31, 2013, the Company has entered into commodity
            price risk management arrangements as follows:

                                                  Price       Price
              Type          Period   Volume       Floor     Ceiling   Index

                           January
                           1, 2013
              Crude oil    to Dec.    1,500      $           $
              fixed       31, 2013    bbl/d   94.50 CDN   94.50 CDN     WTI

              Crude oil    January
              call         1, 2013                             $
              option       to Dec.    3,000               110.00
              (1)         31, 2013    bbl/d           -          US     WTI

                           January
              Crude oil    1, 2014                             $
              call         to Dec.    3,000               105.00
              option      31, 2014    bbl/d           -          US     WTI

                          April 1,
                           2013 to
              Natural     Oct. 31,   20,000     $          $
              gas fixed       2013     GJ/d    3.05 CDN    3.05 CDN    AECO

                          April 1,
                           2013 to
              Natural     Oct. 31,   10,000      $           $
              gas fixed       2013     GJ/d   3.095 CDN   3.095 CDN    AECO

                           Feb. 1,
                           2013 to
              Natural     Dec. 31,   10,000    $           $
              gas fixed       2013     GJ/d    3.05 CDN    3.05 CDN    AECO

                          April 1,
                           2013 to
              Natural     June 30,   15,000    $           $
              gas fixed       2014     GJ/d    3.05 CDN    3.05 CDN    AECO

        (1)     Subsequent to period end, this crude oil call option for
        the May 1, 2013 to December 31, 2013 period was settled for $0.2
        million.


    13. FAIR VALUE

        The Company's financial instruments as at March 31, 2013 include
        accounts receivable, deposits, commodity contract asset, accounts
        payable and accrued liabilities, long-term debt and convertible
        debentures. The fair value of accounts receivable, deposits,
        accounts payable and accrued liabilities approximate their carrying
        amounts due to their short-terms to maturity.

        The fair value of commodity contracts is determined by discounting
        the difference between the contracted price and published forward
        price curves as at the balance sheet date, using the remaining
        contracted petroleum and natural gas volumes.  The fair value of
        commodity contracts as at March 31, 2012 was a net liability of
        $12.1 million (2012: $0.1 million net asset).  The commodity
        contracts are classified as level 2 within the fair value
        hierarchy.

        Long-term bank debt bears interest at a floating market rate and
        the credit and market premiums therein are indicative of current
        rates; accordingly the fair market value approximates the carrying
        value.

        The fair value of the 4.75% Debentures of $65.8 million is based on
        exchange traded values.  The 4.75% Debentures are classified as
        level 1 within the fair value hierarchy.

    14. SUBSEQUENT EVENT

        As previously disclosed in the Company's December 31, 2012
        financial statements, in January 2013, Bellatrix entered into a
        joint venture agreement with a Seoul Korea based company, to
        accelerate development of Bellatrix's extensive undeveloped Cardium
        land holdings in West Central Alberta.   In April 2013, the JV
        Partner requested and has been granted a one-month extension to the
        closing, which is now anticipated to occur on or before May 31,
        2013.  This agreement is anticipated to be accounted for as a joint
        operation under IFRS.

The Company’s updated corporate presentation is available at www.bellatrixexploration.com.

Bellatrix Exploration Ltd. is a Western Canadian based growth oriented
oil and gas company engaged in the exploration for, and the
acquisition, development and production of oil and natural gas reserves
in the provinces of Alberta, British Columbia and Saskatchewan.  Common
shares and convertible debentures of Bellatrix trade on the Toronto
Stock Exchange (“TSX”) under the symbols BXE and BXE.DB.A,
respectively, and the common shares of Bellatrix trade on the NYSE MKT
under the symbol BXE.

 

 

 

 

 

 

SOURCE Bellatrix Exploration Ltd.


Source: PR Newswire