CAMARILLO, California,
Nov. 10, 2017 /PRNewswire/ -- All
amounts are in U.S. Dollars unless otherwise indicated:
THIRD QUARTER HIGHLIGHTS:
- Average production was 1,097 barrels of oil equivalent per day
(BOEPD) for the third quarter of 2017, an increase of 7% compared
to the third quarter 2016 production of 1,024 BOEPD due to the
production of one month from the Hartgraves 1-6H well. The
Brock 9-2H well was fracture stimulated in September and started
producing in October 2017. Average production for the month
of October was over 1,700 BOEPD
- Funds from continuing operations was $1.7 million for the third quarter of 2017
compared to $1.4 million in the third
quarter of 2016
- Average netbacks were $22.88 per
BOE for the quarter, an increase of 23% compared to the third
quarter of 2016. If the realized gains from the commodity contracts
are included, the average netbacks for the quarter increased by
almost $4/barrel to $26.76 per BOE as about 70% of the Company's oil
production was hedged. The Company has a comparable amount of
volumes hedged in the fourth quarter at $57.10
- Revenue, net of royalties was $2.9
million for the third quarter of 2017 compared to
$2.3 million in the third quarter of
2016 due to higher production
- General & administrative expenses decreased by a further 9%
in the third quarter of 2017 compared to the third quarter of 2016
due to the Company's ongoing cost cutting efforts
- Net loss was $1.3 million for the
third quarter of 2017 compared to a net loss of $0.8 million in the third quarter of 2016.
The third quarter 2017 net loss was attributable to a $1.3 million unrealized losses on commodity
contracts.
- At September 30, 2017, cash
totaled $3.0 million and we had
$1.0 million of unused borrowing
capacity on our credit facility with BOK Financial. In November 2017, we borrowed the $1.0 million of unused capacity for the
completion of the Brock 9-2H well.
- The 30 day initial production (IP) rate from the Brock 9-2H
well was 515 BOEPD, with 86% being oil.
BNK's President and Chief Executive Officer, Wolf Regener commented:
"We are excited about the recent outstanding results from the
two wells that were fracture stimulated in the third quarter as
part of our 2017 drilling program. The Hartgraves 1-6H well,
which came into production in September and the Brock 9-2H well,
which started producing after the end of the quarter have
significantly increased our production volumes. Our average
production for the month of October was over 1,700 BOEPD. The
30-day initial production rate of the Brock well is greater than
the initial possible type curve rate. We are very pleased
with the results of our 2017 drilling program and we expect to
provide more information about our additional drilling plans in the
coming weeks.
"We generated funds from continuing operations of $1.7 million in the third quarter and we expect
that to increase in the fourth quarter when production from both
the Hartgraves 1-6H well and Brock 9-2H well are fully reflected in
the quarter. In the first nine months of 2017, we generated
$3.7 million of funds from continuing
operations.
"Our third quarter production increased to 1,097 BOEPD, an
increase of 7% compared to the prior year third quarter, due to the
one month of production from the Hartgraves 1-6H
well.
"The Company's hedging program continued to increase our
realized prices above current market levels for a significant
portion of our production. The Company's commodity contract
hedges generated $0.4 million in
realized gains during the third quarter of 2017 as more than 70% of
our oil production was hedged. We have a comparable amount of
hedged volumes in place for the fourth quarter at an average price
of $57.10.
"Average netbacks were $22.88 per
BOE for the quarter, an increase of 23% compared to the third
quarter of 2016. If the realized gains from the commodity
contracts are included, the average netbacks for the quarter
increase to $26.76 per BOE in the
third quarter of 2017.
"The Company has continued to succeed in additional cost cutting
efforts that started in 2015. In the third quarter of 2017, a
reduction of general and administrative expense of 9% was achieved
over the third quarter of 2016.
"The Company recorded a net loss of $1.3
million in the third quarter of 2017, due to $1.3 million of unrealized losses on commodity
contracts, compared to a net loss of $0.8
million in the third quarter of
2016.
|
|
Third
Quarter
|
|
First Nine
Months
|
|
|
|
2017
|
2016
|
%
|
2017
|
2016
|
%
|
|
|
|
|
|
|
|
|
Net Income
(Loss):
|
|
|
|
|
|
|
$
Thousands
|
$(1,333)
|
$(843)
|
-
|
$(293)
|
$(7,403)
|
-
|
$ per common
share
|
$(0.01)
|
$(0.01)
|
-
|
$(0.00)
|
$(0.05)
|
-
|
assuming
dilution
|
|
|
|
|
|
|
Funds from continuing
operations
|
$1,662
|
$1,442
|
15%
|
$3,688
|
$4,415
|
(16%)
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$7,485
|
$209
|
3,481%
|
$18,969
|
$746
|
2,443%
|
|
|
|
|
|
|
|
|
Average Production
(boepd)
|
1,097
|
1,024
|
7%
|
942
|
1,174
|
(20%)
|
Average Price per
Barrel
|
$37.05
|
$31.84
|
16%
|
$37.87
|
$27.44
|
38%
|
Average Netback per
Barrel
|
$22.88
|
$18.58
|
23%
|
$23.09
|
$15.97
|
45%
|
Average Price per
Barrel including Commodity Contracts
|
$40.93
|
$41.50
|
(1%)
|
$43.57
|
$38.47
|
13%
|
Average Netback per
Barrel including Commodity Contracts
|
$26.76
|
$28.24
|
(5%)
|
$28.79
|
$27.00
|
7%
|
|
|
|
|
|
|
|
|
|
|
September
2017
|
|
June
2017
|
|
December
2016
|
|
|
|
|
|
|
|
|
|
Cash and Cash
Equivalents
|
$3,065
|
|
$830
|
|
$11,101
|
|
Working
Capital
|
($2,477)
|
|
$1,478
|
|
$10,640
|
|
Third Quarter 2017 versus Third Quarter 2016
Oil and gas gross revenues totaled $3,739,000 in the third quarter 2017 versus
$3,000,000 in the third quarter of
2016. Oil revenues were $3,063,000 in the third quarter 2017 versus
$2,459,000 in the third quarter of
2016, an increase of 25% as average oil production increased by 14%
and oil prices increased by 9%. Natural gas revenues
increased $33,000 or 15%, as natural
gas prices increased 13% compared to the third quarter of
2016. Natural Gas Liquid (NGL) revenue increased $102,000 or 32% to $419,000 as average NGL prices increased by 45%
partially offset by production decreases of 9%.
Production and operating expenses increased $19,000 between quarters. These costs
increased from the prior year quarter due to higher production
volumes. Production and operating expenses averaged
$5.84 per BOE for the third quarter
of 2017 compared to $6.05 per BOE for
the same period in 2016, a decrease of 3%.
Depletion and depreciation expense increased $122,000 between quarters due to increased
production.
General and administrative expenses decreased $80,000 between quarters due to the Company's
cost cutting efforts which resulted in lower salary and benefits,
professional fees and travel costs.
Finance income decreased $519,000
due to a realized gain on financial commodity contracts in 2016 of
$909,000 compared to $392,000 in 2017. Finance expense increased
$700,000 primarily due to an
unrealized loss on financial commodity contracts in 2017 of
$1,269,000 compared to $445,000 in 2016, partially offset by lower
interest expense.
FIRST NINE MONTHS 2017 HIGHLIGHTS
- Average production was 942 BOEPD for the first nine months of
2017, a decrease of 20% compared to the first nine months of 2016
production. The decrease was primarily due to three wells
that were shut-in for all of the first quarter and part of the
second quarter of 2017, as a result of offset fracture stimulation
operations on 19 wells by another operator in the Woodford
formation beneath the Caney, which continued their recovery to
normal production in the third quarter, and also due to the normal
production decline. This decline was partially offset by
production from the Chandler 8-6H well which come into production
in March 2017 and the Hartgraves 1-6H
well which started producing in September
2017.
- Funds from continuing operations was $3.7 million for the first nine months of 2017
compared to $4.4 million in the first
nine months of 2016
- Average netbacks were $23.09 per
BOE for the first nine months of 2017, an increase of 45% compared
to the first nine months of 2016 due to higher prices in 2017. If
the realized gains from the commodity contracts are included, the
average netbacks for the first nine months increase by more than
$5/barrel to $28.79 per BOE
- General & administrative expenses decreased by 6% for the
first nine months of 2017 compared to the first nine months of 2016
due to the Company's continued cost cutting efforts
- Revenue, net of royalties was $7.6
million for the first nine months of 2017 compared to
$6.8 million in the first nine months
of 2016 due to higher prices partially offset by lower production
in 2017 compared to the comparable period in 2016
- Net loss was $293,000 for the
first nine months of 2017 compared to net loss of $7.4 million in first nine months of 2016.
The first nine months of 2016 included an unrealized loss on
commodity contracts of $6.0
million.
- At September 30, 2017, cash
totaled $3.0 million and we had
$1.0 million of unused borrowing
capacity on our credit facility with BOK Financial. In November 2017, we borrowed the $1.0 million of unused capacity.
First Nine Months of 2017 versus First Nine Months of 2016
Oil and gas gross revenues totaled $9,740,000 in the first nine months of 2017
versus $8,826,000 in the first nine
months of 2016. Oil revenues were $8,142,000 in the first nine months of 2017
versus $7,098,000 in the first nine
months of 2016, an increase of 15% as average oil prices increased
24% or $8.94 a barrel for the period,
offset by a decrease in production of 7%. Natural gas
revenues decreased $108,000 or 16%,
in the first nine months of 2017 as natural gas production
decreased 39% offset by an average natural gas price increase of
39% compared to the first nine months of 2016. NGL revenue
decreased $22,000, or 2%, due to a
decrease in NGL production of 37% which was partially offset by an
average NGL price increase of 56% in the first nine months of
2017.
Production and operating expenses decreased $83,000 or 5% for the first nine months of 2017
compared to the prior year first nine months due to a decrease in
total production.
Depletion and depreciation expense decreased $778,000 due to decreased production.
General and administrative expenses decreased $177,000, or 6%, due to the Company's cost
cutting efforts which resulted in lower salary and benefits,
professional fees and travel costs.
Finance income decreased $1,184,000 due to a realized gain on financial
commodity contracts in 2016 of $3,550,000 compared to $1,465,000 in 2017. Finance expense
decreased $6,018,000 due to an
unrealized loss on financial commodity contracts in 2016 of
$5,965,000.
BNK PETROLEUM
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
(Unaudited, Expressed
in Thousands of United States Dollars)
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
2017
|
|
2016
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
3,065
|
$
|
11,101
|
|
Trade and other
receivables
|
|
|
1,805
|
|
1,163
|
|
Deposits and prepaid
expenses
|
|
|
626
|
|
614
|
|
Fair value of
commodity contracts
|
|
|
381
|
|
650
|
|
|
|
5,877
|
|
13,528
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
148,751
|
|
133,476
|
|
|
|
148,751
|
|
133,476
|
|
|
|
|
|
|
Total
assets
|
|
$
|
154,628
|
$
|
147,004
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Trade and other
payables
|
|
$
|
8,354
|
$
|
2,888
|
|
|
|
8,354
|
|
2,888
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Loans and
borrowings
|
|
|
23,575
|
|
20,229
|
|
Asset retirement
obligations
|
|
|
918
|
|
785
|
|
Fair value of
commodity contracts
|
|
|
264
|
|
1,417
|
|
|
|
24,757
|
|
22,431
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Share
capital
|
|
|
289,522
|
|
289,549
|
|
Contributed
surplus
|
|
|
22,347
|
|
22,195
|
|
Deficit
|
|
|
(190,352)
|
|
(190,059)
|
Total
equity
|
|
|
121,517
|
|
121,685
|
|
|
|
|
|
|
Total equity and
liabilities
|
|
$
|
154,628
|
$
|
147,004
|
BNK PETROLEUM
INC.
|
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
|
(Unaudited,
expressed in Thousands of United States dollars, except per
share amounts)
|
|
|
|
Third
Quarter
|
|
First Nine
Months
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Oil and natural gas
revenue, net
|
$
|
2,898
|
$
|
2,321
|
$
|
7,548
|
$
|
6,828
|
Other
income
|
|
(24)
|
|
1
|
|
52
|
|
2
|
|
|
2,874
|
|
2,322
|
|
7,600
|
|
6,830
|
|
|
|
|
|
|
|
|
|
Production and
operating expenses
|
|
589
|
|
570
|
|
1,610
|
|
1,693
|
Depletion and
depreciation
|
|
1,408
|
|
1,286
|
|
3,603
|
|
4,381
|
General and
administrative expenses
|
|
792
|
|
872
|
|
2,725
|
|
2,902
|
Share based
compensation
|
|
44
|
|
144
|
|
131
|
|
506
|
|
|
2,833
|
|
2,872
|
|
8,069
|
|
9,482
|
|
|
|
|
|
|
|
|
|
Finance
income
|
|
396
|
|
915
|
|
2,376
|
|
3,560
|
Finance
expense
|
|
(1,580)
|
|
(880)
|
|
(1,418)
|
|
(7,436)
|
|
|
|
|
|
|
|
|
|
Net income (loss) and
comprehensive income (loss) from continuing operations
|
$
|
(1,143)
|
$
|
(515)
|
$
|
489
|
$
|
(6,528)
|
|
Net loss and
comprehensive loss from discontinued operations
|
|
(190)
|
|
(328)
|
|
(782)
|
|
(875)
|
|
Net loss
|
|
(1,333)
|
|
(843)
|
|
(293)
|
|
(7,403)
|
|
Net loss per
share
|
$
|
(0.01)
|
$
|
(0.01)
|
$
|
(0.00)
|
$
|
(0.05)
|
BNK PETROLEUM
INC.
|
THIRD QUARTER
2017
|
($000 except as
noted)
|
|
|
|
Third
Quarter
|
|
First Nine
Months
|
|
|
2017
|
2016
|
|
2017
|
2016
|
Oil revenue before
royalties
|
$
|
3,063
|
2,459
|
$
|
8,142
|
7,098
|
Gas revenue before
royalties
|
|
257
|
224
|
|
586
|
694
|
NGL revenue before
royalties
|
|
419
|
317
|
|
1,012
|
1,034
|
Gross Oil and Gas
revenue
|
$
|
3,739
|
3,000
|
$
|
9,740
|
8,826
|
|
|
|
|
|
|
|
Cash Flow from
continuing operations
|
|
1,334
|
2,017
|
|
3,008
|
5,560
|
Additions to
property, plant & equipment
|
|
(7,485)
|
(209)
|
|
(18,969)
|
(746)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statistics:
|
|
Third
Quarter
|
|
First Nine
Months
|
|
|
2017
|
2016
|
|
2017
|
2016
|
Average oil
production (Bopd)
|
|
719
|
628
|
|
635
|
681
|
Average natural gas
production (mcf/d)
|
|
1,018
|
1,001
|
|
789
|
1,293
|
Average NGL
production (Boepd)
|
|
208
|
229
|
|
175
|
277
|
Average production
(Boepd)
|
|
1,097
|
1,024
|
|
942
|
1,174
|
Average oil price
($/bbl)
|
|
$46.28
|
$42.55
|
|
$46.98
|
$38.04
|
Average natural gas
price ($/mcf)
|
|
$2.74
|
$2.43
|
|
$2.72
|
$1.96
|
Average NGL price
($/bbl)
|
|
$21.92
|
$15.07
|
|
$21.20
|
$13.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average price per
barrel
|
|
$37.05
|
$31.84
|
|
$37.87
|
$27.44
|
Royalties per
barrel
|
|
8.33
|
7.21
|
|
8.52
|
6.21
|
Operating expenses
per barrel
|
|
5.84
|
6.05
|
|
6.26
|
5.26
|
Netback per
barrel
|
|
$22.88
|
$18.58
|
|
$23.09
|
$15.97
|
|
|
|
|
|
|
|
Average price per
barrel including commodity contracts
|
|
$40.93
|
$41.50
|
|
$43.57
|
$38.47
|
Royalties per
barrel
|
|
8.33
|
7.21
|
|
8.52
|
6.21
|
Operating expenses
per barrel
|
|
5.84
|
6.05
|
|
6.26
|
5.26
|
Netback per barrel
including commodity contracts
|
|
$26.76
|
$28.24
|
|
$28.79
|
$27.00
|
The information outlined above is extracted from and should be
read in conjunction with the Company's unaudited financial
statements for the nine months ended September 30, 2017 and the related management's
discussion and analysis thereof, copies of which are available
under the Company's profile at www.sedar.com.
NON-GAAP MEASURES
Netback per barrel and netbacks including commodity contracts,
net operating income and funds from operations (collectively, the
"Company's Non-GAAP Measures") are not measures recognized under
Canadian generally accepted accounting principles ("GAAP") and do
not have any standardized meanings prescribed by GAAP.
The Company's Non-GAAP Measures are described and reconciled to
the GAAP measures in the management's discussion and analysis which
are available under the Company's profile at www.sedar.com.
Cautionary Statements
In this news release and the Company's other public
disclosure:
(a)
|
The Company's natural
gas production is reported in thousands of cubic feet
("Mcfs"). The Company also uses references to barrels
("Bbls") and barrels of oil equivalent ("Boes") to
reflect natural gas liquids and oil production and sales. Boes may
be misleading, particularly if used in isolation. A Boe conversion
ratio of 6 Mcf:1 Bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. Given that the value
ratio based on the current price of crude oil as compared to
natural gas is significantly different from the energy equivalency
of 6:1, utilizing a conversion on a 6:1 basis may be misleading as
an indication of value.
|
|
|
(b)
|
Discounted and
undiscounted net present value of future net revenues attributable
to reserves do not represent fair market value.
|
|
|
(c)
|
Possible reserves are
those additional reserves that are less certain to be recovered
than probable reserves. There is a 10% probability that the
quantities actually recovered will equal or exceed the sum of
proved plus probable plus possible reserves.
|
|
|
(d)
|
The Company discloses
short-term production rates. Readers are cautioned that such
production rates are preliminary in nature and are not necessarily
indicative of long-term performance or of ultimate
recovery.
|
Caution Regarding Forward-Looking Information
This release contains forward-looking information including
information regarding the proposed timing and expected results of
exploratory and development work including production from the
Company's Tishomingo field,
Oklahoma acreage and the Company's
plans, strategy and objectives. The use of any of the words
"target", "plans", "anticipate", "continue", "estimate", "expect",
"may", "will", "project", "should", "believe" and similar
expressions are intended to identify forward-looking
statements.
Such forward-looking information is based on management's
expectations and assumptions, including that the Company's geologic
and reservoir models and analysis will be validated, that
indications of early results are reasonably accurate predictors of
the prospectiveness of the shale intervals, that previous
exploration results are indicative of future results and success,
that expected production from future wells can be achieved as
modeled, declines will match the modeling, future well production
rates will be improved over existing wells, that rates of return as
modeled can be achieved, that recoveries are consistent with
management's expectations, that additional wells are actually
drilled and completed, that design and performance improvements
will reduce development time and expense and improve productivity,
that discoveries will prove to be economic, that anticipated
results and estimated costs will be consistent with managements'
expectations, that all required permits and approvals and the
necessary labor and equipment will be obtained, provided or
available, as applicable, on terms that are acceptable to the
Company, when required, that no unforeseen delays, unexpected
geological or other effects, equipment failures, permitting delays
or labor or contract disputes are encountered, that the development
plans of the Company and its co-venturers will not change, that the
demand for oil and gas will be sustained, that the Company will
continue to be able to access sufficient capital through
financings, credit facilities, farm-ins or other participation
arrangements to maintain its projects, that the Company will
continue in compliance with the covenants under its reserves-based
loan facility and that the borrowing base will not be reduced, that
funds will be available from the Company's reserves based loan
facility when required to fund planned operations, that the Company
will not be adversely affected by changing government policies and
regulations, social instability or other political, economic or
diplomatic developments in the countries in which it operates and
that global economic conditions will not deteriorate in a manner
that has an adverse impact on the Company's business and its
ability to advance its business strategy.
Forward looking information involves significant known and
unknown risks and uncertainties, which could cause actual results
to differ materially from those anticipated. These risks include,
but are not limited to: any of the assumptions on which such
forward looking information is based vary or prove to be invalid,
including that the Company's geologic and reservoir models or
analysis are not validated, anticipated results and estimated costs
will not be consistent with managements' expectations, the risks
associated with the oil and gas industry (e.g. operational risks in
development, exploration and production; delays or changes in plans
with respect to exploration and development projects or capital
expenditures; the uncertainty of reserve and resource estimates and
projections relating to production, costs and expenses, and health,
safety and environmental risks, including flooding and extended
interruptions due to inclement or hazardous weather conditions),
the risk of commodity price and foreign exchange rate fluctuations,
risks and uncertainties associated with securing the necessary
regulatory approvals and financing to proceed with continued
development of the Tishomingo Field, the Company or its
subsidiaries is not able for any reason to obtain and provide the
information necessary to secure required approvals or that required
regulatory approvals are otherwise not available when required,
that unexpected geological results are encountered, that completion
techniques require further optimization, that production rates do
not match the Company's assumptions, that very low or no production
rates are achieved, that the Company will cease to be in compliance
with the covenants under its reserves-based loan facility and be
required to repay outstanding amounts or that the borrowing base
will be reduced pursuant to a borrowing base re-determination and
the Company will be required to repay the resulting shortfall, that
the Company is unable to access required capital, that funding is
not available from the Company's reserves based loan facility at
the times or in the amounts required for planned operations, that
occurrences such as those that are assumed will not occur, do in
fact occur, and those conditions that are assumed will continue or
improve, do not continue or improve and the other risks identified
in the Company's most recent Annual Information Form under the
"Risk Factors" section, the Company's most recent management's
discussion and analysis and the Company's other public disclosure,
available under the Company's profile on SEDAR at www.sedar.com.
Although the Company has attempted to take into account
important factors that could cause actual costs or results to
differ materially, there may be other factors that cause actual
results not to be as anticipated, estimated or intended. There can
be no assurance that such statements will prove to be accurate as
actual results and future events could differ materially from those
anticipated in such statements. The forward-looking information
included in this release is expressly qualified in its entirety by
this cautionary statement. Accordingly, readers should not place
undue reliance on forward-looking information. The Company
undertakes no obligation to update these forward-looking
statements, other than as required by applicable law.
About BNK Petroleum Inc.
BNK Petroleum Inc.
is an international oil and gas exploration and production company
focused on finding and exploiting large, predominately
unconventional oil and gas resource plays. Through various
affiliates and subsidiaries, the Company owns and operates shale
gas properties and concessions in the
United States. Additionally the Company is utilizing its
technical and operational expertise to identify and acquire
additional unconventional projects. The Company's shares are traded
on the Toronto Stock Exchange under the stock symbol BKX.
For further information: Wolf E.
Regener, President and Chief Executive Officer +1 (805)
484-3613, Email: investorrelations@bnkpetroleum.com, Website:
www.bnkpetroleum.com