All amounts are in U.S. Dollars unless otherwise indicated:
TSX ticker symbol; BKX
OTCQX ticker symbol; BNKPF
CAMARILLO, California,
Nov. 9, 2018 /PRNewswire/ -
THIRD QUARTER HIGHLIGHTS
- Average production for the third quarter of 2018 increased by
40% to 1,534 BOEPD, compared to third quarter 2017 average
production of 1,097 BOEPD. The increase was primarily due to the
Glenn 16-2H and WLC 14-1H wells that were part of the Company's
2018 drilling program as well as two wells that came into
production in the last few months of 2017 partially offset by 77
BOEPD of prior period adjustments
- Funds from operations increased by 107% to $3.4 million in the third quarter 2018 compared
to $1.7 million in the third quarter
of 2017. The increase was mainly due to an 40% increase in
production combined with a 60% increase in prices partially offset
by realized losses from commodity contracts in 2018
- Revenue, net of royalties increased by 136% to $6.8 million in the third quarter of 2018
compared to $2.9 million for third
quarter of 2017, as production increased by 40% and average prices
increased 60% between the quarters
- Average netback from operations increased by 68% for the third
quarter of 2018 to $38.33 per barrel
from the prior year third quarter due to higher prices in 2018
- Positive net income for the third quarter of 2018 of
$1.2 million compared to a net loss
of $1.3 million for the third quarter
of 2017 due to unrealized losses of $0.2
million from hedged commodity contracts in the third quarter
of 2018 compared to an unrealized loss of $1.3 million in the third quarter of 2017
- At September 30, 2018, cash
totaled $1.5 million
BNK's President and Chief Executive Officer, Wolf Regener commented:
"The Company's successful 2018 drilling program has resulted in
a 40% increase in quarterly production from the prior year.
The production increase, combined with a 60% increase in prices,
has resulted in a 107% increase in our funds from operations for
the third quarter of 2018 compared to the prior year third
quarter. As we start the fourth quarter, we are excited about
the final phase of our 2018 drilling program as both the Brock 4-2H
(BNK 77% working interest) and Anderson 1-15H10X3 (BNK 33% working
interest) wells have already been successfully drilled under
budget. Fracture stimulation operations of the Brock 4-2H
began this week with the two mile long lateral Anderson 1-15H10X3
well to follow in mid-November.
Our net revenue increased by 136% in the third quarter of 2018
due to the production and price increases. Average netbacks
from operations for the third quarter of 2018 were $38.33 per boe, an increase of 68% compared to
the prior year due to higher prices and increased production.
Netback after adjustments, which include the impact of price
adjustments from commodity contracts and prior period adjustments
on natural gas and NGL volumes sold as well as processing costs,
were $33.73 per boe for the third
quarter of 2018 compared to $26.76
per boe in the prior year third quarter.
In the third quarter of 2018, the Company generated net income
of $1.2 million compared to a net
loss of $1.3 million in the third
quarter of 2017. This included an unrealized loss on
financial commodity contracts of $0.2
million in the third quarter of 2018, compared to an
unrealized loss of $1.3 million in
the third quarter of 2017."
|
Third
Quarter
|
|
First Nine
Months
|
|
|
2018
|
2017
|
%
|
2018
|
2017
|
%
|
Net Income
(Loss):
|
|
|
|
|
|
|
$
Thousands
|
$1,184
|
$(1,333)
|
-
|
$(111)
|
$(293)
|
-
|
$ per common
share
|
$0.01
|
$(0.01)
|
-
|
$(0.00)
|
$(0.00)
|
-
|
assuming
dilution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$2,188
|
$7,485
|
(71%)
|
$13,771
|
$18,969
|
(27%)
|
|
|
|
|
|
|
|
Average Production
(Boepd)
|
1,534
|
1,097
|
40%
|
1,700
|
942
|
80%
|
Average Price per
Barrel
|
$59.37
|
$37.05
|
60%
|
$51.12
|
$37.87
|
35%
|
Average Netback
from
operations per Barrel
|
$38.33
|
$22.88
|
68%
|
$35.39
|
$23.09
|
53%
|
Average Netback
after
adjustments per Barrel
|
$33.73
|
$26.76
|
26%
|
$28.16
|
$28.79
|
(2%)
|
|
|
|
|
|
|
|
|
September
2018
|
|
June
2018
|
|
December
2017
|
|
|
|
|
|
|
|
|
Cash and Cash
Equivalents
|
$
1,548
|
|
$
1,389
|
|
$
521
|
|
Working
Capital
|
$ (2,541)
|
|
$(3,444)
|
|
$
(537)
|
|
Third Quarter 2018 versus Third Quarter 2017
Oil and gas gross revenues totaled $8,378,000 in the third quarter of 2018 versus
$3,739,000 in the third quarter of
2017. Oil revenues increased $4,458,000 or 146% as oil production increased by
64% to 1,182 boepd and average oil prices increased by $22.90 per barrel or 49% to $69.18. Natural gas revenues decreased
$106,000 or 41% to $151,000 as natural gas production decreased 22%
to 789 mcfpd, which was coupled by an average natural gas price
decrease of $0.66/mcf or 24% to
$2.08/mcf. Natural gas
production for the third quarter of 2018 included a decrease of 565
mcfpd related to prior period adjustments. Natural gas
liquids (NGLs) revenues increased $287,000 or 68% as NGL production increased 6% to
220 boepd and average NGL prices increased 59% to $34.89. NGL production for the third
quarter of 2018 included an increase of 17 boepd related to prior
period adjustments.
Average third quarter 2018 production per day increased 40% from
the third quarter of 2017 due to two additional wells added to
production in 2018 and two wells added in the last few months of
2017. Third quarter 2018 production also included a decrease
of 77 boepd related to prior period adjustments.
Production and operating expenses increased to $1,268,000 due to higher production.
Production and operating costs on a boe basis increased by 36% to
$7.96/boe due to increases in
production taxes from tax rate increases in 2018 which increased
operating costs by $1.70/boe and
additional costs related to water hauling, wireline and road repair
work which increased operating costs by $0.31/boe in the quarter.
Depletion and depreciation expense increased $471,000 or 33% due to an increase in production
in the third quarter of 2018.
General and administrative expenses increased $45,000 or 6% due to less capitalized G&A in
the third quarter of 2018 compared to the prior year resulting from
less drilling activity in the third quarter of 2018 compared to the
prior year quarter.
Stock based compensation increased by $13,000 or 30% due to the timing of stock awards
granted to employees.
Finance income decreased $0.4
million in the third quarter of 2018 compared to the third
quarter of 2017 due to realized gains on commodity contracts in the
third quarter of 2017.
Finance expense decreased slightly in the third quarter of 2018
compared to the prior year quarter primarily due to lower
unrealized losses on commodity contracts in the 2018 third quarter
partially offset by a realized loss on commodity contracts in the
third quarter of 2018 and higher interest expense on the credit
facility in 2018 due to increased borrowings.
Capital expenditures of $2,188,000
were incurred in the third quarter of 2018 relating to the 2018
drilling program.
FIRST NINE MONTHS 2018 HIGHLIGHTS
- Average production for the first nine months of 2018 was 1,700
BOEPD, an increase of 80% compared to prior year first nine months
average production of 942 BOEPD. The increase was primarily due to
the Glenn 16-2H and WLC 14-1H wells that were part of the Company's
2018 drilling program as well as two wells that came into
production in the last few months of 2017 and some prior period
adjustments
- Funds from operations were $9.0
million in the first nine months of 2018 compared to
$3.7 million in the first nine months
of 2017, an increase of 144%. The increase was mainly due to a 80%
increase in production combined with a 35% increase in average
prices partially offset by realized losses from commodity contracts
in the first nine months of 2018
- Revenue, net of royalties was $18.6
million for the first nine months of 2018 compared to
$7.5 million for the first nine
months of 2017, an increase of 147%, due to higher prices and
increased production
- Average netback from operations for the first nine months of
2018 was $35.39 per barrel, an
increase of 53% from the prior year period due to higher production
and prices in 2018
- Net loss for the first nine months of 2018 was $0.1 million compared to net loss of $0.3 million for the first nine months of 2017.
The 2018 amount included an unrealized loss on financial commodity
contracts of $2.5 million and the
2017 amount included an unrealized gain on commodity contracts of
$0.9 million
- Cash totaled $1.5 million at
September 30, 2018
First Nine Months of 2018 versus First Nine Months of 2017
Gross oil and gas revenues increased by 144% and totaled
$23,724,000 in the first nine months
of 2018 versus $9,739,000 in the
first nine months of 2017. Oil revenues were $20,743,000 in the first nine months of 2018
versus $8,142,000 in the same period
of 2017, an increase of 155% as average oil prices increased 40% or
$18.89 a barrel coupled by an
increase in oil production of 82%. Natural gas revenues
increased $626,000 or 107%, due to an
average natural gas production increase of 141% in the first nine
months of 2018 offset by a decrease in natural gas prices of
14%. Natural gas production for the first nine months of 2018
included an increase of 634 mcfpd related to prior period
adjustments. NGL revenue increased $757,000, or 75%, due to an increase in NGL
production of 31% and an average NGL price increase of 34% in the
first nine months of 2018. NGL production for the first nine
months of 2018 included an increase of 16 boepd related to prior
period adjustments.
Average production per day for the first nine months of 2018
increased 40% from the prior year comparable period due to two
additional wells added to production in 2018 and two wells added in
the last few months of 2017. The production for the first
nine months of 2018 also included an increase of 122 boepd related
to prior period adjustments.
Production and operating expenses increased 124% for the first
nine months of 2018 mainly due to an increase in production.
Operating expenses averaged $6.79 per
BOE for the first nine months of 2018 compared to $6.26 per BOE for the same period in 2017.
The per BOE operating expense increase for 2018 is due to an
increase in production taxes due to rate increases in 2018.
Depletion and depreciation expense increased $2,571,000 due to increased production.
General and administrative expenses increased $2,000 due to advisor fees in 2018 which offset
G&A reductions from management's continued efforts to reduce
costs throughout the Company.
Finance income decreased $2.4
million due to unrealized and realized gains on financial
commodity contracts in 2017.
Finance expense increased $4.5
million due to unrealized losses of $2.5 million and realized losses of $2.0 million on commodity contracts in 2018.
BNK PETROLEUM
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
(Unaudited,
Expressed in Thousands of United States Dollars)
|
($000 except as
noted)
|
|
|
|
|
|
September
30
|
|
December
31
|
|
2018
|
|
2017
|
|
|
|
|
Current
Assets
|
|
|
|
Cash
|
$1,548
|
|
$521
|
Trade and other
receivables
|
3,513
|
|
2,510
|
Other current
assets
|
659
|
|
563
|
|
5,720
|
|
3,594
|
|
|
|
|
Non-current
assets
Property, plant and
equipment
|
155,032
|
|
147,195
|
|
155,032
|
|
147,195
|
|
|
|
|
Total
Assets
|
$160,752
|
|
$150,789
|
|
|
|
|
Current
Liabilities
Trade and other
payables
|
$5,075
|
|
$3,132
|
Fair value of
commodity contracts
|
3,186
|
|
999
|
|
8,261
|
|
4,131
|
|
|
|
|
Non-current
liabilities
|
|
|
|
Loans and
borrowings
|
29,562
|
|
24,484
|
Asset retirement
obligations
|
1,154
|
|
950
|
Fair value of
commodity contracts
|
1,218
|
|
951
|
|
31,934
|
|
26,385
|
|
|
|
|
Equity
|
|
|
|
Share
capital
|
289,622
|
|
289,522
|
Contributed
surplus
|
22,701
|
|
22,406
|
Deficit
|
(191,766)
|
|
(191,655)
|
Total
Equity
|
120,557
|
|
120,273
|
|
|
|
|
Total Equity and
Liabilities
|
$160,752
|
|
$150,789
|
BNK PETROLEUM
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
|
(Unaudited,
expressed in Thousands of United States dollars, except per
share amounts)
|
($000 except as
noted)
|
|
|
|
|
|
|
|
Third
Quarter
|
|
First Nine
Months
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Oil and natural gas
revenue, net
|
$
|
6,834
|
|
2,898
|
|
18,632
|
|
7,548
|
Other
income
|
|
-
|
|
(24)
|
|
19
|
|
52
|
|
|
6,834
|
|
2,874
|
|
18,651
|
|
7,600
|
|
|
|
|
|
|
|
|
|
Production and
operating expenses
|
|
1,268
|
|
589
|
|
3,611
|
|
1,610
|
Depletion and
depreciation expense
|
|
1,879
|
|
1,408
|
|
6,174
|
|
3,603
|
General and
administrative expenses
|
|
837
|
|
792
|
|
2,727
|
|
2,725
|
Stock based
compensation
|
|
57
|
|
44
|
|
279
|
|
131
|
|
|
4,041
|
|
2,833
|
|
12,791
|
|
8,069
|
|
|
|
|
|
|
|
|
|
Finance
income
|
|
-
|
|
396
|
|
-
|
|
2,376
|
Finance
expense
|
|
(1,561)
|
|
(1,580)
|
|
(5,873)
|
|
(1,418)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) and
comprehensive income (loss) from continuing operations
|
$
|
1,232
|
|
(1,143)
|
|
(13)
|
|
489
|
Net loss and
comprehensive loss from discontinued operations
|
|
(48)
|
|
(190)
|
|
(98)
|
|
(782)
|
Net income
(loss)
|
|
1,184
|
|
(1,333)
|
|
(111)
|
|
(293)
|
Net income (loss) per
share
|
$
|
0.01
|
|
(0.01)
|
|
(0.00)
|
|
(0.00)
|
BNK PETROLEUM
INC.
|
THIRD QUARTER
2018
|
(Unaudited,
expressed in Thousands of United States dollars, except as
noted)
|
|
|
|
|
|
|
|
Third
Quarter
|
|
First Nine
Months
|
|
|
2018
|
2017
|
|
2018
|
2017
|
Oil revenue before
royalties
|
$
|
7,521
|
3,063
|
|
20,743
|
8,142
|
Gas revenue before
royalties
|
|
151
|
257
|
|
1,212
|
586
|
NGL revenue before
royalties
|
|
706
|
419
|
|
1,769
|
1,012
|
Oil and Gas
revenue
|
|
8,378
|
3,739
|
|
23,724
|
9,740
|
|
|
|
|
|
|
|
Funds from
operations
|
|
3,434
|
1,662
|
|
8,995
|
3,688
|
Additions to
property, plant & equipment
|
|
2,188
|
7,485
|
|
13,771
|
18,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statistics:
|
|
|
|
|
|
|
|
|
3rd
Quarter
|
|
First Nine
Months
|
|
|
2018
|
2017
|
|
2018
|
2017
|
Average oil
production (Bopd)
|
|
1,182
|
719
|
|
1,154
|
635
|
Average natural gas
production (mcf/d)
|
|
789
|
1,018
|
|
1,901
|
789
|
Average NGL
production (Boepd)
|
|
220
|
208
|
|
229
|
175
|
Average production
(Boepd)
|
|
1,534
|
1,097
|
|
1,700
|
942
|
Average oil price
($/bbl)
|
|
$69.18
|
$46.28
|
|
$65.87
|
$46.98
|
Average natural gas
price ($/mcf)
|
|
$2.08
|
$2.74
|
|
$2.33
|
$2.72
|
Average NGL price
($/bbl)
|
|
$34.89
|
$21.92
|
|
$28.35
|
$21.20
|
|
|
|
|
|
|
|
Average price
(Boe)
|
|
$56.91
|
$37.05
|
|
$53.78
|
$37.87
|
Royalties
(Boe)
|
|
10.62
|
8.33
|
|
11.60
|
8.52
|
Operating expenses
(Boe)
|
|
7.96
|
5.84
|
|
6.79
|
6.26
|
Netback from
operations (Boe)
|
|
$38.33
|
$22.88
|
|
$35.39
|
$23.09
|
Price adjustment from
commodity contracts (Boe)
|
|
(5.71)
|
3.88
|
|
(4.22)
|
5.70
|
Netback including
commodity contracts (Boe)
|
|
32.62
|
26.76
|
|
31.17
|
28.79
|
Prior period
adjustments (Boe)
|
|
1.11
|
-
|
|
(3.01)
|
-
|
Netback after
adjustments (Boe)
|
|
$33.73
|
$26.76
|
|
$28.16
|
$28.79
|
The information outlined above is extracted from and should be
read in conjunction with the Company's unaudited financial
statements for the three and nine months ended September 30, 2018 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 from operations, netback including commodity contracts,
netback after adjustments, 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
peak and 30-day initial production rates and other 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, availability of
funds from the Company's reserves based loan facility, expected
hedging levels and the Company's 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), 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.
With respect to estimated reserves, the evaluation of the
Company's reserves is based on a limited number of wells with
limited production history and includes a number of assumptions
relating to factors such as availability of capital to fund
required infrastructure, commodity prices, production performance
of the wells drilled, successful drilling of infill wells, the
assumed effects of regulation by government agencies and future
capital and operating costs. All of these estimates will vary from
actual results. Estimates of the recoverable oil and natural gas
reserves attributable to any particular group of properties,
classifications of such reserves based on risk of recovery and
estimates of future net revenues expected therefrom, may vary. The
Company's actual production, revenues, taxes, development and
operating expenditures with respect to its reserves will vary from
such estimates, and such variances could be material. In
addition to the foregoing, other significant factors or
uncertainties that may affect either the Company's reserves or the
future net revenue associated with such reserves include material
changes to existing taxation or royalty rates and/or regulations,
and changes to environmental laws and regulations.
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 and on the
OTCQX under the stock symbol BNKPF.
CONTACT: Wolf E. Regener,
President and Chief Executive Officer, +1 (805) 484-3613, Email:
investorrelations@bnkpetroleum.com, Website:
www.bnkpetroleum.com