BNK Petroleum Inc. Announces 2nd Quarter 2013 results

            BNK Petroleum Inc. Announces 2nd Quarter 2013 results

PR Newswire

CALGARY, Aug. 8, 2013

CALGARY, Aug. 8, 2013 /PRNewswire/ - All amounts are in U.S. Dollars unless
otherwise indicated:

                     Second Quarter                     First Half
                 2013      2012           %      2013        2012    %
                                                                  
Earnings                                                           
(Loss):
$ Thousands     $(929)  $(2,630)           L  $(6,249)    $(6,150)      L
$ per common   $(0.01)   $(0.02)           L   $(0.04)     $(0.04)      L
share
assuming                                                           
dilution
                                                                  
Capital         $7,870   $12,142       (35%)   $10,362     $22,901  (55%)
Expenditures
                                                                  
Average                                                        
Production
(Boepd)            266     1,439       (82%)       966      1,547  (38%)
Average                                                        
Product
Price per       $43.83    $31.96         37%    $35.96      $35.47    1%
Barrel
Average                                                        
Netback per
Barrel          $16.52    $17.25        (4%)    $18.57      $17.69    5%
                                                                  
            6/30/2013           12/31/2012            6/30/2012  
                                                                  
Cash and                                                       
Cash
Equivalents    $90,454               $2,836              $16,348      
Working        $90,494                $472              $17,406      
Capital

BNK's President and Chief Executive Officer, Wolf Regener commented:

"With the completed sale of our Woodford assets in our Tishomingo field in
April, the Company continues to make significant progress in our ongoing Caney
drilling program during the second quarter. The first well in our 2013
drilling program, the Barnes 6-3H, was drilled with the entire 5,200 lateral
located in the most productive Caney subinterval but unfortunately we were
only able to fracture stimulate 11 out of the 17 planned stages. The lateral
portion of the wellbore was recently cleaned out where two proppant blockages
were encountered after which flow back operations just re-commenced. We
believe these blockages have restricted the frac fluid recovery to only 12% to
date. The gross oil and water production rate is fluctuating between 250 to
350 gross barrels a day with the oil percentage increasing to between 40-50%
as we continue to optimize our flowback.

We also drilled the Dunn 2-2H Caney well, completed a 15 stage fracture
stimulation and are currently flowing back the fracture stimulation fluid. The
fracture stimulation design for this well was improved based on what we
learned from the Barnes 6-3H results. After two weeks of flowback, the Dunn
2-2H continues to free flow up the casing at rates between 1200-1500 barrels
of fluid per day and has recovered only 20% of the frac fluid to date. The
oil cuts continue to improve and the well has already produced at rates of 550
BOEPD with 300 BOPD being oil. Due to the strong flowrate and high flowing
pressures, a snubbing unit is currently installing the tubing string and gas
lift valves which is expected to further improve production from the well.

The third well in our 2013 drilling program, the Hartgraves 5-3H, was spud in
mid-July and although we are only on day 20 of drilling we are anticipating
finishing the drilling of the lateral in the next few days. This well is on
track to be drilled considerably faster and at lower cost than the previous
wells due to continuous design and performance improvements. The Hartgraves
5-3H well is expected to be fracture stimulated during the first week of
September.

Based on the improving excellent results of our Caney wells, the Company will
immediately proceed to the Barnes 7-2H.

To date, the lessons acquired from our Caney drilling program has helped
improve our costs to drill and complete each well, substantially reduce our
rig spud to production time and improve the productivity of the wells.

In Poland the Company has now received the final approval for the EIA on its
Bytow concession. The Company has filed a concession modification request and
is awaiting the final drilling permit which would permit the re-entry of the
Gapowo B-1 well so that the horizontal leg can be drilled.

The Company recorded a gain of $9.7 million on the sale of the Tishomingo
field assets, excluding the Caney and Upper Sycamore formations, and used a
portion of the proceeds to pay down its debt from $41 million to $100,000.
Offsetting this gain was $3.5 million related to the amortization of deferred
financing costs, a pre-payment penalty of $2.5 million and a $2.5 million
payment to settle all of our financial commodity contracts. At June 30, 2013,
we have cash on hand of over $90 million some of which the Company will use to
complete our 2013 drilling program in the Caney and to move forward our
exciting European projects once permits are approved.

The Company incurred a $0.9 million loss in the quarter versus a loss of $2.6
million in the second quarter of 2012. Production decreased 82% in the
comparative quarters due to the April 2013 sale while average pricing per
barrel increased 37% primarily due to higher natural gas prices. Oil and gas
revenues net of royalties declined by $2.5 million mainly due to the April
2013 sale of assets.

General and administrative expenses decreased $1.0 million to $3.2 million
primarily due to a decrease in payroll and related costs, travel expenses and
accounting, management and professional fees in Europe.

Through the first half of 2013 the Company incurred a loss of $6.2 million
which was the same loss incurred through the first half of 2012. Oil and gas
revenues declined $3.7 million due to a 38% decrease in average production per
day due to the sale of assets in April 2013. Other income increased $65,000
due to the higher management fees in 2013 while general and administrative
expenses decreased $1.3 million primarily due to lower payroll and related
costs, travel expenses and accounting, management and professional fees in
Europe.

SECOND QUARTER HIGHLIGHTS:

  *Drilled and fracture stimulated the Barnes 6-3H and Dunn 2-2H wells in the
    Caney formation in the Tishomingo field
  *In July started drilling the third Caney well in the 2013 drilling
    program, the Hartgraves 5-3H well.
  *Cash and working capital totaled $90.4 million and $90.5 million
    respectively at June 30, 2013
  *Closed the sale of the Tishomingo field, excluding the Caney and Upper
    Sycamore formations, in April 2013 for $147.1 million (which includes
    $560,000 of net operating profit for the first 18 days of April 2013)
  *Paid down the credit facility from $41 million to $100,000 in connection
    with the sale
  *Settled all the financial derivative contracts in April 2013 in connection
    with the sale
  *Capital expenditures decreased 35% from 2012 to $7.9 million due to the
    2012 drilling expenditures in Poland
  *Production decreased 82% from the second quarter of 2012 due to the sale
  *Loss of $0.9 million versus loss of $2.6 million in the second quarter of
    2012
  *Comparative oil and gas revenues declined by 75% or $3.1 million to $1.0
    million due to the sale of assets

Second Quarter 2013 to Second Quarter 2012

Oil and gas revenues net of royalties totaled $863,000 in the quarter versus
$3,401,000 in the second quarter of 2012. Oil revenues were $717,000 in the
quarter versus $2,028,000 in the second quarter of 2012, a decline of 65% as
average oil prices declined 1% or $1.32 a barrel while production decreased
64% to an average of 88 barrels per day due to the April sale of assets.
Natural gas revenues declined $487,000 or 71% as average natural gas prices
per mcf increased 96% while natural gas production decreased to 546 mcfd due
to the April sale of assets. Natural Gas Liquid (NGL) revenue declined
$1,326,000 or 90% to $144,000 as average NGL prices declined 35% to $18.18 a
barrel while average production decreased 85% to 87 boepd as a result of the
asset sale.

Other income increased $62,000 to $296,000 as second quarter 2013 results
included higher management fee revenue relating to Saponis.

Exploration and evaluation expenses declined $206,000 between quarters due to
less E&E activity in new areas of interest.

Production and operating expenses declined $679,000 between quarters due to
the sale of assets in April 2013.

Depletion and depreciation expense decreased $1,117,000 between quarters due
to decreased production and depletion base and lower production as a result of
the sale of assets.

General and administrative expenses decreased $1,022,000 between quarters
primarily due to lower payroll and related costs, lower professional fees
incurred in Europe relating to legal, accounting, management fees and lower
travel costs.

Stock based compensation increased $136,000 between quarters due to new stock
options granted in 2013.

Finance income increased $586,000 due to higher unrealized gains on financial
commodity contracts. Finance expense increased $8,559,000 primarily due to a
$6,534,000 charge related to interest on loans and borrowings which included
$3.5 million for the amortization of deferred financings costs and $2.5
million of pre-payment penalties related to the loan paydown along with a
realized loss on financial commodity contracts of $2.7 million as these
contracts were all settled in April 2013.

Cash increased $87,354,000 in the past three months primarily due to the net
proceeds from the sale of assets in the second quarter of 2013.

Capital expenditures of $7,870,000 were incurred in the second quarter of 2013
of which approximately $7.4 million was spent in Oklahoma.

FIRST HALF 2013 VERSUS FIRST HALF 2012 HIGHLIGHTS

  *Closed the sale of the Tishomingo field, excluding the Caney and Upper
    Sycamore formations, in April 2013 for $147.1 million (which includes
    $560,000 of net operating profit for the first 18 days of April 2013)
  *Paid down the credit facility from $41 million to $100,000 in connection
    with the sale
  *Settled all the financial derivative contracts in April 2013 in connection
    with the sale and incurred a realized loss of $2.5 million
  *Capital expenditures decreased $12.5 million or 55% to $10.4 million
    primarily due to $19 million of capital expenditures incurred in Poland in
    2012 partially offset by the 2013 drilling program in Oklahoma which
    totaled $9.0 million for the first half of 2013
  *Average production decreased 38% between comparative first half year
    periods due to the sale of assets in April
  *A net loss of $6.2 million was incurred in 2013 versus a similar loss of
    $6.2 million in 2012

First Half 2013 to First Half 2012

Oil and natural gas revenues net of royalties declined $3,004,000 or 37% to
$5,111,000. Oil revenues before royalties decreased $1,805,000 to $2,728,000
due to a 36% decrease in production due to the sale of assets while prices
decreased 5% between periods. Natural gas revenues before royalties declined
$277,000 or 16% due to a 39% decline in average production due to the sale of
assets partially offset by a 37% increase in natural gas prices per mcf. NGL
revenue before royalties declined $1,617,000 or 43% to $2,147,000 due to a 9%
decline in average NGL prices while average production per day decreased 37%
due to the April sale of assets.

Other income increased due to higher management fees.

Exploration and evaluation expenses declined $204,000 primarily due to less
E&E activity in new areas of interest.

Production and operating expenses decreased 41% as production decreased 38%
due to the sale of assets in April 2013.

Depletion and depreciation expense decreased $1,079,000 primarily due to sale
of assets in 2013.

General and administrative expenses decreased $1,270,000 primarily due to
lower payroll and related costs, lower professional fees incurred in Europe
relating to legal, accounting, management fees and lower travel costs.

Finance Income decreased $1,652,000 due to realized and unrealized gains on
financial commodity contracts in 2012. Finance expense increased $9,164,000
primarily due to a $7,528,000 charge related to interest on loans and
borrowings which included $3.5 million for the amortization of deferred
financings costs and $2.5 million of pre-payment penalties related to the loan
paydown along with a realized loss on financial commodity contracts of $2.5
million as these contracts were all settled in April 2013.

Cash has increased $87,618,000 through the first six months of 2013 primarily
due to the sale of assets in April 2013 offset by the 2013 capital
expenditures.

                        BNK PETROLEUM INC.
     CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
   (Unaudited, Expressed in Thousands of United States Dollars)
                                     June 30,   December 31, 
                                       2013         2012     
Current assets                                              
 Cash and cash equivalents          $    90,454 $        2,836 
 Trade and other receivables             4,568        11,363 
 Deposits and prepaid expenses           3,459         2,334 
 Fair value of commodity contracts           -           779 
                                        98,481        17,312 
                                                           
Non-current assets                                          
 Long-term receivables                     940         1,297 
 Fair value of commodity contracts      10,049        10,114 
 Property, plant and equipment          27,183       156,549 
 Exploration and evaluation assets      35,002        33,590 
                                        73,174       201,550 
                                                           
Total assets                         $   171,655 $      218,862 
                                                           
Current liabilities                                         
 Trade and other payables           $     7,987 $       16,840 
 Current portion of long-term debt           -        31,797 
                                         7,987        48,637 
                                                           
Non-current liabilities                                     
 Loans and borrowings                      100             - 
 Fair value of commodity contracts           -            75 
 Asset retirement obligations               90         1,312 
 Warrants                                    3             3 
                                           193         1,390 
                                                           
Equity                                                      
 Share capital                         247,422       247,326 
 Contributed surplus                    17,456        16,663 
 Deficit                             (101,403)      (95,154) 
Total equity                            163,475       168,835 
                                                           
Total equity and liabilities         $   171,655 $      218,862 


                              BNK PETROLEUM INC.
     CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited, expressed in Thousands of United States dollars, except per share
                                   amounts)
                                                                         
                             Second Quarter                First Half
                           2013           2012         2013        2012
                                                                     
Oil and natural gas                                            
revenue, net of
royalties              $     863  $     3,401  $   5,111      8,115
                                                                    $
Gathering income          1          332    331        734
Other income               296          234    519        454
Gain on sale of assets      9,747            -     9,747          -
                            10,907        3,967      15,708      9,303
                                                                     
Exploration and           3          209     57        261
evaluation
expenditures
Production and             463        1,142              3,135
operating expenses                                           1,862
Depletion and               483        1,600    2,337      3,416
depreciation
General and                 3,241        4,263    6,707      7,977
administrative
expenses
Stock based                 341          205             475
compensation                                                   449
Loss from investments    42          203           65        240
in joint ventures
Legal restructuring                       
expenses                        595           280           595         880
                               5,168        7,902    12,072     16,384
                                                                     
Finance income              2,573        1,987     115      1,767
Finance expense            (9,241)        (682)                (836)
                                                          (10,000)
                                                                     
Net loss and           $       (929)  $   (2,630)              (6,150)
comprehensive loss                                    $    (6,249)  $
                                                                     
Net loss per share                                                    
       Basic and      $    (0.01)  $    (0.02)  $           (0.04)
        Diluted                                             (0.04)  $
                                                          

                              BNK Petroleum Inc.
                             Second Quarter 2013
                            ($000 except as noted)
 
                                  
                                 2nd Quarter          First Half
                                  2013        2012     2013      2012
Oil revenue before             $          2,028            4,533
royalties                                717                  2,728
Gas revenue before                  687            1,690
royalties                               200                 1,413
NGL revenue before                       1,470            3,764
royalties                               144                  2,147
Oil and Gas revenue                        4,185            9,987
                                      1,061                  6,288
                                                                  
Cash Flow used by                (8,952)     (4,085)           (8,884)
operating activities                                        (8,684)
Additions to                                                  
property, plant &
equipment                     (7,483)     (2,310)           (3,568)
                                                            (9,093)
Additions to
Exploration and                                               
Evaluation
Assets                            (387)     (9,382)  (1,269)  (19,333)
                                                                   
                                                                  
                                                                  
Statistics:                                                        
                                   2nd Quarter            First Half
                                 2013         2012     2013      2012
Average natural gas                    546       3,674            3,934
production (mcf/d)                                            2,418
Average NGL                            87         581           630
production (Boepd)                                              397
Average Oil                             88         246           261
production (Bopd)                                               166
Average production                         1,439         1,547
(Boepd)                                  266                    966
Average natural gas              $4.03       $2.06    $3.23     $2.36
price ($/mcf)
Average NGL price                $18.18      $27.79            $32.81
($/bbl)                                                      $29.90
Average oil price                $89.15      $90.47            $95.45
($/bbl)                                                      $90.70
                                                                  
Average price per                          $31.96           $35.47
barrel                                $43.83                 $35.96
Royalties per barrel             8.22        5.99            6.65
                                                               6.74
Operating expenses                         8.72          11.13
per barrel                             19.09                  10.65
                                                             
Netback per barrel                        $17.25           $17.69
                                      $16.52                 $18.57

The information  outlined  above is  extracted  from  and should  be  read  in 
conjunction with the  Company's unaudited financial  statements for the  three 
months ended  June  30,  2012  and the  related  management's  discussion  and 
analysis thereof, copies of which are available under the Company's profile at
www.sedar.com.

Non-IFRS Information

Netback per  barrel and  its components  are calculated  by dividing  revenue, 
royalties and  operating expenses  by the  Company's sales  volume during  the 
period. Netback per barrel is a non-IFRS  measure but it is commonly used  by 
oil and  gas companies  to illustrate  the unit  contribution of  each  barrel 
produced. This is a useful measure  for investors to compare the  performance 
of one entity with  another. The non-IFRS measures  referred to above do  not 
have any standardized  meaning prescribed  by IFRS  and therefore  may not  be 
comparable to similar measures used by other companies.

The Company also  uses the  "barrels" (bbls)  or "barrels  of oil  equivalent" 
(boe) reference  in  this  report  to reflect  natural  gas  liquids  and  oil 
production and sales. All  boe conversions are derived  by converting gas  to 
oil in the  ratio of  six thousand cubic  feet of  gas to one  barrel of  oil, 
representing the approximate energy equivalency.

Caution Regarding Forward-Looking Information

statements  contained  in  this   news  release  constitute   "forward-looking 
information" as  such term  is used  in applicable  Canadian securities  laws, 
including information regarding  the proposed timing  and expected results  of 
exploratory work including  the potential  for, and level  of, oil  production 
from the Lower Caney and upper  Sycamore formations on the Company's  Oklahoma 
acreage and possible impact  of that on the  Company's netbacks and  resources 
base, projected levels of fracture  stimulation fluid recovery, the effect  of 
design and performance  improvements on future  productivity, the  anticipated 
timing of commencement of  drilling, well-deepening and  fracture-stimulations 
in connection with the Company's  Caney drilling program, and the  advancement 
of  the  Company's   European  projects,  including   permit  and   concession 
applications. Forward-looking information is based on plans and estimates  of 
management at the  date the information  is provided and  certain factors  and 
assumptions of management, including that  the Company's geologic models  will 
be validated,  that  previous exploration  results  are indicative  of  future 
results and success, that future well  production rates will be improved  over 
existing  wells,  that  design   and  performance  improvements  will   reduce 
production time and improve  productivity, that discoveries  will prove to  be 
economic, that all required permits  and approvals, funding from  co-venturers 
and the necessary labor and equipment will be obtained, provided or available,
as applicable, on terms that are acceptable to the Company, when required, 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 and the industry as a whole. Forward looking information  is 
subject to a variety of risks  and uncertainties and other factors that  could 
cause plans,  estimates, timing  and actual  results to  vary materially  from 
those projected in such forward-looking information. Factors that could cause
the forward-looking  information in  this  news release  to  change or  to  be 
inaccurate include, but are not limited to, the risk that permits,  approvals, 
equipment and/or funding are delayed or  available only on terms that are  not 
acceptable to the Company,  that production rates do  not match the  Company's 
assumptions, political  and currency  risks and  other risks  associated  with 
exploration and development of oil and gas projects, including those set forth
in the Company's management's discussion  and analysis and annual  information 
form filed under the Company's profile on www.sedar.com.

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, Poland, Germany and Spain.  Additionally the Company is utilizing  its 
technical  and  operational  expertise  to  identify  and  acquire  additional 
unconventional projects outside  of North  America. The  Company's shares  are 
traded on the Toronto Stock Exchange under the stock symbol BKX.

SOURCE BNK Petroleum Inc.

Contact:

Wolf E. Regener, President and Chief Executive Officer +1 (805) 484-3613
Email:investorrelations@bnkpetroleum.com
Website:www.bnkpetroleum.com
 
Press spacebar to pause and continue. Press esc to stop.