BNK Petroleum Inc. Announces 2nd Quarter 2013 results

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


                          Second Quarter                     First Half
                  2013      2012            %      2013         2012      %
                                                                            

Earnings                                                                    
(Loss):

$ Thousands     $(929)         $            L         $     $(6,150)       L
                         (2,630)                (6,249)

$ 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      $              $     3,401   $        5,111   $    8,115
                        863

Gathering                             332              331          734
income                    1

Other income                          234              519          454
                        296

Gain on sale          9,747             -            9,747            -
of assets
                     10,907         3,967           15,708        9,303
                                                                       

Exploration                           209               57          261
and evaluation            3
expenditures

Production and                      1,142            1,862        3,135
operating               463
expenses

Depletion and                       1,600            2,337        3,416
depreciation            483

General and           3,241         4,263            6,707        7,977
administrative
expenses

Stock based                           205              449          475
compensation            341

Loss from                             203               65          240
investments in           42
joint ventures

Legal                                                  595             
restructuring        595              280                           880
expenses
                      5,168         7,902           12,072       16,384
                                                                       

Finance income        2,573         1,987              115        1,767

Finance                             (682)         (10,000)        (836)
expense             (9,241)
                                                                       

Net loss and   $      (929)   $   (2,630)   $      (6,249)   $  (6,150)
comprehensive
loss
                                                                       

Net loss per                                                           
share

  Basic and    $              $    (0.02)   $       (0.04)   $   (0.04)
  Diluted            (0.01)
                                                            
                                       BNK Petroleum Inc.
                                       Second Quarter 2013
                        ($000 except as noted)
                                                                           
                                           
                           2nd Quarter                    First Half
                              2013         2012         2013       2012

Oil revenue          $                    2,028        2,728      4,533
before                         717
royalties

Gas revenue                                 687       1,413       1,690
before                        200 
royalties

NGL revenue                               1,470        2,147      3,764
before                        144 
royalties

Oil and Gas                               4,185        6,288      9,987
revenue                     1,061 
                                                                       

Cash Flow                  (8,952)      (4,085)      (8,684)    (8,884)
used by
operating
activities

Additions to
property,                                                       
plant &

equipment                 (7,483)       (2,310)      (9,093)    (3,568)

Additions to
Exploration                                                     
and
Evaluation

Assets                      (387)       (9,382)      (1,269)   (19,333)
                                                                       
                                                                       
                                                                       

Statistics:                                                            
    
                                2nd Quarter               First Half
                            2013          2012        2013        2012

Average                        546        3,674        2,418      3,934
natural gas
production
(mcf/d)

Average NGL                     87          581          397        630
production
(Boepd)

Average Oil                     88          246          166        261
production
(Bopd)

Average                        266        1,439          966      1,547
production
(Boepd)

Average                      $4.03        $2.06        $3.23      $2.36
natural gas
price
($/mcf)

Average NGL                 $18.18       $27.79       $29.90     $32.81
price
($/bbl)

Average oil                 $89.15       $90.47       $90.70     $95.45
price
($/bbl)
                                                                       

Average                                  $31.96       $35.96     $35.47
price per                   $43.83
barrel

Royalties                     8.22         5.99         6.74       6.65
per barrel

Operating                                  8.72        10.65      11.13
expenses per                 19.09
barrel
                                                                

Netback per                              $17.25       $18.57     $17.69
barrel                      $16.52

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. 
Wolf E. Regener, President and Chief Executive Officer +1 (805) 484-3613 
Email:investorrelations@bnkpetroleum.com Website:www.bnkpetroleum.com 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/August2013/08/c4985.html 
CO: BNK Petroleum Inc.
ST: Alberta
NI: OIL ERN  
-0- Aug/09/2013 00:25 GMT
 
 
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