BNK Petroleum Inc. Announces 3rd Quarter 2013 results

            BNK Petroleum Inc. Announces 3rd Quarter 2013 results

  PR Newswire

  CALGARY, Alberta, November 6, 2013

CALGARY, Alberta, November 6, 2013 /PRNewswire/ --

All amounts are in U.S. Dollars unless otherwise indicated:


                                   Third Quarter                  Nine Months
                                 2013          2012     %     2013         2012       %

    Earnings (Loss):
    $ Thousands                   $(2,445)   $(4,260)   -   $(8,694)     $(10,410)    -
    $ per common share            $ (0.02)    $(0.03)   -    $(0.06)       $(0.07)    -
    assuming dilution

    Capital Expenditures            $34,908   $12,691  175%   $45,270      $35,592    27%

    Average Production (Boepd)        302      1,547  (80%)       743        1,547   (52%)
    Average Product Price per Barrel $72.81   $34.11   113%    $40.97       $35.01    17%
    Average Netback per Barrel       $50.13   $17.77   182%    $22.87       $17.71    29%

                                                     9/30/2013  12/31/2012   9/30/2012

    Cash, Cash Equivalents and
    Marketable Securities                             $73,392     $2,836       $9,549
    Working Capital                                   $54,069      $472        $7,081


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

"At the end of the quarter, we completed the Hartgraves 5-3H well which is our
most successful Caney well so far. The Hartgraves 5-3H well was the third
well in our 2013 drilling program and was fracture stimulated in September.
The fracture stimulation was designed utilizing lessons learned from previous
stimulations and included the use of all ceramic proppant and had tighter
fracture stimulation stage spacings, among other modifications. Subsequent to
the end of the quarter, the well achieved a 30 day initial production (IP)
rate of 748 barrels of oil equivalent per day (BOEPD) of which 388 barrels was
oil. We believe that the improved production that the Company is achieving in
each successive Caney well is the result of continuous improvements in
completion design as geologically no significant variations have been
observed. We expect the design used in the Hartgraves 5-3H well to also
reduce the initial production decline and increase overall recoveries by
accessing a much larger part of the reservoir near the lateral.

The second well in our 2013 drilling program, the Dunn 2-2H, was completed
earlier in the third quarter with 15 stages successfully fracture stimulated.
The fracture stimulation design for the Dunn 2-2H well was improved based on
the previous Caney well, the Barnes 6-3H, and utilized both sand and ceramic
proppant. The Dunn 2-2H well realized peak initial production rates as high
as 620 BOEPD with 300 barrels of oil and had a 30 day IP rate of 420 BOEPD of
which 195 barrels were oil. The first well in the 2013 drilling program, the
Barnes 6-3H well, had a 30 day IP rate of 200 BOEPD of which 93 barrels were
oil.

In April of this year we closed the sale of virtually all of our producing
assets. Less than five months later, our average third quarter production,
which does not include production from the Hartgraves 5-3H well, rose to 302
BOEPD or approximately 20% of our average 2012 third quarter production. In
addition, our netbacks for this Caney production averaged $50.13 per barrel
for the third quarter of 2013, a 182% increase over the netbacks from the
Woodford production in the third quarter of last year, which averaged $17.77
per barrel.

We are now moving forward with our fourth well in the 2013 Caney drilling
program, the Barnes 7-2H, which was spud on August 31. The Barnes 7-2H well
was initially drilled vertically so that we could collect whole core and run a
full suite of open hole logs over the Caney, T-zone and Upper Sycamore
formations. Analysis of the more detailed data collected from the vertical
well helped us optimize the placing of the subsequently drilled horizontal leg
in what appears to be a more prolific subinterval of the Caney. We have since
begun fracture stimulation operations, to date completing 15% of the planned
stimulations, and expect to have flowback results in mid to late November.
The fracture design is a modified version of what was done in the Hartgraves
5-3H well. We also began drilling the Wiggins 12-8H well in October and
expect to complete the fracture stimulation of that well in December.

In Poland, the Company has filed a concession modification amendment for its
Bytow concession and is awaiting its approval, after having received the
approved Environmental Impact Assessment for the concession. The final
drilling permit for the re-entry of the Gapowo B-1 well will be submitted
after the concession amendment is approved. Once all permits are received, we
intend to finalize a drilling contract and mobilize a drilling rig to re-enter
the Gapowo B-1 well and drill a horizontal lateral in the Ordovician
formation.

The Company incurred a $2.4 million loss in the quarter versus a loss of $4.3
million in the third quarter of 2012. Production decreased 80% in the
comparative quarters due to the April 2013 sale of the Company's Tishomingo
field assets, excluding the Caney and Upper Sycamore formations (the "Woodford
Sale"), which was offset by production from our subsequently drilled Caney
wells, while average pricing per barrel increased 113% due to the Caney
production having a much higher percentage of oil vs gas and natural gas
liquids (NGLs) than the Woodford production. Oil and gas revenues net of
royalties declined by $2.3 million mainly due to the Woodford Sale. At
September 30, 2013, cash and marketable securities on hand were over $73
million, some of which the Company will use to continue our 2013 drilling
program in the Caney and to move our European projects forward once permits
are approved.

Through the first nine months of 2013 the Company incurred a loss of $8.7
million versus a loss of $10.4 million through the first nine months of 2012.
Oil and gas revenues declined $5.3 million, or 44%, due to a decrease in
average production per day due to the Woodford Sale which was offset by
production from our subsequently drilled Caney wells and an increase in
average pricing per barrel.

The Company recorded a gain of $9.6 million on the Woodford Sale, 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."

THIRD QUARTER HIGHLIGHTS:

  *Drilled and fracture stimulated the Dunn 2-2H and Hartgraves 5-3H wells in
    the Caney formation in the Tishomingo Field
  *In August, commenced drilling of the fourth Caney well in the 2013
    drilling program, the Barnes 7-2H well, which is expected to start flowing
    back in November
  *At quarter end, cash and marketable securities totaled $73.4 million and
    working capital was $54.0 million
  *Production started increasing, post Woodford Sale, and averaged 302 BOEPD
    in the quarter
  *Oil and gas revenues started increasing post Woodford Sale, and totaled
    $1.6 million for the quarter
  *Loss of $2.4 million versus loss of $4.3 million in the third quarter of
    2012
  *G&A decreased by $0.7 million due to reductions in staff and lower costs
    in Europe

Third Quarter 2013 to Third Quarter 2012

Oil and gas revenues net of royalties totaled $1,647,000 in the quarter versus
$3,946,000 in the third quarter of 2012. Oil revenues were $1,705,000 in the
quarter versus $2,170,000 in the third quarter of 2012, a decline of 21% as
production decreased 32% to an average of 177 barrels per day due to the
Woodford Sale while average oil prices increased 17% or $14.95 a barrel.
Natural gas revenues declined $801,000 or 89% as natural gas production
decreased to 329 mcfd due to the Woodford Sale while average natural gas
prices per mcf increased 30%. NGL revenue declined $1,566,000 or 88% to
$217,000 as average production decreased 89% to 70boepd as a result of the
Woodford Sale while average NGL prices increased 13% to $33.84 a barrel.

Other income increased $161,000 to $442,000 as third quarter 2013 results
included higher management fee revenue relating to the Company's joint venture
in Saponis Investments Sp. zo.o and gains from equipment sales.

Exploration and evaluation expenses declined $49,000 between quarters due to
less E&E activity in new areas of interest.

Production and operating expenses declined $1,163,000 between quarters due to
the Woodford Sale.

Depletion and depreciation expense decreased $1,020,000 between quarters due
to decreased production and depletion base and lower production as a result of
the Woodford Sale.

General and administrative expenses decreased $711,000 between quarters
primarily due to lower payroll and related costs and lower professional fees
incurred in Europe relating to legal, accounting, and management fees which
were partially offset by higher director fees incurred in 2013. In addition,
the third quarter of 2013 included approximately $300,000 of non-recurring
charges.

Stock based compensation decreased $70,000 between quarters due to lower stock
option valuations and awards becoming fully vested.

Finance income decreased $424,000 due to realized gains on financial commodity
contracts in 2012. Finance expense decreased $1,684,000 primarily due to a
$1,091,000 unrealized loss on financial commodity contracts in 2012 and
interest on loans and borrowings of $385,000 in 2012.

Capital expenditures of $34,908,000 were incurred in the third quarter of
2013, almost all of which was spent in Oklahoma.

FIRST NINE MONTHS 2013 VERSUS FIRST NINE MONTHS 2012 HIGHLIGHTS

  *Drilled and fracture stimulated the first three wells of the Company's
    2013 drilling program in the Caney formation in the Tishomingo field
  *Closed the Woodford Sale 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 Company's credit facility from $41 million to $100,000 in
    connection with the Woodford Sale
  *Settled all the financial derivative contracts in April 2013 in connection
    with the Woodford Sale and incurred a realized loss of $2.5 million
  *Capital expenditures increased $9.7 million or 27% to $45.3 million
    primarily due to the 2013 drilling program in Oklahoma which totaled $43.7
    million for the first nine months of 2013. The 2012 capital expenditures
    amount included $26 million of capital expenditures incurred in Poland
  *G&A expenses decreased by $2.0 million primarily due to staff reductions
    and lower costs in Europe
  *Average production decreased 52% between comparative first nine month
    periods due to the Woodford Sale, which was partially offset by production
    from subsequently drilled Caney wells
  *A net loss of $8.7 million was incurred in the first nine months of 2013
    versus a loss of $10.4 million in the same period in 2012

First Nine Months 2013 to First Nine Months 2012

Oil and natural gas revenues net of royalties declined $5,303,000 or 44% to
$6,758,000. Oil revenues before royalties decreased $2,270,000 to $4,433,000
due to a 35% decrease in production due to the Woodford Sale while prices
increased 2% between periods. Natural gas revenues before royalties declined
$1,078,000 or 42% due to a 56% decline in average production due to the
Woodford Sale partially offset by a 33% increase in natural gas prices per
mcf. NGL revenue before royalties declined $3,183,000 or 57% to $2,364,000
due to a 55% decline in average production per day due to the Woodford Sale
and a 5% decline in average NGL prices.

Other income increased due to higher management fee revenue relating to the
joint venture in Saponis Investments Sp. zo.o and gains from equipment sales.

Exploration and evaluation expenses declined $253,000 primarily due to less
E&E activity in new areas of interest.

Production and operating expenses decreased 54% as production decreased 52%
due to the Woodford Sale.

Depletion and depreciation expense decreased $2,099,000 primarily due to
decreased production and depletion base and lower production as a result of
the Woodford Sale.

General and administrative expenses decreased $1,981,000 primarily due to
lower payroll and related costs, lower professional fees incurred in Europe
relating to legal, accounting, management fees and lower travel costs
partially offset by higher director fees in 2013.

Finance Income decreased $1,137,000 due to realized gains on financial
commodity contracts and

unrealized gains on warrant revaluation in 2012. Finance expense increased
$8,419,000 primarily due to a $7,520,000 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 and marketable securities have increased by $70,556,000 through the first
nine months of 2013 primarily due to the Woodford Sale offset by the 2013
capital expenditures.


                                BNK PETROLEUM INC.
             CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
           (Unaudited, Expressed in Thousands of United States Dollars)

                                               September 30,       December 31,
                                                    2013              2012
    Current assets
                   Cash and cash
                   equivalents              $     43,359       $     2,836
                   Investments in
                   marketable
                   securities                     30,033                 -
                   Trade and other
                   receivables                     5,472            11,363
                   Deposits and
                   prepaid expenses                4,512             2,334
                   Fair value of
                   commodity
                   contracts                           -               779
                                                  83,376            17,312

    Non-current assets
                   Long-term
                   receivables                       725             1,297
                   Investments in
                   joint ventures                 10,226            10,114
                   Property, plant
                   and equipment                  61,530           156,549
                   Exploration and
                   evaluation assets              35,151            33,590
                                                 107,632           201,550

    Total assets                            $    191,008       $   218,862

    Current liabilities
                   Trade and other
                   payables                 $     29,307       $    16,840
                   Loans and
                   borrowings                          -            31,797
                                                  29,307            48,637

    Non-current liabilities
                   Loans and
                   borrowings                        100                 -
                   Fair value of
                   commodity
                   contracts                           -                75
                   Asset retirement
                   obligations                       271             1,312
                   Warrants                            1                 3
                                                     372             1,390

    Equity
                   Share capital                 247,485           247,326
                   Contributed
                   surplus                        17,692            16,663
                   Deficit                     (103,848)          (95,154)
    Total equity                                 161,329           168,835

    Total equity and liabilities            $    191,008       $   218,862



                               BNK PETROLEUM, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
                               COMPREHENSIVE LOSS
          (Unaudited, expressed in Thousands of United States dollars,
                            except per share amounts)

                                   Three months ended       Nine months ended
                                      September 30            September 30
                                    2013        2012       2013         2012
    Revenue:
    Oil and natural gas
    revenue, net                $   1,647   $   3,946  $   6,758   $   12,061
    Gathering income                    -         330        331        1,064
    Gain on sale of assets          (129)           -      9,618            -
    Management fees and other
    income                            442         281        961          735
                                    1,960       4,557     17,668       13,860
    Expenses:
    Exploration and
    evaluation                          -          49         57          310
    Production and operating          251       1,414      2,113        4,549
    Depletion and
    depreciation                      720       1,740      3,057        5,156
    General and
    administrative                  3,223       3,934      9,930       11,911
    Share based compensation          140         210        589          685
    Loss from investments in
    joint ventures                     29          33         94          273
    Restructuring expenses              -         135        595        1,015
                                    4,363       7,515     16,435       23,899

    Finance income                     66         490        108        1,245
    Finance expense                   108       1,792     10,035        1,616

    Net loss and
    comprehensive loss          $ (2,445)   $ (4,260)  $ (8,694)   $ (10,410)

    Net loss per share
               Basic and
               Diluted          $  (0.02)   $  (0.03)  $  (0.06)   $   (0.07)



                                      BNK PETROLEUM, INC.
                                      THIRD QUARTER 2013
         (Unaudited, expressed in Thousands of United States dollars, except as noted)

                                                           3rd Quarter     First Nine Months

                                                          2013    2012        2013     2012
    Oil revenue before royalties                        $1,705   2,170       4,433    6,703
    Gas revenue before royalties                           101     902       1,514    2,592
    NGL revenue before royalties                           217   1,783       2,364    5,547
    Oil and Gas revenue                                  2,023   4,855       8,311   14,842

    Cash flow used by operating activities               (248)  (2053)     (8,942) (10,937)
    Additions to property, plant & equipment          (34,789) (5,365)    (43,882)  (8,933)
    Additions to Exploration and Evaluation Assets       (119) (7,326)     (1,388) (26,659)

    Statistics:
                                                                                 First Nine
                                                        3rd Quarter                  Months
                                                          2013    2012        2013     2012
    Average natural gas production (mcf/d)                 329   3,816       1,714    3,894
    Average NGL production (Boepd)                          70     649         287      637
    Average Oil production (Bopd)                          177     262         170      261
    Average production (Boepd)                             302   1,547         743    1,547
    Average natural gas price ($/mcf)                    $3.33   $2.57       $3.24    $2.43
    Average NGL price ($/bbl)                           $33.84  $29.85      $30.22   $31.80
    Average oil price ($/bbl)                          $104.98  $90.03      $95.71   $93.63

    Average price per barrel                            $72.81  $34.11      $40.97   $35.01
    Royalties per barrel                                 13.65    6.40        7.68     6.57
    Operating expenses per barrel                         9.03    9.94       10.42    10.73
    Netback per barrel                                  $50.13  $17.77      $22.87   $17.71


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, 2013 and the related management's discussion and
analysis thereof, copies of which are available under the Company's profile at
http://www.sedar.com .

Non-IFRS Information

Netback per barrel and its components are calculated by dividing revenue less
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. However, non-IFRS measures do not have any
standardized meaning prescribed by IFRS and therefore may not be comparable to
similar measures used by other companies.

The Company's natural gas production is reported in thousand cubic feet or
(mcf). The Company also uses "barrels" (bbls) or "barrels of oil equivalent"
(boe or BOE) in this report 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.

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 and development work including production from the Lower Caney and
upper Sycamore formations on the Company's Oklahoma acreage, the effect of
design and performance improvements on future productivity, the anticipated
timing of commencement and completion of drilling and fracture-stimulations in
connection with the Company's Caney drilling program, the advancement of the
Company's European projects, including permit and concession applications and
approvals and drilling plans and the planned use and sufficiency of cash and
marketable securities on hand. 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 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 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
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 any of the
assumptions on which such forward looking information is based vary or prove
to be invalid, including that anticipated results and estimated costs will not
be consistent with managements' expectations, 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 and on terms acceptable to the Company, 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 is unable to access required capital, that the Company is adversely
affected by changing government policies and regulations, social instability
or other political, economic or diplomatic developments in the countries in
which it operates, 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, political and currency risks and the
other risks and uncertainties applicable to exploration and development
activities and the Company's business, including those set forth in the
Company's management's discussion and analysis and annual information form
filed under the Company's profile on http://www.sedar.com . Although the
Company has attempted to take into account important factors that could cause
actual 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. 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, Poland, Germany and Spain. 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:
http://www.bnkpetroleum.com

    (BKX.)
 
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