BNK Petroleum Inc. Announces 3rd Quarter 2013 results

            BNK Petroleum Inc. Announces 3rd Quarter 2013 results

PR Newswire

CALGARY, Nov. 5, 2013

CALGARY, Nov. 5, 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 ofUnited 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,   $   1,647  $   3,946   $   6,758  $   12,061
net
Gathering income                      -        330        331       1,064
Gain on sale of assets            (129)          -      9,618           -
Management fees and other           442        281        961         735
income
                                 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       29         33         94         273
ventures
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     $ (2,445)  $ (4,260)  $ (8,694)  $ (10,410)
loss
                                                                    
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:                                                      
                                     3rd Quarter   First Nine 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
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 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.

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