BNK Petroleum Inc. Announces 3rd Quarter 2013 results

CALGARY, Nov. 5, 2013 /CNW/ - 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                30,033                -  
  securities

  Trade and other receivables               5,472           11,363  

  Deposits and prepaid expenses             4,512            2,334  

  Fair value of commodity                       -              779  
  contracts
                                           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               35,151           33,590  
  assets
                                          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                       -               75  
  contracts

  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    $   1,647   $   3,946   $   6,758   $   12,061
revenue, net

Gathering income               -         330         331        1,064

Gain on sale of assets     (129)           -       9,618            -

Management fees and          442         281         961          735
other income
                           1,960       4,557      17,668       13,860

Expenses:                                                            

Exploration and                -          49          57          310
evaluation

Production and               251       1,414       2,113        4,549
operating

Depletion and                720       1,740       3,057        5,156
depreciation

General and                3,223       3,934       9,930       11,911
administrative

Share based                  140         210         589          685
compensation

Loss from investments         29          33          94          273
in joint 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           $ (2,445)   $ (4,260)   $ (8,694)   $ (10,410)
comprehensive 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. 
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/November2013/05/c4581.html 
CO: BNK Petroleum Inc.
ST: Alberta
NI: OIL ERN  
-0- Nov/06/2013 03:00 GMT
 
 
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