BNK Petroleum Inc. Announces 3rd Quarter 2011 results

CALGARY, Alberta, November 10, 2011 -

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

                                                             First Nine
                              Third Quarter                    Months
                          2011      2010       %       2011        2010  %
   Earnings (Loss):
   $ Thousands            ($274)   ($1,464)    81%       $18   ($3,895)   P
   $ per common share     $0.00     ($0.01)            $0.00    ($0.04)   P
   assuming dilution

   Funds from operations:
   $ Thousands           $3,330     ($808)            $6,281  ($17,129)
   $ per common share     $0.02    ($0.01)             $0.04    ($0.16)

   Capital Expenditures $10,771    $7,639      41%   $22,515   $23,556  (4)%

   Average Production
    (Boepd)               1,868     1,098      70%     1,503     1,114  35%
   Average Product Price
    per Barrel           $46.81    $37.67      24%    $46.79    $40.43  16%
   Average Netback per
    Barrel               $28.27    $19.97      42%    $27.56    $21.13  30%

                            9/30/2011          12/31/2010         9/30/2010

   Cash and Cash Equivalents  $41,957            $62,062            $10,115
   Working Capital            $46,154            $63,503           $(15,849)

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

“BNK incurred a net loss of $.3 million in the third quarter of 2011 on a 70% increase in average third quarter production and a 111% increase in oil and gas revenues net of royalties compared to the same period in 2010. Included in third quarter results were a $2.6 million unrealized currency loss due to the weakening of the Canadian dollar relative to the US dollar and higher general and administrative costs versus the third quarter of last year of $2.4 million. General and administrative expenses increased due to higher professional fees (primarily legal fees in connection with corporate restructuring incurred to significantly minimize the Company’s short and long term tax liability), increased salaries and wages, higher travel costs and higher public relations costs.

Third quarter results benefited from other income of $1.4 million from management fee income and $1.8 million from unrealized gains resulting from financial hedges on crude oil and natural gas.

During the third quarter in Oklahoma the Company completed fracture stimulations of 29 gross stages on two wells that it operates and benefited from a successful fracture stimulation of 12 stages on a non-operated well. During the quarter fracture stimulations began on a third well with 12 stages. We are very pleased with the production we are achieving in the Woodford wells in Oklahoma as production has been averaging approximately 2,200 barrels as day in recent weeks.

Cash and working capital totaled $42 million and $46 million respectively at September 30, 2011.

As a result of a review of its reserves effective August 1 of its Tishomingo shale gas field the Company’s US lender, Amegy Bank recently increased the borrowing base against these assets to $32 million from $23.8 million. The Company has currently borrowed $20 million against this credit facility.

Through the first nine months of 2011 BNK earned net income of $18,000 versus a loss of $3.9 million through the first nine months of 2010. Oil and gas revenues net of royalties increased $5.8 million or 60% aided by a 35% increase in average production per day and a 16% increase in average product prices.

In Poland the Company as Manager for Saponis Investments Sp z o.o. completed drilling the third well (Starogard S-1) in August 2011. Completion of the Lebork S-1 well was initiated in mid-September. The fracture stimulations were not successful in placing the programmed quantities and concentrations of proppant. The Company plans to use a new fracture stimulation design in the spring of 2012 to re-stimulate and test the Lebork well, The Wytowno S-1 and Starogard S-1 wells are scheduled to be completed in the spring of 2012 after the Lebork S-1 re-stimulation and results of the analysis of the cored interval at Starogard are received.

On its wholly owned Indiana concessions (Bytow, Trzebielino and Darlowo) operations must be commenced to drill three wells by September 2012.In that regard a drilling rig has been contracted and the Company is planning on beginning to drill the first well in the first quarter of 2012.

In Germany the Company is continuing the bidding process for the 2D seismic operations on its concessions to provide the necessary information for its drilling program and has initiated a public relations campaign to communicate its commitment to the environment, safety and open dialogue.

In Spain in addition to its Arquetu concession the Company has recently been awarded two new concessions (Urraca in September totaling 234,000 acres and Sedano this month totaling 86,000 acres).

In other areas of Europe (including France) the Company has made concession applications and awaits their potential grant. The Company also explores for shale gas opportunities in other areas of the world.”

THIRD QUARTER HIGHLIGHTS:

• Oil and gas revenues net of royalties increased 112%
• Average net-back per barrel increased 42% to $28.27 a barrel
• Cash and working capital at September 30, 2011 totaled $42 million and $46 million respectively
• Average daily production increased 70% to 1,868 boepd
• Capital expenditures totaled $10.8 million of which $8.4 million was in Oklahoma, $1.6 million was in Poland and $0.8 in other countries.
• Acquired a new concession in Spain totaling 234,292 acres
• As manager of Saponis completed drilling its third well in Poland

Third Quarter 2011 to Third Quarter 2010

Oil and gas revenues net of royalties totaled $6,537,000 in the third quarter versus $3,080,000 in the third quarter of 2010. Oil revenues increased $1,741,000 or 105% as oil production per day increased 76% to 432boepd while average oil prices increased $12.05 a barrel or 16% to $85.46 a barrel. Natural gas liquids (NGL’s) revenues increased $1,604,000 or 121% to $2,930,000 as NGL production increased 45% to 675boepd while NGL prices increased 52% to $47.15 a barrel. Natural gas revenues increased $895,000 or 108% to $1,720,000 as average natural gas prices rose $.23 a barrel to $4.10 while natural gas production increased 2,245 metric cubic feet per day (mcf/d) to 4,564 or 97%.

Other income of $1,423,000 consisted of management fees recorded as operator of Saponis Sp z o.o.

Exploration and evaluation expenses totaled $258,000 in the quarter and relates to pre-concession expenses related to new ventures.

Production and operating expenses increased $616,000 or 58% to $1,678,000 due to a 70% increase in production between quarters.

Depletion and depreciation expenses increased $876,000 or 97% to $1,781,000 due to increased production, a higher reserve base on which the reserve percentage is applied and increased depreciation.

General and administrative expenses increased $2,358,000 or 119% due to higher legal costs primarily incurred in restructuring the corporate entities, higher salary and wage costs, other professional fees, and higher salary and wage expense.

Finance income increased to $2,226,000 from $1,151,000 or 93% due to projected gains on the hedging of crude oil and natural gas.

Finance expense increased 541% or $2,371,000 due to a $2,594,000 unrealized currency loss in the third quarter due to the weakening of the Canadian dollar relative to the US dollar.

FIRST NINE MONTHS 2011 VERSUS FIRST NINE MONTHS 2010 HIGHLIGHTS

• Average production per day increased 35% to 1,503boepd
• Oil and gas revenues net of royalties increased 60% to $15,599,000 from $9,750,000 in the first nine months of 2010
• Average net-back per barrel increased 30% to $27.56 a barrel
• Earnings were $18,000 versus a loss of $3,895,000 through the first nine months of 2010
• Cash from operations excluding changes in non-cash working capital increased to a positive $374,000 from a negative $8,500,000 through the first nine months of 2010
• Capital expenditures totaled $22,515,000 versus $23,556,000 in 2010 (including the $12,000,000 expenditure in the second quarter of 2010 to purchase the overriding royalty and the net profits interest from its former lender which was recorded as an increase in property, plant & equipment).

Oil and gas revenues net of royalties totaled $15,599,000 through the first nine months of 2011 versus $9,750,000 through the first nine months of 2010. Oil revenues increased $2,986,000 or 65% as oil production per day increased 39% to 306 boepd while average oil prices increased $14.14 a barrel or 18% to $90.74 a barrel. Natural gas liquids (NGL’s) revenues increased $2,702,000 or 56% to $7,536,000 as NGL production increased 23% to 597boepd while NGL prices increased 27% to $46.25 a barrel. Natural gas revenues increased $1,214,000 or 42% to $4,072,000 as average natural gas prices declined $.11 an mcf to $4.15 while natural gas production increased 1,142 metric cubic feet per day (mcf/d) to 3,598 or 46%.

Other income totaled $3,214,000 through the first nine months of 2011 versus none in 2010 and was the result of $2,038,000 in management fee income and $1,176,000 from the sale of seismic data in Oklahoma.

Exploration and evaluation expenses declined $2,433,000 in the comparative nine month periods due to increased Black Warrior write-offs through the first nine months of 2010.

Production and operating expenses increased 29% commensurate with the 35% increase in production.

Depletion and depreciation expense increased $1,645,000 or 62% due to increased production, a higher reserve base on which the depletion rate is applied and increased depreciation primarily on European assets.

General and administrative expenses increased $4,528,000 in the comparative periods due to higher legal costs, mainly due to restructuring,and other professional fees (management fees, accounting and public relations fees), higher salary and wage and recruiting expenses as well as higher travel costs.

Finance income increased $867,000 or 69% due to higher unrealized gains resulting from the financial hedging of crude oil and natural gas.

Finance expense increased 14% to $2,026,000 as increased foreign exchange losses of $1,265,000 due to the weakening of the Canadian dollar versus the US dollar more than offset lower interest expense of $645,000 due to lower debt levels and lower borrowing rates.

Key Financial and operating data follow.

                              BNK PETROLEUM INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
         (Unaudited, Expressed in Thousands of United States Dollars)
                                            September 30,    December 31,
                                                2011             2010
   Assets
                  Cash and cash
                  equivalents             $        41,957  $       62,062
                  Trade and other
                  receivables                      19,450          18,398
                  Deposits and
                  prepaid expenses                  2,284             757
                  Fair value of
                  commodity contracts               1,267             322
   Total current assets                            64,958          81,539

   Non-current assets
                  Property, plant and
                  equipment                       147,002         132,413
                  Exploration and
                  evaluation assets                 7,757           2,345
                  Fair value of
                  commodity contracts                 826               -
   Total non-current assets                       155,585         134,758

   Total Assets                           $       220,543  $      216,297

   Liabilities
                  Trade and other
                  payables                $        18,804  $       18,036
   Total current liabilities                       18,804          18,036

   Non-current liabilities
                  Loans and
                  borrowings                       19,604          19,486
                  Asset retirement
                  obligations                       1,709           1,730
                  Warrants                             80             205
   Total non-current liabilities                   21,393          21,421

   Equity
                  Share capital                   247,207         246,240
                  Contributed surplus              14,032          11,511
                  Deficit                         (80,893)        (80,911)
                  Total equity                    180,346         176,840
   Total Equity and Liabilities           $       220,543  $      216,297

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

                                                          First Nine
                               Third Quarter                Months
                              2011       2010           2011      2010
    Oil and natural
    gas revenue, net
    of royalties           $  6,537   $  3,080       $ 15,599  $   9,750
    Gathering income            404        464          1,354      2,406
    Other income              1,423          -          3,214          -
                              8,364      3,544         20,167     12,156

    Exploration and
    evaluation
    expenditures                258      1,774          1,593      4,026
    Production and
    operating expenses        1,678      1,062          4,291      3,322
    Depletion and
    depreciation              1,781        905          4,299      2,654
    General and
    administrative
    expenses                  4,338      1,980         10,064      5,536
                              8,055      5,721         20,247     15,538

    Operating income
    (loss)                      309     -2,177            -80     -3,382

    Finance income            2,226      1,151          2,124      1,257
    Finance expense          -2,809       -438         -2,026     -1,770
    Net finance income
    (expense)                  -583        713             98       -513

    Net income (loss)
    and comprehensive
    income (loss)          $   -274   $ -1,464       $     18  $  -3,895

    Net income (loss)
    per share
                  Basic
                    and
                Diluted    $      0   $  -0.01       $      0  $   -0.04

                                BNK Petroleum Inc.
                                  Third Quarter 2011
                               ($000 except as noted)

                                                            First Nine
                                         3rd Quarter          Months
                                         2011    2010      2011    2010
    Oil revenue before
    royalties                         $   3,396  1,654      7,591   4,605
    Gas revenue before
    royalties                             1,720    825      4,072   2,858
    NGL revenue before
    royalties                             2,930  1,326      7,536   4,834
    Oil and Gas revenue                   8,046  3,805     19,199  12,297

    Cash Flow provided (used) by
    operating activities                  1,201 -1,409        374  -8,512
    Capital expenditures                -10,771 -7,639    -22,515 -23,556
    Cash proceeds of stock options
    exercised                               192    183        621     183
    Repayment of long-term
    debt                                      -      -          -  -7,427

    Statistics:

                                                            First Nine
                                         3rd Quarter          Months
                                         2011    2010      2011    2010
    Average natural gas
    production (mcf/d)                    4,564  2,319      3,598   2,456
    Average NGL production
    (Boepd)                                 675    466        597     485
    Average Oil production
    (Bopd)                                  432    245        306     220
    Average production
    (Boepd)                               1,868  1,098      1,503   1,114
    Average natural gas price
    ($/mcf)                               $4.10  $3.87      $4.15   $4.26
    Average NGL price
    ($/bbl)                              $47.15 $30.95     $46.25  $36.48
    Average oil price
    ($/bbl)                              $85.46 $73.41     $90.74  $76.60

    Average price per
    barrel                               $46.81 $37.67     $46.79  $40.43
    Royalties per barrel                   8.78   7.18       8.77    8.38
    Operating expenses per
    barrel                                 9.76  10.52      10.46   10.92
    Netback per barrel                   $28.27 $19.97     $27.56  $21.13

The information outlined above is extracted from and should be read in conjunction with the Company’s unaudited financial statements for the three and nine months ended September 30, 2011 and the related management’s discussion and analysis thereof, copies of which are available under the Company’s profile at www.sedar.com.

Non-GAAP Measures

Funds from operations and funds from operations per common share are not defined by GAAP in Canada and are referred to as non-GAAP measures. Funds from operations are based on cash flow from operating activities as per the statement of cash flows before changes in non-cash working capital. Funds from operations per common share is calculated based on the weighted average number of common shares outstanding consistent with the calculation of net earnings (loss) per share.

For more details on non-GAAP measures, refer to BNK’s “Management’s Discussion and Analysis.

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

Certain 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, commencement of drilling, 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 all required permits and approvals, funding from co-venturers and the necessary labor and equipment will be obtained, provided or available, as applicable, when required. 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, 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.

For further information:

Wolf E. Regener, President and Chief Executive Officer +1(805)484-3613
Email: investorrelations@bnkpetroleum.com
Website: www.bnkpetroleum.com

(BKX.)

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