BNK Petroleum inc. Reports Third Quarter 2010 ResultsBy Bnk Petroleum Inc, PRNE
Wednesday, November 3, 2010
CALGARY, Alberta, November 4, 2010 -
OVERVIEW Three Months Ended Sept 30 Nine Months Ended Sept 30 (US$000) 2010 2009 % Change 2010 2009 % Change Earnings (Loss): $ Thousands ($30) ($3,224) 99 ($611) ($9,915) 94 $ per common share $0.00 ($0.04) 100 ($0.01) ($0.14) 93 assuming dilution Capital Expenditures$8,067 $4,722 71 $25,918 $11,878 118 Average Production (Boepd) 1,098 981 12 1,114 939 19 Average Product Price per Barrel $37.47 $29.37 28 $40.43 $26.40 53 Average Netback per Barrel $21.13 $12.27 72 $19.97 $15 33 As at 9/30/2010 6/30/2010 12/31/2009 (US$000) Cash and Cash Equivalents$10,081 $20,096 $8,372 Working Capital $7,963 ($8,640) ($13,771)
BNK's President and CEO Wolf Regener commented:
"Excellent progress has been made on our European concessions during the
quarter. Six 2D seismic lines were acquired and interpreted on our Baltic
Basin Project. The seismic lines were acquired to avoid encountering faults
in our test wells so that all targeted intervals can be properly evaluated.
Tendering for our first two wells is now nearly complete so that our 1st
well, the Wytowno #1 can be spudded near the end of November. In Germany our
geologic work continued with our team making excellent progress towards
further high-grading the concessions and achieving our goal of being able to
pursue farm down opportunities in the second quarter of 2011. Our team has
also been busy working on additional concessions in other basins within
Europe that we hope to be awarded in the future which would further diversify
Our operating results in the U.S. also continued to improve and were
characterized by higher revenues resulting from improved product pricing on
increased production over last year with increased investment in property,
plant and equipment. The field work done in the third quarter has resulted in
our net production increasing further to over 1,300 barrels of oil equivalent
per day. The third quarter loss of $30,000 was only 1% of last year's third
quarter loss of $3.2 million. For the nine month period the loss was
$611,000, a 94% improvement as compared to a $9.9 million loss in the first
nine months of 2009".
"Working capital improved to a positive $8.0 million at September 30,
2010 versus negative working capital at June 30, 2010 and December 31, 2009
of $8.6 million and $13.8 million, respectively."
"The recently announced private placement will increase our cash and
working capital by a net $64 million once fully funded. $26.9 million of
these funds were received on October 27, 2010 and the second tranche is
expected to close in November 2010. This cash will allow us to fully pursue
our currently planned European exploration activities and give us flexibility
and options for our European projects."
"On October 27, 2010 the Company's US operating subsidiary, BNK Petroleum
(US) Inc., obtained a new revolving reserve based credit facility with an
initial borrowing base of $23.8 million against which $20 million of credit
was extended and used to partially pay off our former bank debt. The balance
owed inclusive of accrued interest of $3.5 million was paid from cash on
hand. Absent any reductions in the borrowing base this new three year
facility requires interest only payments versus required principal payments
under our former facility, which payments totaled $4,678,000 through the
first nine months of 2010. As a result the new facility will free up more
cash for operating needs".
THIRD QUARTER HIGHLIGHTS - The net loss in the quarter was $30,000 versus $3,223,000 in the third quarter of 2009 - Oil and gas revenue increased 77% to $3,805,000 in the quarter compared to the same quarter in 2009 - Earnings per share was zero versus a four cent per share loss in the same period last year - Capital expenditures were $8,067,000 in the quarter up 71% from the third quarter of 2009 - Production per day averaged 1,098 or 12% higher than the third quarter of 2009 - Oil production increased 49% to 245 barrels per day versus the third quarter of 2009 - Natural gas production increased 14% to 2,319 mcf per day versus the third quarter of 2000 - NGL (Natural Gas Liquids) production declined 2% to 466 barrels per day versus the third quarter of 2009 - Production per day declined 6% from the second quarter of 2010 as three wells were shut in preparation for fracing and the time required for flowback after fracture stimulation - Working capital improved $16.6 million to $7,963,000 at September 30, 2010 from a negative $8,640,000 at June 30, 2010
Third Quarter 2010 Compared to Third Quarter 2009
Oil and gas revenues net of royalties were $3,080,000 up from $1,681,000
in the third quarter of 2009. Improved product pricing averaging $37.67 a
barrel up from $29.37 a barrel (a 28% increase) in the third quarter of 2009
coupled with a 12% increase in average daily production caused the increase
in revenue between quarters.
During the quarter 27 gross stages from four Company operated wells in
its Tishomingo field were fracture stimulated. Three wells were shut in for
all or some of the quarter in preparation for frac-ing and the time required
for flowback after fracture stimulations.
In the quarter the Company recorded an unrealized risk management gain on
its product hedges of $380,000 primarily related to its hedges on natural gas
that benefit the Company if the price of natural gas declines.
Operating expenses increased 52% to $1,063,000 due to higher gathering
fees and production taxes while general and administrative expenses increased
64% to $1,317,000 due primarily to increased salaries and wages as the
Interest in the quarter declined $173,000 or 31% to $390,000 due to lower
debt levels between quarters.
A foreign exchange gain of $653,000 was recorded in the quarter primarily
due to the strengthening of the Canadian dollar to the US dollar in the third
quarter of 2010. A $28,000 foreign exchange loss was recorded in the third
quarter of 2009.
Stock-based compensation expense totaled $673,000 in the quarter and was
51% lower than the third quarter of 2009 as more options were granted in the
third quarter of 2009 (6,740,000) than in the third quarter of 2010
Depletion, Accretion and Depreciation expense totaled $1,278,000 in the
quarter or 22% lower than the third quarter of 2009 due to increased reserves
decreasing the depletion rate per barrel.
First Nine Months of 2010 Compared to first Nine Months of 2009
The loss for the first nine months of $611,000 was 94% lower than the
loss in the first nine months of 2009 of $9,915,000.
FIRST NINE MONTHS HIGHLIGHTS - Losses declined 94% to $611,000 - Loss per share declined 93% to one cent per share from 14 cents per share - Additions to property, plant and equipment totals $25,918,000 versus $11,868,000 last year. Excluding the $12,000,000 paid to Wells Fargo in the second quarter to purchase the net profits and overriding royalty interests from its senior lender net additions to property plant and equipment totaled $13,918,000 in the first nine months of 2010 and primarily relate to fracing and drilling costs in Oklahoma - Average production per day increased 19% to 1,114 barrels per day - Average product price increased 53% to $40.43 per barrel - Oil and Gas revenue increased 78% to $12,297,000 - On January 26, 2010 the Company was awarded two additional concessions of 770,000 acres in Germany - On March 20, 2010 the Company was awarded three new concessions in Poland totaling 880,000 acres - On May 19, 2010 the Company was awarded an additional concession in Germany totaling 840,000 acres bringing total gross acreage in Europe to 3.9 million acres (3.5 million net) - On May 18, 2010 the Company closed a bought deal equity financing raising $43,593,000 in gross proceeds issuing 15,800,000 common shares at a price of CAD$2.85 - On May 19, 2010 the Company repaid its subordinated debt of $2,749,000 - On May 21, 2010 the Company purchased the net profits and overriding royalty interests from its senior lender for $12,000,000
Oil and gas revenues net of royalties were $9,750,000 up from $5,521,000
in the first nine months of 2009. This 77% increase was caused by higher
average product prices of $76.60 versus $48.34 in 2009, an increase of 58%
and increased average production of 1,114 barrels per day or 19% versus the
first nine months of 2009.
Through the first nine months of 2010, 60 gross stages from 11 wells have
been fracture stimulated in the Tishomingo field. In all of 2009, 32 gross
stages were fracture stimulated.
The Company has earned 8,400 out of a possible 40,000 net acres in the
Black Warrior Project .
Through the first nine months of 2010 the Company has recorded gathering
revenue of $2,406,000 versus $820,000 in the same period in 2009. However
$1,150,000 of this year's gathering income resulted from a correction of an
accounting error that related to 2009 and 2008.
Through the first nine months of 2010 an unrealized gain on risk
management contracts of $937,000 versus a loss of $334,000 in the same period
last year relates to gains primarily on natural gas hedges.
Operating expenses total $3,322,000 through the first nine months of 2010
or 47% higher than the comparable period in 2009 due to higher gathering fees
and production taxes resulting from increased production.
General and Administrative expenses totaled $3,586,000 through the first
nine months of 2010 versus $2,734,000 for the same period in 2009, an
increase of 31% due to higher salary and recruitment costs as the company
Interest through the first nine months of 2010 total $1,356,000 versus
$2,604,000, a decline of 48% due to lower debt levels.
Stock based compensation expense declined 46% to $1,733,000 due to lower
levels of options granted in 2010 than 2009.
Depletion, depreciation and accretion declined 30% to $3,575,000 due to
increased reserves decreasing the depletion rate per barrel.
Three months ended Nine months ended September 30 September 30 2010 2009 2010 2009 Revenue Oil and gas $3,805 $2,148 $12,297 $6,918 Royalties (725) (467) (2,547) (1,397) Gathering 464 313 2,406 820 Realized gain on risk management contracts 122 31 238 43 Unrealized gain (loss) on risk management contracts 380 (146) 937 (334) Interest and other 14 - 26 5 Equity loss on investment (22) - (43) - 4,038 1,879 13,314 6,055 Expenses Operating 1,063 698 3,322 2,256 General and Adminis- trative 1,317 803 3,586 2,734 Interest on long-term debt 390 479 1,297 2,132 Interest on subordinated debt - 84 59 472 Foreign exchange (gain) loss (653) 28 353 80 Stock-based compensation 673 1,376 1,733 3,220 Depletion, depreciation and accretion 1,278 1,635 3,575 5,076 4,068 5,103 13,925 15,970 Net loss and comprehensive loss for the period (30) (3,224) (611) (9,915) Loss per share $(0.00) $(0.04) $(0.01) $(0.14) Average shares outstanding 117,404,930 82,763,422 109,428,482 76,145,521 BNK Petroleum Inc. Third Quarter 2010 ($000 except as noted) 3RD Quarter Nine Months 2010 2009 2010 2009 Oil revenue before royalties 1,654 753 4,605 2,740 Gas revenue before royalties 825 347 2,858 1,745 NGL revenue before royalties 1,326 1,048 4,834 2,433 Oil and Gas revenue 3,805 2,148 12,297 6,918 Cash flow provided by operating activities 1,563 (67) 3,803 (1,284) Additions to property, plant & equipment 8,607 4,722 25,918 11,868 Advance to and investments in affiliates 695 - 1,278 - Issue of Equity Investments - 4,506 41,083 4,506 Proceeds from Long-term debt - 1,480 - 28,996 Repayment of Long-term debt 1,343 478 4,678 478 Repayment of Subordinated debt - 416 2,749 2,028 Statistics: Average natural gas production (mcf/d) 2,456 2,133 2,319 2,040 Average NGL production (Boepd) 485 375 466 477 Average Oil production (Bopd) 220 208 245 164 Average production (Boepd) 1,114 939 1,098 981 Average natural gas price ($/mcf) $4.26 $3.00 $3.87 $2.88 Average NGL price ($/bbl) $36.48 $22.29 $30.95 $25.68 Average oil price ($/bbl) $76.60 $48.34 $73.41 $65.35 Average price per barrel $40.43 $26.40 $37.67 $29.37 Royalties per barrel 8.38 5.33 7.18 6.22 Operating expenses per barrel 10.92 8.80 10.52 8.15 Netback per barrel $21.13 $12.27 $19.97 $15.00
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, 2010 and the related management's discussion and
analysis thereof, copies of which are available under the Company's profile
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-GAAP 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-GAAP measures referred to
above do not have any standardized meaning prescribed by GAAP 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 expected closing of the
second tranche of the private placement and timing thereof, expectations that
the funds from the private placement will be sufficient to fund the Company's
planned exploration expenditures in Europe, and work plans and timing of same
in the United States and Europe. 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 conditions
to closing of the second tranche of the private placement will be fulfilled
that costs of planned exploration activities in Europe will be as currently
anticipated and that the Company will not need to use the funds for other
purposes, that the capital, equipment and approvals required to conduct the
proposed work will be available when required. Forward looking information is
subject to a variety of risks and uncertainties and other factors that could
cause plans, estimates 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 respecting the private
placement to change or to be inaccurate include, but are not limited to, the
risk that regulatory approval of the private placement will be delayed or not
obtained, that the Company could experience a material adverse effect, that
the costs of equipment and labor are higher than budgeted, that unexpected
events and contingencies could occur that require a diversion of funds to
other purposes, that the required capital, equipment, regulatory and third
party approvals are not available when required or at all.
About BNK Petroleum Inc.
BNK Petroleum Inc. is a U.S. based 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 and Germany. 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, contact: Wolf E. Regener, President and Chief Executive Officer +1-805-484-3613 Email: email@example.com Website: www.bnkpetroleum.com
For further information, contact: Wolf E. Regener, President and Chief Executive Officer, +1(805)484-3613, Email: investorrelations at bnkpetroleum.com
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