BNK Petroleum Inc. Announces 3rd Quarter 2012 results
CALGARY, Nov. 12, 2012 /PRNewswire/ – All amounts are in U.S. Dollars unless
Third Quarter First Nine Months 2012 2011 % 2012 2011 % Earnings (Loss): $ Thousands $(4,260) $(274) L $(10,410) $18 L $ per common $(0.03) $0.00 L $(0.07) $0.00 L share assuming dilution Capital $12,746 $11,436 11% $36,104 $23,180 56% Expenditures Average 1,547 1,868 (17%) 1,547 1,503 3% Production (Boepd) Average Product Price per Barrel $34.11 $46.81 (27%) $35.01 $46.79 (25%) Average Netback $17.77 $28.27 (37%) $17.71 $27.56 (36%) per Barrel 9/30/2012 12/31/2011 9/30/2011 Cash and Cash $10,285 $40,496 $41,957 Equivalents Working Capital $7,904 $39,697 $46,154
BNK’s President and Chief Executive Officer, Wolf Regener commented:
“Third Quarter results reflect our continued investment in Poland as we
seek to discover new large shale gas reserves in that country as well
as continued investment in our Oklahoma assets. In Poland we believe
we are much closer to proving that shale gas will work in Europe with
our Gapowo B-1 well results. We are looking forward to obtaining the
approvals needed to drill the lateral to test the overpressured, high
gas show intervals that we encountered. In the United States our
production from the Woodford shale has begun increasing once again and
we look forward to further evaluation of the mainly oil producing
Caney/Sycamore lime interval in the same field. The Caney/Sycamore
lime could add substantial reserves and it should generate much higher
net backs since it is anticipated to be mainly oil, based on our early
In the third quarter the Company incurred a loss of $4.3 million versus
a loss of $.3 million in the third quarter of 2011. For the first nine
months of 2012 the Company incurred a loss of $10.4 million versus a
profit of $18,000 earned in the first nine months of 2011. In the
third quarter oil and gas revenues before royalties were up $549,000
over 2(nd) quarter 2012, but declined $3.2 million in comparison to the third
quarter 2011, due to a lower average natural gas prices and NGL prices
coupled with reduced average total daily production. Other income in
the third quarter declined $1.1 million due to lower management fee
For the comparative nine month periods oil and gas revenues before
royalties declined $4.4 million due to lower natural gas and NGL
prices. Other income in the comparative nine month period declined
$2.5 million due to a sale of seismic data in 2011 and lower management
fee income. Expenses increased $3.6 million between the comparative
nine month periods due to higher general and administrative expenses
resulting from the Company’s expanding European operations.
Capital expenditures were $12.7 million in the quarter and $36.1 million
through the first nine months of 2012 as we continue to explore for
large shale gas reserves in Poland through our 100% owned Indiana
Investments Sp z o. o. subsidiary (“Indiana”) and further develop our
Tishomingo assets both in operated and non-operated wells primarily
operated by XTO Energy.
As recently announced we remain very encouraged with the data we have
obtained from analyzing the core samples obtained from the Gapowo B-1
well in Poland. The data validates our geologic model of increasing
thickness and organic content over the target interval and are
consistent with analyses indicating over pressured permeable shales.
We await approval to drill a lateral out of the Gapowo B-1 wellbore.
The Company’s ongoing analysis in Germany has determined that a number
of the targets that the Company is pursuing have a higher risk profile
due to new data gathered. The Company will be deciding whether to
continue pursuing a number of these projects in the coming months.
We are excited about the results of our testing of the Company operated
horizontal Barnes 6-2H well targeting the Lower Caney and Upper
Sycamore formations in Oklahoma. After fracture stimulation we are
seeing production in the range of 170 to 250 barrels of equivalent oil
per day with 80% of that production being crude oil after flowing back
only 32% of the fracture stimulation fluid. Accordingly we expect to
see higher production as flow back increases. Testing of the Sycamore
and two lower zones of the Caney formation will confirm the production
rates of each zone and the data obtained will be used to position
future horizontal wells to maximize production rates.
We are exploring several options to secure new sources of working
capital. These include up front cash proceeds obtained from a possible
farm-out arrangement relating to certain of our European concessions, a
potential increase in the borrowing base against our Oklahoma assets as
well as potential proceeds from selling additional equity in the
Company. We are confident that the combination of cash on hand, cash
from operations and these potential new sources of working capital if
successfully completed will be sufficient to meet the cash needs of the
Company for the foreseeable future.
THIRD QUARTER HIGHLIGHTS:
-- Capital Expenditures increased 11% in the quarter to $12.7 million of which $7.1 million was spent in Poland relating to our Indiana concession and $5.0 million was spent in Oklahoma primarily to develop the Caney formation -- The Polish Ministry of Environment provided positive Environmental Decisions allowing the Company to drill slightly deeper at both the Miszewo T-1 and Gapowo B-1 wells -- The Company-operated Barnes 6-2H well in Oklahoma targeting the Lower Caney and Upper Sycamore formations (Mississippi Lime Equivalent) was fracture stimulated in 13 stages over an approximate 4,300 lateral -- Cash used from operating activities before changes in working capital and long-term receivables was a negative $234,000 in the quarter -- Loss of $4.3 million versus a loss of $.3 million in the third quarter of 2011 due to lower oil and gas revenues of $2.6 million and lower other income of $1.1 million -- Cash and working capital totaled $10.3 million and $7.9 million respectively at September 30, 2012
Third Quarter 2012 to Third Quarter 2011
Oil and gas revenues before royalties declined 40% or $3,191,000 in the
quarter to $4,855,000. Oil revenues were $2,170,000 in the quarter
versus $3,396,000 in the third quarter of 2011 or a decline of 36% as
average oil production in the comparative quarters declined 39% due to
normal declines from existing wells and not many new wells being
drilled in 2012. Average crude oil prices increased 5% between
quarters to an average of $90.03 a barrel. Natural gas revenues
declined 48% to $902,000 as natural gas prices declined 37% between
quarters while natural gas production declined 16%. Natural Gas
Liquids (NGLs) revenue declined 39% to $1,783,000 as average NGL prices
declined 37% while NGL production between quarters declined 4%.
Other income declined $1,163,000 between quarters due to lower
management fees relating to its role as Manager of Saponis Investments
Sp z o.o. (“Saponis”).
Exploration and evaluation expenses declined $209,000 as more
pre-concession costs were incurred in the third quarter of 2011.
Production and operating expenses declined 16% commensurate with the
17% decline in average daily production between quarters.
General and administrative expenses increased 21% or $677,000 to
$3,940,000 primarily due to higher payroll and associated costs of
$431,000 and higher professional fees.
Stock Based Compensation expense declined $295,000 to $210,000 due to
fewer stock options being granted. Legal restructuring expenses
declined $435,000 to $135,000 as the legal restructuring of the
Company’s European operations is nearing completion.
Finance Income declined $1,736,000 to $490,000 as 2011 results included
a $1,797,000 unrealized gain on financial commodity contracts. Finance
Expense declined $1,028,000 between quarters to $1,781,000 primarily
due to lower foreign currency losses between quarters of $2,272,000
partially offset by an unrealized loss in the third quarter of 2012 of
$1,091,000 on financial commodity contracts.
Cash declined $7,026,000 in the past three months due to $12,746,000 in
capital expenditures, a loss net of non-cash charges in the third
quarter of $441,000 offset by increased borrowings of $4,200,000 plus
changes in working capital. The Company estimates that it incurred
$5,700,000 in additions to Exploration and Evaluation Assets as a
direct result of the requirement to obtain a positive Environmental
Decision from the Polish Ministry of Environment to drill slightly
deeper than allowed in the original concession applications.
Exploration and evaluation assets increased $8,247,000 in the quarter
primarily relating to drilling and seismic costs pertaining to the
Company’s Indiana concession.
Trade and other payables increased $3,628,000 primarily resulting from
costs incurred in Poland while loans and borrowings increased
$4,261,000 due to increased borrowings of $4,200,000 in the quarter and
amortization of debt issue costs.
FIRST NINE MONTHS 2012 VERSUS FIRST NINE MONTHS 2011 HIGHLIGHTS:
-- Capital expenditures increased 56% or $12.9 million to $36.1 million of which $26.2 million relates to capital expenditures incurred at our Indiana concession, $8.6 million incurred in Oklahoma and $1.3 million in the rest of Europe -- Average production increased 3% to 1,547 barrels a day -- Average product prices declined 25% -- A net loss of $10.4 million was incurred versus a profit of $18,000 in 2011 primarily due to lower oil and gas revenues of $4.4 million, higher general and administrative expenses of $4.8 million and lower finance income of $.9 million
First Nine Months 2012 to First Nine Months 2011:
Oil and natural gas revenues before royalties declined 23% or $4,355,000
to $14,844,000. Oil revenues decreased 12% or $888,000 to $6,703,000
due to a 15% reduction in production as natural declines set in from
higher activity levels in 2011 than 2012. Average crude oil prices
increased 3% to $93.63 a barrel. Natural gas revenues declined 36% or
$1,480,000 to $2,592,000 due to a 41% decline in average natural gas
prices to $2.43 an mcf. Through nine months natural gas production has
increased 8%. NGL revenues declined 26% or $1,989,000 to $5,547,000
due to average NGL prices declining 31%. NGL production has increased
7% between periods.
Other income declined $2,479,000 to $735,000 due to the sale of seismic
data in 2011 and lower management fees.
Exploration and evaluation expenses declined $1,283,000 to $310,000 due
to the write-off of the investment in Black Warrior of $1,091,000 in
2011 and higher pre-concession costs last year.
Production and operating expenses increased 6% or $258,000 to $4,549,000
as average production increased 3% and current year operating expenses
include $390,000 in workover expenses partially offset by the rebate of
production taxes in Oklahoma.
Depletion and depreciation expense increased 21% or $906,000 to
$5,205,000 primarily due to increased production applied on a higher
General and administrative expenses increased $4,775,000 or 66% to
$12,064,000 due to increased payroll and related costs of $2,173,000
and increased professional fees (legal, accounting, trust services,
public relations and consulting) primarily related to our European
operations of $2,202,000 and higher rent and office costs of $217,000.
Stock based compensation declined $1,110,000 or 62% to $685,000 due to
fewer stock options being issued.
Finance income declined $864,000 to $1,260,000 primarily due to lower
net gains on financial commodity contracts of $985,000. Finance
expense declined $324,000 primarily due to reduced foreign exchange
losses between periods of $675,000.
Cash has declined $30,211,000 since yearend 2011 primarily due to
capital expenditures of $36,104,000, losses less non-cash charges of
$4,107,000 net of $8,200,000 in new borrowing plus changes in working
BNK PETROLEUM INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited, Expressed in Thousands of United States Dollars) September December 30, 31, 2012 2011 Current assets Cash and cash equivalents $ 10,285 $ 40,496 Trade and other receivables 14,583 11,509 Deposits and prepaid expenses 2,697 2,309 Fair value of commodity 817 738 contracts 28,382 55,052 Non-current assets Long-term receivables 1,511 1,928 Fair value of commodity 126 311 contracts Property, plant and equipment 154,107 150,313 Exploration and evaluation 42,860 14,911 assets 198,604 167,463 Total assets $ 226,986 $ 222,515 Current liabilities Trade and other payables $ 20,478 $ 15,355 Non-current liabilities Loans and borrowings 31,736 23,353 Asset retirement obligations 1,826 1,769 Warrants 16 262 33,578 25,384 Equity Share capital 247,326 247,207 Contributed surplus 16,220 14,775 Deficit (90,616) (80,206) Total equity 172,930 181,776 Total equity and liabilities $ 226,986 $ 222,515
BNK PETROLEUM INC. CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited, expressed in Thousands of United States dollars, except per share amounts) Third Quarter First Nine Months 2012 2011 2012 2011 Oil and $ 3,946 $ 6,537 $ 12,061 $ 15,599 natural gas revenue, net of royalties Gathering 330 404 1,064 1,354 income Other income 260 1,423 735 3,214 4,536 8,364 13,860 20,167 Exploration 49 258 310 1,593 and evaluation expenditures Production and 1,414 1,678 4,549 4,291 operating expenses Depletion and 1,757 1,781 5,205 4,299 depreciation General and 3,940 3,263 12,064 7,289 administrative expenses Stock based 210 505 685 1,795 compensation Legal 135 570 1,015 980 restructuring expenses 7,505 8,055 23,828 20,247 Finance income 490 1,260 2,124 2,226 Finance (1,781) (1,702) (2,026) expense (2,809) Net income $ (4,260) $ (274) $ (10,410) $ 18 (loss) and comprehensive income (loss) Net income (loss) per share Basic and $ (0.03) $ 0.00 $ (0.07) $ (0.00) Diluted
BNK Petroleum Inc. Third Quarter 2012 ($000 except as noted) 3rd Quarter First Nine Months 2012 2011 2012 2011 Oil revenue $ 2,170 3,396 6,703 7,591 before royalties Gas revenue 902 1,720 2,592 4,072 before royalties NGL revenue 1,783 2,930 5,547 7,536 before royalties Oil and Gas 4,855 8,046 14,842 19,199 revenue Cash Flow provided (1,799) 1,270 (10,495) 374 (used) by operating activities Capital (12,746) (11,436) (36,104) (23,180) Expenditures Proceeds from Loans 4,200 0 8,200 0 and Borrowings Cash Proceeds of 0 192 63 621 Stock Options and Warrants
Statistics: 3rd Quarter First Nine Months 2012 2011 2012 2011 Average natural gas production 4,564 3,894 3,598 (mcf/d) 3,816 Average NGL production (Boepd) 675 637 597 649 Average Oil production (Bopd) 432 261 306 262 Average production (Boepd) 1,868 1,547 1,503 1,547 Average natural gas price ($/mcf) $4.10 $2.43 $4.15 $2.57 Average NGL price ($/bbl) $47.15 31.80 $46.25 29.85 Average oil price ($/bbl) $85.46 93.63 $90.74 90.03 Average price per barrel $46.81 $35.01 $46.79 $34.11 Royalties per barrel 8.78 6.57 8.77 6.40 Operating expenses per 9.76 10.73 10.46 barrel 9.94 Netback per barrel $28.27 $17.71 $27.56 $17.77
The information outlined above is extracted from and should be read in
conjunction with the Company’s unaudited financial statements for the
three 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.
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 including the potential
for oil production from the Lower Caney and upper Sycamore formations
on the Company’s Oklahoma acreage and possible impact of that on the
Company’s netbacks and resources base, anticipated timing of
commencement of drilling, well-deepening, fracture-stimulations, 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 the
Company’s geologic models will be validated, that previous exploration
results are indicative of future results and success, that discoveries
will prove to be economic, 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.
SOURCE BNK Petroleum Inc.