BNK Petroleum Inc. Announces 3rd Quarter 2016 Results

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PR Newswire

CAMARILLO, California, Nov. 9, 2016

CAMARILLO, California, Nov. 9, 2016 /PRNewswire/ --

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

THIRD QUARTER HIGHLIGHTS:

In October 2016, the Company completed an equity offering under which it issued 70,000,000 shares at a price of C$0.20 per share for gross proceeds of C$14,000,000. The Company intends to use proceeds from this offering to fund a drilling program with an expected start date in early December for the further development of its Tishomingo Field, located in Oklahoma
Operating cash flow from continuing operations was $2.0 million for the third quarter of 2016 compared to $2.6 million in the third quarter of 2015
Average netbacks were $18.58 per BOE for the quarter, a decrease of 3% compared to the third quarter of 2015. If the realized gains from the commodity contracts are included, the average netbacks for the quarter increased by almost $10/barrel to $28.24 per BOE as more than 75% of the Company's oil production was hedged at $64.82. The Company has a comparable percentage of oil hedged at $64.88 for the fourth quarter of 2016 and $61.93 for 2017 based on its forecasted existing production
Revenue, net of royalties was $2.3 million for the third quarter of 2016 compared to $3.5 million in the third quarter of 2015 due to lower production
Average production was 1,024 barrels of oil equivalent per day (BOEPD) for the third quarter of 2016, a decrease of 34% compared to the third quarter 2015 production of 1,554 BOEPD due to the completion of the Nickel Hill 36-3H well and the remaining portion of the Emery 17-1H well in mid-2015
During the third quarter, the Company made additional paydowns totaling $2.1 million on its credit facility to reduce the outstanding balance to $20.5 million. The Company has $3.9 million available to borrow on the credit facility as the existing lenders reaffirmed the Company's available borrowing capacity at $24.4 million subsequent to the end of the third quarter
General & administrative expenses decreased by a further 6% in the third quarter of 2016 compared to the third quarter of 2015 due to the Company's ongoing cost cutting efforts
Net loss was $0.8 million for the third quarter of 2016 compared to a net income of $4.2 million in the third quarter of 2015. The third quarter of 2015 included an unrealized gain on commodity hedges totaling $4.3 million
Cash and working capital totaled $1.7 million and $3.7 million respectively at September 30, 2016

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

"With the recently announced completion of our equity offering, we are moving ahead with a drilling program to further develop our Tishomingo Field in Oklahoma. We are in negotiations with drilling rig contractors and plan to begin drilling the first location, the Chandler 8-6H well in which we have a 99.9% working interest, in early December. The Chandler 8-6H well and subsequent locations in the planned drilling program are in comparable geographic areas to some of our best performing wells and we expect the wells to significantly increase our cash flow as well as prove up additional reserves.

"We continue to generate positive cash flow due to our cost cutting efforts and the impact of our hedging program. The Company generated over $2.0 million of operating cash flows from our continuing operations in the third quarter of 2016, even though our production was down 34% from the prior year quarter. In the first nine months of 2016 we have generated $5.6 million of positive cash flow from continuing operations.

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"The Company's hedging program continued to increase our realized prices above current market levels for a significant portion of our production. The Company's commodity contract hedges generated $0.9 million in realized gains during the third quarter of 2016 as more than 75% of our oil production was hedged at $64.82. We have a comparable percentage of oil hedged at $64.88 for the fourth quarter of 2016 and $61.93 for 2017 based on our forecasted existing production.

"In order to reduce our interest expense, we have been using our positive operating cash flow to make paydowns totaling $3.9 million on our credit facility during 2016. Our current outstanding balance on the credit facility is now $20.5 million. As announced last week, our existing lenders reaffirmed our credit facility at its current outstanding borrowing base of $24.4 million, so the Company has $3.9 million available to borrow in addition to the net proceeds from the equity offering and operating cash flow.

"Our third quarter production decreased to 1,024 BOEPD, a decrease of 34% compared to the prior year third quarter, due to the fracture stimulation of the previously drilled Nickel Hill 36-3H well and the remaining stages in the Emery 17-1H well in mid-2015.

"The Company recorded net loss of $0.8 million in the third quarter of 2016 compared to a net income of $4.2 million in the third quarter of 2015. The third quarter of 2015 included an unrealized gain on commodity hedges totaling $4.3 million compared to an unrealized loss of $0.4 million in the third quarter of 2016.

"Average netbacks were $18.58 per BOE for the quarter, a decrease of 3% compared to the third quarter of 2015. If the realized gains from the commodity contracts are included, the average netbacks for the quarter increase to $28.24 per BOE in the third quarter of 2016.

	Third Quarter			First Nine Months
	2016	2015	%	2016	2015	%

Net Income (Loss):
$ Thousands	$(843)	$4,197	-	$(7,403)	$(221)	(3,250%)
$ per common share	$(0.01)	$0.03	-	$(0.05)	$(0.00)	-
assuming dilution

Capital Expenditures	$209	$684	(69%)	$746	$9,109	(92%)

Average Production (boepd)	1,024	1,554	(34%)	1,174	1,432	(18%)
Average Price per Barrel	$31.84	$31.65	1%	$27.44	$35.75	(23%)
Average Netback per Barrel	$18.58	$19.24	(3%)	$15.97	$22.37	(29%)
Average Price per Barrel including Commodity Contracts	$41.50	$40.91	1%	$38.47	$43.09	(11%)
Average Netback per Barrel including Commodity Contracts	$28.24	$28.50	(1%)	$27.00	$29.71	(9%)

	September 2016		June 2016		December 2015

Cash and Cash Equivalents	$1,677		$2,442		$1,666
Working Capital	$3,748		$5,278		7,298

Third Quarter 2016 versus Third Quarter 2015

Oil and gas gross revenues totaled $3,001,000 in the third quarter 2016 versus $4,526,000 in the third quarter of 2015. Oil revenues were $2,459,000 in the third quarter 2016 versus $3,693,000 in the third quarter of 2015, a decrease of 33% as average oil production decreased by 31%. Natural gas revenues decreased $196,000 or 47%, as natural gas production decreased 44% compared to the third quarter of 2015. Natural Gas Liquid (NGL) revenue decreased $95,000 or 23% to $317,000 as average production decreased 35% which was partially offset by an average NGL price increase of 18%.

Production and operating expenses decreased $147,000 between quarters. These costs declined from the prior year quarter due to lower production volumes.

Depletion and depreciation expense decreased $998,000 between quarters due to decreased production.

General and administrative expenses decreased $53,000 between quarters due to the Company's cost cutting efforts which resulted in lower salary and benefits, professional fees and travel costs.

Finance income decreased $4,711,000 due to an unrealized gain on financial commodity contracts in 2015 of $4,286,000. Finance expense increased $318,000 primarily due to an unrealized loss on financial commodity contracts in 2016 of $445,000 offset by lower interest expense.

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