BNK Petroleum Inc. Announces First Quarter 2018 Results

CAMARILLO, CA, May 9, 2018

TSX ticker symbol; BKX
OTCQX ticker symbol; BNKPF

CAMARILLO, CA, May 9, 2018 /PRNewswire/ -

FIRST QUARTER HIGHLIGHTS

• During the first quarter of 2018, the Company commenced its 2018 development drilling program by drilling two wells, the Glenn 16-2H well and the WLC 14-1H well (both 100% working interest)
• The Glenn 16-2H well, which started production in late March, had a 30-day initial production (IP) rate of 630 boepd, of which 540 barrels was oil. This is 45% higher than the Company's next highest well's oil production at the 30 day mark
• Average production for the first quarter of 2018 was 1,464 BOEPD, an increase of 94% compared to first quarter 2017 average production of 753 BOEPD. The increase was primarily due to the addition of three producing wells in 2017 and the Glenn 16-2H well in 2018
• Average production for the month of April 2018, which included a full month of production from the Glenn 16-2H well, was 1,833 BOE
• Funds from operations was $2.2 million in the first quarter 2018 compared to $0.9 million in the first quarter of 2017. The increase was mainly due to a 94% increase in production combined with a 25% increase in oil prices partially offset by realized losses from commodity contracts in the first quarter of 2018
• Net loss for the first quarter of 2018 was approximately $0.5 million compared to a net income of $1.0 million for the first quarter of 2017 due to unrealized losses of $0.8 million from hedged commodity contracts in the first quarter of 2018 compared to an unrealized gain of $1.5 in first quarter 2017
• Revenue, net of royalties was $4.9 million in the first quarter of 2018 compared to $2.2 million for first quarter of 2017, an increase of 127%, as production increased by 94% and average prices increased 16% between the quarters
• Average netback per barrel for the first quarter of 2018 was $29.95, an increase of 16% from the prior year first quarter due to the higher prices in 2018. The Company received prior period adjustments for its natural gas volumes sold and processing costs related to prior years. Excluding the impact of these prior period adjustments, the netbacks for the first quarter of 2018 were $31.69 per BOE, an increase of 23% from the prior year first quarter
• At March 31, 2018, cash totaled $1.0 million and the Company had $3.0 million in available borrowing capacity on its credit facility. The Company's working capital was $(5.1) million and the Company's 90-Day working capital, which includes borrowings under its credit facility expected in the next 90 days and the fair value of the liability under its commodity contracts that are payable within 90 days, was $(0.9) million

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

"We are excited to have kicked off our 2018 development drilling program with the excellent results of the Glenn 16-2H well, which started producing in late March.  As previously disclosed, the 30-day initial production (IP) rate of the Glenn well was 630 boepd, including 540 barrels of oil, which is 45% higher than the 30-day oil IP rate from any of our past wells.  The Glenn 16-2H well was the first to utilize our latest generation frack design which our technical team believes was the main driver of these impressive results. Our April production, which included a full month of the Glenn 16-2H well, was 1,833 BOE per day. 

We just completed the fracture stimulation of the WLC 14-2H well, using the same frack design as was used on the Glenn 16-2H well, and we expect to release the preliminary flow results from the well later this month.  Once again, I am proud that our team has safely executed both the drilling and fracture stimulation of this well on time and we are expecting the total cost for the well to again come in below our estimated $5.7 million budget.  Since this well is outside of the acreage that was evaluated by our reserve engineers at the end of 2017, a successful production rate from the WLC 14-2H well should prove up significant reserves in future reserve reports.  We are currently in the planning stage of selecting the next locations to be drilled in our 2018 development drilling program which we are planning to start in the third quarter.