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BNK Petroleum Inc. Announces Third Quarter 2017 Results

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CAMARILLO, CA, Nov. 9, 2017 /CNW/ - All amounts are in U.S. Dollars unless otherwise indicated:

BNK Petroleum Inc. Announces Third Quarter 2017 Results (CNW Group/BNK Petroleum Inc.)

THIRD QUARTER HIGHLIGHTS:

  • Average production was 1,097 barrels of oil equivalent per day (BOEPD) for the third quarter of 2017, an increase of 7% compared to the third quarter 2016 production of 1,024 BOEPD due to the production of one month from the Hartgraves 1-6H well.  The Brock 9-2H well was fracture stimulated in September and started producing in October 2017.  Average production for the month of October was over 1,700 BOEPD
  • Funds from continuing operations was $1.7 million for the third quarter of 2017 compared to $1.4 million in the third quarter of 2016
  • Average netbacks were $22.88 per BOE for the quarter, an increase of 23% compared to the third quarter of 2016. If the realized gains from the commodity contracts are included, the average netbacks for the quarter increased by almost $4/barrel to $26.76 per BOE as about 70% of the Company's oil production was hedged. The Company has a comparable amount of volumes hedged in the fourth quarter at $57.10
  • Revenue, net of royalties was $2.9 million for the third quarter of 2017 compared to $2.3 million in the third quarter of 2016 due to higher production
  • General & administrative expenses decreased by a further 9% in the third quarter of 2017 compared to the third quarter of 2016 due to the Company's ongoing cost cutting efforts
  • Net loss was $1.3 million for the third quarter of 2017 compared to a net loss of $0.8 million in the third quarter of 2016.  The third quarter 2017 net loss was attributable to a $1.3 million unrealized losses on commodity contracts.
  • At September 30, 2017, cash totaled $3.0 million and we had $1.0 million of unused borrowing capacity on our credit facility with BOK Financial. In November 2017, we borrowed the $1.0 million of unused capacity for the completion of the Brock 9-2H well.
  • The 30 day initial production (IP) rate from the Brock 9-2H well was 515 BOEPD, with 86% being oil.

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

"We are excited about the recent outstanding results from the two wells that were fracture stimulated in the third quarter as part of our 2017 drilling program.  The Hartgraves 1-6H well, which came into production in September and the Brock 9-2H well, which started producing after the end of the quarter have significantly increased our production volumes.  Our average production for the month of October was over 1,700 BOEPD.  The 30-day initial production rate of the Brock well is greater than the initial possible type curve rate.  We are very pleased with the results of our 2017 drilling program and we expect to provide more information about our additional drilling plans in the coming weeks.

"We generated funds from continuing operations of $1.7 million in the third quarter and we expect that to increase in the fourth quarter when production from both the Hartgraves 1-6H well and Brock 9-2H well are fully reflected in the quarter.  In the first nine months of 2017, we generated $3.7 million of funds from continuing operations.

"Our third quarter production increased to 1,097 BOEPD, an increase of 7% compared to the prior year third quarter, due to the one month of production from the Hartgraves 1-6H well.   

"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 $0.4 million in realized gains during the third quarter of 2017 as more than 70% of our oil production was hedged.  We have a comparable amount of hedged volumes in place for the fourth quarter at an average price of $57.10.

"Average netbacks were $22.88 per BOE for the quarter, an increase of 23% compared to the third quarter of 2016.  If the realized gains from the commodity contracts are included, the average netbacks for the quarter increase to $26.76 per BOE in the third quarter of 2017.

"The Company has continued to succeed in additional cost cutting efforts that started in 2015.  In the third quarter of 2017, a reduction of general and administrative expense of 9% was achieved over the third quarter of 2016.

"The Company recorded a net loss of $1.3 million in the third quarter of 2017, due to $1.3 million of unrealized losses on commodity contracts, compared to a net loss of $0.8 million in the third quarter of 2016.  

                                                                                                                        



Third Quarter


First Nine Months




2017

2016

%

2017

2016

%









Net Income (Loss):







$ Thousands

$(1,333)

$(843)

-

$(293)

$(7,403)

-

$ per common share

$(0.01)

$(0.01)

-

$(0.00)

$(0.05)

-

assuming dilution







Funds from continuing operations

$1,662

$1,442

15%

$3,688

$4,415

(16%)









Capital Expenditures

$7,485

$209

3,481%

$18,969

$746

2,443%









Average Production (boepd)

1,097

1,024

7%

942

1,174

(20%)

Average Price per Barrel

$37.05

$31.84

16%

$37.87

$27.44

38%

Average Netback per Barrel

$22.88

$18.58

23%

$23.09

$15.97

45%

Average Price per Barrel including Commodity Contracts

$40.93

$41.50

(1%)

$43.57

$38.47

13%

Average Netback per Barrel including Commodity Contracts

$26.76

$28.24

(5%)

$28.79

$27.00

7%











September

2017


June

2017


December

2016










Cash and Cash Equivalents

$3,065


$830


$11,101


Working Capital

($2,477)


$1,478


$10,640


 

Third Quarter 2017 versus Third Quarter 2016

Oil and gas gross revenues totaled $3,739,000 in the third quarter 2017 versus $3,000,000 in the third quarter of 2016.  Oil revenues were $3,063,000 in the third quarter 2017 versus $2,459,000 in the third quarter of 2016, an increase of 25% as average oil production increased by 14% and oil prices increased by 9%.  Natural gas revenues increased $33,000 or 15%, as natural gas prices increased 13% compared to the third quarter of 2016.  Natural Gas Liquid (NGL) revenue increased $102,000 or 32% to $419,000 as average NGL prices increased by 45% partially offset by production decreases of 9%.

Production and operating expenses increased $19,000 between quarters.   These costs increased from the prior year quarter due to higher production volumes.  Production and operating expenses averaged $5.84 per BOE for the third quarter of 2017 compared to $6.05 per BOE for the same period in 2016, a decrease of 3%.

Depletion and depreciation expense increased $122,000 between quarters due to increased production.

General and administrative expenses decreased $80,000 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 $519,000 due to a realized gain on financial commodity contracts in 2016 of $909,000 compared to $392,000 in 2017.  Finance expense increased $700,000 primarily due to an unrealized loss on financial commodity contracts in 2017 of $1,269,000 compared to $445,000 in 2016, partially offset by lower interest expense.

FIRST NINE MONTHS 2017 HIGHLIGHTS

  • Average production was 942 BOEPD for the first nine months of 2017, a decrease of 20% compared to the first nine months of 2016 production.  The decrease was primarily due to three wells that were shut-in for all of the first quarter and part of the second quarter of 2017, as a result of offset fracture stimulation operations on 19 wells by another operator in the Woodford formation beneath the Caney, which continued their recovery to normal production in the third quarter, and also due to the normal production decline.  This decline was partially offset by production from the Chandler 8-6H well which come into production in March 2017 and the Hartgraves 1-6H well which started producing in September 2017.
  • Funds from continuing operations was $3.7 million for the first nine months of 2017 compared to $4.4 million in the first nine months of 2016
  • Average netbacks were $23.09 per BOE for the first nine months of 2017, an increase of 45% compared to the first nine months of 2016 due to higher prices in 2017. If the realized gains from the commodity contracts are included, the average netbacks for the first nine months increase by more than $5/barrel to $28.79 per BOE
  • General & administrative expenses decreased by 6% for the first nine months of 2017 compared to the first nine months of 2016 due to the Company's continued cost cutting efforts
  • Revenue, net of royalties was $7.6 million for the first nine months of 2017 compared to $6.8 million in the first nine months of 2016 due to higher prices partially offset by lower production in 2017 compared to the comparable period in 2016
  • Net loss was $293,000 for the first nine months of 2017 compared to net loss of $7.4 million in first nine months of 2016.  The first nine months of 2016 included an unrealized loss on commodity contracts of $6.0 million.
  • At September 30, 2017, cash totaled $3.0 million and we had $1.0 million of unused borrowing capacity on our credit facility with BOK Financial. In November 2017, we borrowed the $1.0 million of unused capacity.

First Nine Months of 2017 versus First Nine Months of 2016

Oil and gas gross revenues totaled $9,740,000 in the first nine months of 2017 versus $8,826,000 in the first nine months of 2016.  Oil revenues were $8,142,000 in the first nine months of 2017 versus $7,098,000 in the first nine months of 2016, an increase of 15% as average oil prices increased 24% or $8.94 a barrel for the period, offset by a decrease in production of 7%.  Natural gas revenues decreased $108,000 or 16%, in the first nine months of 2017 as natural gas production decreased 39% offset by an average natural gas price increase of 39% compared to the first nine months of 2016.  NGL revenue decreased $22,000, or 2%, due to a decrease in NGL production of 37% which was partially offset by an average NGL price increase of 56% in the first nine months of 2017. 

Production and operating expenses decreased $83,000 or 5% for the first nine months of 2017 compared to the prior year first nine months due to a decrease in total production.

Depletion and depreciation expense decreased $778,000 due to decreased production.

General and administrative expenses decreased $177,000, or 6%, due to the Company's cost cutting efforts which resulted in lower salary and benefits, professional fees and travel costs.

Finance income decreased $1,184,000 due to a realized gain on financial commodity contracts in 2016 of $3,550,000 compared to $1,465,000 in 2017.  Finance expense decreased $6,018,000 due to an unrealized loss on financial commodity contracts in 2016 of $5,965,000.

BNK PETROLEUM INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited, Expressed in Thousands of United States Dollars)





September 30,


December 31,




2017


2016

Current assets







Cash and cash equivalents


$

3,065

$

11,101


Trade and other receivables



1,805


1,163


Deposits and prepaid expenses



626


614


Fair value of commodity contracts



381


650




5,877


13,528







Non-current assets







Property, plant and equipment



148,751


133,476




148,751


133,476







Total assets


$

154,628

$

147,004







Current liabilities







Trade and other payables


$

8,354

$

2,888




8,354

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