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BNK Petroleum Inc. Announces 2nd Quarter 2011 Results
Camarillo, California (ots/PRNewswire) - All amounts are in U.S. Dollars unless otherwise indicated:
Second Quarter First Half 2011 2010 % 2011 2010 % Earnings (Loss): $ Thousands $407 ($2,720) P $292 ($2,431) P $ per common share assuming dilution - ($0.03) P $0.00 ($0.02) P Capital Expenditures $7,434 $14,594 (49)% $11,744 $15,917 (26)% Average Production (Boepd) 1,308 1,162 13% 1,318 1,124 17% Average Product Price per Barrel $47.92 $36.46 31% $46.76 $41.74 12% Average Netback per Barrel $27.92 $18.40 52% $27.04 $21.68 25% 6/30/2011 12/31/2010 6/30/2010 Cash and Cash Equivalents $56,353 $62,062 $20,102 Working Capital $56,419 $63,503 ($8,706)
BNK's President and Chief Executive Officer, Wolf Regener commented:
"BNK earned a net profit of $407,000 in the second quarter of 2011 on a 53% increase in oil and gas revenues net of royalties. Other income in the quarter was $2.2 million versus $.4 million in the second quarter of 2010 which resulted from the sale of seismic data in Oklahoma for $1.2 million, $.6 million in estimated management fee income and $.4 million in gathering revenue.
The increase in oil and gas revenues resulted from the combination of a 31% increase in average product prices in the quarter coupled with a 13% increase in average daily production. Average net-backs per barrel (per barrel product prices less royalties and operating expenses) increased 52% in the quarter.
General and administrative expenses increased 93% or $1.8 million in the comparative quarters due to increases in re-organization fees of $ 370,000, higher stock based compensation expense of $325,000, increased European accounting management and consulting fees of $ 329,000 as well as increased travel costs of $204,000 and other smaller cost items.
Cash and working capital remained strong at June 30, 2011 totaling $56.4 million and $56.4 million respectively.
Through the first half of 2011 BNK earned net income of $292,000 versus a loss of $2.4 million in the first half of 2010. Oil and gas revenues increased $2.4 million or 36% aided by a 17% increase in average production per day and a 12% increase in average product prices.
The Company recently fracture stimulated two Woodford horizontal wells in Oklahoma one of which is still in the early stages of flowback. In addition the Company participated in a non-operated well which was recently fracture stimulated. Accordingly recent production increased to over 2,300 barrels a day and the Company is scheduling fracture stimulations on two more horizontal wells by the end of the year.
In Poland the Company as Manager for Saponis Investments Sp z o.o. finished drilling two wells (Wytowno S-1 and Lebork S-1) and spud a third well (Starogard S-1) last month with total depth on that well expected to be reached by the end of August 2011. Fracture stimulation work on the first two wells is scheduled for mid-September.
Based on the recent core analysis received from 3rd party contractors on the Wytowno S-1 and Lebork S-1 wells the Company is encouraged with the Lebork S-1 well looking particularly promising.
On its wholly owned Indiana concessions (Bytow, Trzebielino and Darlowo) operations must be commenced to drill three wells by September 2012 in order to continue to hold those concessions. The Company is in process of determining drilling locations for these wells and plans to begin shooting seismic data in the fourth quarter of 2011 which will help to further define basin structure.
In Germany the Company has opened an office in Hannover and plans to acquire seismic data on its six locations beginning in the fourth quarter of this year.
In other areas of Europe the Company awaits the potential grant of other concessions that it has applied for in addition to applying for other concessions throughout the world."
SECOND QUARTER 2011 VERSUS SECOND QUARTER 2010 HIGHLIGHTS:
- Oil and gas revenues net of royalties increased 53% - Average net-back per barrel increased 52% to $27.92 a barrel - Cash and working capital at June 30, 2011 totaled $56.4 million and $56.4 million respectively - Average daily production increased 13% to 1,308 boepd - Capital expenditures totaled $7.4 million of which $5.7 million was in Oklahoma, $1.4 million was in Poland and $.3 million was in Spain - Acquired a new concession in Spain totaling 61,470 acres - As manager of Saponis completed drilling two wells in Poland and prepared to spud a third well in July 2011
Second Quarter 2011 to Second Quarter 2010
Oil and gas revenues net of royalties totaled $4,634,000 in the second quarter versus $3,022,000 in the second quarter of 2010. Oil revenues increased $806,000 or 63% as oil production per day increased 22% to 230 boepd while average oil prices increased $24.85 a barrel or 33% to $99.54 a barrel. Natural gas liquids (NGL's) revenues increased $767,000 or 47% to $2,414,000 as NGL production increased 6% to 564 boepd while NGL prices increased 38% to $47.04 a barrel. Natural gas revenues increased $276,000 or 30% to $1,204,000 as average natural gas prices rose $.44 a barrel to $4.29 while natural gas production increased 434 metric cubic feet per day (mcf/d) to 3,083 or 16%.
Other income of $1,761,000 consisted of $1,176,000 from the sale of seismic data in Oklahoma and $585,000 for management fees.
Exploration and evaluation expenses totaled $692,000 in the quarter and relates to write-off of costs relating to Black Warrior in Alabama of $591,000 and other European costs of $101,000
Production and operating expenses increased $233,000 to $1,310,000 or 22% due to higher gathering and field maintenance expenses due to increased production of 13% and the timing of repair and maintenance costs
Depletion and depreciation expenses increased $417,000 or 46% to $1,329,000 due to increased production, a higher reserve base on which the reserve percentage is applied and increased depreciation
General and administrative expenses increased $1,787,000 or 93% due to higher legal, other professional fees, stock based compensation, travel and other costs.
Finance income increased to $856,000 from $337,000 or 154% due to projected gains on the hedging of crude oil.
Finance expense decreased 84% to $261,000 due to a $1,112,000 currency loss in the second quarter of last year versus a $16,000 currency gain in the second quarter of 2011 coupled with lower interest expense between quarters of $228,000
FIRST HALF 2011 VERSUS FIRST HALF 2010 HIGHLIGHTS
- Average production per day increased 17% to 1,318 boepd - Oil and gas revenues net of royalties increased 36% to $9,062,000 from $6,670,000 in the first half of 2010 - Average net-back per barrel increased 25% to $27.04 a barrel - Earnings were $292,000 versus a loss of $2,431,000 in the first half of 2010 - Cash from operations excluding changes in non-cash working capital increased to $2,951,000 from $953,000 - Capital expenditures totaled $11,744,000 versus $3,917,000 in 2010 (excluding the $12,000,000 expenditure in the second quarter of 2010 to purchase the overriding royalty and the net profits interest from its former lender which was recorded as an increase in property, plant & equipment).
Oil and gas revenues net of royalties totaled $9,062,000 in the first half of 2011 versus $6,670,000 in the first half of 2010. Oil revenues increased $1,245,000 or 42% as oil production per day increased 17% to 243 boepd while average oil prices increased $16.99 a barrel or 22% to $95.51 a barrel. Natural gas liquids (NGL's) revenues increased $1,098,000 or 31% to $4,606,000 as NGL production increased 13% to 557 boepd while NGL prices increased 17% to $45.69 a barrel. Natural gas revenues increased $319,000 or 16% to $2,352,000 as average natural gas prices declined $.27 an mcf to $4.18 while natural gas production increased 581 metric cubic feet per day (mcf/d) to 3,107 or 23%.
Exploration and evaluation expenses declined $917,000 in the comparative periods due to increased Black Warrior write-offs in the first half of 2010.
Production and operating expenses increased 16% commensurate with the 17% increase in production.
Depletion and depreciation expense increased $769,000 or 44% due to increased production, a higher reserve base on which the depletion rate is applied and increased depreciation primarily on European assets.
General and administrative expenses increased $2,170,000 in the comparative periods due to higher legal and other professional fees (management fees, accounting and consulting fees), travel and other.
Finance income increased $621,000 as foreign currency gains realized in the first half of 2011 due to the strong Canadian dollar versus the US dollar were partially offset by unrealized and realized hedging gains and an unrealized gain on broker warrant revaluation in the first half of 2010.
Key Financial and operating data follow.
BNK PETROLEUM INC. CONSOLIDATED BALANCE SHEETS (Unaudited, Expressed in Thousands of United States Dollars) June 30, December 31, 2011 2010 Assets Cash and cash equivalents $ 56,353 $ 62,062 Trade and other receivables 15,588 18,398 Deposits and prepaid expenses 935 757 Fair value of commodity contracts 215 322 Total current assets 73,091 81,539 Non-current assets Property, plant and equipment 139,653 132,413 Exploration and evaluation assets 4,738 2,345 Fair value of commodity contracts 81 - Total non-current assets 144,472 134,758 Total assets $ 217,563 $ 216,297 Liabilities Trade and other payables $ 16,672 $ 18,036 Total current liabilities 16,672 18,036 Non-current liabilities Loans and borrowings 19,555 19,486 Asset retirement obligations 1,692 1,730 Warrant 347 205 Total non-current liabilities 21,594 21,421 Equity Share capital 246,932 246,240 Contributed surplus 12,984 11,511 Deficit (80,619) (80,911) Total equity 179,297 176,840 Total equity and liabilities $ 217,563 $ 216,297
BNK PETROLEUM INC. CONSOLIDATED STATEMENT OF OPERATIONS, COMPREHENSIVE INCOME (LOSS) AND DEFICIT (Unaudited, expressed in Thousands of United States dollars, except per share amounts) Second Quarter First Half 2011 2010 2011 2010 Oil and natural gas revenue, net of royalties $ 4,634 $ 3,022 $ 9,062 $ 6,670 Gathering income 449 412 950 1,942 Other income 1,761 - 1,791 - 6,844 3,434 11,803 8,612 Exploration and evaluation expenditures 692 986 1,335 2,252 Production and operating expenses 1,310 1,077 2,613 2,260 Depletion and depreciation 1,329 912 2,518 1,749 General and administrative expenses 3,701 1,914 5,726 3,556 7,032 4,889 12,192 9,817 (188) (1,455) (389) (1,205) Finance income 856 337 1,394 773 Finance expense (261) (1,602) (713) (1,999) Net finance income (loss) 595 (1,265) 681 (1,226) Net income (loss) and comprehensive income (loss) $ 407 $ (2,720) $ 292 $ (2,431) Net income (loss) per share Basic and Diluted $ 0.00 $ (0.03) $ 0.00 $ (0.02) BNK Petroleum Inc. Second Quarter 2011 ($000 except as noted) 2nd Quarter First Half 2011 2010 2011 2010 Oil revenue before royalties $ 2,086 1,280 4,196 2,951 Gas revenue before royalties 1,204 928 2,352 2,033 NGL revenue before royalties 2,414 1,647 4,606 3,508 Oil and Gas revenue 5,704 3,855 11,154 8,492 Cash Flow provided (used) by operating activities (3,670) (3,677) (827) (7,103) Additions to property, plant & equipment (7,434) (14,594) (11,744) (15,917) Cash proceeds of stock options exercised 47 - 429 - Repayment of long-term debt - (4,761) - (6,084) Statistics: 2nd Quarter First Half 2011 2010 2011 2010 Average natural gas production (mcf/d) 3,083 2,649 3,107 2,526 Average NGL production (Boepd) 564 532 557 495 Average Oil production (Bopd) 230 188 243 208 Average production (Boepd) 1,308 1,162 1,318 1,124 Average natural gas price ($/mcf) $4.29 $3.85 $4.18 $4.45 Average NGL price ($/bbl) $47.04 $34.01 $45.69 $39.12 Average oil price ($/bbl) $99.54 $74.69 $95.51 $78.52 Average price per barrel $47.92 $36.46 $46.76 $41.74 Royalties per barrel 8.99 7.88 8.77 8.96 Operating expenses per barrel 11.01 10.18 10.95 11.10 Netback per barrel $27.92 $18.40 $27.04 $21.68
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 June 30, 2011 and the related management's discussion and analysis thereof, copies of which are available under the Company's profile at http://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, commencement of drilling, 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 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 http://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.