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BNK Petroleum Inc. Announces 3rd Quarter 2011 results
Calgary, Alberta, November 10 (ots/PRNewswire) - All amounts are in U.S. Dollars unless otherwise indicated:
First Nine Third Quarter Months 2011 2010 % 2011 2010 % Earnings (Loss): $ Thousands ($274) ($1,464) 81% $18 ($3,895) P $ per common share $0.00 ($0.01) $0.00 ($0.04) P assuming dilution Funds from operations: $ Thousands $3,330 ($808) $6,281 ($17,129) $ per common share $0.02 ($0.01) $0.04 ($0.16) Capital Expenditures $10,771 $7,639 41% $22,515 $23,556 (4)% Average Production (Boepd) 1,868 1,098 70% 1,503 1,114 35% Average Product Price per Barrel $46.81 $37.67 24% $46.79 $40.43 16% Average Netback per Barrel $28.27 $19.97 42% $27.56 $21.13 30% 9/30/2011 12/31/2010 9/30/2010 Cash and Cash Equivalents $41,957 $62,062 $10,115 Working Capital $46,154 $63,503 $(15,849)
BNK's President and Chief Executive Officer, Wolf Regener commented:
"BNK incurred a net loss of $.3 million in the third quarter of 2011 on a 70% increase in average third quarter production and a 111% increase in oil and gas revenues net of royalties compared to the same period in 2010. Included in third quarter results were a $2.6 million unrealized currency loss due to the weakening of the Canadian dollar relative to the US dollar and higher general and administrative costs versus the third quarter of last year of $2.4 million. General and administrative expenses increased due to higher professional fees (primarily legal fees in connection with corporate restructuring incurred to significantly minimize the Company's short and long term tax liability), increased salaries and wages, higher travel costs and higher public relations costs.
Third quarter results benefited from other income of $1.4 million from management fee income and $1.8 million from unrealized gains resulting from financial hedges on crude oil and natural gas.
During the third quarter in Oklahoma the Company completed fracture stimulations of 29 gross stages on two wells that it operates and benefited from a successful fracture stimulation of 12 stages on a non-operated well. During the quarter fracture stimulations began on a third well with 12 stages. We are very pleased with the production we are achieving in the Woodford wells in Oklahoma as production has been averaging approximately 2,200 barrels as day in recent weeks.
Cash and working capital totaled $42 million and $46 million respectively at September 30, 2011.
As a result of a review of its reserves effective August 1 of its Tishomingo shale gas field the Company's US lender, Amegy Bank recently increased the borrowing base against these assets to $32 million from $23.8 million. The Company has currently borrowed $20 million against this credit facility.
Through the first nine months of 2011 BNK earned net income of $18,000 versus a loss of $3.9 million through the first nine months of 2010. Oil and gas revenues net of royalties increased $5.8 million or 60% aided by a 35% increase in average production per day and a 16% increase in average product prices.
In Poland the Company as Manager for Saponis Investments Sp z o.o. completed drilling the third well (Starogard S-1) in August 2011. Completion of the Lebork S-1 well was initiated in mid-September. The fracture stimulations were not successful in placing the programmed quantities and concentrations of proppant. The Company plans to use a new fracture stimulation design in the spring of 2012 to re-stimulate and test the Lebork well, The Wytowno S-1 and Starogard S-1 wells are scheduled to be completed in the spring of 2012 after the Lebork S-1 re-stimulation and results of the analysis of the cored interval at Starogard are received.
On its wholly owned Indiana concessions (Bytow, Trzebielino and Darlowo) operations must be commenced to drill three wells by September 2012.In that regard a drilling rig has been contracted and the Company is planning on beginning to drill the first well in the first quarter of 2012.
In Germany the Company is continuing the bidding process for the 2D seismic operations on its concessions to provide the necessary information for its drilling program and has initiated a public relations campaign to communicate its commitment to the environment, safety and open dialogue.
In Spain in addition to its Arquetu concession the Company has recently been awarded two new concessions (Urraca in September totaling 234,000 acres and Sedano this month totaling 86,000 acres).
In other areas of Europe (including France) the Company has made concession applications and awaits their potential grant. The Company also explores for shale gas opportunities in other areas of the world."
THIRD QUARTER HIGHLIGHTS:
- Oil and gas revenues net of royalties increased 112% - Average net-back per barrel increased 42% to $28.27 a barrel - Cash and working capital at September 30, 2011 totaled $42 million and $46 million respectively - Average daily production increased 70% to 1,868 boepd - Capital expenditures totaled $10.8 million of which $8.4 million was in Oklahoma, $1.6 million was in Poland and $0.8 in other countries. - Acquired a new concession in Spain totaling 234,292 acres - As manager of Saponis completed drilling its third well in Poland
Third Quarter 2011 to Third Quarter 2010
Oil and gas revenues net of royalties totaled $6,537,000 in the third quarter versus $3,080,000 in the third quarter of 2010. Oil revenues increased $1,741,000 or 105% as oil production per day increased 76% to 432boepd while average oil prices increased $12.05 a barrel or 16% to $85.46 a barrel. Natural gas liquids (NGL's) revenues increased $1,604,000 or 121% to $2,930,000 as NGL production increased 45% to 675boepd while NGL prices increased 52% to $47.15 a barrel. Natural gas revenues increased $895,000 or 108% to $1,720,000 as average natural gas prices rose $.23 a barrel to $4.10 while natural gas production increased 2,245 metric cubic feet per day (mcf/d) to 4,564 or 97%.
Other income of $1,423,000 consisted of management fees recorded as operator of Saponis Sp z o.o.
Exploration and evaluation expenses totaled $258,000 in the quarter and relates to pre-concession expenses related to new ventures.
Production and operating expenses increased $616,000 or 58% to $1,678,000 due to a 70% increase in production between quarters.
Depletion and depreciation expenses increased $876,000 or 97% to $1,781,000 due to increased production, a higher reserve base on which the reserve percentage is applied and increased depreciation.
General and administrative expenses increased $2,358,000 or 119% due to higher legal costs primarily incurred in restructuring the corporate entities, higher salary and wage costs, other professional fees, and higher salary and wage expense.
Finance income increased to $2,226,000 from $1,151,000 or 93% due to projected gains on the hedging of crude oil and natural gas.
Finance expense increased 541% or $2,371,000 due to a $2,594,000 unrealized currency loss in the third quarter due to the weakening of the Canadian dollar relative to the US dollar.
FIRST NINE MONTHS 2011 VERSUS FIRST NINE MONTHS 2010 HIGHLIGHTS
- Average production per day increased 35% to 1,503boepd - Oil and gas revenues net of royalties increased 60% to $15,599,000 from $9,750,000 in the first nine months of 2010 - Average net-back per barrel increased 30% to $27.56 a barrel - Earnings were $18,000 versus a loss of $3,895,000 through the first nine months of 2010 - Cash from operations excluding changes in non-cash working capital increased to a positive $374,000 from a negative $8,500,000 through the first nine months of 2010 - Capital expenditures totaled $22,515,000 versus $23,556,000 in 2010 (including 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 $15,599,000 through the first nine months of 2011 versus $9,750,000 through the first nine months of 2010. Oil revenues increased $2,986,000 or 65% as oil production per day increased 39% to 306 boepd while average oil prices increased $14.14 a barrel or 18% to $90.74 a barrel. Natural gas liquids (NGL's) revenues increased $2,702,000 or 56% to $7,536,000 as NGL production increased 23% to 597boepd while NGL prices increased 27% to $46.25 a barrel. Natural gas revenues increased $1,214,000 or 42% to $4,072,000 as average natural gas prices declined $.11 an mcf to $4.15 while natural gas production increased 1,142 metric cubic feet per day (mcf/d) to 3,598 or 46%.
Other income totaled $3,214,000 through the first nine months of 2011 versus none in 2010 and was the result of $2,038,000 in management fee income and $1,176,000 from the sale of seismic data in Oklahoma.
Exploration and evaluation expenses declined $2,433,000 in the comparative nine month periods due to increased Black Warrior write-offs through the first nine months of 2010.
Production and operating expenses increased 29% commensurate with the 35% increase in production.
Depletion and depreciation expense increased $1,645,000 or 62% 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 $4,528,000 in the comparative periods due to higher legal costs, mainly due to restructuring ,and other professional fees (management fees, accounting and public relations fees), higher salary and wage and recruiting expenses as well as higher travel costs.
Finance income increased $867,000 or 69% due to higher unrealized gains resulting from the financial hedging of crude oil and natural gas.
Finance expense increased 14% to $2,026,000 as increased foreign exchange losses of $1,265,000 due to the weakening of the Canadian dollar versus the US dollar more than offset lower interest expense of $645,000 due to lower debt levels and lower borrowing rates.
Key Financial and operating data follow.
BNK PETROLEUM INC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited, Expressed in Thousands of United States Dollars) September 30, December 31, 2011 2010 Assets Cash and cash equivalents $ 41,957 $ 62,062 Trade and other receivables 19,450 18,398 Deposits and prepaid expenses 2,284 757 Fair value of commodity contracts 1,267 322 Total current assets 64,958 81,539 Non-current assets Property, plant and equipment 147,002 132,413 Exploration and evaluation assets 7,757 2,345 Fair value of commodity contracts 826 - Total non-current assets 155,585 134,758 Total Assets $ 220,543 $ 216,297 Liabilities Trade and other payables $ 18,804 $ 18,036 Total current liabilities 18,804 18,036 Non-current liabilities Loans and borrowings 19,604 19,486 Asset retirement obligations 1,709 1,730 Warrants 80 205 Total non-current liabilities 21,393 21,421 Equity Share capital 247,207 246,240 Contributed surplus 14,032 11,511 Deficit (80,893) (80,911) Total equity 180,346 176,840 Total Equity and Liabilities $ 220,543 $ 216,297
BNK PETROLEUM INC. CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited, expressed in Thousands of United States dollars, except per share amounts) First Nine Third Quarter Months 2011 2010 2011 2010 Oil and natural gas revenue, net of royalties $ 6,537 $ 3,080 $ 15,599 $ 9,750 Gathering income 404 464 1,354 2,406 Other income 1,423 - 3,214 - 8,364 3,544 20,167 12,156 Exploration and evaluation expenditures 258 1,774 1,593 4,026 Production and operating expenses 1,678 1,062 4,291 3,322 Depletion and depreciation 1,781 905 4,299 2,654 General and administrative expenses 4,338 1,980 10,064 5,536 8,055 5,721 20,247 15,538 Operating income (loss) 309 -2,177 -80 -3,382 Finance income 2,226 1,151 2,124 1,257 Finance expense -2,809 -438 -2,026 -1,770 Net finance income (expense) -583 713 98 -513 Net income (loss) and comprehensive income (loss) $ -274 $ -1,464 $ 18 $ -3,895 Net income (loss) per share Basic and Diluted $ 0 $ -0.01 $ 0 $ -0.04 BNK Petroleum Inc. Third Quarter 2011 ($000 except as noted) First Nine 3rd Quarter Months 2011 2010 2011 2010 Oil revenue before royalties $ 3,396 1,654 7,591 4,605 Gas revenue before royalties 1,720 825 4,072 2,858 NGL revenue before royalties 2,930 1,326 7,536 4,834 Oil and Gas revenue 8,046 3,805 19,199 12,297 Cash Flow provided (used) by operating activities 1,201 -1,409 374 -8,512 Capital expenditures -10,771 -7,639 -22,515 -23,556 Cash proceeds of stock options exercised 192 183 621 183 Repayment of long-term debt - - - -7,427 Statistics: First Nine 3rd Quarter Months 2011 2010 2011 2010 Average natural gas production (mcf/d) 4,564 2,319 3,598 2,456 Average NGL production (Boepd) 675 466 597 485 Average Oil production (Bopd) 432 245 306 220 Average production (Boepd) 1,868 1,098 1,503 1,114 Average natural gas price ($/mcf) $4.10 $3.87 $4.15 $4.26 Average NGL price ($/bbl) $47.15 $30.95 $46.25 $36.48 Average oil price ($/bbl) $85.46 $73.41 $90.74 $76.60 Average price per barrel $46.81 $37.67 $46.79 $40.43 Royalties per barrel 8.78 7.18 8.77 8.38 Operating expenses per barrel 9.76 10.52 10.46 10.92 Netback per barrel $28.27 $19.97 $27.56 $21.13
The information outlined above is extracted from and should be read in conjunction with the Company's unaudited financial statements for the three and nine 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 http://www.sedar.com.
Funds from operations and funds from operations per common share are not defined by GAAP in Canada and are referred to as non-GAAP measures. Funds from operations are based on cash flow from operating activities as per the statement of cash flows before changes in non-cash working capital. Funds from operations per common share is calculated based on the weighted average number of common shares outstanding consistent with the calculation of net earnings (loss) per share.
For more details on non-GAAP measures, refer to BNK's "Management's Discussion and Analysis.
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.
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