BNK Petroleum Inc.

BNK Petroleum Inc. Announces 1st Quarter 2011 Results

Camarillo, California (ots/PRNewswire) -

                                      2011 (a)     2010 (a)             %
    Earnings (Loss):
    $ Thousands                      ($115)           $289              L
    $ per common share assuming          -               -              L
    Capital Expenditures            $4,310          $1,323            226
    Average production per day       1,327           1,085             22
    Average Product Price per       $45.63          $47.49             (4)
    Average Netback per Barrel      $26.16          $25.25              4
                                 3/31/2011 (a)  12/31/2010 (a)  3/31/2010 (a)
    Cash and Cash Equivalents      $58,530         $62,062         $3,841
    Working Capital                $61,443         $63,503       ($14,538) 

BNK's President and CEO Wolf Regener commented:

"BNK's average production per day increased 22% and its revenues increased 18% in the first quarter of 2011 versus the first quarter of 2010. The net loss of $.1 million in the current quarter versus net income of $.3 million in the first quarter of 2010 was the result of unrealized hedging losses of $.8 million primarily on crude oil in the current quarter versus unrealized hedging gains of $.5 million on natural gas in the first quarter of 2010, higher general and administrative expenses (primarily payroll) of $.4 million, lower exploration and evaluation expenditures of $.6 million relating to the decision to abandon the Black Warrior Field in Alabama last year, partially offset by currency gains of a net $1.2 million between quarters due to the strong Canadian dollar. Production from the Tishomingo field has been extremely consistent with virtually no decline in the last three months. Production has been averaging over 1,350 boepd net to BNK since the beginning of March. Beginning in June an additional hydraulic fracture stimulation program will begin which will continue throughout the rest of the year and is expected to increase production.

In Poland through Saponis Investments Sp z o.o. where the Company is manager, we completed the drilling of the Wytowno #1 well in February and in April completed the drilling of the Lebork S-1 vertical well. Completion activity will not begin until core analysis and log interpretations are completed and zones of interest will be fracture stimulated and flow tested. The Starogard S-1 well currently has an anticipated drilling start date in June 2011. The Company, through Saponis, has begun constructing the location for the Starogard S-1 well, which is expected to spud in late June. The Company is awaiting analysis of the Lebork S-1 and Wytowno #1 well cores from the Lebork S-1 and Wytowno #1 wells from the 3rd party laboratories, which has taken much longer than originally anticipated. BNK has heard from a number of laboratories that turnaround time on core work is now normally four months or more due to their volume of work. In Poland the Company is waiting for approval to acquire about 650 km of 2D seismic on the six concessions in Poland and hopes to be able to begin that acquisition later this summer. On its 100% owned Indiana concessions the Company has negotiated 3 surface locations where signed agreements are expected shortly for its first three wells on those concessions.

In Germany, the Company initiated the bidding process for the 2D seismic operations on its six concessions which will provide the necessary information for its drilling program next year. The seismic acquisition is planned for the late 2011/early 2012.

In Spain the Company through its wholly owned subsidiary Trofagas Hidrocarburos, S.L. was awarded an oil and gas concession totaling 61,470 acres bringing BNK's total acreage in Europe to about 3.6 million net acres in 5 separate basins. This summer the Company intends to conduct field work which will consist of additional detailed outcrop work to characterize original basin geometries and predict subsurface depositional trends. In addition the company is currently working on incorporating existing 2D seismic data into its basin model.

BNK's first quarter condensed interim consolidated financial statements were prepared by management in accordance with International Accounting Standard ("IAS") 34, "Interim Financial Reporting". As a result the company recorded a non-cash adjustment to reduce the carrying value of property, plant and equipment to accumulated deficit by $56.9 million effective January 1, 2010".


- Average production per day increased 22% to 1,327 boepd

- Comparative first quarter revenues increased 18% to $5,450,000 from $4,637,000 in the first quarter of 2010

- Average per barrel netbacks increased 4% to $26.16 from $25.25 in the first quarter of 2010

- Yearend reserves increased 31% to $315 million using an estimated present value of 10% on future revenues

- Proved and probable reserves increased 5% to 39.7 million boe

- Cash and Working Capital totaled $58.5 million and $61.4 million respectively

- As manager for Saponis Investments Sp z o.o. BNK completed drilling its first well in Poland and began drilling its second well

- Plans were set in place to shoot 2D seismic in Germany in the second half of this year

First Quarter 2011 versus First Quarter 2010

Oil and Gas revenues totaled $5,450,000 in the quarter versus $4,637,000 in the first quarter of 2010. Oil revenues increased $439,000 or 26% as oil production per day increased 12% to 255 boepd while average oil prices increased $10.11 per barrel or 12% to $91.83. Natural Gas Liquids (NGL's) revenues increased $331,000 or 18% as NGL production increased 20% to 550 boepd while average NGL prices fell 2% or 83 cents to $44.29. Natural Gas revenues increased $43,000 or 4% to $1,148,000 as natural gas production increased by 731 metric cubic feet per day (mcf/d) to 3,132 while average natural gas prices fell $1.04 an mcf or 20% to $4.07.

Gathering revenues in the quarter totaled $501,000 versus $1,530,000 as last years total benefited from a correction of an error in 2009 increasing first quarter 2010 gathering revenue by $1,150,000

In the first quarter of 2011 BNK incurred unrealized hedging losses of $842,000 of which $798,000 related to hedges on crude oil while in the first quarter of 2010 BNK recorded unrealized hedging gains of $455,000 entirely relating to natural gas

Operating expenses increased $120,000 or 10% to $1,303,000 due to higher production taxes and field maintenance costs due to higher production. On a per barrel basis operating expenses declined 10% to $10.91 per barrel from $12.11 per barrel

Exploration and Evaluation Expenditures totaled $643,000 in the quarter as BNK paid $500,000 in liquidated damages due to its decision to not drill a third well in the Black Warrior acreage in Alabama

General and administrative expenses increased $382,000 or 23% primarily due to higher payroll related costs.

In the quarter BNK recorded a $1,313,000 currency gain due to the rising Canadian dollar versus the US Dollar

Capital expenditures in the quarter totaled $4,310,000 and related primarily to frac, drilling and leasing costs in Oklahoma of $3,000,000 and drilling costs in Poland of $1,000,000

                                                    Three months
                                                   ended March 31
    ($000's)                                                 2011       2010
    Oil and Gas Revenue net of Royalties                   $4,428     $3,648
    Other Income                                              531      1,530
                                                            4,959      5,178
    Exploration and Evaluation Expenditures                   643      1,267
    Production and Operating expenses                       1,303      1,183
    Depletion and Depreciation                              1,189        836
    General and Administrative Expenses                     2,025      1,643
                                                           $5,160     $4,929
    Results from Operations                                 (201)        249
    Finance Income                                          1,364        567
    Finance Expense                                       (1,278)       (527)
    Net Finance Income                                         86         40
    Net Income (loss) and comprehensive Income
    for the period                                         ($115)       $289
    Income (Loss) per share                                 $0.00      $0.00
                               BNK Petroleum Inc.
                             ($000 except as noted)
                                                          1st QUARTER
                                                             2011       2010
    Oil revenue before royalties                           $2,110     $1,671
    Gas revenue before royalties                            1,148      1,105
    NGL revenue before royalties                            2,192      1,861
    Oil and Gas revenue                                     5,450      4,637
    Cash flow provided (used) by operating                  2,843     (3,426)
    Additions to property, plant & equipment              (4,310)     (1,323)
    Cash Proceeds of Stock Options Exercised                  382        109
    Repayment of Long term debt                                 -     (1,323)
    Average natural gas production (mcf/d)
    Average NGL production (Boepd)                          3,132      2,401
    Average Oil production (Bopd)                             550        458
    Average production (Boepd)                                255        227
    Average natural gas price ($/mcf)                       1,327      1,085
    Average NGL price ($/bbl)                                4.07       5.11
    Average oil price ($/bbl)                               44.29      45.12
                                                            91.83      81.72
    Average price per barrel
    Royalties per barrel                                   $45.63     $47.49
    Operating expenses per barrel                            8.56      10.13
    Netback per barrel                                      10.91      12.11
                                                           $26.16     $25.25 
    ($000's)                          March 31  December 31  March 31
                                        2011       2010        2010
    Cash                               $58,530      $62,062    $3,841
    Trade and Other Receivables         19,009       18,398     5,380
    Other Current Assets                 1,036        1,079     1,777
    Total Current Assets                78,575       81,539    10,998
    Property, Plant and Equipment      134,770      132,413   108,369
    Exploration and Evaluation Assets    3,220        2,345     1,325
    Total Non-current assets           137,990      134,758   109,694
    Total Assets                      $216,565     $216,297  $120,692
    Trade and other payables           $16,824      $18,036   $13,289
    Current portion long-term debt           -            -     1,750
    Other Current liabilities             $308            -    10,497
    Total Current Liabilities           17,132       18,036    25,536
    Loans and Borrowings                19,518       19,486    16,216
    Subordinated Debt                        -            -     2,788
    Other non-current liabilities        2,243        1,935     1,680
                                        21,761       21,421    20,684
    Share Capital                      246,885      246,240   142,028
    Contributed surplus                 11,813       11,511     9,388
    Deficit                            (81,026)     (80,911)  (76,944)
    Total Equity                       177,672      176,840    74,472
    Total Equity and Liabilities      $216,565     $216,297  $120,692 

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 March 31, 2011 and the related management's discussion and analysis thereof, copies of which are available under the Company's profile at

Non-IFRS Information

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

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.

For further information:

Wolf E. Regener, President and Chief Executive Officer +1(805)484-3613 Email:




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