BNK Petroleum Inc. announces 1st quarter 2014 results

Camarillo, California (ots/PRNewswire) -

All amounts are in U.S. Dollars unless otherwise indicated:

1st Qtr 2014 1st Qtr 2013 %
Earnings (Loss):
$ Thousands $250 $(5,320) -
$ per common share assuming dilution $0.00 $(0.04) -

Capital Expenditures $12,954 $2,492 420

Average production per day (Boepd) 962 1,674 (43)
Average Product Price per Barrel $78.18 $34.69 125
Average Netback per Barrel $57.36 $18.89 204

3/31/2014 12/31/2013 3/31/2013
Cash and Cash Equivalents $47,351 $17,159 $3,100
Working Capital $37,237 $18,854 $1,773

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

"Due to our successful drilling program in the Caney formation of
the Tishomingo field during the past 9 months, the Company was able
to generate positive net income for the first quarter 2014, less than
1 year after the sale of substantially all of the Company's
production in April of last year. Due to higher oil content in the
production mix of the Caney formation, we increased our netbacks more
than 200% compared to the 2013 first quarter, which helped us to
achieve profitability with 43% lower average total production. In
addition, we generated positive cash flow from operations of almost
$3.0 million and revenue of $5.5 million for the quarter.

"A significant portion of our recently completed equity offering,
where the Company received net proceeds of $31 million, will be used
to start our 2014 drilling program in the United States. BNK has
recently signed a drilling rig contract and expects to take
possession in late May, when the rig will move to the first of two
locations that have already been built. Once drilled, these two
locations will result in 1.93 net wells to the Company.

"The last wells drilled and hydraulically fractured in our prior
year US drilling program, the Wiggins 12-8H and the Barnes 7-2H, have
continued to perform well. The Barnes 7-2H well was shut-in in
mid-March to complete the fracture stimulation of the remaining 15%
of the lateral. Production from the Barnes 7-2H well came back online
in mid-April and the well is returning to production rates in line
with previous levels, but with a proportionate production increase
due to the additional 15%.

"Current, Company-wide production is about 1,150 boepd, excluding
production from the Leila 31-2H well, where the Company had fracture
stimulated the remaining 87.5% of the lateral in April 2014. The well
is currently flowing back the fracture stimulation fluid. Early
flowback data is comparable to previous Company drilled Caney wells.
In addition, the Company is working on putting in place a reserve
based loan facility after which the full year's drilling program can
be determined.

"After successfully drilling and casing the horizontal re-entry of
the Gapowo B-1 well in Poland during the first quarter, the Company
began fracture stimulating the lateral on May 8, 2014. The
stimulation was delayed by a number of days due to issues with a
sub-contractors equipment which has since been rectified. The plan is
to fracture stimulate approximately one third of the 5,900 feet of
lateral and immediately flow back the fracture stimulation fluid and
then test the stimulated portion of the lateral.

"In the first quarter of 2014, the Company generated net income of
$250,000 and positive cash flow from operating activities of almost
$3 million compared to a net loss of $5.3 million and positive cash
flow from operations of $268,000 in the first quarter 2013. Oil and
gas revenue, net of royalties was $5.5 million in the first quarter
of 2014, an increase of $1.3 million, or 29%, compared to the prior
year quarter.

"Average netbacks for the first quarter 2014 were $57.36, an
increase of 204% compared to the prior year quarter due to the
significantly higher levels of oil in the production mix of the Caney
formation. Oil accounted for 68% of 2014 production in the Caney
versus 15% of 2013 production from the Woodford formation which was
sold in April 2013.

"Capital expenditures increased to $13.0 million in the first
quarter 2014 due to the completion of the prior year drilling program
in the US and the drilling and casing of the re-entry of the Gapowo
B-1 well in Poland. Capital expenditures in the first quarter of 2013
were $2.5 million."

FIRST QUARTER HIGHLIGHTS

- Net income was $250,000 for the first quarter 2014 and cash flow from
operations was $3.0 million
- Revenue, net of royalties was $5.5 million for first quarter of 2014, an
increase of 29% compared to the first quarter of 2013
- Average net-backs per barrel increased 204% to $57.36 primarily due to higher
oil production in 2014 and higher natural gas and NGL prices in 2014
- Completed an equity financing in March 2014 for total net proceeds of
approximately $31 million (including the over-allotment option proceeds received in
April)
- Capital expenditures increased 420% to $13.0 million primarily due to the
completion of the 2013 US drilling program and the drilling of the Gapowo B-1 well in
Poland
- Cash and working capital totaled $47.4 million and $37.2 million respectively
at March 31, 2014

First Quarter 2014 versus First Quarter 2013

Oil and gas gross revenues totaled $6,770,000 in the quarter
versus $5,228,000 in the first quarter of 2013. Oil revenues
increased $3,678,000 or 183% as oil production per day increased 166%
to 651 boepd while average oil prices increased $5.88 per barrel or
6% to $97.15. Natural gas liquids (NGL's) revenues decreased
$1,335,000 or 67% as NGL production decreased 77% to 166 boepd while
average NGL prices increased 43% or $13.38 a barrel to $44.73.
Natural gas revenues decreased $800,000 or 66% to $413,000 as natural
gas production decreased by 3,441 cubic feet per day (mcf/d) or 80%
to 870 mcf/d while average natural gas prices increased $2.14 an mcf
or 68% to $5.27.

Average production per day decreased 43% from the first quarter of
2013 due to the sale of the Woodford assets in April 2013, partially
offset by 2014 production from the Caney formation.

The Company also sold its gathering system in April 2013 so it no
longer generates gathering revenue. Gathering revenue was $330,000 in
the first quarter 2013. Production and operating expenses decreased
$866,000 to $533,000 due to the lower number of wells in 2014
resulting from the Woodford sale in 2013.

Depletion and depreciation expense decreased $46,000 or 2% due to
a decrease in the capital base from the Woodford sale.

General and administrative expenses decreased $536,000 or 15% due
to cost cutting which resulted in lower legal, consulting, management
and professional fees, partially offset by higher director fees.

Share based compensation increased $227,000 or 210% due to
additional stock grants in 2014.

Finance expense decreased $3,462,000 or 98% to $57,000 primarily
due to $2.5 million of unrealized losses on financial commodity
contracts and $994,000 of interest expense in 2013.

Capital expenditures of $12,954,000 were incurred in the first
quarter of 2014 primarily related to the completion of the prior year
drilling program in the US and the Gapowo B-1 well in Poland.

BNK PETROLEUM INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, Expressed in Thousands of United States Dollars)
($000 except as noted)
March 31 December 31
2014 2013

Current Assets
Cash $47,351 $17,159
Trade and other receivables 6,653 7,268
Other current assets 1,353 1,243
Investments - 25,056
55,357 50,726

Non-current assets
Property, plant and equipment 98,387 94,663
Exploration and evaluation assets 43,986 36,194
Investment in joint ventures 3,093 2,787
Other non-current assets 218 433
145,684 134,077

Total Assets $201,041 $184,803

Current Liabilities
Trade and other payables $18,120 $31,872
18,120 31,872

Non-current liabilities
Loans and borrowings 100 100
Asset retirement obligations 1,301 1,192
1,401 1,292

Equity
Share capital 276,949 247,782
Contributed surplus 19,185 18,721
Deficit (114,614) (114,864)
Total Equity 181,520 151,639

Total Equity and Liabilities $201,041 $184,803

BNK PETROLEUM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited, expressed in Thousands of United States dollars, except per share
amounts)
($000 except as noted)
Three months ended March
31
($000's) 2014 2013

Oil and gas revenue net of royalties $5,501 $4,248
Other income 202 553
5,703 4,801

Exploration and evaluation expenditures 100 54
Production and operating expenses 533 1,399
Depletion and depreciation 1,808 1,854
General and administrative expenses 2,930 3,466
Share based compensation 335 108
Loss (gain) on equity investments (291) 23
Legal restructuring expenses - -
$5,415 $6,904

Finance Income 19 302
Finance Expense (57) (3,519)

Net income (loss) and comprehensive income (loss) for the
period $250 $(5,320)
Net income (loss) per share $0.00 $(0.04)

BNK PETROLEUM, INC.
FIRST QUARTER 2014
(Unaudited, expressed in Thousands of United States dollars, except as noted)

Quarter Ending March 31,
2014 2013
Oil revenue before royalties $5,688 $2,011
Gas revenue before royalties 413 1,213
NGL revenue before royalties 668 2,004
Oil and Gas revenue 6,769 5,228
Cash flow provided by operating activities 2,956 268
Capital expenditures (12,954) (2,492)

Statistics:
Average natural gas production (mcf/d) 870 4,311
Average NGL production (Boepd) 166 710
Average Oil production (Bopd) 651 245
Average production (Boepd) 962 1,674
Average natural gas price ($/mcf) $5.27 $3.13
Average NGL price ($/bbl) 44.73 31.35
Average oil price ($/bbl) 97.15 91.27

Average price per barrel $78.18 $34.69
Royalties per barrel 14.66 6.51
Operating expenses per barrel 6.16 9.29
Netback per barrel $57.36 $18.89

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, 2014 and the related
management's discussion and analysis thereof, copies of which are
available under the Company's profile at http://www.sedar.com.

NON-GAAP MEASURES

Netback per barrel, net operating income and funds from operations
(collectively, the "Company's Non-GAAP Measures") are not measures
recognized under Canadian generally accepted accounting principles
("GAAP") and do not have any standardized meanings prescribed by
GAAP. Management of the Company believes that such measures are
relevant for evaluating returns on each of the Company's projects as
well as the performance of the enterprise as a whole. The Company's
Non-GAAP Measures may differ from similar computations as reported by
other similar organizations and, accordingly, may not be comparable
to similar non-GAAP measures as reported by such organizations. The
Company's Non-GAAP Measures should not be construed as alternatives
to net income, cash flows related to operating activities, or other
financial measures determined in accordance with GAAP, as an
indicator of the Company's performance.

Netback per barrel and its components are calculated by dividing
revenue less 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.
However, non-IFRS measures do not have any standardized meaning
prescribed by IFRS and therefore may not be comparable to similar
measures used by other companies.

Net operating income is similarly a non-GAAP measure that
represents revenue net of royalties and operating expenses. The
Company believes that net operating income is a useful supplemental
measure to analyze operating performance and provides an indication
of the results generated by the Company's principal business
activities prior to the consideration of other income and expenses.

Funds from operations is a non-GAAP measure that represents cash
provided by (used in) operating activities, as per the consolidated
statements of cash flows, before changes in non-cash working capital.
The Company considers this a key measure as it demonstrates its
ability to generate the funds necessary for future growth after
taking into account the short-term fluctuations in the collection of
accounts receivable and the payment for accounts payable.

Cautionary Statements

In this news release and the Company's other public disclosure:

(a) The Company's natural gas production is reported in thousands of cubic feet
("Mcfs"). The Company also uses references to barrels ("Bbls") and barrels of oil
equivalent ("Boes") to reflect natural gas liquids and oil production and sales.
Boes may be misleading, particularly if used in isolation. A Boe conversion ratio
of 6 Mcf:1 Boe is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency at the
wellhead. Given that the value ratio based on the current price of crude oil as
compared to natural gas is significantly different from the energy equivalency of
6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of
value.
(b) Discounted and undiscounted net present value of future net revenues attributable
to reserves do not represent fair market value.
(c) Possible reserves are those additional reserves that are less certain to be
recovered than probable reserves. There is a 10% probability that the quantities
actually recovered will equal or exceed the sum of proved plus probable plus
possible reserves.
(d) This news release contains short-term production rates. Readers are cautioned that
such production rates are not necessarily indicative of long-term performance or
of ultimate recovery.

Caution Regarding Forward-Looking Information

This release contains forward-looking information including
information regarding the proposed timing and expected results of
exploratory and development work including production from the Lower
Caney and upper Sycamore formations on the Company's Oklahoma
acreage, the effect of design and performance improvements on future
productivity, the anticipated timing of commencement and completion
of drilling and fracture-stimulations in connection with the
Company's Caney drilling program, the advancement of the Company's
European projects, including permit and concession applications and
approvals, drilling plans and fracture stimulation operations
underway on the Company's Gapowo B-1 shale gas well in Poland,
planned capital expenditure programs and cost estimates, planned use
and sufficiency of cash and marketable securities on hand, a proposed
reserves based loan facility and the Company's strategy and
objectives. The use of any of the words "target", "plans",
"anticipate", "continue", "estimate", "expect", "may", "will",
"project", "should", "believe" and similar expressions are intended
to identify forward-looking statements.

Such forward-looking information is based on management's
expectations and assumptions, including that the Company's geologic
models will be validated, that indications of early results are
reasonably accurate predictors of the prospectiveness of the shale
intervals, that previous exploration results are indicative of future
results and success, that expected production from future wells can
be achieved as modeled, declines will match the modeling, future well
production rates will be improved over existing wells, that rates of
return as modeled can be achieved, that recoveries are consistent
with management's expectations, that additional wells are actually
drilled and completed, that design and performance improvements will
reduce development time and expense and improve productivity, that
discoveries will prove to be economic, that anticipated results and
estimated costs will be consistent with managements' expectations,
that all required permits and approvals and the necessary labor and
equipment will be obtained, provided or available, as applicable, on
terms that are acceptable to the Company, when required, that no
unforeseen delays, unexpected geological or other effects, equipment
failures, permitting delays or labor or contract disputes are
encountered, that the development plans of the Company and its
co-venturers will not change, that the demand for oil and gas will be
sustained, that the Company will continue to be able to access
sufficient capital through financings, credit facilities, farm-ins or
other participation arrangements to maintain its projects, that the
proposed reserves based loan facility will be completed, that the
Company will not be adversely affected by changing government
policies and regulations, social instability or other political,
economic or diplomatic developments in the countries in which it
operates and that global economic conditions will not deteriorate in
a manner that has an adverse impact on the Company's business and its
ability to advance its business strategy.

Forward looking information involves significant known and unknown
risks and uncertainties, which could cause actual results to differ
materially from those anticipated. These risks include, but are not
limited to: any of the assumptions on which such forward looking
information is based vary or prove to be invalid, including that
anticipated results and estimated costs will not be consistent with
managements' expectations, the risks associated with the oil and gas
industry (e.g. operational risks in development, exploration and
production; delays or changes in plans with respect to exploration
and development projects or capital expenditures; the uncertainty of
reserve and resource estimates and projections relating to
production, costs and expenses, and health, safety and environmental
risks), the risk of commodity price and foreign exchange rate
fluctuations, risks and uncertainties associated with securing the
necessary regulatory approvals and financing to proceed with
continued development of the Tishomingo Field and other shale basins
in the United States and Europe, the Company or its subsidiaries is
not able for any reason to obtain and provide the information
necessary to secure required approvals or that required regulatory
approvals are otherwise not available when required, that unexpected
geological results are encountered, that completion techniques
require further optimization, that production rates do not match the
Company's assumptions, that very low or no production rates are
achieved, that the Company is unable to access required capital, that
the proposed reserves based loan facility is not completed, that
occurrences such as those that are assumed will not occur, do in fact
occur, and those conditions that are assumed will continue or
improve, do not continue or improve and the other risks identified in
the Company's most recent Annual Information Form under the "Risk
Factors" section and the Company's other public disclosure, available
under the Company's profile on SEDAR at http://www.sedar.com.

Although the Company has attempted to take into account important
factors that could cause actual costs or results to differ
materially, there may be other factors that cause actual results not
to be as anticipated, estimated or intended. There can be no
assurance that such statements will prove to be accurate as actual
results and future events could differ materially from those
anticipated in such statements. The forward-looking information
included in this release is expressly qualified in its entirety by
this cautionary statement. Accordingly, readers should not place
undue reliance on forward-looking information. The Company undertakes
no obligation to update these forward-looking statements, other than
as required by applicable law.

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 and
Spain. Additionally the Company is utilizing its technical and
operational expertise to identify and acquire additional
unconventional projects. 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: investorrelations@bnkpetroleum.com
Website: http://www.bnkpetroleum.com

ots Originaltext: BNK Petroleum Inc.
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