BNK Petroleum Inc. Announces Annual 2016 Financial Results

Camarillo, California (ots/PRNewswire) -

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

2016 HIGHLIGHTS

- In October 2016, the Company completed an equity offering issuing
70,000,000 shares at a price of C$0.20 per share. The Company
intends to use the net proceeds from this offering for exploration
and development of its Tishomingo Field, located in Oklahoma,
including funding a drilling program and for general working
capital. The net cash proceeds of the equity offering totalled $9.7
million
- The Company had oil hedges in place for almost 80% of its
production during 2016 at an average price of $65.22/bbl. In 2017,
the Company has a comparable percentage of oil hedged on its
forecasted existing production at $61.55/bbl, excluding the new
production that it expects to generate from its 2017 drilling
program.
- Operating cash flow was $5.2 million for 2016
- The Company's Total Proved Reserves increased by 1% to 18 million
barrels of oil equivalent (BOE) and the Proved plus Probable
Reserves increased by 2% to 42 million BOEs based on the Company's
December 31, 2016 independent reserves evaluation.
- The estimated ultimate recovery from the Company's previously
existing producing wells increased by 1.2 million BOEs, as the
existing producing wells once again exceeded the previous year
forecast based on the Company's December 31, 2016 independent
reserves evaluation
- Average production was 1,045 barrels of oil equivalent per day
(BOEPD) for 2016, a decrease of 26% compared to 2015 production of
1,415 BOEPD due to normal production decline as the Company did not
drill or complete any new wells in 2016 and also had three wells
shut-in during the fourth quarter due to offset fracture
stimulation operations by another operator
- General & administrative expenses related to continuing operations
decreased by 21% compared to 2015 due to the Company's continuing
cost cutting efforts
- Average netbacks were $16.76 per BOE for 2016, a decrease of 21%
compared to 2015 due to lower prices in 2016 and slightly higher
operating costs per barrel. However, if the realized gains from the
commodity hedge contracts discussed above are included, the average
netbacks for the year increase by almost $11/barrel to $27.70 per
BOE
- In 2017, the Company drilled and fracture stimulated the Chandler
8-6H well, the first well in its 2017 drilling program, in which it
holds a 99.9% working interest
- The Company also drilled the Hartgraves 1-6H well, the second well
in its 2017 drilling program, in which it holds a 100% working
interest. The Company expects to begin fracture stimulation of the
well in May
- The third well in the 2017 drilling program, the Brock 9-2H well,
is currently being drilled by the Company. The Company has a 100%
working interest in that well and expects to begin fracture
stimulation operations in May
- During 2016, the Company made paydowns totaling $3.9 million on its
credit facility to reduce the outstanding balance to $20.5 million.
In the fourth quarter of 2016, the existing lenders reaffirmed the
Company's available borrowing capacity at $24.4 million.
- Revenue, net of royalties was $8.6 million for 2016 compared to
$13.7 million in 2015 due to lower prices in 2016 and reduced
production
- A net loss of $11.1 million was incurred in 2016 which included an
$8.0 million unrealized loss on risk management contracts.
- Cash and working capital totaled $11.1 million and $10.6 million
respectively at December 31, 2016

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

"With the proceeds from the equity offering that was completed in
October 2016, we were excited to begin our 2017 drilling program at
the end of the year. We drilled and completed the Chandler 8-6H well
(99.9% working interest), which was our first well in the 2017
drilling program, during the first quarter of 2017. The 30 day
initial production rate (IP) is 230 barrels of oil per day and 265
barrels of oil equivalent per day. The well continues to produce a
higher oil percentage (87%) than expected from this part of the field
while still continuing to clean up. The well is producing in line
with our proved undeveloped (PUD) case type curve for oil that is
used to estimate the reserves attributed to the Company's Tishomingo
Field.

"The Hartgraves 1-6H well (100% working interest), which is the
second well in our 2017 drilling program, was successfully drilled in
the first quarter and we expect to begin fracture stimulation
operations in May.

"In addition, we are currently drilling the third well in our
drilling program, the Brock 9-2H well (100% working interest). We
expect to finish the drilling operations in April with fracture
stimulation to follow after the Hartgraves 1-6H stimulation. The
drilling and completion plan for the well has been modified based on
the learnings from the more easterly located Chandler 8-6H well. The
Company expects these changes to result in making even better wells
that exceed our PUD case type curve as we step out further to the
East.

"Despite the continued lower level of oil prices during 2016, the
Company was able to realize higher prices on a significant amount of
its production due to its hedging program. During the year, the
Company was able to realize an average price of $65.22/bbl on almost
80% of its oil production. This trend will continue into 2017 as the
Company has commodity contracts in place to recognize a price of
$61.55/bbl on 80% of existing production going forward, excluding the
new production coming on-line from the 2017 drilling program.

"The Company's Total Proved Reserves increased by 1% to 18 million
BOEs and the Proved plus Probable Reserves increased by 2% to 42
million BOEs, despite not drilling any wells in 2016. In addition,
the estimated ultimate recovery from the Company's previously
existing producing wells increased by 1.2 million BOEs, as the
existing producing wells once again exceeded the previous year
forecast.

"We continue to generate positive cash flow due to our cost
cutting efforts and the impact of our hedging program. The Company
generated $5.2 million of operating cash flows during 2016, a
decrease of only 7% from 2015.

"During 2016, the Company's production declined by 26% to 1,045
boepd due to the normal production decline as the Company did not
have any new production during 2016. We also had three wells that
were shut-in during part of the fourth quarter of 2016, due to offset
fracture stimulation operations by another operator in the Woodford
formation. The operator completed the fracture stimulations in the
first quarter of 2017 and all of these wells have been brought back
on to production. The Company does not expect any impact on the
long-term production of the wells going forward.

"Our continuing cost cutting efforts continue to result in
significant cost reductions with general and administrative expenses
decreasing by 21% during 2016 compared to the prior year. In
addition, the shutdown of the European operations will contribute to
the cost reduction efforts as these discontinued operations incurred
a net loss of $1.2 million in 2016.

"Average netbacks for 2016 were $16.76, a decrease of 21% compared
to the prior year due to lower prices. If we include the impact of
the realized gains from the commodity hedging contracts, our average
netbacks for 2016 would be $27.70, which is a decrease of only 6%
compared to 2015."

Fourth Year
Quarter Ended
2016 2015 % 2016 2015 %
Net Loss:
$ Thousands $(3,745) $(6,350) -% $(11,148) $(6,570) -%
$ per common $(0.02) $(0.04) -% $(0.06) $(0.04) -%
share
assuming
dilution
Capital $1,751 $417 320% $2,497 $9,526 (74%)
Expenditures
Average 661 1,367 (52%) 1,045 1,415 (26%)
Production
(Boepd)
Gross 2,258 3,629 (38%) 11,084 17,606 (37%)
Revenue
Average $37.13 $28.86 29% $28.98 $34.09 (15%)
Product
Price per
Barrel
Average $20.97 $17.10 23% $16.76 $21.10 (21%)
Netback per
Barrel
Average $47.56 $40.24 18% $39.92 $42.42 (6%)
Price per
Barrel
including
Commodity
Contracts
Average $31.40 $28.48 10% $27.70 $29.43 (6%)
Netback per
Barrel
including
Commodity
Contracts
December December
2016 2015
Cash and $11,101 $1,666
Cash
Equivalents
Working $10,640 $7,298
Capital

Year Ended 2016 to Year Ended 2015

For 2016, oil and natural gas revenues net of royalties decreased
$5,135,000 or 37% to $8,578,000. Oil revenues before royalties
decreased by 39% to $9,008,000 due to a 14% decrease in prices
between years and a 29% decrease in production. Natural gas revenues
before royalties declined $569,000 or 41% due to a 17% decrease in
natural gas prices per mcf and a 29% decrease in average production.
NGL revenue before royalties declined $138,000 or 10% due to a 14%
decrease in production partially offset by a 4% increase in average
prices.

Exploration and evaluation expenses increased $789,000. The 2016
amount includes an impairment of $835,000 on exploration and
evaluation leases.

Depletion and depreciation expense decreased $2,726,000 primarily
due to reduced production.

General and administrative expenses decreased $1,029,000 due to
the Company's cost cutting efforts during 2016 and 2015 which
resulted in lower salary and benefit costs due to decreased
headcount, legal and professional fees and travel costs.

Finance income decreased $4,157,000 due to an unrealized gain on
risk management contracts in 2015 of $3,975,000. Finance expense
increased $7,861,000 due to an unrealized loss on risk management
contracts of $8,027,000 in 2016.

Capital expenditures of $2,497,000 were incurred in 2016 mainly
for drilling and completion costs in Oklahoma during the fourth
quarter of the year.

FOURTH QUARTER HIGHLIGHTS:

- Revenue, net of royalties, was $1.8 million for fourth quarter
2016, a decrease of 42% compared to the fourth quarter 2015 due to
lower prices and decreased production
- Cash flow from operations was $0.5 million in the fourth quarter of
2016 compared to $1.0 million in prior year fourth quarter mainly
due to the shut-in of three wells during 2016
- Average netbacks for the fourth quarter of 2016 were $20.97, an
increase of 23% over fourth quarter 2015 due to price increases. If
the realized gains from the commodity contracts are included, the
average netbacks for the fourth quarter of 2016 increase by more
than $10/barrel to $31.40 per BOE compared to $28.48 per BOE for
the fourth quarter of 2015
- Average production for the quarter was 661 BOEPD, a decrease of 52%
compared to the prior year fourth quarter mainly due the three
shut-in wells, all of which have been brought back on production in
early 2017
- G&A expense decreased by $0.3 million, or 27%, due to the Company's
cost cutting efforts
- A net loss of $3.7 million was incurred in the fourth quarter 2016
due primarily to unrealized losses on commodity contracts of $2.1
million and $0.8 million impairment of exploration and evaluation
assets
- The Company's lender reaffirmed the Company's current outstanding
borrowing base of $24.4 million

Fourth Quarter 2016 to Fourth Quarter 2015

Oil and gas revenues net of royalties totaled $1,750,000 in the
quarter versus $3,008,000 in the fourth quarter of 2015. Oil
revenues were $1,910,000 in the quarter versus $3,011,000 in the
fourth quarter of 2015, a decrease of 37% due to decreased production
of 47% partially offset by an increase in average oil prices of 18%.
Natural gas revenues decreased 46% due to the decrease in the
production of 59% partially offset by an increase in natural gas
prices of 32%. NGL revenue decreased 42% to $213,000 as average NGL
production decreased by 60% partially offset by an average price
increase of 45%.

Exploration and evaluation expenses increased $833,000 in 2016
compared to 2015. The 2016 amount includes an impairment of $835,000
on exploration and evaluation leases.

Depletion and depreciation expense decreased $845,000 primarily
due to reduced production.

General and administrative expenses decreased $318,000 between
quarters due to the Company's cost cutting efforts during 2016 and
2015 which resulted in lower salary and benefit costs due to
decreased headcount, legal and professional fees and travel costs.

BNK
PETROLEUM
INC.
CONDENSED
CONSOLIDATED
STATEMENTS
OF FINANCIAL
POSITION
(Unaudited,
Expressed in
Thousands of
United
States
Dollars)
December December
31, 31,
2016 2015
Current
assets
Cash and $ 11,101 $ 1,666
cash
equivalents
Trade and 1,163 2,905
other
receivables
Deposits 614 906
and prepaid
expenses
Fair value 650 4,459
of
commodity
contracts
13,528 9,936
Non-current
assets
Fair value - 2,802
of
commodity
contracts
Property, 133,476 136,233
plant and
equipment
Exploration - 835
and
evaluation
assets
133,476 139,870
Total assets $ 147,004 $ 149,806
Current
liabilities
Trade and $ 2,888 $ 2,638
other
payables
2,888 2,638
Non-current
liabilities
Fair value 1,417 -
of
commodity
contracts
Loans and 20,229 23,961
borrowings
Asset 785 788
retirement
obligations
22,431 24,749
Equity
Share 289,549 279,859
capital
Contributed 22,195 21,471
surplus
Deficit (190,059) (178,911)
Total equity 121,685 122,419
Total equity $ 147,004 $ 149,806
and
liabilities

BNK PETROLEUM INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Unaudited, expressed in
Thousands of United
States dollars, except
per share amounts)
Three Year
months ended
ended December
December 31
31
2016 2015 2016 2015
Revenue:
Oil and natural gas $ 1,750 $ 3,008 $ 8,578 $ 13,713
revenue, net
Other income (19) - (17) 6
1,731 3,008 8,561 13,719
Expenses:
Exploration and 835 2 835 46
evaluation
Production and operating 475 653 2,168 2,614
Depletion and 868 1,713 5,249 7,975
depreciation
General and 858 1,176 3,760 4,789
administrative
Share based compensation 105 147 611 602
3,141 3,691 12,623 16,026
Finance income 634 3,034 4,184 8,341
Finance expense (2,674) (522) (10,100) (2,239)
Net income/loss and $ (3,450) 1,829 (9,978) 3,795
comprehensiveincome/loss
from continuing
operations
Net loss and (295) (8,179) (1,170) (10,364)
comprehensive
loss
fromdiscontinued
operations
Net loss and $ (3,745) $ (6,350) $ (11,148) $ (6,569)
comprehensive loss
Net income/loss per
share
Continuing (0.02) 0.01 (0.05) 0.02
operations
Discontinued (0.00) (0.05) (0.01) (0.06)
operations
Basic and $ (0.02) $ (0.04) $ (0.06) $ (0.04)
Diluted

BNK
PETROLEUM
INC.
FOURTH
QUARTER AND
YEAR ENDED
2016
(Unaudited,
expressed
in
Thousands
of United
States
dollars,
except as
noted)
4th Year
Quarter Ended
Dec.
31
2016 2015 2016 2015
Oil revenue $ 1,910 3,011 9,008 14,823
before
royalties
Gas revenue 135 249 829 1,398
before
royalties
NGL revenue 213 369 1,247 1,385
before
royalties
Oil and Gas 2,258 3,629 11,084 17,606
gross
revenue
Cash flow 454 1,039 5,180 5,581
from
operating
activities
Additions (1,751) (52) (2,497) (9,133)
to
property,
plant &
equipment
Additions - (365) - (393)
to
Exploration
and
Evaluation
Assets
Statistics:
4th Year
Quarter Ended
Dec.
31
2016 2015 2016 2015
Average oil 445 832 622 879
production
(Bopd)
Average 588 1,436 1,116 1,568
natural gas
production
(mcf/d)
Average NGL 118 296 237 275
production
(Boepd)
Average 661 1,367 1,045 1,415
production
(Boepd)
Average oil $46.63 $39.36 $39.59 $46.20
price
($/bbl)
Average $2.50 $1.89 $2.03 $2.44
natural gas
price
($/mcf)
Average NGL $19.61 $13.54 $14.36 $13.79
price
($/bbl)
Average $37.13 $28.86 $28.98 $34.09
price per
barrel
Royalties 8.35 6.57 6.55 7.94
per barrel
Operating 7.81 5.19 5.67 5.05
expenses
per barrel
Netback per $20.97 $17.10 $16.76 $21.10
barrel
Average $47.56 $40.24 $39.92 $42.42
price per
barrel
including
commodity
contracts
Royalties 8.35 6.57 6.55 7.94
per barrel
Operating 7.81 5.19 5.67 5.05
expenses
per barrel
Netback per $31.40 $28.48 $27.70 $29.43
barrel
including
commodity
contracts

The information outlined above is extracted from and should be
read in conjunction with the Company's audited financial statements
for the year ended December 31, 2016 and the related management's
discussion and analysis thereof, copies of which are available under
the Company's profile at 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.

The Company's Non-GAAP Measures are described and reconciled to
the GAAP measures in the management's discussion and analysis which
are available under the Company's profile at www.sedar.com.

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 Bbl 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) The Company
discloses
peak and
30-day
initial
production
rates and
other
short-term
production
rates.
Readers are
cautioned
that such
production
rates are
preliminary
in nature and
are not
necessarily
indicative of
long-term
performance
or of
ultimate
recovery.

Readers are referred to the full description of the results of the
Company's December 31, 2016 independent reserves evaluation and other
oil and gas information contained in its Form 51-101F1 Statement of
Reserves Data and Other Oil and Gas Information for the year ended
December 31, 2016, which the Company filed on SEDAR on March 23,
2017.

Caution Regarding Forward-Looking Information

This release contains forward-looking information including
information regarding the use of proceeds from the equity offering
completed in October 2016, estimates of reserves, the proposed timing
and expected results of exploratory and development work including
production from the Company's Tishomingo field, Oklahoma acreage, the
future performance of wells following shut-in and restart, the
expected effects of cost reduction efforts, availability of funds
from the Company's 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
and reservoir models and analysis 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
Company will continue in compliance with the covenants under its
reserves-based loan facility and that the borrowing base will not be
reduced, that funds will be available from the Company's reserves
based loan facility when required to fund planned operations, 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 the
Company's geologic and reservoir models or analysis are not
validated, 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 including flooding and extended interruptions due
to inclement or hazardous weather), 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, 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 will
cease to be in compliance with the covenants under its reserves-based
loan facility and be required to repay outstanding amounts or that
the borrowing base will be reduced pursuant to a borrowing base
re-determination, that the Company is unable to access required
capital, that funding is not available from the Company's reserves
based loan facility at the times or in the amounts required for
planned operations, 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, the Company's most
recent management's discussion and analysis and the Company's other
public disclosure, available under the Company's profile on SEDAR at
www.sedar.com.

With respect to estimated reserves, the evaluation of the
Company's reserves is based on a limited number of wells with limited
production history and includes a number of assumptions relating to
factors such as availability of capital to fund required
infrastructure, commodity prices, production performance of the wells
drilled, successful drilling of infill wells, the assumed effects of
regulation by government agencies and future capital and operating
costs. All of these estimates will vary from actual results.
Estimates of the recoverable oil and natural gas reserves
attributable to any particular group of properties, classifications
of such reserves based on risk of recovery and estimates of future
net revenues expected therefrom, may vary. The Company's actual
production, revenues, taxes, development and operating expenditures
with respect to its reserves will vary from such estimates, and such
variances could be material. In addition to the foregoing, other
significant factors or uncertainties that may affect either the
Company's reserves or the future net revenue associated with such
reserves include material changes to existing taxation or royalty
rates and/or regulations, and changes to environmental laws and
regulations.

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.
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.

ots Originaltext: BNK Petroleum Inc.
Im Internet recherchierbar: http://www.presseportal.de

Contact:
Wolf E. Regener, President and Chief Executive Officer +1 (805)
484-3613, Email: investorrelations@bnkpetroleum.com, Website:
www.bnkpetroleum.com

Original-Content von: BNK Petroleum Inc., übermittelt durch news aktuell