BNK Petroleum Inc. Announces 2nd Quarter 2013 results
Calgary (ots/PRNewswire)
All amounts are in U.S. Dollars unless otherwise indicated:
Second Quarter First Half
2013 2012 % 2013 2012 %
Earnings
(Loss):
$ Thousands $(929) $(2,630) L $(6,249) $(6,150) L
$ per common
share $(0.01) $(0.02) L $(0.04) $(0.04) L
assuming
dilution
Capital
Expenditures $7,870 $12,142 (35%) $10,362 $22,901 (55%)
Average
Production
(Boepd) 266 1,439 (82%) 966 1,547 (38%)
Average
Product
Price per
Barrel $43.83 $31.96 37% $35.96 $35.47 1%
Average
Netback per
Barrel $16.52 $17.25 (4%) $18.57 $17.69 5%
6/30/2013 12/31/2012 6/30/2012
Cash and
Cash
Equivalents $90,454 $2,836 $16,348
Working
Capital $90,494 $472 $17,406
BNK's President and Chief Executive Officer, Wolf Regener commented:
"With the completed sale of our Woodford assets in our Tishomingo field in April, the Company continues to make significant progress in our ongoing Caney drilling program during the second quarter. The first well in our 2013 drilling program, the Barnes 6-3H, was drilled with the entire 5,200 lateral located in the most productive Caney subinterval but unfortunately we were only able to fracture stimulate 11 out of the 17 planned stages. The lateral portion of the wellbore was recently cleaned out where two proppant blockages were encountered after which flow back operations just re-commenced. We believe these blockages have restricted the frac fluid recovery to only 12% to date. The gross oil and water production rate is fluctuating between 250 to 350 gross barrels a day with the oil percentage increasing to between 40-50% as we continue to optimize our flowback.
We also drilled the Dunn 2-2H Caney well, completed a 15 stage fracture stimulation and are currently flowing back the fracture stimulation fluid. The fracture stimulation design for this well was improved based on what we learned from the Barnes 6-3H results. After two weeks of flowback, the Dunn 2-2H continues to free flow up the casing at rates between 1200-1500 barrels of fluid per day and has recovered only 20% of the frac fluid to date. The oil cuts continue to improve and the well has already produced at rates of 550 BOEPD with 300 BOPD being oil. Due to the strong flowrate and high flowing pressures, a snubbing unit is currently installing the tubing string and gas lift valves which is expected to further improve production from the well.
The third well in our 2013 drilling program, the Hartgraves 5-3H, was spud in mid-July and although we are only on day 20 of drilling we are anticipating finishing the drilling of the lateral in the next few days. This well is on track to be drilled considerably faster and at lower cost than the previous wells due to continuous design and performance improvements. The Hartgraves 5-3H well is expected to be fracture stimulated during the first week of September.
Based on the improving excellent results of our Caney wells, the Company will immediately proceed to the Barnes 7-2H.
To date, the lessons acquired from our Caney drilling program has helped improve our costs to drill and complete each well, substantially reduce our rig spud to production time and improve the productivity of the wells.
In Poland the Company has now received the final approval for the EIA on its Bytow concession. The Company has filed a concession modification request and is awaiting the final drilling permit which would permit the re-entry of the Gapowo B-1 well so that the horizontal leg can be drilled.
The Company recorded a gain of $9.7 million on the sale of the Tishomingo field assets, excluding the Caney and Upper Sycamore formations, and used a portion of the proceeds to pay down its debt from $41 million to $100,000. Offsetting this gain was $3.5 million related to the amortization of deferred financing costs, a pre-payment penalty of $2.5 million and a $2.5 million payment to settle all of our financial commodity contracts. At June 30, 2013, we have cash on hand of over $90 million some of which the Company will use to complete our 2013 drilling program in the Caney and to move forward our exciting European projects once permits are approved.
The Company incurred a $0.9 million loss in the quarter versus a loss of $2.6 million in the second quarter of 2012. Production decreased 82% in the comparative quarters due to the April 2013 sale while average pricing per barrel increased 37% primarily due to higher natural gas prices. Oil and gas revenues net of royalties declined by $2.5 million mainly due to the April 2013 sale of assets.
General and administrative expenses decreased $1.0 million to $3.2 million primarily due to a decrease in payroll and related costs, travel expenses and accounting, management and professional fees in Europe.
Through the first half of 2013 the Company incurred a loss of $6.2 million which was the same loss incurred through the first half of 2012. Oil and gas revenues declined $3.7 million due to a 38% decrease in average production per day due to the sale of assets in April 2013. Other income increased $65,000 due to the higher management fees in 2013 while general and administrative expenses decreased $1.3 million primarily due to lower payroll and related costs, travel expenses and accounting, management and professional fees in Europe.
SECOND QUARTER HIGHLIGHTS:
- Drilled and fracture stimulated the Barnes 6-3H and Dunn 2-2H wells in the Caney formation in the Tishomingo field - In July started drilling the third Caney well in the 2013 drilling program, the Hartgraves 5-3H well. - Cash and working capital totaled $90.4 million and $90.5 million respectively at June 30, 2013 - Closed the sale of the Tishomingo field, excluding the Caney and Upper Sycamore formations, in April 2013 for $147.1 million (which includes $560,000 of net operating profit for the first 18 days of April 2013) - Paid down the credit facility from $41 million to $100,000 in connection with the sale - Settled all the financial derivative contracts in April 2013 in connection with the sale - Capital expenditures decreased 35% from 2012 to $7.9 million due to the 2012 drilling expenditures in Poland - Production decreased 82% from the second quarter of 2012 due to the sale - Loss of $0.9 million versus loss of $2.6 million in the second quarter of 2012 - Comparative oil and gas revenues declined by 75% or $3.1 million to $1.0 million due to the sale of assets
Second Quarter 2013 to Second Quarter 2012
Oil and gas revenues net of royalties totaled $863,000 in the quarter versus $3,401,000 in the second quarter of 2012. Oil revenues were $717,000 in the quarter versus $2,028,000 in the second quarter of 2012, a decline of 65% as average oil prices declined 1% or $1.32 a barrel while production decreased 64% to an average of 88 barrels per day due to the April sale of assets. Natural gas revenues declined $487,000 or 71% as average natural gas prices per mcf increased 96% while natural gas production decreased to 546 mcfd due to the April sale of assets. Natural Gas Liquid (NGL) revenue declined $1,326,000 or 90% to $144,000 as average NGL prices declined 35% to $18.18 a barrel while average production decreased 85% to 87 boepd as a result of the asset sale.
Other income increased $62,000 to $296,000 as second quarter 2013 results included higher management fee revenue relating to Saponis.
Exploration and evaluation expenses declined $206,000 between quarters due to less E&E activity in new areas of interest.
Production and operating expenses declined $679,000 between quarters due to the sale of assets in April 2013.
Depletion and depreciation expense decreased $1,117,000 between quarters due to decreased production and depletion base and lower production as a result of the sale of assets.
General and administrative expenses decreased $1,022,000 between quarters primarily due to lower payroll and related costs, lower professional fees incurred in Europe relating to legal, accounting, management fees and lower travel costs.
Stock based compensation increased $136,000 between quarters due to new stock options granted in 2013.
Finance income increased $586,000 due to higher unrealized gains on financial commodity contracts. Finance expense increased $8,559,000 primarily due to a $6,534,000 charge related to interest on loans and borrowings which included $3.5 million for the amortization of deferred financings costs and $2.5 million of pre-payment penalties related to the loan paydown along with a realized loss on financial commodity contracts of $2.7 million as these contracts were all settled in April 2013.
Cash increased $87,354,000 in the past three months primarily due to the net proceeds from the sale of assets in the second quarter of 2013.
Capital expenditures of $7,870,000 were incurred in the second quarter of 2013 of which approximately $7.4 million was spent in Oklahoma.
FIRST HALF 2013 VERSUS FIRST HALF 2012 HIGHLIGHTS
- Closed the sale of the Tishomingo field, excluding the Caney and Upper Sycamore formations, in April 2013 for $147.1 million (which includes $560,000 of net operating profit for the first 18 days of April 2013) - Paid down the credit facility from $41 million to $100,000 in connection with the sale - Settled all the financial derivative contracts in April 2013 in connection with the sale and incurred a realized loss of $2.5 million - Capital expenditures decreased $12.5 million or 55% to $10.4 million primarily due to $19 million of capital expenditures incurred in Poland in 2012 partially offset by the 2013 drilling program in Oklahoma which totaled $9.0 million for the first half of 2013 - Average production decreased 38% between comparative first half year periods due to the sale of assets in April - A net loss of $6.2 million was incurred in 2013 versus a similar loss of $6.2 million in 2012
First Half 2013 to First Half 2012
Oil and natural gas revenues net of royalties declined $3,004,000 or 37% to $5,111,000. Oil revenues before royalties decreased $1,805,000 to $2,728,000 due to a 36% decrease in production due to the sale of assets while prices decreased 5% between periods. Natural gas revenues before royalties declined $277,000 or 16% due to a 39% decline in average production due to the sale of assets partially offset by a 37% increase in natural gas prices per mcf. NGL revenue before royalties declined $1,617,000 or 43% to $2,147,000 due to a 9% decline in average NGL prices while average production per day decreased 37% due to the April sale of assets.
Other income increased due to higher management fees.
Exploration and evaluation expenses declined $204,000 primarily due to less E&E activity in new areas of interest.
Production and operating expenses decreased 41% as production decreased 38% due to the sale of assets in April 2013.
Depletion and depreciation expense decreased $1,079,000 primarily due to sale of assets in 2013.
General and administrative expenses decreased $1,270,000 primarily due to lower payroll and related costs, lower professional fees incurred in Europe relating to legal, accounting, management fees and lower travel costs.
Finance Income decreased $1,652,000 due to realized and unrealized gains on financial commodity contracts in 2012. Finance expense increased $9,164,000 primarily due to a $7,528,000 charge related to interest on loans and borrowings which included $3.5 million for the amortization of deferred financings costs and $2.5 million of pre-payment penalties related to the loan paydown along with a realized loss on financial commodity contracts of $2.5 million as these contracts were all settled in April 2013.
Cash has increased $87,618,000 through the first six months of 2013 primarily due to the sale of assets in April 2013 offset by the 2013 capital expenditures.
BNK PETROLEUM INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, Expressed in Thousands of United States Dollars)
June 30, December 31,
2013 2012
Current assets
Cash and cash
equivalents $ 90,454 $ 2,836
Trade and
other
receivables 4,568 11,363
Deposits and
prepaid
expenses 3,459 2,334
Fair value of
commodity
contracts - 779
98,481 17,312
Non-current assets
Long-term
receivables 940 1,297
Fair value of
commodity
contracts 10,049 10,114
Property,
plant and
equipment 27,183 156,549
Exploration
and
evaluation
assets 35,002 33,590
73,174 201,550
Total assets $ 171,655 $ 218,862
Current liabilities
Trade and
other
payables $ 7,987 $ 16,840
Current
portion of
long-term
debt - 31,797
7,987 48,637
Non-current
liabilities
Loans and
borrowings 100 -
Fair value of
commodity
contracts - 75
Asset
retirement
obligations 90 1,312
Warrants 3 3
193 1,390
Equity
Share capital 247,422 247,326
Contributed
surplus 17,456 16,663
Deficit (101,403) (95,154)
Total equity 163,475 168,835
Total equity and
liabilities $ 171,655 $ 218,862
BNK PETROLEUM INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited, expressed in Thousands of United States dollars,
except per share amounts)
Second Quarter First Half
2013 2012 2013 2012
Oil and natural gas
revenue, net of
royalties $ 863 $ 3,401 $ 5,111 $ 8,115
Gathering income 1 332 331 734
Other income 296 234 519 454
Gain on sale of assets 9,747 - 9,747 -
10,907 3,967 15,708 9,303
Exploration and
evaluation
expenditures 3 209 57 261
Production and
operating expenses 463 1,142 1,862 3,135
Depletion and
depreciation 483 1,600 2,337 3,416
General and
administrative
expenses 3,241 4,263 6,707 7,977
Stock based
compensation 341 205 449 475
Loss from investments
in joint ventures 42 203 65 240
Legal restructuring
expenses 595 280 595 880
5,168 7,902 12,072 16,384
Finance income 2,573 1,987 115 1,767
Finance expense (9,241) (682) (10,000) (836)
Net loss and
comprehensive loss $ (929) $ (2,630) $ (6,249) $ (6,150)
Net loss per share
Basic and
Diluted $ (0.01) $ (0.02) $ (0.04) $ (0.04)
BNK Petroleum Inc.
Second Quarter 2013
($000 except as noted)
2nd Quarter First Half
2013 2012 2013 2012
Oil revenue before royalties $ 717 2,028 2,728 4,533
Gas revenue before royalties 200 687 1,413 1,690
NGL revenue before royalties 144 1,470 2,147 3,764
Oil and Gas revenue 1,061 4,185 6,288 9,987
Cash Flow used by operating
activities (8,952) (4,085) (8,684) (8,884)
Additions to property, plant
&
equipment (7,483) (2,310) (9,093) (3,568)
Additions to Exploration and
Evaluation
Assets (387) (9,382) (1,269) (19,333)
Statistics:
2nd Quarter First Half
2013 2012 2013 2012
Average natural gas production
(mcf/d) 546 3,674 2,418 3,934
Average NGL production (Boepd) 87 581 397 630
Average Oil production (Bopd) 88 246 166 261
Average production (Boepd) 266 1,439 966 1,547
Average natural gas price ($/mcf) $4.03 $2.06 $3.23 $2.36
Average NGL price ($/bbl) $18.18 $27.79 $29.90 $32.81
Average oil price ($/bbl) $89.15 $90.47 $90.70 $95.45
Average price per barrel $43.83 $31.96 $35.96 $35.47
Royalties per barrel 8.22 5.99 6.74 6.65
Operating expenses per barrel 19.09 8.72 10.65 11.13
Netback per barrel $16.52 $17.25 $18.57 $17.69
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, 2012 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-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
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 including the potential for, and level of, oil production from the Lower Caney and upper Sycamore formations on the Company's Oklahoma acreage and possible impact of that on the Company's netbacks and resources base, projected levels of fracture stimulation fluid recovery, the effect of design and performance improvements on future productivity, the anticipated timing of commencement of drilling, well-deepening and fracture-stimulations in connection with the Company's Caney drilling program, and the advancement of the Company's European projects, including permit 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 the Company's geologic models will be validated, that previous exploration results are indicative of future results and success, that future well production rates will be improved over existing wells, that design and performance improvements will reduce production time and improve productivity, that discoveries will prove to be economic, that all required permits and approvals, funding from co-venturers and the necessary labor and equipment will be obtained, provided or available, as applicable, on terms that are acceptable to the Company, when required, 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 and the industry as a whole. 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, that production rates do not match the Company's assumptions, 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.
For further information: Wolf E. Regener, President and Chief Executive Officer +1-805-484-3613 Email: investorrelations@bnkpetroleum.com Website: http://www.bnkpetroleum.com
(BKX.)