Press

BNK Petroleum Inc. Announces Second Quarter 2018 Results

Posted by OilVoice Press - OilVoice

10-Aug-2018


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

TSX ticker symbol; BKX
OTCQX ticker symbol; BNKPF

CAMARILLO, California, Aug. 10, 2018 /PRNewswire/ --

SECOND QUARTER HIGHLIGHTS

  • Average production for the second quarter of 2018 was 2,100 BOEPD, an increase of 116% compared to second quarter 2017 average production of 970 BOEPD.  The increase was primarily due to the Glenn 16-2H and WLC 14-1H wells that were part of the Company's 2018 drilling program as well as two wells that came into production in the second half of 2017 and some prior period adjustments, partially offset by the 2017 impact of offset fracture operations by another operator
  • Funds from operations was $3.4 million in the second quarter 2018 compared to $1.1 million in the second quarter of 2017.  The increase was mainly due to a 116% increase in production combined with a 44% increase in oil prices partially offset by realized losses from commodity contracts in the first quarter of 2018
  • Revenue, net of royalties was $6.9 million in the second quarter of 2018 compared to $2.5 million for second quarter of 2017, an increase of 178%, as production increased by 116% and average prices increased 50% between the quarters
  • General & administrative expenses decreased by 13% for the second quarter of 2018 compared to the second quarter of 2017.  The decrease relates primarily to management's continued efforts to reduce costs throughout the Company
  • Average netback from operations for the second quarter of 2018 was $35.60 per barrel, an increase of 67% from the prior year second quarter due to higher prices in 2018
  • Net loss for the second quarter of 2018 was approximately $0.8 million compared to a net income of $56,000 for the second quarter of 2017 due to unrealized losses of $1.4 million from hedged commodity contracts in the first quarter of 2018 compared to an unrealized gain of $0.6 in second quarter 2017
  • At June 30, 2018, cash totaled $1.4 million

 

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

"We are excited that the results of our 2018 drilling program has led to a substantial increase in production and almost a 200% increase in our funds from operations for the second quarter of 2018 compared to the prior year second quarter.  The Glenn 16-2H well came into production in late March and the WLC 14-1H well started production in May.  The total cost of each of these wells were both under our estimated $5.7 million budget.  We expect to continue the successful results of our 2018 development drilling program with the Brock 4-2H well which is expected to commence drilling around August 15th.  The Company will be operating the Brock 4-2H well with a 77% working interest in the well.  A major oil company with offset operations to the field owns the remaining 23% working interest.  The Company will also have a 36% working interest in a partner-operated well targeting the Caney formation, with drilling operations expected to begin in September.  This well is located in the section directly east of BNK's Brock 9-2H well.

Our net revenue increased by 178% in the second quarter 2018 as production increased by 116% and average prices increased by 50% compared to the prior year quarter.  In addition, we generated funds from operations of $3.4 million in the second quarter of 2018, which was a 198% increase from the second quarter 2017 amount of $1.1 million.

Average netbacks from operations for the second quarter of 2018 were $35.60 per boe, an increase of 67% compared to the prior year due to higher prices and increased production.  Netback after adjustments, which include the impact of price adjustments from commodity contracts and prior period adjustments on natural gas and NGL volumes sold as well as processing costs, were $24.97 per boe for the second quarter of 2018 compared to $27.99 per boe in the prior year second quarter.

In the second quarter of 2018, the Company incurred a net loss of $0.8 million compared to net income of $56,000 in the second quarter 2017.  This is primarily due to an unrealized loss on financial commodity contracts of $1.4 million in the second quarter of 2018, compared to an unrealized gain of $0.6 million in the second quarter of 2017."

 

Second Quarter

 

First Six Months

 
 

2018

2017

%

2018

2017

%

       

Net Income (Loss):

      

$ Thousands

$(801)

$56

-

$(1,295)

$1,040

-

$ per common share

$(0.00)

$0.00

-

$(0.01)

$0.00

-

assuming dilution

      
       

Capital Expenditures

$3,652

$940

289%

$11,582

$11,484

1%

       

Average Production (Boepd)

2,100

970

116%

1,783

862

107%

Average Price per Barrel

$54.31

$36.16

50%

$52.15

$38.46

36%

Average Netback from

operations per Barrel

$35.60

$21.30

67%

$33.86

$23.26

46%

Average Netback after

adjustments per Barrel

$24.97

$27.99

(11%)

$25.72

$30.14

(15%)

       
 

June

2018

 

March

2018

 

December

2017

 
       

Cash and Cash Equivalents

$  1,389

 

$ 1,024

 

$   521

 

Working Capital

$ (3,444)

 

$(5,058)

 

$  (537)

 

 

Second Quarter 2018 versus Second Quarter 2017

Oil and gas gross revenues totaled $6,866,000 in the quarter versus $2,473,000 in the second quarter of 2017.  Oil revenues increased $5,080,000 or 190% as oil production increased by 102% to 1,288 boepd and average oil prices increased by $20.06 per barrel or 44% to $66.17.  Natural gas revenues increased $513,000 or 298% to $685,000 as natural gas production increased 320% to 3,328 mcfpd which was partially offset by an average natural gas price decrease of $0.12/mcf or 5% to $2.26/mcf.  Natural gas production for the second quarter of 2018 included 2,104 mcfpd related to prior period adjustments.  Natural gas liquids (NGLs) revenues increased $243,000 or 71% as NGL production increased 29% to 257 boepd and average NGL prices increased 33% to $25.01.  NGL production for the second quarter of 2018 included 24 boepd related to prior period adjustments.

Average second quarter 2018 production per day increased 116% from the second quarter of 2017 due to two additional wells added to production in 2018 and two wells added in 2017.  Second quarter 2018 production also included 375 boepd related to prior period adjustments.

Production and operating expenses increased to $1,356,000 due to higher production.  Production and operating costs on a boe basis decreased by 17% to $5.59/boe due to an increase in production which lowers the fixed operating cost per barrel partially offset by increased production taxes due to a rate increase in 2018 which increased operating costs by $0.90/boe.

Depletion and depreciation expense increased $1,303,000 or 105% due to an increase in production in the second quarter of 2018.

General and administrative expenses decreased $129,000 or 13% due to continued cost cutting efforts in the second quarter of 2018.

Stock based compensation increased by $150,000 or 349% due to the timing of stock awards granted to employees.

Finance income decreased $1.2 million in the second quarter of 2018 compared to the prior year quarter due to unrealized and realized gains on commodity contracts in the second quarter of 2017.

Finance expense increased $2.0 million in the second quarter of 2018 compared to the prior year quarter primarily due to unrealized and realized losses on commodity contracts in the second quarter of 2018 offset by reduced interest expense on the credit facility in 2018.

Capital expenditures of $3,652,000 were incurred in the second quarter of 2018 relating to the 2018 drilling program.

FIRST SIX MONTHS 2018 HIGHLIGHTS

  • Average production for the first six months of 2018 was 1,783 BOEPD, an increase of 107% compared to prior year first six months average production of 862 BOEPD.  The increase was primarily due to the Glenn 16-2H and WLC 14-1H wells that were part of the Company's 2018 drilling program as well as two wells that came into production in the second half of 2017 and some prior period adjustments partially offset by the 2017 impact of offset fracture operations by another operator
  • Funds from operations was $5.6 million in the first six months of 2018 compared to $2.0 million in the first six months of 2017.  The increase was mainly due to a 107% increase in production combined with a 35% increase in oil prices partially offset by realized losses from commodity contracts in the first six months of 2018
  • Revenue, net of royalties was $11.8 million for first six months of 2018 compared to $4.7 million for the first six months of 2017, an increase of 150%, due to higher prices in 2018 and increased production
  • General & administrative expenses decreased by 2% for the first six months of 2018 compared to the first six months of 2017.  The decrease relates primarily to management's continued efforts to reduce costs throughout the Company partially offset by advisor fees in 2018
  • Average netback from operations for the first six months of 2018 was $33.86 per barrel, an increase of 46% from the prior year period due to higher prices in 2018
  • Net loss for the first six months of 2018 was $1.3 million compared to net income of $1.0 million for the first six months of 2017.  The 2018 amount included an unrealized loss on financial commodity contracts of $2.2 million and the 2017 amount included an unrealized gain on commodity contracts of $2.2 million
  • Cash totaled $1.4 million at June 30, 2018

 

First Six Months of 2018 versus First Six Months of 2017

Gross oil and gas revenues totaled $11,800,000 in the first six months of 2018 versus $4,650,000 in the first six months of 2017.  Oil revenues were $13,224,000 in the first six months versus $5,079,000 in the same period of 2017, an increase of 160% as average oil prices increased 35% or $16.72 a barrel coupled by an increase in oil production of 92%.  Natural gas revenues increased $732,000 or 222%, due to an average natural gas production increase of 267% in the first six months of 2018 offset by a decrease in natural gas prices of 12%.  Natural gas production for the first six months of 2018 included 1,244 mcfpd related to prior period adjustments.  NGL revenue increased $470,000, or 79%, due to an increase in NGL production of 47% and an average NGL price increase of 22% in the first six months of 2018.  NGL production for the first six months of 2018 included 15 boepd related to prior period adjustments.

Average production per day for the first six months of 2018 increased 107% from the prior year comparable period due to two additional wells added to production in 2018 and two wells added in 2017.  The production for the first six months of 2018 also included 222 boepd related to prior period adjustments.

Production and operating expenses increased 129% for the first six months of 2018 due to an increase in production.  Operating expenses averaged $6.18 per BOE for the first six months of 2018 compared to $6.54 per BOE for the same period in 2017.  The per BOE operating expense decrease for 2018 is due to an increase in production which lowers the fixed operating cost per barrel partially offset by increased production taxes due to a rate increase in 2018.

Depletion and depreciation expense increased $2,100,000 due to increased production.

General and administrative expenses decreased $43,000 primarily due to management's continued efforts to reduce costs throughout the Company which were partially offset by advisor fees in 2018.

Finance income decreased $3.2 million due to unrealized and realized gains on financial commodity contracts in 2017.

Finance expense increased $3.2 million due to unrealized and realized losses on commodity contracts in 2018 offset by reduced interest expense on the credit facility in 2018.

BNK PETROLEUM INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited, Expressed in Thousands of United States Dollars)

($000 except as noted)

    
 

June 30

 

December 31

 

2018

 

2017

    

Current Assets

   
 

Cash

$1,389

 

$521

 

Trade and other receivables

3,030

 

2,510

 

Other current assets

363

 

563

 

4,782

 

3,594

    

Non-current assets

   
 

Property, plant and equipment

154,646

 

147,195

 

154,646

 

147,195

    

Total Assets

$159,428

 

$150,789

    

Current Liabilities

   
 

Trade and other payables

$5,382

 

$3,132

 

Fair value of commodity contracts

2,844

 

999

 

8,226

 

4,131

    

Non-current liabilities

   
 

Loans and borrowings

29,536

 

24,484

 

Asset retirement obligations

1,081

 

950

 

Fair value of commodity contracts

1,328

 

951

 

31,945

 

26,385

    

Equity

   
 

Share capital

289,540

 

289,522

 

Contributed surplus

22,667

 

22,406

 

Deficit

(192,950)

 

(191,655)

Total Equity

119,257

 

120,273

    

Total Equity and Liabilities

$159,428

 

$150,789

 

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)

     
  

Second Quarter

 

First Six Months

  

2018

 

2017

 

2018

 

2017

         

Oil and natural gas revenue, net

$

6,866

 

2,473

 

11,798

 

4,650

Other income

 

1

 

75

 

19

 

76

  

6,867

 

2,548

 

11,817

 

4,726

         

Production and operating expenses

 

1,356

 

594

 

2,343

 

1,021

Depletion and depreciation expense

 

2,541

 

1,238

 

4,295

 

2,195

General and administrative expenses

 

867

 

996

 

1,890

 

1,933

Stock based compensation

 

193

 

43

 

222

 

87

  

4,957

 

2,871

 

8,750

 

5,236

         

Finance income

 

-

 

1,212

 

-

 

3,249

Finance expense

 

(2,687)

 

(638)

 

(4,312)

 

(1,107)

         
 

Net income (loss) and comprehensive

income (loss) from continuing

operations

$

(777)

 

251

 

(1,245)

 

1,632

 

Net loss and comprehensive loss from

discontinued operations

 

(24)

 

(195)

 

(50)

 

(592)

 

Net income (loss)

 

(801)

 

56

 

(1,295)

 

1,040

 

Net income (loss) per share

$

(0.00)

 

0.00

 

(0.01)

 

0.01


 

BNK PETROLEUM INC.

SECOND QUARTER 2018

(Unaudited, expressed in Thousands of United States dollars, except as noted)

   
 

Second Quarter

First Six Months

  

2018

2017

 

2018

2017

Oil revenue before royalties

$

7,758

2,678

 

13,224

5,079

Gas revenue before royalties

 

685

172

 

1,061

329

NGL revenue before royalties

 

585

342

 

1,063

593

Oil and Gas revenue

 

9,028

3,192

 

15,348

6,001

       

Funds from operations

 

3,400

1,140

 

5,561

2,026

Additions to property, plant & equipment

 

(3,652)

(940)

 

(11,582)

(11,484)

       
       

Statistics:

      
 

2nd Quarter

First Six Months

  

2018

2017

 

2018

2017

Average Oil production (Bopd)

 

1,288

638

 

1,139

592

Average natural gas production (mcf/d)

 

3,328

793

 

2,467

673

Average NGL  production (Boepd)

 

257

200

 

233

158

Average production (Boepd)

 

2,100

970

 

1,783

862

Average oil price ($/bbl)

 

$66.17

$46.11

 

$64.13

$47.41

Average natural gas price ($/mcf)

 

$2.26

$2.38

 

$2.38

$2.70

Average NGL price ($/bbl)

 

$25.01

$18.80

 

$25.21

$20.72

       

Average price (Boe)

 

$54.31

$36.16

 

$52.15

$38.46

Royalties (Boe)

 

13.12

8.13

 

12.11

8.66

Operating expenses (Boe)

 

5.59

6.73

 

6.18

6.54

Netback from operations (Boe)

 

$35.60

$21.30

 

$33.86

$23.26

Price adjustment from commodity

contracts (Boe)

 

 

(3.85)

 

6.69

 

 

(3.85)

 

6.69

Netback including commodity contracts

(Boe)

 

31.75

27.99

 

30.28

30.14

Prior period adjustments (Boe)

 

(6.78)

-

 

(4.56)

-

Netback after adjustments (Boe)

 

$24.97

$27.99

 

$25.72

$30.14

 

BNK PetroleumTSXResults

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