Press

BNK Petroleum Inc. Announces Third Quarter 2018 Results With Positive Net Income

Posted by OilVoice Press - OilVoice

13-Nov-2018


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

TSX ticker symbol; BKX
OTCQX ticker symbol; BNKPF

CAMARILLO, California, Nov. 9, 2018 /PRNewswire/ -

THIRD QUARTER HIGHLIGHTS

  • Average production for the third quarter of 2018 increased by 40% to 1,534 BOEPD, compared to third quarter 2017 average production of 1,097 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 last few months of 2017 partially offset by 77 BOEPD of prior period adjustments
  • Funds from operations increased by 107% to $3.4 million in the third quarter 2018 compared to $1.7 million in the third quarter of 2017. The increase was mainly due to an 40% increase in production combined with a 60% increase in prices partially offset by realized losses from commodity contracts in 2018
  • Revenue, net of royalties increased by 136% to $6.8 million in the third quarter of 2018 compared to $2.9 million for third quarter of 2017, as production increased by 40% and average prices increased 60% between the quarters
  • Average netback from operations increased by 68% for the third quarter of 2018 to $38.33 per barrel from the prior year third quarter due to higher prices in 2018
  • Positive net income for the third quarter of 2018 of $1.2 million compared to a net loss of $1.3 million for the third quarter of 2017 due to unrealized losses of $0.2 million from hedged commodity contracts in the third quarter of 2018 compared to an unrealized loss of $1.3 million in the third quarter of 2017
  • At September 30, 2018, cash totaled $1.5 million

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

"The Company's successful 2018 drilling program has resulted in a 40% increase in quarterly production from the prior year.  The production increase, combined with a 60% increase in prices, has resulted in a 107% increase in our funds from operations for the third quarter of 2018 compared to the prior year third quarter.  As we start the fourth quarter, we are excited about the final phase of our 2018 drilling program as both the Brock 4-2H (BNK 77% working interest) and Anderson 1-15H10X3 (BNK 33% working interest) wells have already been successfully drilled under budget.  Fracture stimulation operations of the Brock 4-2H began this week with the two mile long lateral Anderson 1-15H10X3 well to follow in mid-November. 

Our net revenue increased by 136% in the third quarter of 2018 due to the production and price increases.  Average netbacks from operations for the third quarter of 2018 were $38.33 per boe, an increase of 68% 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 $33.73 per boe for the third quarter of 2018 compared to $26.76 per boe in the prior year third quarter.

In the third quarter of 2018, the Company generated net income of $1.2 million compared to a net loss of $1.3 million in the third quarter of 2017.  This included an unrealized loss on financial commodity contracts of $0.2 million in the third quarter of 2018, compared to an unrealized loss of $1.3 million in the third quarter of 2017."

 

Third Quarter

 

First Nine Months

 
 

2018

2017

%

2018

2017

%

Net Income (Loss):

      

$ Thousands

$1,184

$(1,333)

-

$(111)

$(293)

-

$ per common share

$0.01

$(0.01)

-

$(0.00)

$(0.00)

-

assuming dilution

      
       

Capital Expenditures

$2,188

$7,485

(71%)

$13,771

$18,969

(27%)

       

Average Production (Boepd)

1,534

1,097

40%

1,700

942

80%

Average Price per Barrel

$59.37

$37.05

60%

$51.12

$37.87

35%

Average Netback from
operations per Barrel

$38.33

$22.88

68%

$35.39

$23.09

53%

Average Netback after
adjustments per Barrel

$33.73

$26.76

26%

$28.16

$28.79

(2%)

       
 

September
2018

 

June
2018

 

December
2017

 
       

Cash and Cash Equivalents

$   1,548

 

$  1,389

 

$   521

 

Working Capital

$ (2,541)

 

$(3,444)

 

$  (537)

 

 

Third Quarter 2018 versus Third Quarter 2017

Oil and gas gross revenues totaled $8,378,000 in the third quarter of 2018 versus $3,739,000 in the third quarter of 2017.  Oil revenues increased $4,458,000 or 146% as oil production increased by 64% to 1,182 boepd and average oil prices increased by $22.90 per barrel or 49% to $69.18.  Natural gas revenues decreased $106,000 or 41% to $151,000 as natural gas production decreased 22% to 789 mcfpd, which was coupled by an average natural gas price decrease of $0.66/mcf or 24% to $2.08/mcf.  Natural gas production for the third quarter of 2018 included a decrease of 565 mcfpd related to prior period adjustments.  Natural gas liquids (NGLs) revenues increased $287,000 or 68% as NGL production increased 6% to 220 boepd and average NGL prices increased 59% to $34.89.  NGL production for the third quarter of 2018 included an increase of 17 boepd related to prior period adjustments.

Average third quarter 2018 production per day increased 40% from the third quarter of 2017 due to two additional wells added to production in 2018 and two wells added in the last few months of 2017.  Third quarter 2018 production also included a decrease of 77 boepd related to prior period adjustments.

Production and operating expenses increased to $1,268,000 due to higher production.  Production and operating costs on a boe basis increased by 36% to $7.96/boe due to increases in production taxes from tax rate increases in 2018 which increased operating costs by $1.70/boe and additional costs related to water hauling, wireline and road repair work which increased operating costs by $0.31/boe in the quarter.

Depletion and depreciation expense increased $471,000 or 33% due to an increase in production in the third quarter of 2018.

General and administrative expenses increased $45,000 or 6% due to less capitalized G&A in the third quarter of 2018 compared to the prior year resulting from less drilling activity in the third quarter of 2018 compared to the prior year quarter.

Stock based compensation increased by $13,000 or 30% due to the timing of stock awards granted to employees.

Finance income decreased $0.4 million in the third quarter of 2018 compared to the third quarter of 2017 due to realized gains on commodity contracts in the third quarter of 2017.

Finance expense decreased slightly in the third quarter of 2018 compared to the prior year quarter primarily due to lower unrealized losses on commodity contracts in the 2018 third quarter partially offset by a realized loss on commodity contracts in the third quarter of 2018 and higher interest expense on the credit facility in 2018 due to increased borrowings.

Capital expenditures of $2,188,000 were incurred in the third quarter of 2018 relating to the 2018 drilling program.

FIRST NINE MONTHS 2018 HIGHLIGHTS

  • Average production for the first nine months of 2018 was 1,700 BOEPD, an increase of 80% compared to prior year first nine months average production of 942 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 last few months of 2017 and some prior period adjustments
  • Funds from operations were $9.0 million in the first nine months of 2018 compared to $3.7 million in the first nine months of 2017, an increase of 144%. The increase was mainly due to a 80% increase in production combined with a 35% increase in average prices partially offset by realized losses from commodity contracts in the first nine months of 2018
  • Revenue, net of royalties was $18.6 million for the first nine months of 2018 compared to $7.5 million for the first nine months of 2017, an increase of 147%, due to higher prices and increased production
  • Average netback from operations for the first nine months of 2018 was $35.39 per barrel, an increase of 53% from the prior year period due to higher production and prices in 2018
  • Net loss for the first nine months of 2018 was $0.1 million compared to net loss of $0.3 million for the first nine months of 2017. The 2018 amount included an unrealized loss on financial commodity contracts of $2.5 million and the 2017 amount included an unrealized gain on commodity contracts of $0.9 million
  • Cash totaled $1.5 million at September 30, 2018

First Nine Months of 2018 versus First Nine Months of 2017

Gross oil and gas revenues increased by 144% and totaled $23,724,000 in the first nine months of 2018 versus $9,739,000 in the first nine months of 2017.  Oil revenues were $20,743,000 in the first nine months of 2018 versus $8,142,000 in the same period of 2017, an increase of 155% as average oil prices increased 40% or $18.89 a barrel coupled by an increase in oil production of 82%.  Natural gas revenues increased $626,000 or 107%, due to an average natural gas production increase of 141% in the first nine months of 2018 offset by a decrease in natural gas prices of 14%.  Natural gas production for the first nine months of 2018 included an increase of 634 mcfpd related to prior period adjustments.  NGL revenue increased $757,000, or 75%, due to an increase in NGL production of 31% and an average NGL price increase of 34% in the first nine months of 2018.  NGL production for the first nine months of 2018 included an increase of 16 boepd related to prior period adjustments.

Average production per day for the first nine months of 2018 increased 40% from the prior year comparable period due to two additional wells added to production in 2018 and two wells added in the last few months of 2017.  The production for the first nine months of 2018 also included an increase of 122 boepd related to prior period adjustments.

Production and operating expenses increased 124% for the first nine months of 2018 mainly due to an increase in production.  Operating expenses averaged $6.79 per BOE for the first nine months of 2018 compared to $6.26 per BOE for the same period in 2017.  The per BOE operating expense increase for 2018 is due to an increase in production taxes due to rate increases in 2018.

Depletion and depreciation expense increased $2,571,000 due to increased production.

General and administrative expenses increased $2,000 due to advisor fees in 2018 which offset G&A reductions from management's continued efforts to reduce costs throughout the Company.

Finance income decreased $2.4 million due to unrealized and realized gains on financial commodity contracts in 2017. 

Finance expense increased $4.5 million due to unrealized losses of $2.5 million and realized losses of $2.0 million on commodity contracts in 2018.

EarningsResultsBNK PetroleumUnited StatesUSA

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