BNK Petroleum Inc. Announces 4th Quarter 2010 Results
CAMARILLO, California, March 25, 2011 /PRNewswire/ --
- TSX ticker symbol: BKX
All amounts are in U.S. Dollars unless otherwise indicated:
Fourth Quarter Year
2010 2009 % 2010 2009 %
Earnings (Loss):
$ Thousands $900 ($2,673) P $299 ($12,588) P
$ per common share
assuming dilution $0.01 ($0.03) P $0.00 ($0.17) P
Capital Expenditures $5,288 $3,822 38% $32,870 $15,161 117%
Average Production
(Boepd) 1,516 940 61% 1,216 939 29%
Average Product $43.60 $39.32 11% $41.41 $29.48 40%
Price per Barrel
Average Netback $32.24 $15.35 110% $24.61 $12.97 90%
per Barrel
12/31/2010 9/30/2010 12/31/2009
Cash and Cash $62,062 $10,115 $8,378
Equivalents
Working Capital $63,503 $7,511 ($13,804)
BNK's President and CEO Wolf Regener commented:
"BNK delivered significantly improved financial and operating performance for both the year and the fourth quarter ended December 31, 2010. For the full year earnings were $299,000 in 2010 versus a loss of $12.6 million in 2009 driven by higher oil and gas revenues, higher gathering revenues, gains from natural gas hedges, lower interest, stock based compensation, depletion expenses and currency gains derived from a strong Canadian dollar. Oil and gas revenues increased 78% to $18.4 million in 2010 versus $10.3 million a year ago.
Fourth quarter earnings were $.9 million versus a loss in the fourth quarter of 2009 of $2.7 million.
Average daily production in the fourth quarter totaled 1,516 barrels a 61% improvement versus the fourth quarter of 2009.
Additions to property, plant and equipment were $32.9 million in 2010 (including $12 million from the purchase of the overriding royalty and net profits interest on our prior debt facility and $2.6 million spent in Europe) versus $15.2 million in 2009. Working capital increased to $63.5 million at December 31, 2010 versus a negative $13.8 million at December 31, 2009.
In Poland under the Saponis joint venture, the Wytowno #1 well was drilled, cased and cemented on budget in the first quarter of 2011 while the second well (Lebork #1) began drilling on March 11, 2011. The third well in the Saponis venture, Starogard#1 currently has an anticipated start date in the third quarter of 2011. In our wholly owned subsidiary, Indiana, core analysis and geological work is ongoing and the Company plans to spud its first well later this year.
In Germany the Company is currently analyzing shale samples gathered as part of two field studies undertaken in 2010. Once this analysis is completed a geological model will be further refined and 2D seismic work will commence in 2011.
The Company has also made other concession applications, in other basins, including France and is awaiting their potential grant.
Based on our most recent independent reserve evaluation of our oil and gas properties in the United States before tax net present value of our proved and probable reserves increased 31% to $315 million from $241 million using a 10% discount factor while proved and probable reserves increased 5% to 39.7 million boe."
FOURTH QUARTER HIGHLIGHTS
- The net earnings in the quarter were $900,000 versus a loss of $2,673,000 in the fourth quarter of 2009.
- Oil and gas revenue increased 79% to $6,081,000 in the quarter
- Earnings per share was one cent versus a three cent per share loss last year
- Capital expenditures were $5,288,000 in the quarter up 38% from the fourth quarter of 2009
- Production per day averaged 1,516 boe or 61% higher than the fourth quarter of 2009
- Oil production increased 119% to 371 barrels per day versus the fourth quarter of 2009
- Natural gas production increased 46% to 3,263 mcf per day versus the fourth quarter of 2009
- NGL's (Natural Gas Liquids) production increased 51% to 601 barrels per day
- Production per day increased 38% from the third quarter of 2010 as wells fracture stimulated in the third quarter went back on production in the fourth quarter
- On October 19, 2010 the Company announced a private-placement of 26 million shares at a price per share of CAD $2.54 for gross proceeds of $66,040,000. The placement closed in two tranches between October 27 and November 8, 2010
- On October 27, 2010 the Company obtained a new lending facility with a borrowing base of $23.8 million against which $20 million was borrowed and together with cash of $3.5 million was used to pay off its then existing debt facility
- Working Capital improved $55.6 million to $63,503,000 at December 31, 2010 from $7,511,000 at September 30, 2010 due to the $66 million private placement in November
Fourth Quarter 2010 versus Fourth Quarter 2009
Oil and gas revenues less royalties were $4,940,000 up from $2,687,000 in the fourth quarter of 2009. A 61% increase in average daily production coupled with improved product pricing averaging $43.60 a barrel up from $39.32 a barrel (an 11% increase) in the fourth quarter of 2009 caused the increase in revenue between quarters.
In the quarter four gross stages from two Company operated wells in its Tishomingo field were fracture stimulated. The fracture stimulation work on one of the wells (three stages) appears to be initially successful however the fracture stimulation work on the other well (one stage) was followed by mechanical issues, which caused the well to be shut in for repairs.
In the quarter the Company recorded an unrealized risk management loss on its product hedges of $327,000 primarily related to projected increases in future prices of natural gas compared to the previous quarter.
Operating expenses before a retroactive adjustment for production taxes of $1,115,000 increased 15% to $1,559,000 due to higher gathering fees and production taxes while general and administrative expenses increased $919,000 or 74% to $2,168,000 due to increased travel and professional fees relating to our European operations and higher salary and professional fees in North America.
Total interest expense in the quarter declined $147,000 or 27% to $394,000 due to lower debt levels between quarters.
A foreign exchange gain of $995,000 was recorded in the quarter primarily due to the strengthening of the Canadian dollar to the US dollar in the fourth quarter of 2010. A $13,000 foreign exchange gain was recorded in the fourth quarter of 2009.
Stock-based compensation expense totaled $809,000 in the quarter and was 203% higher than the fourth quarter of 2009 as more options were granted in the fourth quarter of 2010 (770,000) than in the fourth quarter of 2009 (65,000).
Depletion, Accretion and Depreciation expense totaled $1,685,000 in the quarter or 34% higher than the fourth quarter of 2009 due to an increase in production of 61% offset by increased reserves decreasing the depletion rate per barrel.
2010 versus 2009
Earnings for the year of $299,000 compared to the loss for 2009 of $12,588,000, an increase of $13,029,000
2010 HIGHLIGHTS
- Earnings of $299,000 versus a $12.6 million loss in 2009.
- Additions to property, plant and equipment totals $32,870,000 versus $15,161,000 last year. Excluding the $12,000,000 paid to Wells Fargo in the second quarter to purchase the net profits and overriding royalty interests from its senior lender net additions to PP&E totaled $20,870,000 in 2010 and primarily relate to fracing and drilling costs in Oklahoma
- Average production per day increased 29% to 1,216 barrels per day
- Average product price increased 40% to $41.41 per barrel
- Oil and Gas revenue increased 78% to $18,378,000
- Cash and working capital were $62,062,000 and $63,503,000 respectively at December 31, 2010 versus $8,378,000 and a negative $13,804,000 respectively at December 31, 2009.
- On January 26, 2010 the Company was awarded two additional concessions of 770,000 acres in Germany
- On March 20, 2010 the Company was awarded three new concessions in Poland totaling 880,000 acres
- On May 19, 2010 the Company was awarded an additional concession in Germany totaling 840,000 acres bringing total gross acreage in Europe to 3.9 million acres (3.5 million net)
- On May 18, 2010 the Company closed a bought deal equity financing raising $43,593,000 in gross proceeds issuing 15,800,000 common shares at a price of CAD$2.85
- On May 19, 2010 the Company repaid its subordinated debt of $2,749,000
- On May 21, 2010 the Company purchased the net profits and overriding royalty interests from its senior lender for $12,000,000
Oil and gas revenues net of royalties were $14,690,000 up from $8,208,000 in 2009. This 79% increase was caused by increased average production of 1,216 barrels per day or 29% versus 2009 and higher average product prices of $41.41 versus $29.48 in 2009, an increase of 40%.
In 2010 64 gross stages from 13 wells were fracture stimulated in the Tishomingo field. In all of 2009 32 gross stages were fracture stimulated.
In 2010 the Company recorded gathering revenue of $2,870,000 versus $482,000 in the same period in 2009. However $1,150,000 of this year's gathering income resulted from a correction of an accounting error that related to 2009 and 2008.
In 2010 an unrealized gain on risk management contracts of $610,000 versus a loss of $288,000 in 2009 relates to gains primarily on natural gas hedges.
Operating expenses before a retroactive adjustment for production taxes were $4,881,000 in 2010 or 35% higher than the comparable period in 2009 due to higher gathering fees and repair work on producing wells.
General and Administrative expenses totaled $5,776,000 in 2010 versus $3,983,000 in 2009, an increase of 45% due to higher salary, travel and recruitment costs.
Interest in 2010 was $1,750,000 versus $3,145,000 in 2009, a decline of 44% due to lower debt levels.
Stock based compensation expense declined 27% to $2,542,000 due to lower levels of options granted in 2010 than 2009.
Depletion, depreciation and accretion declined 17% to $5,260,000 due to an increase in production of 29% offset by increased reserves decreasing the depletion rate per barrel.
(US $000 Except as Noted)
Three months ended Year ended
December 31 December 31
2010 2009 2010 2009
Revenue
Oil and gas $6,081 $3,401 $18,378 $10,319
Royalties (1,141) (714) (3,688) (2,111)
Gathering 464 (338) 2,870 482
Management fee 202 - 202 -
Realized gain
on risk management
contracts 110 28 348 71
Unrealized gain
(loss) on risk
management
contracts (327) 46 610 (288)
Interest and other 16 2 42 7
Expenses incurred
on disposal of
subsidiary - (436) - (436)
5,405 1,989 $18,762 $8,044
Expenses
Operating 444 1,360 3,766 3,616
General and
administrative 2,168 1,249 5,776 3,983
Interest on
long-term debt 394 454 1,691 2,586
Interest on
subordinated debt - 87 59 559
Foreign exchange
(gain) loss (995) (13) (631) 67
Stock-based
compensation 809 267 2,542 3,487
Depletion,
depreciation and 1,685 1,258 5,260 6,334
accretion
4,505 4,662 18,463 20,632
Net income (loss)
and comprehensive
income (loss) for
the period 900 (2,673) 299 (12,588)
Income (Loss)
per share $0.01 $(0.03) $0.00 $(0.17)
Average shares
outstanding 117,404,930 82,763,422 120,178,685 76,192,594
BNK Petroleum Inc.
(US $000 except as noted)
4th QUARTER Year
2010 2009 2010 2009
Oil revenue before 1,129 7,396 3,992
royalties 2,791
Gas revenue before 832 3,949 2,577
royalties 1,091
NGL revenue before 1,440 7,033 3,750
royalties 2,199
Oil and Gas revenue 6,081 3,401 18,378 10,319
Cash flow provided by
operating activities 3,431 (1,195) 7,199 (2,479)
Additions to property,
plant & equipment 5,288 3,822 32,870 15,161
Issue of Equity
Investments 63,018 17,656 104,101 22,162
Proceeds from Long-term
debt 19,486 121 19,486 29,117
Repayment of Long term
debt 23,358 602 28,036 1,080
Repayment of
Subordinated debt - 8,677 2,749 10,705
Statistics:
Average natural gas
production (mcf/d) 3,263 2,229 2,659 2,157
Average NGL production
(Boepd) 601 399 515 381
Average Oil production
(Bopd) 371 169 258 198
Average production
(Boepd) 1,516 940 1,216 939
Average natural gas
price ($/mcf) $3.63 $4.06 $4.07 $3.27
Average NGL price
($/bbl) $39.75 $39.24 $37.44 $26.76
Average oil price
($/bbl) $81.79 $72.53 $78.48 $51.85
Average price per barrel $43.60 $39.32 $41.41 $29.48
Royalties per barrel 8.18 8.24 8.31 6.03
Operating expenses per
barrel 3.18 15.73 8.49 10.48
Netback per barrel $32.24 $15.35 $24.61 $12.97
Non-GAAP Measures
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-GAAP 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.
Caution Regarding Forward-Looking Information
Certain 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, commencement of drilling, 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 all required permits and approvals, funding from co-venturers and the necessary labor and equipment will be obtained, provided or available, as applicable, when required. 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, 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 www.sedar.com.
About BNK Petroleum Inc.
BNK Petroleum Inc. is a U.S. based 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 Germany. 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
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