BNK Announces 4th Quarter and Annual 2012 results

Calgary, Alberta (ots/PRNewswire) -

TSX ticker symbol; BKX

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

Fourth Quarter Twelve Months
2012 2011 % 2012 2011 %

Earnings (Loss):
$ Thousands ($4,538) $687 L ($14,948) $705 L
$ per common share ($0.03) $0.00 L ($0.10) $0.00 L
assuming dilution

Funds from operations:
$ Thousands $(1,855) ($346) (436%) ($5,545) $5,972 L
$ per common share ($0.01) ($0.00) - ($0.04) $0.04 L

Capital Expenditures $5,009 $10,778 (54%) $41,113 $33,958 21%

Average Production (Boepd) 1,681 2,066 (19%) 1,581 1,645 (4%)
Average Product Price per Barrel $33.52 $42.60 (21%) $34.61 $45.46 (24%)
Average Netback per Barrel $17.83 $26.06 (32%) $17.75 $27.09 (34%)

12/31/2012 12/31/2011 9/30/2012

Cash and Cash Equivalents $3,419 $40,496 $10,285
Adjusted Working Capital $1,250* $39,697 $7,904

* Excludes debt classified as current at December 31, 2012
refinanced to non-current in January 2013.

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

"With the recently announced signing of the Purchase and Sale
Agreement with XTO Energy Inc. for the sale of our Tishomingo Field
assets in Oklahoma, other than the Caney and upper Sycamore
formations, for $147.5 million in cash, post-closing, the Company
will be well positioned to maximize what we believe will be
outstanding opportunities in the oil-rich Caney and upper Sycamore
formations and to pursue our exciting European projects with or
without partners. The test results from the first Caney wells have
been encouraging and we look forward to drilling the next wells,
where the first of them is about to begin drilling. Completion of the
sale transaction with XTO Energy Inc. is subject to customary closing
conditions. If those conditions are satisfied, the transaction is
expected to close in late April, 2013.

The fourth quarter loss was $4.5 million versus income of $.7
million earned in the fourth quarter of 2011. For the full year a
loss of $14.9 million was incurred versus a profit of $.7 million
earned in 2011.

Capital expenditures were a record $41.1 million in 2012 as the
Company continued to invest in Oklahoma and drilled two wells in
Poland.

In Poland, as was stated in the Company's January 13, 2013 press
release, the Company continues to await approval to re-enter, drill a
horizontal leg and fracture stimulate the Gapowo B-1 well. The
Company is continuing to have discussions with potential farmout
partners, but under the assumed sale of the Company's Woodford
assets, the Company will have the flexibility to drill the Gapowo B-1
well on its own, after approval for re-entry is received.

The Company is continuing to have discussions with potential
farmout partners for its European assets, but once sale of the
Company's Woodford assets to XTO Energy Inc. is completed, the
Company will have the flexibility to drill the Gapowo B-1 well on its
own.

In Spain, the Company has submitted five separate Environmental
Impact Assessments ("EIA") documents for the exploration permits on
its Sedano and Urraca concessions. The EIA's are part of the process
to obtain approval to drill exploration wells on these concessions."

FOURTH QUARTER HIGHLIGHTS:

- Net loss was $4.5 million versus earnings of $.7 million from the fourth
quarter of 2011
- Capital expenditures were $5.0 million versus $10.8 million from the fourth
quarter of 2011, a decrease of 54%
- Average per day production from the Tishomingo field in Oklahoma decreased to
1,681 versus 2,066 from the fourth quarter of 2011, a decrease of 19%
- Average netbacks were $17.83 in the quarter versus $26.06 in the fourth
quarter of 2011 or a decline of 32%

Fourth Quarter 2012 to Fourth Quarter 2011

Oil and gas revenues before royalties totaled $5,184,000 in the
fourth quarter versus $8,098,000 in the fourth quarter of 2011. Oil
revenues decreased $1,165,000 or 39% as average oil prices decreased
12% to $80.93 a barrel while average production per day declined 31%.
Retroactive working interest adjustments reduced average fourth
quarter crude oil prices by $3.03 a barrel, absent these adjustments
average fourth quarter crude oil prices would have been $83.96. NGL
revenue decreased $991,000 or 32% due to average production per day
decreasing 41 barrels a day or 5% while average NGL prices decreased
29% to $31.02 a barrel. Natural gas revenues decreased 37% to
$757,000 as average per day gas production decreased 25% to 4,240
metric cubic feet per day (mcf/d) while average natural gas prices
decreased 16% to $3.28 an MCF.

Other income decreased $297,000 from $1,195,000 in the fourth
quarter of 2011 primarily due to lower management fee income relating
to the Company's role as Manager of Saponis Investments Sp z o.o.
("Saponis") partially offset by gains from eliminating asset
retirement obligations for wells no longer owned by the Company.

Exploration and evaluation expenses increased $526,000 in the
quarter due to costs incurred relating to the decision to discontinue
drilling activities in certain concessions in Germany.

Production and operating expenses totaled $1,453,000 versus
$1,625,000 in the fourth quarter of 2011 or 11% commensurate with the
19% decline in production between periods.

Depletion and depreciation expenses decreased 16% to $1,936,000
also due to the decline in average production between periods.

General and administrative expenses decreased 2% to $4,267,000 due
to lower professional fees between quarters.

Restructuring costs increased $566,000 to $756,000 due to
severance costs relating the decision to discontinue exploration
activities in five concessions in Germany and to eliminate the New
Venture Geological staff in the Camarillo office and absorb those
activities with the existing Geological staff.

Finance income decreased 86% to $446,000 primarily due to lower
foreign exchange gains.

Finance expense decreased in the fourth quarter by 45% to 768,000
due to lower unrealized losses on financial commodity contracts.

Full Year 2012 versus Full Year 2011:

FULL YEAR HIGHLIGHTS:

- Average production decreased 4% to 1,581 barrels per day
- Net oil and gas revenues decreased 27% to $16,273,000 from $22,179,000
- Net loss totaled $14,948,000 versus net income of $705,000 in 2011
- Average net-back per barrel decreased 34% to $17.75
- Cash flow used by operating activities totaled $9,650,000 versus providing
$3,737,000 in 2011
- Capital expenditures totaled $41,113,000 of which $26,688,000 was spent in
Poland and $12,818,000 was spent in Oklahoma
- Other Income declined $2,776,000 to $1,633,000

Oil and gas revenues net of royalties totaled $16,273,000 in 2012
versus $22,179,000 in 2011. Oil revenues before royalties decreased
$2,053,000 or 19% as average oil prices decreased $0.35 a barrel or
.4% to $90.59 while average oil production per day decreased 19% to
257 barrels per day. Natural gas liquid revenues (NGLs) before
royalties decreased $2,980,000 or 28% as average NGL prices decreased
30% to $31.58 while average per day production increased 3%. Natural
gas revenues before royalties decreased $2,237,000 or 37% as average
natural gas production decreased 3% while average natural gas prices
decreased 35% to $2.66 metric cubic feet.

Other income declined $2,776,000 due to the seismic sale in 2011
and lower management fees partially offset by gains from eliminating
asset retirement obligations.

Exploration and evaluation expenses declined $757,000 due to
higher exploration costs in 2011 relating to pre-concession activity
and a 2011 impairment in the United States partially offset by the
write-off of E&E assets related to five concessions in Germany in
2012.

Depletion and depreciation expense increased $536,000 or 8% due to
an increased depletable base on which the depletion rate is applied.

General and administrative expenses increased $4,670,000. This
increase was primarily due to higher payroll and related costs from
increased headcount of $2,951,000, higher consulting, management,
accounting and public relations costs of $970,000 and an increase in
legal costs relating to the European assets of $414,000.

Restructuring costs totaling $1,771,000 were incurred to
reorganize the European assets to facilitate their management and
financing and for severance relating to Germany and Camarillo.

Finance income decreased $1,375,000 primarily due to lower
unrealized gains on warrant revaluation and foreign exchange gains in
2011.

Finance expense increased $1,346,000 primarily due to foreign
exchange losses of $721,000 relating to foreign currency denominated
transactions in Poland and fluctuations between the US dollar and the
Euro, higher interest expense of $299,000 due to increased borrowings
and unrealized losses on financial commodity contracts in 2012.

Key Financial and Operating data follow:

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, Expressed in Thousands of United States Dollars)
December December
31, 31,
2012 2011
Assets
Cash and cash
equivalents $ 3,419 $ 40,496
Trade and other
receivables 11,564 11,509
Deposits and
prepaid expenses 2,367 2,309
Fair value of
commodity
contracts 779 738
Total current assets 18,129 55,052

Non-current assets
Property, plant
and equipment 157,132 150,585
Exploration and
evaluation assets 42,343 14,639
Long-term
Receivables and
other non-current
assets 1,297 2,239
Total Non-current assets 200,772 167,463

Total Assets $ 218,901 $ 222,515

Liabilities
Loans and
borrowings $ 31,797 $ -
Trade and other
payables 16,879 15,355
Total current liabilities 48,676 15,355

Non-current liabilities
Loans and
borrowings - 23,353
Asset retirement
obligations 1,312 1,769
Fair value of
commodity
contracts 75 -
Warrants 3 262
Total non-current
liabilities 1,390 25,384

Equity
Share capital 247,326 247,207
Contributed
surplus 16,663 14,775
Deficit (95,154) (80,206)
Total equity 168,835 181,776
Total Equity and
Liabilities $ 218,901 $ 222,515

BNK PETROLEUM INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
(Unaudited, expressed in Thousands of United States dollars,
except per share amounts)

Fourth Quarter Twelve Months
2012 2011 2012 2011

Oil and natural gas
revenue, net of
royalties $ 4,212 $ 6,580 $ 16,273 $ 22,179
Gathering income 356 457 1,420 1,811
Other income 898 1,195 1,633 4,409
5,466 8,232 19,326 28,399

Exploration and
evaluation
expenditures 1,078 552 1,388 2,145
Production and
operating expenses 1,453 1,625 6,002 5,916
Depletion and
depreciation 1,936 2,306 7,141 6,605
General and
administrative
expenses 4,267 4,372 16,331 11,661
Legal restructuring
costs 756 190 1,771 1,170
Stock based
compensation 192 359 877 2,154
9,682 9,404 33,510 29,651

Finance income 446 3,266 1,706 3,081
Finance expense (768) (1,407) (2,470) (1,124)

Net income (loss) and
comprehensive
income (loss) $ (4,538) $ 687 $ (14,948) $ 705

Net income (loss) per
share
Basic and Diluted $ (0.03) $ 0.00 $ (0.10) $ 0.00

BNK Petroleum Inc.
Fourth Quarter and Year 2012
($000 except as noted)

4th Quarter Twelve Months
2012 2011 2012 2011
Oil revenue before
royalties $ 1,822 2,987 8,525 10,578
Gas revenue before
royalties 1,281 2,038 3,873 6,110
NGL revenue before
royalties 2,081 3,072 7,628 10,608
Oil and Gas revenue 5,184 8,097 20,026 27,296

Cash Flow provided (used)
by operating activities 845 3,363 (9,650) 3,737
Capital expenditures (5,009) (10,778) (41,113) (33,958)
Cash proceeds of stock
options and warrants - 4 63 625

Statistics:
4th Quarter Twelve Months
2012 2011 2012 2011
Average natural gas
production (mcf/d) 4,240 5,644 3,981 4,114
Average NGL production
(Boepd) 729 770 660 640
Average Oil production
(Bopd) 245 355 257 319
Average production (Boepd) 1,681 2,066 1,581 1,645
Average natural gas price
($/mcf) $3.28 $3.92 $2.66 $4.07
Average NGL price ($/bbl) $31.02 $43.39 $31.58 $45.38
Average oil price ($/bbl) $80.93 $91.47 $90.59 $90.94

Average price per barrel $33.52 $42.60 $34.61 $45.46
Royalties per barrel 6.29 7.99 6.49 8.52
Operating expenses per
barrel 9.40 8.55 10.37 9.85
Netback per barrel $17.83 $26.06 $17.75 $27.09

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, 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-GAAP Measures

Funds from operations and funds from operations per common share
are not defined by GAAP in Canada and are referred to as non-GAAP
measures. Funds from operations are based on cash flow from operating
activities as per the statement of cash flows before changes in
non-cash working capital. Funds from operations per common share is
calculated based on the weighted average number of common shares
outstanding consistent with the calculation of net earnings (loss)
per share.

For more details on non-GAAP measures, refer to BNK's
"Management's Discussion and Analysis.

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 which is applicable at the burner tip and does not
represent a value equivalency at the wellhead.

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 sale of
the Company's Woodford shale, Tishomingo assets (the "Proposed
Sale"), the anticipated use of proceeds from the Proposed Sale and
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 the conditions
to completion of the Proposed Sale will be satisfied and that the
Proposed Sale will be completed as expected, that indications of
early results are reasonably accurate predictors of the
prospectiveness of the shale intervals, that required regulatory
approvals will be available when required, 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 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, farm-ins or other
participation arrangements to maintain its projects, and that global
economic conditions will not deteriorate in a manner that has an
adverse impact on the Company's business, 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 any of the
assumptions on which such forward looking information is based vary
or prove to be invalid, including that the conditions to completion
of the Proposed Sale will be not be satisfied or that the Proposed
Sale is otherwise not completed in the anticipated timeframe or at
all, 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 is
unable to access required capital, 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 and uncertainties applicable to
exploration and development activities and the Company's business as
set forth in the Company's management discussion and analysis and its
annual information form, both of which are available for viewing
under the Company's profile at http://www.sedar.com, any of which
could result in delays, cessation in planned work or loss of one or
more concessions and have an adverse effect on the Company and its
financial condition. 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, 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.)

ots Originaltext: BNK Petroleum Inc.
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