BNK Petroleum Inc. Announces 1st Quarter 2015 Results

Camarillo, California (ots/PRNewswire) -

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

FIRST QUARTER HIGHLIGHTS

- In February 2015, obtained an additional $8.5 million under the Company's
$100 million credit facility to fund the drilling of Caney wells in Oklahoma
- In April 2015, fracture stimulated the Nickel Hill 36-3H well and the Emery
17-1H well
- Average production for the first quarter was 1,249 boepd, an increase of 30%
compared to the prior year first quarter due to increased production from the Caney
wells drilled during 2014. Average prices declined by 53% during the first quarter
2015 compared to first quarter 2014
- G&A expenses decreased by 13% in the first quarter of 2015 as the Company
continues its cost-cutting efforts
- Cash flow from operations was $1.3 million in the first quarter 2015 and net
loss was $760,000 for the first quarter 2015 compared to net income of $250,000 for
the first quarter 2014
- Revenue, net of royalties was $3.2 million in the first quarter of 2015
compared to $5.5 million for first quarter of 2014, a decrease of 42% compared to the
first quarter of 2014 due to lower prices in 2015
- Average net-back per barrel was $23.33 primarily due to lower prices in 2015,
a decrease of 59%
- Capital expenditures decreased 67% to $4.3 million as the Company paused its
U.S. drilling program in the first quarter of 2015 and due to no drilling activity in
Poland vs drilling the Gapowo B-1 well in Poland in 2014.
- Cash and working capital each totaled $6.8 million at March 31, 2015

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

"Our existing production continues to perform well and is on
forecast with our 2014 year-end reserves report. During the first
quarter of 2015, the Company increased its average production to
1,249 boepd, an increase of 30% compared to the prior year first
quarter. We exited the quarter with production of about 1,250 BOEPD.

"In April 2015, subsequent to the end of the quarter, we fracture
stimulated the previously drilled Nickel Hill 36-3H well and the
remaining stages in the Emery 17-1H well, where 6 stages had already
been completed in late 2014 before a mechanical issue was
encountered. That mechanical issue was overcome and 12 additional
stages were stimulated.

"The fracture stimulations went very well and both wells were
completed under budget. On a per stage basis, these costs were 25%
less than our lowest 2014 completion cost and 40% less than our
average 2014 completion costs, even though we placed more sand in
these two wells. This was achieved by efficient timely execution and
supply management optimization as well as lower service costs.

"The two wells are both in early flowback of the fracture
stimulation fluids and are performing very well, despite our having
to restrict flow rates due to severe weather in Oklahoma flooding the
lease roads. We anticipate being able to provide further updates in
the coming weeks after the clean up period is over and the wells are
in the steady production mode.

"The Company generated positive cash flow from operations of $1.3
million in the first quarter of 2015 despite a 53% decrease in
average prices compared to the prior year quarter. This was partially
the result of our cost cutting efforts as we reduced general and
administrative expense by 13% in the first quarter of 2015 over the
first quarter of 2014 and we also reduced our operating expense per
barrel by 18% to $5.05/barrel compared to the prior year first
quarter.

"In February 2015, we received an additional $8.5 million under
our $100 million reserves based loan facility with Morgan Stanley.
The Company has now borrowed a total of $24.4 million to fund our
U.S. drilling program.

"In the first quarter of 2015, the Company generated a net loss of
$760,000 compared to net income of $250,000 in the first quarter
2014. Oil and gas revenue, net of royalties was $3.2 million in the
first quarter of 2015, a decrease of $2.3 million, or 42%, compared
to the prior year quarter.

"Average netbacks for the first quarter 2015 were still $23.33.
Although a decrease of 59% compared to the prior year quarter, the
netbacks were still 24% higher than the netbacks from our Woodford
production in the first quarter of 2013 before it was sold.

"Capital expenditures decreased by 67% in the first quarter 2015
as we completed the U.S. drilling program at the end of 2014."

1st Qtr 2015 1st Qtr 2014 %
Net income (loss):
$ Thousands $(760) $250 -
$ per common share assuming dilution $(0.00) $0.00 -
Capital Expenditures $4,318 $12,954 (67)
Average production per day (Boepd) 1,249 962 30
Average Product Price per Barrel $36.62 $78.18 (53)
Average Netback per Barrel $23.33 $57.36 (59)
3/31/2015 12/31/2014
Cash and Cash Equivalents $6,757 $12,035
Adjusted Working Capital (excludes debt) $6,827 $663

First Quarter 2015 versus First Quarter 2014

Oil and gas gross revenues totaled $4,117,000 in the quarter
versus $6,770,000 in the first quarter of 2014. Oil revenues
decreased $2,088,000 or 37% as average oil prices decreased $51.02
per barrel or 53% to $46.13 which was partially offset by a 33%
increase in oil production per day to 867 boepd. Natural gas revenues
decreased $39,000 or 9% to $374,000 as average natural gas prices
decreased $2.30/mcf or 44% to $2.97 which was partially offset by a
61% increase in natural gas production of 527 cubic feet per day
(mcf/d) to 1,397 mcf/d. Natural gas liquids (NGL's) revenues
decreased $525,000 or 79% as NGL production decreased 10% to 149
boepd while average NGL prices decreased 76% to $10.68.

Average first quarter 2015 production per day increased 30% from
the first quarter of 2014 due to the production from the Caney wells
drilled throughout 2014.

Production and operating expenses increased slightly to $572,000
but the per barrel production and operating costs decreased by 18% to
$5.05/barrel due to the Company's cost cutting efforts.

Depletion and depreciation expense increased $26,000 or 1% due to
an increase in the reserve base in 2015.

General and administrative expenses decreased $385,000 or 13% due
to cost cutting efforts which included reduced salary expense due to
lower headcount.

Share based compensation decreased $155,000 or 46% due to a lower
stock price in 2015 which reduced the valuation of stock grants.

Finance income increased $2,034,000 in the first quarter of 2015
compared to the prior year quarter primarily due to realized and
unrealized gains on commodity contracts.

Finance expense increased $585,000 in the first quarter of 2015
compared to the prior year quarter primarily due to the interest
expense on the credit facility.

Capital expenditures of $4,318,000 were incurred in the first
quarter of 2015 relating to the US drilling program.

BNK PETROLEUM INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, Expressed in Thousands of United States Dollars)
($000 except as noted)
March 31 December 31
2015 2014
Current Assets
Cash $6,757 $12,035
Trade and other
receivables 2,912 3,938
Other current assets 1,790 1,304
Fair value of
commodity contracts 3,330 2,037
14,789 19,314
Non-current assets
Property, plant and
equipment 137,510 134,942
Exploration and
evaluation assets 7,951 7,925
Fair value of
commodity contracts 1,127 1,248
146,588 144,115
Total Assets $161,377 $163,429
Current Liabilities
Trade and other
payables $7,962 $18,651
Current Portion of
long-term debt - 15,401
7,962 34,052
Non-current liabilities
Loans and borrowings 23,854 -
Asset retirement
obligations 2,017 1,355
25,871 1,355
Equity
Share capital 279,859 279,859
Contributed surplus 20,787 20,505
Deficit (173,102) (172,342)
Total Equity 127,544 128,022
Total Equity and Liabilities $161,377 $163,429

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)
Three months ended March 31
($000's) 2015 2014
Oil and gas revenue net of royalties $3,191 $5,501
Other income 41 202
3,232 5,703

Exploration and evaluation expenditures 32 100
Production and operating expenses 572 533
Depletion and depreciation 1,834 1,808
General and administrative expenses 2,545 2,930
Share based compensation 180 335
Loss (gain) on equity investments - (291)
Legal restructuring expenses 240 -
$5,403 $5,415
Finance Income 2,053 19
Finance Expense (642) (57)
Net income (loss) and comprehensive income (loss)
for the period $(760) $250
Net income (loss) per share $(0.00) $0.00

BNK PETROLEUM, INC.
FIRST QUARTER 2014
Unaudited, expressed in Thousands of United States dollars, except as noted)
Quarter Ending March 31,
2015 2014
Oil revenue before royalties $3,600 $5,688
Gas revenue before royalties 374 413
NGL revenue before royalties 143 668
Oil and Gas revenue 4,117 6,769
Cash flow provided by operating activities 1,282 2,956
Capital expenditures (4,318) (12,954)
Statistics:
Average natural gas production (mcf/d) 1,397 870
Average NGL production (Boepd) 149 166
Average Oil production (Bopd) 867 651
Average production (Boepd) 1,249 962
Average natural gas price ($/mcf) $2.97 $5.27
Average NGL price ($/bbl) 10.68 44.73
Average oil price ($/bbl) 46.13 97.15
Average price per barrel $36.62 $78.18
Royalties per barrel 8.24 14.66
Operating expenses per barrel 5.05 6.16
Netback per barrel $23.33 $57.36

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 March 31, 2015 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

Netback per barrel, net operating income and funds from operations
(collectively, the "Company's Non-GAAP Measures") are not measures
recognized under Canadian generally accepted accounting principles
("GAAP") and do not have any standardized meanings prescribed by
GAAP. Management of the Company believes that such measures are
relevant for evaluating returns on each of the Company's projects as
well as the performance of the enterprise as a whole. The Company's
Non-GAAP Measures may differ from similar computations as reported by
other similar organizations and, accordingly, may not be comparable
to similar non-GAAP measures as reported by such organizations. The
Company's Non-GAAP Measures should not be construed as alternatives
to net income, cash flows related to operating activities, or other
financial measures determined in accordance with GAAP, as an
indicator of the Company's performance.

Netback per barrel and its components are calculated by dividing
revenue less 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.
However, non-IFRS measures do not have any standardized meaning
prescribed by IFRS and therefore may not be comparable to similar
measures used by other companies.

Net operating income is similarly a non-GAAP measure that
represents revenue net of royalties and operating expenses. The
Company believes that net operating income is a useful supplemental
measure to analyze operating performance and provides an indication
of the results generated by the Company's principal business
activities prior to the consideration of other income and expenses.

Funds from operations is a non-GAAP measure that represents cash
provided by (used in) operating activities, as per the consolidated
statements of cash flows, before changes in non-cash working capital.
The Company considers this a key measure as it demonstrates its
ability to generate the funds necessary for future growth after
taking into account the short-term fluctuations in the collection of
accounts receivable and the payment for accounts payable.

Cautionary Statements

In this news release and the Company's other public disclosure:

The Company's natural gas production is reported in thousands of cubic feet
("Mcfs"). The Company also uses references to barrels ("Bbls") and barrels of oil
equivalent ("Boes") to reflect natural gas liquids and oil production and sales.
Boes may be misleading, particularly if used in isolation. A Boe conversion ratio
of 6 Mcf:1 Boe is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value equivalency at the
wellhead. Given that the value ratio based on the current price of crude oil as
compared to natural gas is significantly different from the energy equivalency of
6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of
(a) value.
Discounted and undiscounted net present value of future net revenues attributable
(b) to reserves do not represent fair market value.
Possible reserves are those additional reserves that are less certain to be
recovered than probable reserves. There is a 10% probability that the quantities
actually recovered will equal or exceed the sum of proved plus probable plus
(c) possible reserves.
The Company discloses short-term production rates. Readers are cautioned that such
production rates are not necessarily indicative of long-term performance or of
(d) ultimate recovery.

Caution Regarding Forward-Looking Information

This release contains forward-looking information including
information regarding the proposed timing and expected results of
exploratory and development work including production from the Lower
Caney and upper Sycamore formations on the Company's Oklahoma
acreage, the effect of design and performance improvements on future
productivity, the anticipated timing of commencement and completion
of drilling and fracture-stimulations in connection with the
Company's Caney drilling program, the advancement of the Company's
European projects, planned capital expenditure programs and cost
estimates, planned use and sufficiency of cash and marketable
securities on hand and the Company's strategy and objectives. The use
of any of the words "target", "plans", "anticipate", "continue",
"estimate", "expect", "may", "will", "project", "should", "believe"
and similar expressions are intended to identify forward-looking
statements.

Such forward-looking information is based on management's
expectations and assumptions, including that the Company's geologic
models will be validated, that indications of early results are
reasonably accurate predictors of the prospectiveness of the shale
intervals, that previous exploration results are indicative of future
results and success, 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 design and performance improvements will
reduce development time and expense and improve productivity, that
discoveries will prove to be economic, that anticipated results and
estimated costs will be consistent with managements' expectations,
that all required permits and approvals and the necessary labor and
equipment will be obtained, provided or available, as applicable, on
terms that are acceptable to the Company, when required, 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, credit facilities, farm-ins or
other participation arrangements to maintain its projects, that the
Company will not be adversely affected by changing government
policies and regulations, social instability or other political,
economic or diplomatic developments in the countries in which it
operates 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.

Forward looking information involves significant known and unknown
risks and uncertainties, which could cause actual results to differ
materially from those anticipated. These risks include, but are not
limited to: any of the assumptions on which such forward looking
information is based vary or prove to be invalid, including that
anticipated results and estimated costs will not be consistent with
managements' expectations, the risks associated with the oil and gas
industry (e.g. operational risks in development, exploration and
production; delays or changes in plans with respect to exploration
and development projects or capital expenditures; the uncertainty of
reserve and resource estimates and projections relating to
production, costs and expenses, and health, safety and environmental
risks), the risk of commodity price and foreign exchange rate
fluctuations, risks and uncertainties associated with securing the
necessary regulatory approvals and financing to proceed with
continued development of the Tishomingo Field and other shale basins
in the United States and Europe, 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 identified in
the Company's most recent Annual Information Form under the "Risk
Factors" section and the Company's other public disclosure, available
under the Company's profile on SEDAR at http://www.sedar.com.

Although the Company has attempted to take into account important
factors that could cause actual costs or results to differ
materially, there may be other factors that cause actual results not
to be as anticipated, estimated or intended. There can be no
assurance that such statements will prove to be accurate as actual
results and future events could differ materially from those
anticipated in such statements. The forward-looking information
included in this release is expressly qualified in its entirety by
this cautionary statement. Accordingly, readers should not place
undue reliance on forward-looking information. 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 and Spain. Additionally the Company is utilizing its
technical and operational expertise to identify and acquire
additional unconventional projects. The Company's shares are traded
on the Toronto Stock Exchange under the stock symbol BKX.

Wolf E. Regener, President and Chief Executive Officer,
+1(805)484-3613, Email: investorrelations@bnkpetroleum.com , Website:
http://www.bnkpetroleum.com

ots Originaltext: BNK Petroleum Inc.
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