BNK Petroleum Inc. announces 2nd quarter 2015 results

Camarillo, California (ots/PRNewswire) -

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

SECOND QUARTER HIGHLIGHTS:

- Average production for the second quarter of 2015 was 1,490 BOEPD, an increase of
49% compared to second quarter 2014 production of 999 BOEPD due to the completion of
the Nickel Hill 36-3H well and the remaining portion of the Emery 17-1H well during
the second quarter
- General & administrative expenses decreased by 41% and operating expenses on a per
barrel basis decreased by 34% for the second quarter of 2015 compared to the second
quarter of 2014 due to the Company's global cost cutting efforts initiated at the
beginning of the year
- Revenue, net of royalties was $4.0 million for second quarter of 2015 compared to $6.0
million in the second quarter of 2015 due to lower prices in 2015
- Average netbacks were $24.88 per BOE for the quarter, a decrease of 58% compared to
the second quarter of 2014 due to lower prices in 2015 partially offset by lower
operating costs per barrel. If the realized gains from the commodity contracts are
included, the average netbacks for the quarter increase by almost $5/barrel to $29.84
per BOE
- Cash flow from operating activities was $1.6 million for the second quarter of 2015
compared to $2.3 million in the second quarter of 2014
- Cash and working capital totaled $3.7 million and $2.3 million respectively at June 30,
2015
- Capital expenditures decreased by 81% to $4.2 million primarily due to the prior year
drilling and completion of the Gapowo well in Poland

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

"Our second quarter production increased to 1,490 BOEPD, an
increase of 49% compared to the prior year second quarter, due to the
fracture stimulation of the previously drilled Nickel Hill 36-3H well
and the remaining stages in the Emery 17-1H well during the quarter.
The cost of the completion work on these 2 wells was 40% less than
our average 2014 completion costs, even with larger fracture
stimulations, due to efficient execution and lower service costs.
The Company's existing production continues to perform well and our
June 2015 average production was over 1,700 BOEPD.

"Our global cost cutting efforts that were initiated at the
beginning of the year led to decreases in general and administrative
expense of 41% during the second quarter of 2015 compared to the
prior year second quarter. In addition, the Company's per barrel
operating costs for the 2015 second quarter were $4.96, a 34%
decrease from the 2014 second quarter.

"These costs reductions helped the Company to maintain positive
cash flow from operations of $1.6 million for the second quarter of
2015 despite a decrease in average prices of 52% compared to the
prior year second quarter. Cash flow from operations in the second
quarter of last year were $2.3 million.

"Average netbacks for the second quarter 2015 were $24.88, a
decrease of 58% compared to the prior year second quarter due to the
52% average price decrease. If we include the impact of the realized
gains from the commodity contracts, our average netbacks for the
second quarter would be $29.84, which is a decrease of 49% compared
to the 2014 second quarter.

"In the second quarter of 2015, the Company generated a net loss
of $3.7 million compared to net income of $199k in the second quarter
of 2014. The 2015 net loss included unrealized losses on commodity
contracts of $3.1 million as the Company had to mark its commodity
contracts to market as oil prices increased throughout the second
quarter before falling down to their current levels subsequent to
quarter-end.

"Capital expenditures decreased to $4.2 million in the second
quarter 2015 due to the prior year drilling and completion of the
Gapowo B-1 well in Poland. Capital expenditures in the second
quarter of 2014 were $22.7 million."

Second Quarter First Six Months
2015 2014 % 2015 2014 %
Net Income (Loss):
$ Thousands $(3,658) $199 - $(4,418) $449 -
$ per common share $(0.02) $0.00 - $(0.03) $0.00 -
assuming dilution
Capital Expenditures $4,248 $22,710 (81%) $8,566 $35,664 (76%)
Average Production (Boepd) 1,490 999 49% 1,369 980 40%
Average Price per Barrel $39.35 $81.74 (52%) $38.15 $80.05 (52%)
Average Netback per Barrel $24.88 $58.85 (58%) $24.21 $58.16 (58%)
Average Price per Barrel
including Commodity Contracts $44.31 $81.74 (46%) $44.38 $80.05 (45%)
Average Netback per Barrel
including Commodity Contracts $29.84 $58.85 (49%) $30.44 $58.16 (48%)
June March December
2015 2015 2014
Cash and Cash Equivalents $3,748 $6,757 $12,035
Working Capital $2,310 $6,827 $663

Second Quarter 2015 versus Second Quarter 2014

Oil and gas gross revenues totaled $5,335,000 in the second
quarter 2015 versus $7,431,000 in the second quarter of 2014. Oil
revenues were $4,519,000 in the quarter versus $6,697,000 in the
second quarter of 2014, a decrease of 33% as average oil prices
decreased 47% or $47.58 a barrel for the quarter, partially offset by
an increase in production of 27%. Natural gas revenues increased
$20,000 or 6%, as natural gas production increased 99% which was
partially offset by a 47% decrease in average natural gas prices
compared to the second quarter of 2014. Natural Gas Liquid (NGL)
revenue increased $62,000 or 16% to $461,000 as average production
increased 116% which was partially offset by an average NGL price
decrease of 47%.

Production and operating expenses decreased $15,000 between
quarters. These costs declined from the prior year quarter even
though total production increased by 49% and the Company incurred
over $30,000 of repair and maintenance costs for heavy flooding in
Oklahoma during the second quarter of 2015.

Depletion and depreciation expense increased $312,000 between
quarters due to increased production and a higher depletion base due
to the Caney wells that were drilled and completed in the last half
of 2014 and 2015.

General and administrative expenses decreased $1,241,000 between
quarters due to the Company's global cost cutting efforts which
reduced employee salary and benefit costs, director fees, legal and
professional fees and travel costs.

Finance income increased $362,000 due to realized gains on
financial commodity contracts in 2015. Finance expense increased
$3,424,000 primarily due to 2015 unrealized loss on financial
commodity contracts of $3,084,000 and interest expense of $490,000.

Capital expenditures of $4,248,000 were incurred in the second
quarter of 2015 primarily related to completions operations in the
U.S. during the quarter.

FIRST SIX MONTHS 2015 HIGHLIGHTS

- Average production was 1,369 BOEPD for the first six months, an increase of 40%
compared to the prior year six months production of 980 BOEPD due to the completion of
the Nickel Hill 36-3H well and the remaining portion of the Emery 17-1H well during
the second quarter of 2015
- General & administrative expenses decreased by 27% and operating expenses on a per
barrel basis decreased by 27% for the first six months of 2015 compared to the first
six months of 2014 due to the Company's global cost cutting efforts initiated in the
first quarter
- Revenue, net of royalties was $7.2 million for first six months of 2015 compared to
$11.5 million for the first six months of 2014, a decrease of 37%, due to lower prices
in 2015
- Average netbacks were $24.21 per BOE for the first six months of 2015, a decrease of
58% compared to the first six months of 2014 due to lower prices in 2015 partially
offset by lower operating costs per barrel. If the realized gains from the commodity
contracts are included, the average netbacks for the first six months of 2015 increase
by more than $6/barrel to $30.44 per BOE
- Cash flow from operating activities was $2.9 million for the first six months of 2015
compared to $5.3 million in the first six months of 2014 due mainly to lower prices
- Capital expenditures decreased by 76% to $8.6 million primarily due to the prior year
drilling and completion of the Gapowo well in Poland
- In February 2015, the Company obtained an additional $8.5 million under the Company's
$100 million credit facility to fund the drilling of Caney wells in Oklahoma. Total
borrowing under the facility is now at $24.4 million

First Six Months of 2015 versus First Six Months of 2014

Gross oil and gas revenues totaled $9,452,000 in the first six
months of 2015 versus $14,200,000 in the first six months of 2014.
Oil revenues were $8,119,000 in the first six months versus
$12,385,000 in the same period of 2014, a decrease of 34% as average
oil prices decreased 49% or $49.31 a barrel which was partially
offset by an oil production increase of 30%. Natural gas revenues
decreased $19,000 or 3%, due to an average natural gas price decrease
of 46% in the first six months of 2015 which was partially offset by
an increase in natural gas production of 79%. NGL revenue decreased
$463,000, or 43%, due to an average NGL price decrease of 62% in the
first six months of 2015, partially offset by an increase in NGL
production of 48% in the first six months of 2015.

Other income decreased due to lower management fees compared to
the prior year.

Production and operating expenses increased 2% for the first six
months of 2015 due to $30,000 of repair and maintenance costs for
heavy flooding in Oklahoma during the second quarter of 2015 and an
increase in the number of wells which contributed to an increase in
production of 40%.

Depletion and depreciation expense increased $338,000 due to
increased production and a higher depletion base due to the Caney
wells that were drilled and completed in the last half of 2014 and
2015.

General and administrative expenses decreased $1,626,000 primarily
due to the Company's global cost cutting efforts which reduced
employee salary and benefit costs, director fees, legal and
professional fees and travel costs.

Finance income increased $1,242,000 due to realized gains on
financial commodity contracts in 2015. Finance expense increased
$2,855,000 primarily due to 2015 unrealized loss on financial
commodity contracts of $1,912,000 and interest expense of $949,000.

BNK PETROLEUM INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, Expressed in Thousands of United States Dollars)

June 30, December 31,
2015 2014
Current assets
Cash and
cash
equivalents $ 3,748 $ 12,035
Trade and
other
receivables 3,088 3,938
Deposits and
prepaid
expenses 1,640 1,304
Fair value
of commodity
contracts 1,215 2,037
9,691 19,314
Non-current assets
Fair value
of commodity
contracts 158 1,248
Property,
plant and
equipment 139,475 134,942
Exploration
and
evaluation
assets 8,132 7,925
147,765 144,115
Total assets $ 157,456 $ 163,429
Current liabilities
Trade and
other
payables $ 7,381 $ 18,651
Loans and
borrowings - 15,401
7,381 34,052
Non-current
liabilities
Loans and
borrowings 23,893 -
Asset
retirement
obligations 2,024 1,355
25,917 1,355
Equity
Share
capital 279,859 279,859
Contributed
surplus 21,059 20,505
Deficit (176,760) (172,342)
Total equity 124,158 128,022
Total equity and
liabilities $ 157,456 $ 163,429

BNK PETROLEUM INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
(Unaudited, expressed in Thousands of United States dollars, except per
share amounts)
Second Quarter First Six Months
2015 2014 2015 2014
Oil and natural gas
revenue, net $ 4,044 $ 6,083 $ 7,235 $ 11,539
Other income 4 3 45 205
4,048 6,041 7,280 11,744
Exploration and
evaluation expenditures 12 36 44 136
Production and operating
expenses 672 687 1,244 1,220
Depletion and
depreciation 2,198 1,886 4,032 3,694
General and
administrative expenses 1,761 3,002 4,306 5,932
Stock based compensation 178 356 358 691
Loss from investments in
joint ventures - 52 - (239)
Restructuring expenses - - 240 -
4,821 6,019 10,224 11,434
Finance income 693 331 1,558 316
Finance expense (3,578) (154) (3,032) (177)
Net income (loss) and
comprehensive income
(loss) $ (3,658) $ 199 $ (4,418) $ 449
Net income (loss) per
share
Basic and
Diluted $ (0.02) $ 0.00 $ (0.03) $ 0.00

BNK PETROLEUM INC.
SECOND QUARTER 2015
($000 except as noted)
Second Quarter First Six Months
2015 2014 2015 2014
Oil revenue before royaltie $ 4,519 6,697 8,119 12,385
Gas revenue before royalties 355 335 729 748
NGL revenue before royalties 461 399 604 1,067
Oil and Gas revenue 5,335 7,431 9,452 14,200
Cash Flow from operating activities 1,580 2,340 2,862 5,296
Additions to property, plant & equipment (4,083) (7,308) (8,396) (12,487)
Additions to exploration
and evaluation assets (165) (15,402) (170) (23,177)
Statistics:
2nd Quarter First Six Months
2015 2014 2015 2014
Average Oil production (Bopd) 914 722 890 686
Average natural gas production (mcf/d) 1,637 822 1,518 846
Average NGL production (Boepd) 303 140 226 153
Average production (Boepd) 1,490 999 1,369 980
Average oil price ($/bbl) $54.35 $101.93 $50.37 $99.68
Average natural gas price ($/mcf) $2.38 $4.48 $2.65 $4.89
Average NGL price ($/bbl) $16.72 $31.28 $14.75 $38.54
Average price per barrel $39.35 $81.74 $38.15 $80.05
Royalties per barrel 9.51 15.33 8.94 15.01
Operating expenses per barrel 4.96 7.56 5.00 6.88
Netback per barrel $24.88 $58.85 $24.21 $58.16

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 June 30, 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, netback per barrel including commodity
contracts, 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. Netbacks including Commodity Contracts and
its components are calculated by dividing revenue and realized gains
from commodity contracts, 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.
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 and should not be used to make
comparisons.

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.

Cautionary Statements

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

(a) 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
value.
(b) Discounted and undiscounted net present value of future net revenues attributable
to reserves do not represent fair market value.
(c) 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
possible reserves.
(d) This news release may disclose short-term production rates. Readers are cautioned
that such production rates are preliminary in nature and are not necessarily
indicative of long-term performance or of 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, future well stimulations, and expected
productivity from future wells, planned capital expenditure programs
and cost estimates, availability of funds from the Company's reserves
based loan facility 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
and reservoir models and analysis 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 funds
will be available from the Company's reserves based loan facility
when required to fund planned operations, 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 the
company's geologic and reservoir models or analysis are not
validated, 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 funding is not available from the Company's reserves based loan
facility at the times or in the amounts required for planned
operations, 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, the Company's most recent management's
discussion and analysis 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.

Contact: 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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