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Subscribe to BNK Petroleum Inc.

24.03.2017 – 02:08

BNK Petroleum Inc.

BNK Petroleum Inc. Announces Annual 2016 Financial Results

Camarillo, California (ots/PRNewswire)

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

2016 HIGHLIGHTS

- In October 2016, the Company completed an equity offering issuing 
  70,000,000 shares at a price of C$0.20 per share. The Company 
  intends to use the net proceeds from this offering for exploration 
  and development of its Tishomingo Field, located in Oklahoma, 
  including funding a drilling program and for general working 
  capital. The net cash proceeds of the equity offering totalled $9.7
  million 
- The Company had oil hedges in place for almost 80% of its 
  production during 2016 at an average price of $65.22/bbl. In 2017, 
  the Company has a comparable percentage of oil hedged on its 
  forecasted existing production at $61.55/bbl, excluding the new 
  production that it expects to generate from its 2017 drilling 
  program. 
- Operating cash flow was $5.2 million for 2016 
- The Company's Total Proved Reserves increased by 1% to 18 million 
  barrels of oil equivalent (BOE) and the Proved plus Probable 
  Reserves increased by 2% to 42 million BOEs based on the Company's 
  December 31, 2016 independent reserves evaluation. 
- The estimated ultimate recovery from the Company's previously 
  existing producing wells increased by 1.2 million BOEs, as the 
  existing producing wells once again exceeded the previous year 
  forecast based on the Company's December 31, 2016 independent 
  reserves evaluation 
- Average production was 1,045 barrels of oil equivalent per day 
  (BOEPD) for 2016, a decrease of 26% compared to 2015 production of 
  1,415 BOEPD due to normal production decline as the Company did not
  drill or complete any new wells in 2016 and also had three wells 
  shut-in during the fourth quarter due to offset fracture 
  stimulation operations by another operator 
- General & administrative expenses related to continuing operations 
  decreased by 21% compared to 2015 due to the Company's continuing 
  cost cutting efforts 
- Average netbacks were $16.76 per BOE for 2016, a decrease of 21% 
  compared to 2015 due to lower prices in 2016 and slightly higher 
  operating costs per barrel. However, if the realized gains from the
  commodity hedge contracts discussed above are included, the average
  netbacks for the year increase by almost $11/barrel to $27.70 per 
  BOE 
- In 2017, the Company drilled and fracture stimulated the Chandler 
  8-6H well, the first well in its 2017 drilling program, in which it
  holds a 99.9% working interest 
- The Company also drilled the Hartgraves 1-6H well, the second well 
  in its 2017 drilling program, in which it holds a 100% working 
  interest. The Company expects to begin fracture stimulation of the 
  well in May 
- The third well in the 2017 drilling program, the Brock 9-2H well, 
  is currently being drilled by the Company. The Company has a 100% 
  working interest in that well and expects to begin fracture 
  stimulation operations in May 
- During 2016, the Company made paydowns totaling $3.9 million on its
  credit facility to reduce the outstanding balance to $20.5 million.
  In the fourth quarter of 2016, the existing lenders reaffirmed the 
  Company's available borrowing capacity at $24.4 million. 
- Revenue, net of royalties was $8.6 million for 2016 compared to 
  $13.7 million in 2015 due to lower prices in 2016 and reduced 
  production 
- A net loss of $11.1 million was incurred in 2016 which included an 
  $8.0 million unrealized loss on risk management contracts. 
- Cash and working capital totaled $11.1 million and $10.6 million 
  respectively at December 31, 2016 

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

"With the proceeds from the equity offering that was completed in October 2016, we were excited to begin our 2017 drilling program at the end of the year. We drilled and completed the Chandler 8-6H well (99.9% working interest), which was our first well in the 2017 drilling program, during the first quarter of 2017. The 30 day initial production rate (IP) is 230 barrels of oil per day and 265 barrels of oil equivalent per day. The well continues to produce a higher oil percentage (87%) than expected from this part of the field while still continuing to clean up. The well is producing in line with our proved undeveloped (PUD) case type curve for oil that is used to estimate the reserves attributed to the Company's Tishomingo Field.

"The Hartgraves 1-6H well (100% working interest), which is the second well in our 2017 drilling program, was successfully drilled in the first quarter and we expect to begin fracture stimulation operations in May.

"In addition, we are currently drilling the third well in our drilling program, the Brock 9-2H well (100% working interest). We expect to finish the drilling operations in April with fracture stimulation to follow after the Hartgraves 1-6H stimulation. The drilling and completion plan for the well has been modified based on the learnings from the more easterly located Chandler 8-6H well. The Company expects these changes to result in making even better wells that exceed our PUD case type curve as we step out further to the East.

"Despite the continued lower level of oil prices during 2016, the Company was able to realize higher prices on a significant amount of its production due to its hedging program. During the year, the Company was able to realize an average price of $65.22/bbl on almost 80% of its oil production. This trend will continue into 2017 as the Company has commodity contracts in place to recognize a price of $61.55/bbl on 80% of existing production going forward, excluding the new production coming on-line from the 2017 drilling program.

"The Company's Total Proved Reserves increased by 1% to 18 million BOEs and the Proved plus Probable Reserves increased by 2% to 42 million BOEs, despite not drilling any wells in 2016. In addition, the estimated ultimate recovery from the Company's previously existing producing wells increased by 1.2 million BOEs, as the existing producing wells once again exceeded the previous year forecast.

"We continue to generate positive cash flow due to our cost cutting efforts and the impact of our hedging program. The Company generated $5.2 million of operating cash flows during 2016, a decrease of only 7% from 2015.

"During 2016, the Company's production declined by 26% to 1,045 boepd due to the normal production decline as the Company did not have any new production during 2016. We also had three wells that were shut-in during part of the fourth quarter of 2016, due to offset fracture stimulation operations by another operator in the Woodford formation. The operator completed the fracture stimulations in the first quarter of 2017 and all of these wells have been brought back on to production. The Company does not expect any impact on the long-term production of the wells going forward.

"Our continuing cost cutting efforts continue to result in significant cost reductions with general and administrative expenses decreasing by 21% during 2016 compared to the prior year. In addition, the shutdown of the European operations will contribute to the cost reduction efforts as these discontinued operations incurred a net loss of $1.2 million in 2016.

"Average netbacks for 2016 were $16.76, a decrease of 21% compared to the prior year due to lower prices. If we include the impact of the realized gains from the commodity hedging contracts, our average netbacks for 2016 would be $27.70, which is a decrease of only 6% compared to 2015."

             Fourth            Year           
             Quarter           Ended          
             2016     2015     %     2016      2015     %    
Net Loss:                                                    
$ Thousands  $(3,745) $(6,350) -%    $(11,148) $(6,570) -%   
$ per common $(0.02)  $(0.04)  -%    $(0.06)   $(0.04)  -%   
share                                                        
assuming                                                     
dilution                                                     
Capital      $1,751   $417     320%  $2,497    $9,526   (74%)
Expenditures                                                 
Average      661      1,367    (52%) 1,045     1,415    (26%)
Production                                                   
(Boepd)                                                      
Gross        2,258    3,629    (38%) 11,084    17,606   (37%)
Revenue                                                      
Average      $37.13   $28.86   29%   $28.98    $34.09   (15%)
Product                                                      
Price per                                                    
Barrel                                                       
Average      $20.97   $17.10   23%   $16.76    $21.10   (21%)
Netback per                                                  
Barrel                                                       
Average      $47.56   $40.24   18%   $39.92    $42.42   (6%) 
Price per                                                    
Barrel                                                       
including                                                    
Commodity                                                    
Contracts                                                    
Average      $31.40   $28.48   10%   $27.70    $29.43   (6%) 
Netback per                                                  
Barrel                                                       
including                                                    
Commodity                                                    
Contracts                                                    
                      December       December                
                      2016           2015                    
Cash and              $11,101        $1,666            
Cash                                                   
Equivalents                                            
Working               $10,640        $7,298            
Capital                                                 

Year Ended 2016 to Year Ended 2015

For 2016, oil and natural gas revenues net of royalties decreased $5,135,000 or 37% to $8,578,000. Oil revenues before royalties decreased by 39% to $9,008,000 due to a 14% decrease in prices between years and a 29% decrease in production. Natural gas revenues before royalties declined $569,000 or 41% due to a 17% decrease in natural gas prices per mcf and a 29% decrease in average production. NGL revenue before royalties declined $138,000 or 10% due to a 14% decrease in production partially offset by a 4% increase in average prices.

Exploration and evaluation expenses increased $789,000. The 2016 amount includes an impairment of $835,000 on exploration and evaluation leases.

Depletion and depreciation expense decreased $2,726,000 primarily due to reduced production.

General and administrative expenses decreased $1,029,000 due to the Company's cost cutting efforts during 2016 and 2015 which resulted in lower salary and benefit costs due to decreased headcount, legal and professional fees and travel costs.

Finance income decreased $4,157,000 due to an unrealized gain on risk management contracts in 2015 of $3,975,000. Finance expense increased $7,861,000 due to an unrealized loss on risk management contracts of $8,027,000 in 2016.

Capital expenditures of $2,497,000 were incurred in 2016 mainly for drilling and completion costs in Oklahoma during the fourth quarter of the year.

FOURTH QUARTER HIGHLIGHTS:

- Revenue, net of royalties, was $1.8 million for fourth quarter 
  2016, a decrease of 42% compared to the fourth quarter 2015 due to 
  lower prices and decreased production 
- Cash flow from operations was $0.5 million in the fourth quarter of
  2016 compared to $1.0 million in prior year fourth quarter mainly 
  due to the shut-in of three wells during 2016 
- Average netbacks for the fourth quarter of 2016 were $20.97, an 
  increase of 23% over fourth quarter 2015 due to price increases. If
  the realized gains from the commodity contracts are included, the 
  average netbacks for the fourth quarter of 2016 increase by more 
  than $10/barrel to $31.40 per BOE compared to $28.48 per BOE for 
  the fourth quarter of 2015 
- Average production for the quarter was 661 BOEPD, a decrease of 52%
  compared to the prior year fourth quarter mainly due the three 
  shut-in wells, all of which have been brought back on production in
  early 2017 
- G&A expense decreased by $0.3 million, or 27%, due to the Company's
  cost cutting efforts 
- A net loss of $3.7 million was incurred in the fourth quarter 2016 
  due primarily to unrealized losses on commodity contracts of $2.1 
  million and $0.8 million impairment of exploration and evaluation 
  assets 
- The Company's lender reaffirmed the Company's current outstanding 
  borrowing base of $24.4 million  

Fourth Quarter 2016 to Fourth Quarter 2015

Oil and gas revenues net of royalties totaled $1,750,000 in the quarter versus $3,008,000 in the fourth quarter of 2015. Oil revenues were $1,910,000 in the quarter versus $3,011,000 in the fourth quarter of 2015, a decrease of 37% due to decreased production of 47% partially offset by an increase in average oil prices of 18%. Natural gas revenues decreased 46% due to the decrease in the production of 59% partially offset by an increase in natural gas prices of 32%. NGL revenue decreased 42% to $213,000 as average NGL production decreased by 60% partially offset by an average price increase of 45%.

Exploration and evaluation expenses increased $833,000 in 2016 compared to 2015. The 2016 amount includes an impairment of $835,000 on exploration and evaluation leases.

Depletion and depreciation expense decreased $845,000 primarily due to reduced production.

General and administrative expenses decreased $318,000 between quarters due to the Company's cost cutting efforts during 2016 and 2015 which resulted in lower salary and benefit costs due to decreased headcount, legal and professional fees and travel costs.

BNK         
PETROLEUM   
INC.        
CONDENSED   
CONSOLIDATED
STATEMENTS  
OF FINANCIAL
POSITION    
(Unaudited, 
Expressed in
Thousands of
United      
States      
Dollars)    
                         December           December
                         31,                31,     
                         2016               2015    
Current                                             
assets                                              
             Cash and    $        11,101    $        1,666    
             cash                                             
             equivalents                                      
             Trade and            1,163              2,905    
             other                                            
             receivables                                      
             Deposits             614                906      
             and prepaid                                      
             expenses                                         
             Fair value           650                4,459    
             of                                               
             commodity                                        
             contracts                                        
                         13,528             9,936   
Non-current                                         
assets                                              
             Fair value           -                  2,802    
             of                                               
             commodity                                        
             contracts                                        
             Property,            133,476            136,233  
             plant and                                        
             equipment                                        
             Exploration          -                  835      
             and                                              
             evaluation                                       
             assets                                           
                         133,476            139,870 
Total assets $           147,004  $         149,806 
Current                                             
liabilities                                         
             Trade and   $        2,888     $        2,638    
             other                                            
             payables                                         
                         2,888              2,638   
Non-current                                         
liabilities                                         
             Fair value           1,417              -        
             of                                               
             commodity                                        
             contracts                                        
             Loans and            20,229             23,961   
             borrowings                                       
             Asset                785                788      
             retirement                                       
             obligations                                      
                         22,431             24,749  
Equity                                              
             Share                289,549            279,859  
             capital                                          
             Contributed          22,195             21,471   
             surplus                                          
             Deficit              (190,059)          (178,911)
Total equity             121,685            122,419 
Total equity $           147,004  $         149,806 
and                                                 
liabilities                                          
BNK PETROLEUM INC.      
CONDENSED CONSOLIDATED  
STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS  
(Unaudited, expressed in
Thousands of United     
States dollars, except  
per share amounts)      
                                          Three           Year    
                                          months          ended   
                                          ended           December
                                          December        31      
                                          31                      
                                          2016            2015             2016             2015   
Revenue:                                                                                           
Oil and natural gas      $                1,750    $      3,008    $       8,578    $       13,713 
revenue, net                                                                                       
Other income                              (19)            -                (17)             6      
                                          1,731           3,008            8,561            13,719 
Expenses:                                                                                          
Exploration and                           835             2                835              46     
evaluation                                                                                         
Production and operating                  475             653              2,168            2,614  
Depletion and                             868             1,713            5,249            7,975  
depreciation                                                                                       
General and                               858             1,176            3,760            4,789  
administrative                                                                                     
Share based compensation                  105             147              611              602    
                                          3,141           3,691            12,623           16,026 
Finance income                            634             3,034            4,184            8,341  
Finance expense                           (2,674)         (522)            (10,100)         (2,239)
Net income/loss and      $                (3,450)         1,829            (9,978)          3,795  
comprehensiveincome/loss                                                                           
from continuing                                                                                    
operations                                                                                         
                         Net loss and              (295)           (8,179)          (1,170)         (10,364)
                         comprehensive                                                                      
                         loss                                                                               
                         fromdiscontinued                                                                   
                         operations                                                                         
Net loss and             $                (3,745)  $      (6,350)  $       (11,148) $       (6,569)
comprehensive loss                                                                                 
Net income/loss per                                                                                
share                                                                                              
                         Continuing                (0.02)          0.01             (0.05)          0.02    
                         operations                                                                         
                         Discontinued              (0.00)          (0.05)           (0.01)          (0.06)  
                         operations                                                                         
                         Basic and        $        (0.02) $        (0.04)  $        (0.06)  $       (0.04)  
                         Diluted                                                                             
BNK        
PETROLEUM  
INC.       
FOURTH     
QUARTER AND
YEAR ENDED 
2016       
(Unaudited,
expressed  
in         
Thousands  
of  United 
States     
dollars,   
except as  
noted)     
              4th      Year  
              Quarter  Ended 
                       Dec.  
                       31    
              2016     2015    2016     2015   
Oil revenue $ 1,910    3,011   9,008    14,823 
before                                         
royalties                                      
Gas revenue   135      249     829      1,398  
before                                         
royalties                                      
NGL revenue   213      369     1,247    1,385  
before                                         
royalties                                      
Oil and Gas   2,258    3,629   11,084   17,606 
gross                                          
revenue                                        
Cash flow     454      1,039   5,180    5,581  
from                                           
operating                                      
activities                                     
Additions     (1,751)  (52)    (2,497)  (9,133)
to                                             
property,                                      
plant &                                        
equipment                                      
Additions     -        (365)   -        (393)  
to                                             
Exploration                                    
and                                            
Evaluation                                     
Assets                                         
Statistics:                                    
              4th      Year  
              Quarter  Ended 
                       Dec.  
                       31    
              2016     2015    2016     2015   
Average oil   445      832     622      879    
production                                     
(Bopd)                                         
Average       588      1,436   1,116    1,568  
natural gas                                    
production                                     
(mcf/d)                                        
Average NGL   118      296     237      275    
production                                     
(Boepd)                                        
Average       661      1,367   1,045    1,415  
production                                     
(Boepd)                                        
Average oil   $46.63   $39.36  $39.59   $46.20 
price                                          
($/bbl)                                        
Average       $2.50    $1.89   $2.03    $2.44  
natural gas                                    
price                                          
($/mcf)                                        
Average NGL   $19.61   $13.54  $14.36   $13.79 
price                                          
($/bbl)                                        
Average       $37.13   $28.86  $28.98   $34.09 
price per                                      
barrel                                         
Royalties     8.35     6.57    6.55     7.94   
per barrel                                     
Operating     7.81     5.19    5.67     5.05   
expenses                                       
per barrel                                     
Netback per   $20.97   $17.10  $16.76   $21.10 
barrel                                         
Average       $47.56   $40.24  $39.92   $42.42 
price per                                      
barrel                                         
including                                      
commodity                                      
contracts                                      
Royalties     8.35     6.57    6.55     7.94   
per barrel                                     
Operating     7.81     5.19    5.67     5.05   
expenses                                       
per barrel                                     
Netback per   $31.40   $28.48  $27.70   $29.43 
barrel                                         
including                                      
commodity                                      
contracts                                       

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, 2016 and the related management's discussion and analysis thereof, copies of which are available under the Company's profile at 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.

The Company's Non-GAAP Measures are described and reconciled to the GAAP measures in the management's discussion and analysis which are available under the Company's profile at www.sedar.com.

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 Bbl 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) The Company  
    discloses    
    peak and     
    30-day       
    initial      
    production   
    rates and    
    other        
    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.     

Readers are referred to the full description of the results of the Company's December 31, 2016 independent reserves evaluation and other oil and gas information contained in its Form 51-101F1 Statement of Reserves Data and Other Oil and Gas Information for the year ended December 31, 2016, which the Company filed on SEDAR on March 23, 2017.

Caution Regarding Forward-Looking Information

This release contains forward-looking information including information regarding the use of proceeds from the equity offering completed in October 2016, estimates of reserves, the proposed timing and expected results of exploratory and development work including production from the Company's Tishomingo field, Oklahoma acreage, the future performance of wells following shut-in and restart, the expected effects of cost reduction efforts, 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 the Company will continue in compliance with the covenants under its reserves-based loan facility and that the borrowing base will not be reduced, 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 including flooding and extended interruptions due to inclement or hazardous weather), 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, 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 will cease to be in compliance with the covenants under its reserves-based loan facility and be required to repay outstanding amounts or that the borrowing base will be reduced pursuant to a borrowing base re-determination, 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 www.sedar.com.

With respect to estimated reserves, the evaluation of the Company's reserves is based on a limited number of wells with limited production history and includes a number of assumptions relating to factors such as availability of capital to fund required infrastructure, commodity prices, production performance of the wells drilled, successful drilling of infill wells, the assumed effects of regulation by government agencies and future capital and operating costs. All of these estimates will vary from actual results. Estimates of the recoverable oil and natural gas reserves attributable to any particular group of properties, classifications of such reserves based on risk of recovery and estimates of future net revenues expected therefrom, may vary. The Company's actual production, revenues, taxes, development and operating expenditures with respect to its reserves will vary from such estimates, and such variances could be material. In addition to the foregoing, other significant factors or uncertainties that may affect either the Company's reserves or the future net revenue associated with such reserves include material changes to existing taxation or royalty rates and/or regulations, and changes to environmental laws and regulations.

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. 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:
www.bnkpetroleum.com

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