Mr. Wolf Regener reports
BNK PETROLEUM INC. - ANNOUNCES A 26% BOE INCREASE IN 2018 YEAR-END PROVED RESERVES
BNK Petroleum Inc. has provided the results of its Dec. 31, 2018, independent reserves evaluation.
Wolf Regener, president and chief executive officer, commented: "We are very pleased with our proved reserve increases of 26 per cent on a BOE basis and 31 per cent on a NPV basis compared to the prior year. These increases were primarily due to our 2018 drilling program as well as our existing producing wells outperforming the previous years forecasts. We are also excited that the estimated ultimate recovery (EURs) from the existing wells increased from the prior year continuing the trend of the last few years. This continued year-over-year improvement of our proved reserves demonstrates the favourable performance of our wells and the long life we anticipate from our field."
The evaluation of the company's reserves in the Caney formation of the Tishomingo field in the SCOOP area of Oklahoma was conducted by Netherland, Sewell & Associates Inc. (NSAI) in accordance with National Instrument 51-101 -- Standards of Disclosure for Oil and Gas Activities.
2018 gross reserves summary
Total proved reserves of 33.8 million barrels of oil equivalent (boe),
an increase of 26 per cent over the Dec. 31, 2017, estimate;
Proved plus probable reserves of 53.3 million boe,
an increase of 11 per cent over the Dec. 31, 2017, estimate;
Proved plus probable plus possible reserves of 78.5 million boe, an increase of 6 per cent from the Dec. 31, 2017, estimate;
- Net present value of reserves discounted at 10 per cent;
Total proved reserves before tax of $376.9-million
(U.S.), an increase of 31 per cent over the Dec. 31, 2017, estimate;
Proved plus probable reserves before tax of $521.4-million
(U.S.) an increase of 7 per cent over the Dec. 31, 2017, estimate;
Proved plus probable plus possible reserves before tax of $690.3-million
(U.S.), a decrease of 11 per cent over the Dec. 31, 2017, estimate.
The above total proved reserves are attributed to 17 of the Caney wells already drilled, four Woodford wells (4.9-per-cent working interest for the company) and the drilling of 55.76 net additional wells over the next three years. The probable reserves are attributed to the drilling of 28.91 net additional wells. The wells in this report are planned at 107-acre spacing (six wells per section) on approximately 14,337 net acres. This is approximately 82 per cent of the 17,395 net acres the company has in the Tishomingo field. The other 18 per cent of the acreage is on the easterly side of the company's acreage and based on data from the company's historical drilling of the deeper Woodford formation wells, correlated with a 3-D seismic survey, the company anticipates that future wells on its easterly acreage will demonstrate that the Caney is also productive over this easterly acreage.
SUMMARY OF OIL AND GAS RESERVES
Tight oil Shale gas NGLs MBOE
gross Net gross Net BNK Net BNK Net
Reserve category (Mbbl) (Mbbl) (MMcf) (MMcf) (Mbbl) (Mbbl) (Mbbl) (Mbbl)
Developed producing 3,074 2,413 3,033 2,376 760 590 4,338 3,399
Developed non-producing 314 256 172 140 43 35 385 314
Undeveloped 22,173 17,443 16,706 13,081 4,148 3,248 29,106 22,871
Total proved 25,560 20,112 19,911 15,598 4,950 3,873 33,829 26,585
Probable 13,388 10,641 14,574 11,604 3,619 2,881 19,436 15,456
Total proved plus probable 38,948 30,753 34,485 27,201 8,569 6,754 53,264 42,041
Possible 18,099 14,511 17,143 13,680 4,257 3,397 25,213 20,188
Total proved plus probable plus possible 57,047 45,264 51,628 40,881 12,826 10,151 78,478 62,229
NET PRESENT VALUE OF FUTURE NET REVENUE
As of Dec. 31, 2018
Forecast prices and costs
Net present value of future net revenue ($ millions)
Before income tax After income tax
Reserve category 0% 5% 10% 15% 20% 0% 5% 10% 15% 20%
Developed producing $134.2 $96.0 $74.8 $61.7 $52.9 $134.2 $96.0 $74.8 $61.7 $52.9
Developed non-producing 17.4 12.0 9.3 7.8 6.7 17.4 12.0 9.3 7.8 6.7
Undeveloped 807.4 466.9 292.7 191.9 128.4 596.1 366.7 234.2 153.0 100.7
Total proved 959.1 574.9 376.8 261.4 188.0 747.7 474.7 318.3 222.5 160.3
Probable 570.6 269.8 144.5 82.9 48.9 420.4 210.8 112.6 62.7 35.3
Total proved plus probable 1,529.7 844.7 521.3 344.3 236.9 1,168.7 685.5 430.9 285.2 195.6
Possible 889.7 355.3 168.9 88.6 48.9 655.6 281.6 130.9 64.7 33.2
Total proved plus probable plus possible 2,419.4 1,200.0 690.3 432.9 285.8 1,823.7 967.1 561.8 349.9 228.8
Note: All dollar values are expressed in U.S. dollars.
Both the Brock 4-2H well, which BNK operates with a 77-per-cent working interest, and the Anderson 1-15H10X3 well (BNK 33-per-cent working interest), which is operated by a large corporation with offset operations, are still currently producing significant amounts of flowback fluid. The Brock 4-2H well had a 30-day IP rate of 251 barrels of oil equivalent per day (boepd) of which 83 per cent was oil, but is still producing much more frack fluid, at this stage of the flowback, than the company's previous wells in the field and thus is not fully cleaned up yet. Current tests indicate that at least a portion of this fluid can be traced to the offsetting Anderson well. The Anderson 1-15H10X3 well had a 30-day IP of 290 boepd of which 85 per cent was oil. The operator of the Anderson well has shut in the well to clean out the lateral, as it has evidence that the well is not producing from the full length of the lateral. The company will have a better gauge on what both wells are capable of producing once the Anderson well has been cleaned out and the flowback fluid has been recovered from both wells.
The company's reserves are derived from non-conventional oil and gas activities. The company's reserves are contained in a shale oil reservoir from which gas and natural gas liquids are produced as byproducts. Tight oil means crude oil (a) contained in dense organic-rich rocks, including low-permeability shales, siltstones and carbonates, in which the crude oil is primarily contained in microscopic pore spaces that are poorly connected to one another, and (b) that typically requires the use of hydraulic fracturing to achieve economic production rates. Shale gas means natural gas (a) contained in dense organic-rich rocks, including low-permeability shales, siltstones and carbonates, in which the natural gas is primarily adsorbed on the kerogen or clay minerals, and (b) that usually requires the use of hydraulic fracturing to achieve economic production rates.
These after income tax net present values reflect the tax burden on the company's Tishomingo field interests on a stand-alone basis, do not consider the business-entity-level tax situation, or tax planning and do not provide an estimate of the value at the level of the business entity, which may be significantly different. The financial statements and the management's discussion and analysis (MD&A) of the company should be consulted for information at the level of the business entity.
Readers are referred to the company's Form 51-101F1 statement of reserves data and other oil and gas information for the year ended Dec. 31, 2018, which can be accessed electronically from the SEDAR website, for additional information.
About BNK Petroleum Inc.
BNK Petroleum 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 oil and 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.
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