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BNK Petroleum Inc
Symbol BKX
Shares Issued 232,922,625
Close 2019-03-08 C$ 0.265
Recent Sedar Documents

BNK estimates year-end proved reserves of 33.8M boe

2019-03-11 08:24 ET - News Release

Mr. Wolf Regener reports


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

                                             BNK              BNK             
                                            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%
United States
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.


Operations update

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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