BNK Petroleum Inc. - Announces a 26% BOE Increase in 2018 Year-End Proved Reserves
CAMARILLO, CA, March 11, 2019 /PRNewswire/ - BNK Petroleum Inc. (the "Company" or "BNK") (TSX: BKX), is providing the results of its December 31, 2018 independent reserves evaluation.
Wolf Regener, President and CEO commented. "We are very pleased with our proved reserve increases of 26% on a BOE basis and 31% 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 favorable 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 33.8 million Barrels of oil equivalent (BOE)
-- an increase of 26% over the December 31, 2017 estimate
-- Proved plus Probable Reserves 53.3 million BOEs
-- an increase of 11% over the December 31, 2017 estimate
-- Proved plus Probable plus Possible Reserves 78.5 million BOEs
-- a increase of 6% from the December 31, 2017 estimate
Net Present Value of Reserves discounted at 10%
-- Total Proved Reserves before tax of U.S. $376.9 million
-- an increase of 31% over the December 31, 2017 estimate
-- Proved plus Probable Reserves before tax of U.S. $521.4 million
-- an increase of 7% over the December 31, 2017 estimate
-- Proved plus Probable plus Possible Reserves before tax of U.S. $690.3
million
-- a decrease of 11% over the December 31, 2017 estimate
The above total Proved reserves are attributed to 17 of the Caney wells already drilled, four Woodford wells (4.9% working interest for the Company) and the drilling of 55.76 net additional wells over the next 3 years. The Probable reserves are attributed to the drilling of 28.91 net additional wells. The wells in this report are planned at 107 acre spacing (6 wells per section) on approximately 14,337 net acres. This is approximately 82 percent of the 17,395 net acres the Company has in the Tishomingo Field. The other 18 percent of the acreage is on the easterly side of the Company's acreage and based on data from the Company's historical drilling of the deeper Woodford formation wells, correlated with a 3D seismic survey, the Company anticipates that future wells on its easterly acreage will demonstrate that the Caney is also productive over this easterly acreage.
Summary of Oil & Gas Reserves
Tight Oil Shale Gas Natural Gas
Liquids
MBOE's
Reserve Category
BNK
Net
BNK
Net
BNK
Net
BNK
Net
Gross (Mbbl) Gross (MMcf) (Mbbl) (Mbbl) (Mbbl) (Mbbl)
(Mbbl) (MMcf)
Proved
Developed Producing 3,074 2,413 3,033 2,376 760 590 4,338 3,399
Developed Non-Producing 314 256 172 140 43 35 385 314
Undeveloped 22,173 17,443 16,706 13,081 4,148 3,248 29,106 22,871
Total Proved 25,560 20,112 19,911 15,598 4,950 3,873 33,829 26,585
Probable 13,388 10,641 14,574 11,604 3,619 2,881 19,436 15,456
Total Proved Plus Probable 38,948 30,753 34,485 27,201 8,569 6,754 53,264 42,041
Possible 18,099 14,511 17,143 13,680 4,257 3,397 25,213 20,188
Total Proved Plus Probable Plus Possible 57,047 45,264 51,628 40,881 12,826 10,151 78,478 62,229
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Net Present Value of Future Net Revenue
As of December 31, 2018
Forecast Prices & Costs
Net Present Value of Future Net Revenue ($ millions)
Before Income Tax
After Income Tax
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Reserve Category 0% 5% 10% 15% 20% 0% 5% 10% 15% 20%
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United States
Proved
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
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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
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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
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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
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Note: All dollar values are
expressed in U.S. dollars.
Operations Update
Both the Brock 4-2H well, which BNK operates with a 77% working interest, and the Anderson 1-15H10X3 well (BNK 33% 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 BOEPD of which 83% 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% 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 by-products. "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 standalone 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 & Gas Information for the year ended December 31, 2018, which can be accessed electronically from the SEDAR website at www.sedar.com, for additional information.
"BOEs" refers to barrels of oil equivalent. BOEs/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. 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 provided plus probable plus possible reserves. The present value of estimated future net revenues referred to herein does not represent fair market value and should not be construed as the current market value of estimated crude oil and natural gas reserves attributable to the Company's properties. Readers should be aware that references to initial production rates and other short-term production rates are preliminary in nature and are not necessarily indicative of long-term performance or of ultimate recovery.
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 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. The Company's shares are traded on the Toronto Stock Exchange under the stock symbol BKX and on the OTCQX under the stock symbol BNKPF.
Caution Regarding Forward-Looking Information
Certain statements contained in this news release constitute "forward-looking information" as such term is used in applicable Canadian securities laws, including statements regarding estimates of reserves and future net revenue, expectations regarding additional reserves and statements regarding Caney wells development, including plans, anticipated results and timing. Forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking information. Estimated reserves and future net revenue have been independently evaluated by NSAI with an effective date of December 31, 2018. This evaluation 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, will 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. Estimates of after-tax net present value are dependent on a number of factors including utilization of tax-loss carry forwards. 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. Forward-looking information regarding Caney wells development and expectations regarding additional reserves are based on plans and estimates of management and interpretations of exploration information by the Company's exploration team at the date the information is provided and is subject to several factors and assumptions of management, including that required regulatory approvals will be available when required, 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 no unforeseen delays, unexpected geological or other effects, equipment failures, permitting delays or labor or contract disputes or shortages are encountered, that the development plans of the Company and its co-venturers will not change, and is subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking information, including that anticipated results and estimated costs will not be consistent with managements' expectations, the Company or its subsidiaries not being 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 and that equipment failures, permitting delays or labor or contract disputes or shortages are encountered.
Information on other important economic factors or significant uncertainties that may affect components of the reserves data and the other forward looking statements in this release are contained in the Company's Form 51-101F1 Statement of Reserves Data and Other Oil & Gas Information for the year ended December 31, 2018, the Company's Management Discussion and Analysis and the Company's Annual Information Form under "Risk Factors", which are available under the Company's profile at www.SEDAR.com. The Company undertakes no obligation to update forward-looking statements, other than as required by applicable law.
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