Kolibri Global Energy Inc. press release
BNK Petroleum Inc. Announces Second Quarter 2020 Results
TSX - Toronto Stock Exchange · United States
Canada NewsWire
NEWBURY PARK, Calif., Aug. 11, 2020
TSX ticker symbol; BKX OTCQX ticker symbol; BNKPF
NEWBURY PARK, Calif., Aug. 11, 2020/CNW/ -
All amounts are in U.S. Dollars unless otherwise indicated:
SECOND QUARTER HIGHLIGHTS
Average production for the second quarter of 2020 was 1,163 BOEPD, a decrease of 15% compared to the second quarter of 2019 average production of 1,368 BOEPD due to the normal production decline of existing wells The Company has commodity contracts in place for almost 80% of its existing 2020 oil production at an average price of $58.31/barrel General & administrative ("G&A") expense decreased by 23% in the second quarter of 2020 compared to the prior year quarter due to lower payroll and related costs due to management's continued efforts to reduce G&A costs throughout the Company including employee terminations at the end of 2019 Operating expense per barrel averaged $6.07per BOE for the second quarter of 2020 compared to $7.59per BOE for the same period in 2019, a decrease of 20%. The decrease was due to cost cutting measures taken in the field during the current year Interest expense decreased by 39% in the second quarter of 2020 compared to the same period in the prior year due to principal payments on the credit facility during 2019 and 2020 which reduced the outstanding loan balance Average netback including commodity contracts for the second quarter of 2020 was $21.15per barrel, a decrease of 21% from the prior year second quarter due to lower prices in 2020 Adjusted funds flow was $1.6 millionin the second quarter 2020 compared to $2.5 millionin the second quarter of 2019. The decrease was mainly due to a 60% decrease in average oil prices and a decrease of 15% in production partially offset by realized gains from commodity contracts of $1.3 million Net loss for the second quarter of 2020 was $2.2 millioncompared to net income of $1.5 millionfor the second quarter of 2019 due to unrealized losses of $2.3 millionfrom hedged commodity contracts in the second quarter of 2020 compared to an unrealized gain of $1.1 millionin second quarter 2019. Without the unrealized hedging losses for the second quarter of 2020, the Company would have recognized positive net income Revenue, net of royalties was $1.5 millionin the second quarter of 2020 compared to $4.6 millionfor second quarter of 2019, a decrease of 66%, as prices decreased by 60% and production decreased by 15% The Company has an outstanding balance of $23.0 millionon its credit facility at June 30, 2020after paying down $4.5 millionduring the first six months of 2020 At June 30, 2020, cash totaled $1.4 million
BNK's President and Chief Executive Officer, Wolf Regenercommented:
"We are pleased that the Company was able to generate positive adjusted funds flow of $1.6 millionduring the second quarter of 2020 due to the Company's strong hedge position. For the second half of 2020, the Company has commodity contracts in place for almost 80% of its existing oil production at an average price of $58.31/barrel. The Company also has almost 40% of its 2021 existing oil production hedged at $52.66/barrel. We are also experiencing low decline rates in our field, with a year over year decline rate on existing wells of only 15%. Going forward, the Company expects its hedges and low decline rates to allow the Company to continue to generate positive cash flow from its operations. Without the unrealized loss from commodity hedges in the second quarter of 2020, the Company would have recognized positive net income.
The Company has continued to focus on cost reductions during 2020. Our G&A expense for the second quarter of 2020 decreased by 23% from the prior year quarter due to continued cost cutting including employee terminations. We also significantly reduced field operating costs which lowered our operating expense per barrel for the second quarter of 2020 to $6.07/barrel which was a 20% decrease from the prior year quarter. The Company has also made $4.5 millionof principal debt repayments during 2020, which has lowered our interest expense by 39% in the second quarter of 2020 compared to the second quarter of 2019.
The Company's adjusted funds flow was $1.6 millionfor the second quarter of 2020 compared to $2.5 millionin the second quarter of 2019. The decrease was mainly due to lower average prices and lower production partially offset by realized gains from commodity contracts.
Average production for the second quarter of 2020 was 1,163 BOEPD, a decrease of 15% compared to the second quarter of 2019 average production of 1,368 BOEPD. Average production for the six months ended June 30, 2020was 1,194 BOEPD, a decrease of 17% from the average production of 1,440 BOEPD in the same period of 2019. The decrease was due to the normal production decline of the Company's existing wells.
Net revenue decreased by 66% in the second quarter of 2020 as average prices decreased by 60% and production decreased by 15% and compared to the prior year quarter.
Average netback including commodity contracts for the second quarter of 2020 was $21.15per barrel, a decrease of 21% from the prior year second quarter, even though prices decreased by more than 60%, with the oil price averaging $23.35/barrel, in the second quarter. The Company's commodity contracts contributed an additional $12.75per barrel to the second quarter 2020 netback including commodity contracts amount.
The Company incurred a net loss for the second quarter of 2020 of $2.2 millioncompared to net income of $1.5 millionfor the second quarter of 2019. This was due to unrealized losses of $2.3 millionfrom hedged commodity contracts in the second quarter of 2020 compared to an unrealized gain of $1.1 millionin second quarter 2019.
| | Second Quarter | | First Six Months | | | | | | 2019 | 2018 | % | 2019 | 2018 | % | | | | | | | | | | Net Income (Loss): | | | | | | | | $ Thousands | $(2,224) | $1,531 | - | $ (68,716) | $ 54 | - | | $ per common share | $(0.01) | $0.01 | - | $(0.30) | $0.00 | - | | assuming dilution | | | | | | | | | | | | | | | | Capital Expenditures (adjustments) | $(110) | $363 | - | $(111) | $1,115 | - | | | | | | | | | | Average Production (Boepd) | 1,163 | 1,368 | (15%) | 1,194 | 1,440 | (17%) | | Average Price per Barrel | $18.72 | $47.19 | (60%) | $27.15 | $44.88 | (40%) | | Average Netback from operations per Barrel | $8.41 | $29.38 | (71%) | $14.75 | $28.03 | (47%) | | Average Netback including commodity contracts per Barrel | $21.15 | $26.93 | (21%) | $22.67 | $26.20 | (13%) | | | | | | | | | | | June 2020 | | March 2020 | | December 2019 | | | | | | | | | | | Cash and Cash Equivalents | $ 1,388 | | $ 3,745 | | $ 3,089 | | | Working Capital | $ (1,790) | | $(1,572) | | $ (2,482) | |
Second Quarter 2020 versus Second Quarter 2019
Oil and gas gross revenues totaled $1,981,000in the quarter versus $5,875,000in the second quarter of 2019. Oil revenues decreased $3,658,000or 68% as oil production decreased by 21% to 804 boepd and average oil prices decreased by $34.70per barrel or 60% to $23.35per barrel. Natural gas revenues decreased $97,000or 39% to $153,000as natural gas production decreased 2% to 1,033 mcfpd and average natural gas prices decreased by $0.98/mcf or 38% to $1.63/mcf. Natural gas liquids (NGLs) revenues decreased $139,000or 54% as average NGL prices decreased 56% to $7.00which was partially offset by an NGL production increase of 6% to 187 boepd.
Average production for the second quarter of 2020 was 1,163 boepd, a decrease of 15% compared to the second quarter of 2019 average production of 1,368 boepd. The decrease was due to the normal production decline of the Company's existing wells.
Production and operating expenses decreased to $642,000due to lower production and cost cutting. Production and operating expense per barrel averaged $6.07per BOE for the second quarter of 2020 compared to $7.59per BOE for the same period in 2019, a decrease of 20%. The decrease was due to cost cutting measures taken in the field during the current year.
Depletion and depreciation expense decreased $383,000or 25% due to a decrease in production in the second quarter of 2020 and a lower PP&E balance due to the impairment.
General and administrative expenses decreased $194,000or 23% due to lower payroll and related costs due to employee terminations at the end of 2019 and management's continued efforts to reduce G&A costs throughout the Company.
Finance income increased $0.2 millionin the second quarter of 2020 compared to the prior year quarter due to unrealized gains on commodity contracts in the second quarter of 2020.
Finance expense increased $1.8 millionin the second quarter of 2020 compared to the prior year quarter primarily due to an unrealized loss on commodity contracts of $2.3 millionin the second quarter of 2020.
Capital expenditures adjustments reduced PP&E by $110,000in the second quarter of 2020 relating to cost revisions on a non-operated well.
FIRST SIX MONTHS 2020 HIGHLIGHTS
Average production for the first six months of 2020 was 1,194 BOEPD, a decrease of 17% compared to the first six months of 2019 average production of 1,440 BOEPD due to the normal production decline of existing wells The Company has commodity contracts in place for almost 80% of its existing 2020 oil production at an average price of $58.31/barrel G&A expense decreased by 20% in the first six months of 2020 compared to the prior year due to lower payroll and related costs due to employee terminations at the end of 2019 and management's continued efforts to reduce G&A costs throughout the Company Operating expense per barrel averaged $6.44per BOE for the first six months of 2020 compared to $7.19per BOE for the same period in 2019, a decrease of 10%. The decrease was due to cost cutting measures taken in the field during the current year Interest expense decreased by 27% in the first six months of 2020 compared to the same period in the prior year due to principal payments on the credit facility during 2019 and 2020 which reduced the outstanding loan balance Average netback including commodity contracts for the first six months of 2020 was $22.67per barrel, a decrease of 13% from the prior year period due to lower prices in 2020 Adjusted funds flow was $3.6 millionin the first six months of 2020 compared to $5.1 millionin the first six months of 2019. The decrease was mainly due to a 40% decrease in average oil prices and a decrease of 17% in production partially offset by realized gains from commodity contracts of $1.7 million Due to the significant decline in commodity prices and the global impact on demand from the COVID-19 pandemic, the Company performed a PP&E impairment test in the first quarter of 2020. The impairment test resulted in an impairment of PP&E which totaled $71.9 million. In accordance with IFRS, an impairment loss can generally be reversed in future periods if there is an indication that a previously recognized impairment loss has reversed because of a change in the estimates used to determine the impairment loss and the recoverable amount of the impaired asset subsequently increases Net loss for the first six months of 2020 was $68.7 millioncompared to net income of $54 thousandfor the first six months of 2019 due to the PP&E impairment Revenue, net of royalties was $4.6 millionin the first six months of 2020 compared to $9.2 millionfor first six months of 2019, a decrease of 50%, as prices decreased by 40% and production decreased by 17%
First Six Months of 2020 versus First Six Months of 2019
Gross oil and gas revenues totaled $5,899,000in the first six months of 2020 versus $11,698,000in the first six months of 2019. Oil revenues were $5,150,000in the first six months versus $10,637,000in the same period of 2019, a decrease of 52% as average oil prices decreased 38% or $20.84a barrel coupled by a decrease in oil production of 23%. Natural gas revenues decreased $213,000or 38%, due to an average natural gas price decrease of 39% in the first six months of 2020 compared to the prior year period. NGL revenue decreased $99,000, or 20%, due to an average NGL price decrease of 18% and an NGL production decrease of 3% in the first six months of 2020.
Average production for the first six months of 2020 was 1,194 boepd, a decrease of 17% from the average production of 1,440 boepd in the same period of 2019. The decrease was due to the normal production decline of the Company's existing wells.
Production and operating expenses decreased to $1,400,000due to lower production and cost cutting. Production and operating expense per barrel averaged $6.44per BOE for the first six months of 2020 compared to $7.19per BOE for the same period in 2019, a decrease of 10%. The decrease was due to cost cutting measures taken in the field during the current year.
Depletion and depreciation expense decreased $692,000or 22% due to a decrease in production in the first six months of 2020 and a lower PP&E balance due to the impairment.
General and administrative expenses decreased $364,000or 21% due to lower payroll and related costs due to employee terminations at the end of 2019 and management's continued efforts to reduce G&A costs throughout the Company.
Due to industry and market conditions, especially the significant decline in commodity prices and the global impact on demand from the COVID-19 pandemic, the Company performed a PP&E impairment test at March 31, 2020. The impairment test resulted in an impairment of PP&E which totaled $71.9 millionfor the first six months of 2020. In accordance with IFRS, an impairment loss can generally be reversed in future periods if there is an indication that a previously recognized impairment loss has reversed because of a change in the estimates used to determine the impairment loss and the recoverable amount of the impaired asset subsequently increases.
Finance income increased $4.6 millionin the first six months of 2020 compared to the prior year period due to $2.9 millionof unrealized gains on commodity contracts and $1.7 millionof realized gains in the first six months of 2020.
Finance expense decreased $1.4 millionin the first six months of 2020 compared to the prior year period due to an unrealized and realized losses on commodity contracts in the first six months of 2019 as well as lower interest expense in the first six months of 2020 compared to the prior year period.
Capital expenditures adjustments reduced PP&E by $111,000in the first six months of 2020 relating to cost revisions on a non-operated well.
| BNK PETROLEUM INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, Expressed in Thousands of United States Dollars) | | | | | ($000 except as noted) | | | | | | June 30 | | December 31 | | | 2020 | | 2019 | | | | | | | Current Assets | | | | | Cash | $1,388 | | $ 3,089 | | Trade and other receivables | 1,357 | | 2,198 | | Other current assets | 330 | | 513 | | Fair value of commodity contracts | 2,184 | | - | | | 5,259 | | 5,800 | | | | | | | Non-current assets | | | | | Property, plant and equipment | 80,868 | | 155,408 | | Fair value of commodity contracts | 429 | | - | | | 81,297 | | 155,408 | | | | | | | Total Assets | $86,556 | | $161,208 | | | | | | | Current Liabilities | | | | | Trade and other payables | $5,022 | | $6,424 | | Current portion of loans and borrowings | 2,000 | | 1,500 | | Fair value of commodity contracts | - | | 253 | | Lease payable | 27 | | 105 | | | 7,049 | | 8,282 | | | | | | | Non-current liabilities | | | | | Loans and borrowings | 21,022 | | 25,664 | | Asset retirement obligations | 1,143 | | 1,127 | | Fair value of commodity contracts | - | | 97 | | | 22,165 | | 26,888 | | | | | | | Equity | | | | | Share capital | 289,622 | | 289,622 | | Contributed surplus | 22,948 | | 22,925 | | Deficit | (255,228) | | (186,512) | | Total Equity | 57,342 | | 126,035 | | | | | | | Total Equity and Liabilities | $86,556 | | $161,208 |
| BNK PETROLEUM INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | | | | | | | | | | (Unaudited, expressed in Thousands of United States dollars, except per share amounts) | | | | | | | | | | ($000 except as noted) | | | | | | | | | | | | Second Quarter | | First Six Months | | | | | | | | 2020 | | 2019 | | 2020 | | 2019 | | | | | | | | | | | | Oil and natural gas revenue, net | $ | 1,532 | | 4,601 | | 4,603 | | 9,178 | | Other income | | - | | 1 | | 1 | | 2 | | | | 1,532 | | 4,602 | | 4,604 | | 9,180 | | | | | | | | | | | | Production and operating expenses | | 642 | | 945 | | 1,400 | | 1,874 | | Depletion and depreciation expense | | 1,148 | | 1,531 | | 2,508 | | 3,200 | | General and administrative expenses | | 636 | | 830 | | 1,373 | | 1,737 | | Stock based compensation | | 5 | | 28 | | 21 | | 94 | | Impairment of PP&E | | - | | - | | 71,923 | | - | | | | 2,431 | | 3,334 | | 77,225 | | 6,905 | | | | | | | | | | | | Finance income | | 1,349 | | 1,109 | | 4,686 | | 8 | | Finance expense | | (2,674) | | (846) | | (781) | | (2,229) | | | | | | | | | | | | Net income (loss) | | (2,224) | | 1,531 | | (68,716) | | 54 | | Net income (loss) per share | $ | (0.01) | | 0.01 | | (0.30) | | 0.00 |
| BNK PETROLEUM INC. | | | | | | | | SECOND QUARTER 2020 | | | | | | | | (Unaudited, expressed in Thousands of United States dollars, except as noted) | | | | | | | | | | | | | | | | | | Second Quarter | | First Six Months | | | | | | 2020 | 2019 | | 2020 | 2019 | | Oil revenue before royalties | $ | 1,709 | 5,367 | | 5,150 | 10,637 | | Gas revenue before royalties | | 153 | 250 | | 342 | 555 | | NGL revenue before royalties | | 119 | 258 | | 407 | 506 | | Oil and Gas revenue | | 1,981 | 5,875 | | 5,899 | 11,698 | | | | | | | | | | Adjusted funds flow | | 1,601 | 2,525 | | 3,553 | 5,099 | | Additions to property, plant & equipment | | (110) | 363 | | (111) | 1,115 | | | | | | | | | | | | | | | | | | Statistics: | | | | | | | | | | 2nd Quarter | | First Six Months | | | | | | 2020 | 2019 | | 2020 | 2019 | | Average oil production (Bopd) | | 804 | 1,016 | | 823 | 1,064 | | Average natural gas production (mcf/d) | | 1,033 | 1,052 | | 1,050 | 1,046 | | Average NGL production (Boepd) | | 187 | 177 | | 196 | 202 | | Average production (Boepd) | | 1,163 | 1,368 | | 1,194 | 1,440 | | Average oil price ($/bbl) | | $23.35 | $58.05 | | $34.37 | $55.21 | | Average natural gas price ($/mcf) | | $1.63 | $2.61 | | $1.79 | $2.93 | | Average NGL price ($/bbl) | | $7.00 | $16.04 | | $11.41 | $13.87 | | | | | | | | | | Average price (Boe) | | $18.72 | $47.19 | | $27.15 | $44.88 | | Royalties (Boe) | | 4.24 | 10.22 | | 5.96 | 9.66 | | Operating expenses (Boe) | | 6.07 | 7.59 | | 6.44 | 7.19 | | Netback from operations (Boe) | | $8.41 | $29.38 | | $14.75 | $28.03 | | Price adjustment from commodity contracts (Boe) | | 12.74 | (2.45) | | 7.92 | (1.83) | | Netback including commodity contracts (Boe) | | $21.15 | $26.93 | | $22.67 | $26.20 |
The information outlined above is extracted from and should be read in conjunction with the Company's unaudited financial statements for the three and six months ended June 30, 2020and 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 from operations, netback including commodity contracts, net operating income and adjusted fund flow (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. |