Kolibri Global Energy Inc. press release
BNK Petroleum Inc. Announces 3rd Quarter 2014 Results
TSX - Toronto Stock Exchange · United States
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All amounts are in U.S. Dollars unless otherwise indicated:
THIRD QUARTER HIGHLIGHTS:
Revenue, net of royalties was $5.4 millionfor third quarter of 2014 and netbacks were $52.14per BOE, with revenue increasing 230% compared to the third quarter of 2013 due to an increase in production Average production was 971 barrels of oil equivalent per day (BOEPD) for the third quarter, an increase of 222% due to production from the Caneywells drilled at the end of 2013 and in 2014 The Hartgraves 1-5H well, which started production in October, had a production rate for the last 10 days of 620 BOEPD and the average initial production (IP) rate for the first 26 days was 536 BOEPD Net loss was $299,000for the third quarter of 2014 compared to a net loss of $2,445,000in the third quarter of 2013 In July, the Company closed a $100 millioncredit facility with Morgan Stanley and borrowed the initial commitment amount of $15.9 millionduring the third quarter Cash flow from operating activities was $2.9 millionfor the third quarter of 2014 compared to negative cash flow from operating activities of $0.3 millionin the third quarter of 2013 Cash and working capital totaled $26.8 millionand $14.0 millionrespectively at September 30, 2014 Capital expenditures decreased 37% to $22.1 milliondue to the prior year US drilling program
CAMARILLO, CA, Nov. 4, 2014/CNW/ - BNK's President and Chief Executive Officer, Wolf Regenercommented:
"Our current field production is about 1,600 barrels of oil equivalent per day (BOEPD) including the two new Caneywells from our 2014 US drilling program. The Wiggins 11-2H well, which went into production in September and the Hartgraves 1-5H well, which started producing in early October, subsequent to the end of the quarter. The Hartgraves 1-5H well has a 26 day IP rate of 536 BOEPD, of which 351 barrels is oil and for the last 10 days has averaged 620 BOEPD, of which 393 barrels are oil. The well was completed with our largest hydraulic stimulation to date and the initial data indicates that this should be one of the best Caneywells we have drilled. The performance of the Hartgraves well demonstrates the results of the continued optimization of our drilling and completion procedures.
"The first well in our 2014 drilling program, Wiggins 11-2H, had an initial 30 day IP rate of 323 BOEPD as the well experienced a sudden steep decline from its early IP rate with a significantly slower decline thereafter. Based on the results of the Wiggins 11-2H well, as referenced above, we made several modifications in our lateral placement, completion design and flowback procedures when we drilled the more productive Hartgraves 1-5H well.
"We are currently re-drilling the lateral portion of the Emery 17-1H well which is our third well in the 2014 drilling program, after the drill string became stuck. We expect to initiate completion operations on this well in November.
"The Wiggins 12-8H and the Barnes 7-2H wells both continue their strong performance with combined average production of approximately 500 BOEPD in the third quarter 2014. These wells have been on production for 9 and 11 months respectively.
"In the third quarter, we borrowed the initial commitment amount of $15.9 millionfrom our $100 millioncredit facility. We expect additional commitment amounts will become available due to drilling the additional Caneydevelopment.
"The Company intends to continue drilling Caneywells subject to receiving additional commitment amounts from our credit facility. By year-end, we are projecting that the Company will have 2 additional wells on production and have a year-end production exit rate between 2,300 to 2,600 BOEPD.
"We are fortunate that while the price of oil has declined our netbacks are still quite robust. We are estimating that with the price of WTI at $75a barrel, NGL prices of $28a barrel, gas at $4an MCF and using our 3rdquarter operating expense numbers our netbacks would be approximately $39a barrel. At $85WTI, with the same assumptions as above, our netbacks are estimated to be over $44a barrel.
"If the price of oil falls further and the Company slows down the development of the field, the Company's acreage is secure as 93% of the 15,900 acres are already held by production.
"For the first nine months of 2014, the Company generated positive cash flow from operations of $8.2 millioncompared to negative operating cash flow of $8.9 millionin the same period of 2013. Our netbacks for the first nine months increased by more than 150% compared to the same period in 2013, which allowed the Company to generate positive operating cash flow due to the higher oil content in the Caneyproduction mix. In addition, we generated gross revenues of almost $21 millionfor the first nine months of the year.
"The Company is currently performing a reservoir analysis on the Gapowo B-1 horizontal well in Poland. Information from the downhole pressure gauges and the fracture stimulation and flowback will be incorporated into the full reservoir analysis. As previously announced, the Company intends to begin its efforts to joint venture with a suitable partner after completing the reservoir analysis.
"In the third quarter of 2014, the Company incurred a net loss of $299,000compared to a net loss of $2,445,000in the third quarter of 2013. Oil and gas revenue, net of royalties was $5.4 millionin the third quarter of 2014, an increase of $3.8 million, or 230%, compared to the prior year quarter.
"Average netbacks for the third quarter 2014 were $52.14, an increase of 4% compared to the prior year quarter due to an increase of 3% in average prices in the third quarter 2014.
"Production increased 222% in the third quarter 2014 compared to the third quarter 2013 due to the Caneywells drilled at the end of 2013 and in 2014 and the Woodfordsale in April 2013.
"Capital expenditures decreased from $34.9 millionin the third quarter 2013 to $22.1 millionin the third quarter 2014 due to the prior year drilling program in the US.
"Through the first nine months of 2014, the Company generated net income of $150,000compared to a loss of $8.7 millionin the first nine months of 2013. Oil and gas gross revenues increased by 151% to $20.9 milliondue to an increase in average prices due to the higher percentage of oil from the Caneyformation in the production mix.
| | Third Quarter | | | First Nine Months | | | | | | 2014 | 2013 | % | | 2014 | 2013 | % | | | | | | | | | | | Net Income (Loss): | | | | | | | | | $ Thousands | $(299) | $(2,445) | - | | $150 | $(8,694) | - | | $ per common share | $0.00 | $(0.02) | - | | $0.00 | $(0.06) | - | | assuming dilution | | | | | | | | | | | | | | | | | | Capital Expenditures | $22,082 | $34,908 | (37%) | | $57,746 | $45,270 | 28% | | | | | | | | | | | Average Production (boepd) | 971 | 302 | 222% | | 980 | 743 | 32% | | Average Product Price per Barrel | $74.80 | $72.81 | 3% | | $80.05 | $40.97 | 95% | | Average Netback per Barrel | $52.04 | $50.13 | 4% | | $57.46 | $22.87 | 145% | | | | | | | | | | | | September
2014 | | June
2014 | | December 2013 | | | | | | | | | | | | | Cash and Cash Equivalents | $26,808 | | $32,266 | | $17,159 | | | | Working Capital | $13,973 | | $18,720 | | $18,854 | | | | | | | | | | | |
Third Quarter 2014 versus Third Quarter 2013
Gross oil and gas revenues totaled $6,682,000in the third quarter 2014 versus $2,023,000in the third quarter of 2013. Oil revenues were $5,978,000in the third quarter versus $1,705,000in the third quarter of 2013, an increase of 251% as oil production increased 280% due to the additional Caneywells drilled. Average oil prices decreased 8% or $8.38a barrel for the quarter. Natural gas revenues increased $249,000or 247%, as natural gas production increased 211% mainly due to the additional Caneywells drilled. Average natural gas prices per mcf increased 12% compared to the third quarter of 2013. Natural Gas Liquid (NGL) revenue increased $137,000or 63% to $354,000as average production increased 81% to 127 BOEPD due to the additional Caneywells drilled while average NGL prices decreased 10% to $30.32a barrel.
Production and operating expenses increased $521,000between quarters due to the additional Caneywells added at the end of 2013 and in 2014.
Depletion and depreciation expense increased $1,164,000between quarters due to increased production and a higher depletion base due to the Caneywells.
General and administrative expenses decreased $198,000between quarters primarily due to lower salary and benefit costs.
Finance income increased $1,077,000due to realized and unrealized gains on financial commodity contracts in 2014. Finance expense increased $140,000primarily due to interest expense on the credit facility.
Capital expenditures of $22,082,000were incurred in the third quarter of 2014 primarily related to the 2014 drilling program in the US and the Gapowo B-1 well in Poland.
FIRST NINE MONTHS 2014 HIGHLIGHTS
Revenue, net of royalties was $17.0 millionfor first nine months of 2014 and netbacks were $56.14per BOE, an increase in revenue of 151% compared to the first nine months of 2013 due to more oil in the production mix from the Caneywells Average production was 980 BOEPD for the first nine months, an increase of 32% as increased production from the Caneywells drilled at the end of 2013 and in 2014 was offset by the loss of production from the Woodfordsale in April 2013 Net income was $150,000for the first nine months of 2014 compared to a loss of $8,694,000in first nine months of 2013 In July, the Company closed a $100 millioncredit facility with Morgan Stanley and borrowed the initial commitment amount of $15.9 millionduring the third quarter Completed an equity financing for total net proceeds of approximately $30.8 million Cash flow from operating activities was $8,185,000for the first nine months of 2014 compared to negative cash flow from operating activities of $8,942,000in the first nine months of 2013 Capital expenditures increased 28% to $57.7 millionprimarily due to the completion of the 2013 U.S. drilling program, the startup of the 2014 U.S. drilling program and the Gapowo B-1 well in Poland In the second quarter, the Company entered into financial derivative transactions with Morgan Stanley as part of the hedging requirements of the $100 millioncredit facility. These transactions also meet the Company's risk management strategy to manage commodity price fluctuations and stabilize cash flows for future exploration and development programs
First Nine Months of 2014 versus First Nine Months of 2013
Gross oil and gas revenues totaled $20,882,000in the first nine months of 2014 versus $8,311,000in the first nine months of 2013. Oil revenues were $18,363,000in the first nine months versus $4,433,000in the same period of 2013, an increase of 314% as production increased 301% due to the higher oil content from the Caneywells and average oil prices increased 3% or $2.94a barrel. Natural gas revenues decreased $416,000or 27%, due to a decrease in natural gas production of 47% due to the Woodfordasset sale in April 2013which was partially offset by an average natural gas price increase of 37% in the first nine months of 2014. NGL revenue decreased $943,000, or 40%, due to a decrease in NGL production of 50% due to the Woodfordsale in April 2013which was partially offset by an average NGL price increase of 19% in the first nine months of 2014.
Management fees and other income decreased due to lower management fees compared to the prior year.
Production and operating expenses decreased 6% for the first nine months of 2014 due to a reduced well count due to the Woodfordsale in 2013 and reduced gathering costs offset by operating costs for the additional Caneywells in 2014.
Depletion and depreciation expense increased $2,521,000due to increased production and a higher depletion base due to the Caneywells.
General and administrative expenses decreased $973,000primarily due to lower payroll and related costs and lower legal, accounting and consulting expenses.
Finance income increased $1,073,000due to realized and unrealized gains on financial commodity contracts in 2014. Finance expense decreased $9,888,000primarily due to 2013 interest expense of $7.5 million, which included $3.5 millionfor the amortization of deferred financings costs and $2.5 millionof pre-payment penalties, and a realized loss on financial commodity contracts of $2.5 millionas these contracts were all settled in April 2013.
| BNK PETROLEUM INC. | | | | | | | | CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | | | | | | | | (Unaudited, Expressed in Thousands of United States Dollars) | | | | | | | | | | | | | | | | | | | September 30, | | December 31, | | | | | | 2014 | | 2013 | | | Current assets | | | | | | | | | Cash and cash equivalents | | $ | 26,808 | $ | 17,159 | | | Investments in marketable securities | | | - | | 25,056 | | | Trade and other receivables | | | 5,813 | | 7,268 | | | Deposits and prepaid expenses | | | 1,367 | | 1,243 | | | Fair value of commodity contracts | | | 565 | | | | | | | 34,553 | | 50,726 | | | | | | | | | | | Non-current assets | | | | | | | | | Long-term receivables | | | - | | 433 | | | Investments in joint ventures | | | 3,721 | | 2,787 | | | Fair value of commodity contracts | | | 276 | | - | | | Property, plant and equipment | | | 119,810 | | 94,663 | | | Exploration and evaluation assets | | | 63,925 | | 36,194 | | | | | 187,732 | | 134,077 | | | | | | | | | | | Total assets | | $ | 222,285 | $ | 184,803 | | | | | | | | | | | Current liabilities | | | | | | | | | Trade and other payables | | $ | 20,580 | $ | 31,872 | | | | | 20,580 | | 31,872 | | | | | | | | | | | Non-current liabilities | | | | | | | | | Loans and borrowings | | | 15,420 | | 100 | | | Asset retirement obligations | | | 1,326 | | 1,192 | | | | | 16,746 | | 1,292 | | | | | | | | | | | Equity | | | | | | | | | Share capital | | | 279,830 | | 247,782 | | | Contributed surplus | | | 19,843 | | 18,721 | | | Deficit | | | (114,714) | | (114,864) | | Total equity | | | 184,959 | | 151,639 | | | | | | | | | | | Total equity and liabilities | | $ | 222,285 | $ | 184,803 | |
| BNK PETROLEUM INC. | | | | | | | | | | | CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | | | | | | | | | | | (Unaudited, expressed in Thousands of United States dollars, except per share amounts) | | | | | | | | | | | | | | | | | | | | | | | | Third Quarter | | First Nine Months | | | | | | | | | 2014 | | 2013 | | 2014 | | 2013 | | | | | | | | | | | | | | Oil and natural gas revenue, net | $ | 5,428 | $ | 1,647 | $ | 16,967 | $ | 6,758 | | | Gathering income | | - | | - | | - | | 331 | | | Other income | | 114 | | 442 | | 319 | | 961 | | | Gain on sale of assets | | - | | (129) | | - | | 9,618 | | | | | 5,542 | | 1,960 | | 17,286 | | 17,668 | | | | | | | | | | | | | | Exploration and evaluation expenditures | | 12 | | - | | 148 | | 57 | | | Production and operating expenses | | 772 | | 251 | | 1,992 | | 2,113 | | | Depletion and depreciation | | 1,884 | | 720 | | 5,578 | | 3,057 | | | General and administrative expenses | | 3,025 | | 3,223 | | 8,957 | | 9,930 | | | Share based compensation | | 439 | | 140 | | 1,130 | | 589 | | | Loss from investments in joint ventures | | 166 | | 29 | | (73) | | 94 | | | Restructuring expenses | | 438 | | - | | 438 | | 595 | | | | | 6,736 | | 4,363 | | 18,170 | | 16,435 | | | | | | | | | | | | | | Finance income | | 1,143 | | 66 | | 1,181 | | 108 | | | Finance expense | | (248) | | (108) | | (147) | | (10,035) | | | | | | | | | | | | | | Net income (loss) and comprehensive income (loss) | $ | (299) | $ | (2,445) | $ | 150 | $ | (8,694) | | | | | | | | | | | | | | Net income (loss) per share | | | | | | | | | | | | Basic and Diluted | $ | (0.00) | $ | (0.02) | $ | 0.00 | $ | (0.06) | | | | | | | | | | | |
| BNK PETROLEUM INC. | | | | | | | | | | THIRD QUARTER 2014 | | | | | | | | | | ($000 except as noted) | | | | | | | | | | | | | | | | | | | | | Third Quarter | | First Nine Months | | | | | | | | | | | 2014 | 2013 | | 2014 | 2013 | | Oil revenue before royalties | | $ | 5,978 | 1,705 | | 18,363 | 4,433 | | | Gas revenue before royalties | | | 350 | 101 | | 1,098 | 1,514 | | | NGL revenue before royalties | | | 354 | 217 | | 1,421 | 2,364 | | | Gross Oil and Gas revenue | | | 6,682 | 2,023 | | 20,882 | 8,311 | | | | | | | | | | | | | Cash Flow from (used) by operating activities | | | 2,889 | (258) | | 8,185 | (8,942) | | | Additions to property, plant & equipment | | | (17,637) | (34,789) | | (30,124) | (43,882) | | | Additions to exploration and evaluation assets | | | (4,445) | (119) | | (27,622) | (1,388) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Statistics: | | | | | | | | | | | | | Third Quarter | | First Nine Months | | | | | | | | 2014 | 2013 | | 2014 | 2013 | | | Average natural gas production (mcf/d) | | | 1,024 | 329 | | 906 | 1,714 | | | Average NGL production (Boepd) | | | 127 | 70 | | 144 | 287 | | | Average Oil production (Bopd) | | | 673 | 177 | | 682 | 170 | | | Average production (Boepd) | | | 971 | 302 | | 977 | 743 | | | Average natural gas price ($/mcf) | | | $3.72 | $3.33 | | $4.44 | $3.24 | | | Average NGL price ($/bbl) | | | $30.32 | $33.84 | | $36.10 | $30.22 | | | Average oil price ($/bbl) | | | $96.60 | $104.98 | | $98.65 | $95.71 | | | | | | | | | | | | | Average price per barrel | | | $74.80 | $72.81 | | $78.29 | $40.97 | | | Royalties per barrel | | | 14.02 | 13.65 | | 14.68 | 7.68 | | | Operating expenses per barrel | | | 8.64 | 9.03 | | 7.47 | 10.42 | | | Netback per barrel | | | $52.14 | $50.13 | | $56.14 | $22.87 | | | | | | | | | | | |
The information outlined above is extracted from and should be read in conjunction with the Company's unaudited financial statements for the nine months ended September 30, 2014and 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. Management of the Company believes that such measures are relevant for evaluating returns on each of the Company's projects as well as the performance of the enterprise as a whole. The Company's Non-GAAP Measures may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to similar non-GAAP measures as reported by such organizations. The Company's Non-GAAP Measures should not be construed as alternatives to net income, cash flows related to operating activities, or other financial measures determined in accordance with GAAP, as an indicator of the Company's performance.
Netback per barrel and its components are calculated by dividing revenue less royalties and operating expenses by the Company's sales volume during the period. Netback per barrel is a non-IFRS measure but it is commonly used by oil and gas companies to illustrate the unit contribution of each barrel produced. This is a useful measure for investors to compare the performance of one entity with another. However, non-IFRS measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures used by other companies.
Net operating income is similarly a non-GAAP measure that represents revenue net of royalties and operating expenses. The Company believes that net operating income is a useful supplemental measure to analyze operating performance and provides an indication of the results generated by the Company's principal business activities prior to the consideration of other income and expenses.
Funds from operations is a non-GAAP measure that represents cash provided by (used in) operating activities, as per the consolidated statements of cash flows, before changes in non-cash working capital. The Company considers this a key measure as it demonstrates its ability to generate the funds necessary for future growth after taking into account the short-term fluctuations in the collection of accounts receivable and the payment for accounts payable.