CAMARILLO, CA, July 30, 2014 /CNW/ - BNK Petroleum Inc. (the "Company") (TSX: BKX) is pleased to announce that its indirect wholly owned
subsidiary BNK Petroleum (US) Inc. ("BNK US") has obtained a new
US$100,000,000 credit facility ("new facility") from Morgan Stanley
Capital Group Inc. ("MSCGI"). The initial commitment amount of the new
reserve-based facility is US$15,900,000.
The proceeds from the new facility are intended to fund drilling of
Caney shale oil wells in the Tishomingo field in Oklahoma. The new
facility will bear interest at a per annum rate equal to then three
month LIBOR plus an applicable margin ranging from 2% to 7% based on
the ratio of outstanding borrowings to present value of proved
developed producing reserves discounted at 9% ("PDP PV9"). The facility
provides for interest only payments until the July 2018 maturity date.
Additional commitment amounts will be subject to new reserve
Commenting on the new facility, Wolf Regener, President and CEO said "We
are pleased to once again be working with MSCGI, and appreciate their
shared belief in the potential of our assets. This facility has been
structured to grow with our future cash flow needs and to expand our
planned drilling program beyond the 3 Caney wells previously
announced. Our intention is to continue our Caney drilling program
throughout 2014 and 2015."
Oklahoma - Tishomingo Field
The Company has completed drilling the Wiggins 11-2H well (93.4% working
interest) with a 5,050 foot treatable lateral section. The Wiggins
11-2H, the first of three planned Caney formation wells previously
announced, was drilled vertically, had an extensive suite of logs run,
was subsequently plugged back and horizontally directionally drilled.
This lateral was placed in what the Company believes is the most
productive stratigraphic portion of the Caney, based on the analysis of
previous well results and the pilot hole. The fracture stimulation of
the well is expected to begin within the next two weeks. The drilling
rig is moving to the Hartgraves 1-5H location and is expected to begin
drilling within the week. The Hartgraves 1-5H well (100% working
interest) is expected to be drilled in less than 30 days as it will not
have a pilot hole.
After drilling the Hartgraves 1-5H well the Company's net Caney acreage
will have increased to about 15,500 acres.
As previously announced, the Company successfully placed proppant in 9
of the 20 stages attempted in its Gapowo B-1 horizontal well, and is
continuing its recovery of the fracture stimulation fluid ("fluid").
Mechanical issues with the artificial lift equipment resulted in a
fluid recovery rate that was slower than anticipated. The mechanical
issues were corrected late last week, and fluid recovery re-commenced
at higher rates. As of this date, 21% of the fluid has been recovered,
with continuous natural gas being produced from the well.
The well has had gas rates spiking to over one million cubic feet per
day for short periods of time, and is currently averaging between
200,000 to 400,000 cubic feet per day. These gas rates may continue to
increase as the well continues to unload fluid. The preliminary
flowback and gas production results obtained so far indicate that the
fracture stimulation may have achieved a lower than desired effective
permeability. The Company believes that only a few of the 9 stages may
have been successful in creating the desired conductivity. Downhole
pressure recorders were installed which will provide further
information during the continued flowback. This data will also help in
understanding the stronger-than-expected build-up that occurred during
the period when the well was shut-in for mechanical repairs.
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,
Poland and Spain. 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.
This news release contains short-term production rates. Readers are
cautioned that such production rates are not necessarily indicative of
long-term performance or of ultimate recovery.
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 information regarding the Company's
use of proceeds from the new facility and Caney and Gapowo B-1 wells
development, including plans, anticipated results and timing.
Forward-looking information is 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 the indications of early results are reasonably accurate
predictors of the prospectiveness of the shale intervals, that required
regulatory approvals will be available when required, that expected
production from future wells can be achieved as modeled, declines will
match the modeling, future well production rates will be improved over
existing wells, that rates of return as modeled can be achieved, that
recoveries are consistent with management's expectations, that
additional wells are actually drilled and completed, that no unforeseen
delays, unexpected geological or other effects, equipment failures,
permitting delays or labor or contract disputes are encountered, that
the development plans of the Company and its co-venturers will not
change, that the demand for oil and gas will be sustained, that the
Company will continue to be able to access sufficient capital through
financings, farm-ins or other participation arrangements to maintain
its projects, and that global economic conditions will not deteriorate
in a manner that has an adverse impact on the Company's business, its
ability to advance its business strategy and the industry as a whole.
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. Factors that could cause the
forward-looking information in this news release to change or to be
inaccurate include, but are not limited to, the risk that any of the
assumptions on which such forward looking information is based vary or
prove to be invalid, including that the Company or its subsidiaries is
not able for any reason to obtain and provide the information necessary
to secure required approvals, that unexpected geological results are
encountered, 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 the Company is unable to
access required capital, that occurrences such as those that are
assumed will not occur, do in fact occur, and those conditions that are
assumed will continue or improve, do not continue or improve, any of
which could result in delays, cessation in planned work or loss of one
or more concessions and have an adverse effect on the Company and its
financial condition. These risks as well as the other risks and
uncertainties applicable to exploration and development activities and
the Company's business as set forth in the Company's management
discussion and analysis and its annual information form both of which
are available for viewing under the Company's profile at www.sedar.com.
The Company undertakes no obligation to update these forward-looking
statements, other than as required by applicable law.
SOURCE: BNK Petroleum Inc.
For further information:
Wolf E. Regener +1 (805) 484-3613