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 evaluations.
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.
Poland
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.