Out with Q1 2020 Earnings
BNK Petroleum Inc. Announces First Quarter 2020 Results
All amounts are in U.S. Dollars unless otherwise indicated:
TSX ticker symbol; BKX
OTCQX ticker symbol; BNKPF
CAMARILLO, CA, May 6, 2020 /PRNewswire/ -
FIRST QUARTER HIGHLIGHTS
- Average production for the first quarter of 2020 was 1,225 BOEPD, a decrease of 19% compared to first quarter of 2019 average production of 1,513 BOEPD. This decrease was due to the natural 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 $57.79/barrel
- G&A expense decreased by 19% in the first quarter of 2020 compared to the prior year quarter 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
- Average netback including commodity contracts for the first quarter of 2020 was $24.10, a decrease of 6% from the prior year first quarter due to lower prices in 2020
- Adjusted funds flow was $2.0 million in the first quarter of 2020 compared to $2.6 million in the first quarter of 2019. The decrease was mainly due to a decrease in revenue due to lower production and lower average prices
- Revenue, net of royalties was $3.1 million in the first quarter of 2020 compared to $4.6 million for first quarter of 2019, a decrease of 33%, as average prices decreased 18% and average production decreased 19% between the quarters
- 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 at March 31, 2020. The impairment test resulted in an impairment of PP&E which totaled $71.9 million for the first quarter 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.
- Net loss for the first quarter of 2020 was approximately $66.5 million compared to a net loss of $1.5 million for the first quarter of 2019 due to the PP&E impairment of $71.9 million in the first quarter of 2020
- The Company had an outstanding balance of $26.5 million on its credit facility at March 31, 2020 after paying down $1.0 million during the first quarter of 2020. In April 2020, the credit facility was redetermined at a borrowing base of $23.5 million and the Company made an additional principal payment of $3.0 million on the commitment amount
BNK's President and Chief Executive Officer, Wolf Regener commented:
"Due to the Company's strong hedge position in 2020, we are forecasting positive adjusted funds flow for the remainder of the year no matter how low oil prices go. For the rest of 2020, the Company has commodity contracts in place for almost 80% of its existing 2020 oil production at an average price of $57.79/barrel. Our hedges and the low decline rate on our existing wells are allowing us to continue to generate positive cash flow from our operations.
In April 2020, BOK redetermined our credit facility and we made a principal payment of $3.0 million to reduce our outstanding loan balance to $23.5 million. In addition, we will make additional principal payments of $2.5 million through November 2020 that is forecast to be funded by cash on hand and our anticipated positive adjusted funds flow. We are not expecting another redetermination on our credit facility until the fourth quarter of 2020.
The Company's adjusted funds flow was $2.0 million for the first quarter of 2020 compared to $2.6 million in the first quarter of 2019. The decrease was mainly due to lower production and lower average prices partially offset by a realized gain from commodity contracts.
The Company's G&A expenses decreased by 19% 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.
Net revenue decreased by 33% in the first quarter of 2020 as production decreased by 19% and average prices decreased by 18% compared to the prior year quarter.
Average netbacks for the first quarter of 2020 were $20.75 per boe compared to $26.79 per boe in the prior year quarter. Netback including commodity contracts were $24.10 per BOE for the first quarter of 2020 compared to $25.52 per BOE in the prior year quarter, a decrease of 6% due to lower prices.
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 million for the first quarter 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.
In the first quarter of 2020, the Company incurred a net loss of $66.5 million compared to a net loss of $1.5 million in the first quarter of 2019. This is due to an impairment of property, plant and equipment of $71.9 million in the first quarter of 2020."