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BNK Petroleum Inc. has announced that its total proved reserves as of the end of 2018 is 33.8 million barrels of oil equivalent (BOE), an increase of 26% over the previous year. Its proved plus probable reserves are an estimated 53.3 million BOEs.
Wolf Regener, President and CEO commented. "We are very pleased with our proved reserve increases of 26% on a BOE basis and 31% on a NPV basis compared to the prior year. These increases were primarily due to our 2018 drilling program as well as our existing producing wells outperforming the previous years forecasts. We are also excited that the estimated ultimate recovery (EURs) from the existing wells increased from the prior year continuing the trend of the last few years. This continued year over year improvement of our proved reserves demonstrates the favorable performance of our wells and the long life we anticipate from our field. "
The evaluation of the Company's reserves in the Caney formation of the Tishomingo Field in the SCOOP area of Oklahoma was conducted by Netherland, Sewell & Associates, Inc. ("NSAI") in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.
2018 Gross Reserves Summary
- Total Proved Reserves 33.8 million Barrels of oil equivalent (BOE)
- an increase of 26% over the December 31, 2017 estimate
- Proved plus Probable Reserves 53.3 million BOEs
- an increase of 11% over the December 31, 2017 estimate
- Proved plus Probable plus Possible Reserves 78.5 million BOEs
- an increase of 6% from the December 31, 2017 estimate
Net Present Value of Reserves discounted at 10%
- Total Proved Reserves before tax of U.S. $376.9 million
- an increase of 31% over the December 31, 2017 estimate
- Proved plus Probable Reserves before tax of U.S. $521.4 million
- an increase of 7% over the December 31, 2017 estimate
- Proved plus Probable plus Possible Reserves before tax of U.S. $690.3 million
- a decrease of 11% over the December 31, 2017 estimate
The above total Proved reserves are attributed to 17 of the Caney wells already drilled, four Woodford wells (4.9% working interest for the Company) and the drilling of 55.76 net additional wells over the next 3 years. The Probable reserves are attributed to the drilling of 28.91 net additional wells. The wells in this report are planned at 107 acre spacing (6 wells per section) on approximately 14,337 net acres. This is approximately 82 percent of the 17,395 net acres the Company has in the Tishomingo Field. The other 18 percent of the acreage is on the easterly side of the Company's acreage and based on data from the Company's historical drilling of the deeper Woodford formation wells, correlated with a 3D seismic survey, the Company anticipates that future wells on its easterly acreage will demonstrate that the Caney is also productive over this easterly acreage.
Both the Brock 4-2H well, which BNK operates with a 77% working interest, and the Anderson 1-15H10X3 well (BNK 33% working interest), which is operated by a large corporation with offset operations, are still currently producing significant amounts of flowback fluid. The Brock 4-2H well had a 30 day IP rate of 251 BOEPD of which 83% was oil, but is still producing much more frack fluid, at this stage of the flowback, than the Company's previous wells in the field and thus is not fully cleaned up yet. Current tests indicate that at least a portion of this fluid can be traced to the offsetting Anderson well. The Anderson 1-15H10X3 well had a 30 day IP of 290 BOEPD of which 85% was oil. The operator of the Anderson well has shut-in the well to clean out the lateral, as it has evidence that the well is not producing from the full length of the lateral. The Company will have a better gauge on what both wells are capable of producing once the Anderson well has been cleaned out and the flowback fluid has been recovered from both wells.
The Company's reserves are derived from non-conventional oil and gas activities. The Company's reserves are contained in a shale oil reservoir from which gas and natural gas liquids are produced as by-products. "Tight oil" means crude oil (a) contained in dense organic-rich rocks, including low-permeability shales, siltstones and carbonates, in which the crude oil is primarily contained in microscopic pore spaces that are poorly connected to one another, and (b) that typically requires the use of hydraulic fracturing to achieve economic production rates. "Shale gas" means natural gas (a) contained in dense organic-rich rocks, including low-permeability shales, siltstones and carbonates, in which the natural gas is primarily adsorbed on the kerogen or clay minerals, and (b) that usually requires the use of hydraulic fracturing to achieve economic production rates.
These after income tax net present values reflect the tax burden on the Company's Tishomingo Field interests on a standalone basis, do not consider the business-entity-level tax situation, or tax planning and do not provide an estimate of the value at the level of the business entity, which may be significantly different. The financial statements and the management's discussion and analysis (MD&A) of the Company should be consulted for information at the level of the business entity.
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