BNK Petroleum Corporate

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TSX: BKX.TO Last Price: 0.285 Volume: 71,400 Change: +0.015

Corporate History

In March of 2008 Bankers Petroleum Ltd. announced its intent to spin off its United States based wholly owned unconventional exploration and production company which had been pursuing shale gas since 2005. The spin off was complete in July of 2008 with shareholders of Bankers receiving one share of BNK Petroleum Inc. for every ten shares held on the record date.

BNK Petroleum Inc. was among the early companies to recognize that improvements in horizontal drilling and completion technologies would enable the industry to develop vast new supplies of natural gas from unconventional reservoirs such as shales and tight sandstones. In the early years, as a part of Bankers Petroleum Ltd., BNK Petroleum Inc.'s first project was in Palo Duro, Texas when it began leasing acreage in 2005. Soon after the Company commenced drilling science wells in Palo Duro, as well as making an additional strategic acquisition. In May, 2006 BNK Petroleum Inc. acquired all but one of Vintage Petroleum's unconventional assets from Occidental Petroleum for $30 million - $20 million in Bankers stock, and $10 million in cash. In 2008 the Corporation sold its interests in certain oil and gas leases that were not part of the Tishomingo Field development in Oklahoma along with it's Black Warrior Basin acreage in Mississippi and Alabama for $10 million, while retaining a right to earn back a 50% interest in the Black Warrior Basin acreage. The acreage has since expired.

With risk spread out into multiple projects. BNK Petroleum Inc., then still operating as part of Bankers Petroleum Ltd., began drilling wells in Oklahoma and New York. The Company drilled its first encouraging vertical well in Oklahoma in late 2006 and followed this by expanding its operations with four Woodford shale horizontal wells in the Carter/Johnson County project in 2007, now referred to as BNK's Tishomingo field. In 2008 the Company drilled and participated in a further 35 wells and exited the year with Proved and Probable reserves of 13.5 million barrels of oil equivalent.

In July of 2008 the Company was spun out of Bankers Petroleum Ltd. and began trading on it’s own as BNK Petroleum Inc. under the ticker symbol BKX on the Toronto Stock Exchange. The shareholders of Bankers Petroleum, Ltd., received one share of BNK Petroleum Inc. for every 10 shares of Bankers Petroleum Ltd.  In 2008 BNK looked for a way to grow the company utilizing its shale gas expertise it had acquired. As Management and the Board believed that shale gas could not only exist in North America, the Company decided to also look for projects in Europe. In late 2008 the company applied for it’s first European shale gas concessions in Poland. Work continued in other Countries and basins throughout 2008 and into 2009. The first Polish concessions were granted to BNK in March of 2009, with additional concessions being granted in 2010.

Also in 2009 the Company entered into a farmout agreement with RAG and Sorgenia whereby most of BNK’s share of the first $25 million in gross exploration expenses on its first Polish project were paid by them. In 2009

In 2009 through 2011 the Company also acquired concessions totaling 2.4 million acres in Germany, but a few years later due to the difficult political environment and after extensive field work and further geological studies the acreage was eventually dropped. In 2011 the Company acquired concessions in Spain totaling approximately 395,000 acres. Alsothat year the company also tested the Caney Shale formation in it's Tishomingo field by recompleting an existing Woodford shale well. In 2012 the Company drilled it's first horizontal Chaney shale test well ehere 3 discrete intervals were tested. In Poland the Company drilled two vertical wells and worked on the permitting for the Environmental Impact assessments to allow for the drilling of a horizontal lateral out of the previously drilled Gapowo B-1 well.  In Spain the Company began the procedure of getting Environmental Impact assessments for the test wells that were planned.

In 2013 the Company sold its Tishomingo field assets to XTO Energy Inc. for approximately $147 million in cash while retaining its interest in the Caney and Upper Sycamore formations. The Company drilled 5 horizontal Caney wells that year.

In 2014 the company contuinued drilling 3 additional horizontal Caney wells refining both the placement of the lateral within the caney and the fracture completion technique. The Company's year end exit rate was approximately 1,400 BOEPD and it's year end proved and probable reserves grew to an estimated 37.4 million BOE's. In Poland the company drilled the horizontal leg and fracture stimulated the Gapowo B-1 well. Varying amounts of proppant were placed 9 of the 20 stages that were attempted to be fracture stimulated. Gas production averged between 200,000 to 400,000 cubic feet per day. Following the flow test, the well was shut-in for over four weeks to obtain a pressure build up and a numerical reservoir model was prepared. Even though a reservoir analysis showed encouraging results the Company decided in  early 2015 to relinquish the Bytow concession due to the difficult oil and gas price environment that was occuring in 2015. By the end of 2014 in Spain, the Corporation had submitted very extensive Environmental impact assessments to drill up to six wells in two of its concessions.

In 2015 th Company completed one Caney horizontal well that had been drilled in 2014. The average 2015 annual prioduction rate from the field was about 1,415 BOEPD and the year end reserve report estimated the proved plus probable reserves in the Tishomingo field increased to 41.4 million boe while the proved plus probable plus possible reserves were 69.3 million boe. In early 2016 the company announced that it had filed the paperwork necessary to relinquish it's remaining concession in Poland.