BNK Petroleum has announced an 83 percent increase of its Tishomingo shale gas field reported proved reserves ("1P") to 15.3 million boe from 8.4 million boe at year end 2008. Proved reserves as of October 1, 2009 were $105.1 million, calculated at a 10% pre-tax present value of future net revenue ("NPV"). Unless otherwise stated, reserves refer to reserves of either natural gas or natural gas liquids or barrels of oil equivalent ("boe"). Certain amounts cited herein have been rounded for presentation purposes.
At the request of certain lenders in connection with the Company's existing credit facilities, BNK requested an updated evaluation of its proved reserves only (additional probable reserves were not considered), as compared with the evaluation reflected in the year-end report effective December 31, 2008 (the "2008 Year-End Report") prepared by MHA Petroleum Consultants Inc. ("MHA"), independent petroleum engineering consultants of Lakewood, Colorado. As a result of the Company's planned drilling and completion program on its existing properties in the Tishomingo Field, Oklahoma, all reserves that had been classified as probable reserves in the 2008 Year-End Report have been converted to proved reserves in the updated report, also prepared by MHA (the "Mid-Year Report").
All updated reserve estimates are effective as at October 1, 2009. Updated estimates are net of production, apply to proved reserves only and do not include any of the results of BNK's drilling and completion program subsequent to the effective date of the Mid-Year Report.
Additionally, with respect to a number of the horizontal wells, BNK only fracture stimulated a portion of the stages that were available to fracture stimulate and the Mid-Year Report does not give any credit for those remaining stages. BNK still has approximately 60 percent of its net stages of treatable Woodford shale behind pipe that are unstimulated. A net stage of treatable Woodford shale represents the average treated interval length multiplied by BNK's working interest in each well. No reserves were attributed to those remaining stages in the Mid-Year Report. The full impact of this activity will be captured in a year-end 2009 report, which will be prepared and reported upon after relevant data are fully assessed by the company and MHA, its independent evaluators, after year-end 2009.
In December, 2008, BNK applied for and received approval to drill three additional wells in one of its sections at an 80-acre spacing pattern. An 80-acre spacing pattern would allow for eight wells per section which could allow for over 340 total gross wells for this project. To date the company has drilled and participated in 39 gross wells in this project.
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