BNK has entered into an agreement with Wells Fargo Energy Capital Inc. to buy out an overriding royalty interest and net profits interest in the Company's Tishomingo Field, Oklahoma for US $12 million. The overriding royalty interest consists of 3% in the first forty wells ("initial wells"), a 2% overriding royalty interest on all subsequent wells and a net profits interest equal to 20% of the Company's net operating income from its initial wells, declining to 10% on all subsequent wells.
The purchase of these interests is part of the Company's overall strategy to improve the value of its properties and to position the Company to negotiate a reserve-based credit facility on terms that will allow it to retain more of its cash flow and to accelerate development.
The Company has retained Environmental Resources Management ("ERM") to assist it in its objective of meeting or exceeding Polish health, safety, and environmental ("HSE") regulations. ERM will conduct HSE audits and will consult with the Company on HSE regulatory compliance.
Tendering for services and preparation of the drilling permit application required for the Company's first well in Poland has commenced. A number of suitable drilling locations have been identified and negotiations with landowners are underway to secure the surface rights required for drilling.
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