BNK Petroleum Inc. announces new senior credit facility

TSX ticker symbol; BKX

CAMARILLO, CA, Jan. 29, 2013 /PRNewswire/ - BNK Petroleum Inc. (the "Company") (TSX: BKX) is pleased to announce that its indirect wholly owned subsidiary BNK Petroleum (US) Inc. ("BNK US") has obtained a new US$76,000,000 credit facility ("new facility") from Morgan Stanley Capital Group Inc. ("MSCGI"). The initial commitment amount of the new reserve-based facility is US$61,000,000 with an additional uncommitted amount of US$15,000,000 available at the discretion of MSCGI.  A portion of the proceeds from the initial advance under the new facility were used to repay BNK US' existing Senior First Lien Secured Credit Facility, which had a fully drawn borrowing base of US$32,000,000.

After the repayment of the existing facility, the proceeds from the new facility are primarily intended to fund drilling of Sycamore/Caney and Woodford wells in the Tishomingo field.  A portion of the proceeds may also be used for general corporate purposes, including the Company's European activities.  The new facility will bear interest at a per annum rate equal to the greater of 1% and the then three month LIBOR plus an applicable margin ranging from 4% to 9% based on the ratio of outstanding borrowings to present value of proved developed producing reserves discounted at 9% ("PDP PV9"). The facility provides for principal amortization beginning July 1, 2013 through the maturity of the facility in five years.  Amortization is determined based on a formula of PDP PV9 to outstanding debt subject to a minimum monthly amortization of US$300,000 a month beginning in January 2014.

Commenting on the new facility, Wolf Regener, President and CEO said "We are pleased to have received this new, larger facility from MSCGI which will allow the Company to drill additional Sycamore/Caney shale wells and speed up the pace of development of its Woodford shale assets.  The test results from our Sycamore/Caney exploration wells have been very encouraging and we hope to be able to continue to improve on flow rates in future wells and create substantial value from these new intervals".

David Lazarus, Executive Director, Morgan Stanley & Co, stated "We are delighted to provide BNK with a creative solution to fund the development of its Oklahoma producing properties.  Highlighting Morgan Stanley Capital Group, Inc.'s extensive experience with innovative financing, hedging, physical supply and offtake solutions, this facility provides BNK with the development capital that it needs today, with the added benefit of automatic interest rate and amortization reductions as BNK's asset value increases."

Europe

In Germany, the Company has decided to stop its exploration activities in selected areas and intends to relinquish its five concessions in Thuringia, Saxony-Anhalt and Lower Saxony.  The geological work conducted over the last few years indicates an increased geological risk for unconventional oil and gas projects on these concessions.  This decision is the result of an internal ranking of all of the Company's international projects, which considers the geological risk and expected resource potential. The Company will concentrate its unconventional exploration efforts in Germany on its three remaining concessions in North Rhine Westphalia.

In Spain the Company has submitted five separate Environmental Impact Assessment ("EIA") documents for its exploration permits on its Sedano and Urraca concessions.  The EIA's are part of the process to obtain approval to drill exploration wells on these concessions.

In Poland, as was stated in the Company's January 13, 2013 press release, the Company is still awaiting approval for the re-entry of the Gapowo B-1 well to drill a horizontal leg.

About BNK Petroleum Inc.

BNK Petroleum Inc. is an international oil and gas exploration and production company focused on finding and exploiting large, predominately unconventional oil and gas resource plays. Through various affiliates and subsidiaries, the Company owns and operates shale gas properties and concessions in the United States, Poland, Spain and Germany. Additionally the Company is utilizing its technical and operational expertise to identify and acquire additional unconventional projects outside of North America. The Company's shares are traded on the Toronto Stock Exchange under the stock symbol BKX.

Caution Regarding Forward-Looking Information

Certain statements contained in this news release constitute "forward-looking information" as such term is used in applicable Canadian securities laws, including information regarding the Company's use of proceeds from the new facility and future well development and approval for the drilling of a horizontal leg in the Gapowo B-1 well.  Forward-looking information is based on plans and estimates of management and interpretations of exploration information by the Company's exploration team at the date the information is provided and is subject to several factors and assumptions of management, including that the indications of early results are reasonably accurate predictors of the prospectiveness of the shale intervals, that required regulatory approvals will be available when required, that expected production from future wells can be achieved as modeled, declines will match the modeling, future well production rates will be improved over existing wells, that rates of return as modeled can be achieved, that recoveries are consistent with management's expectations, that additional wells are actually drilled and completed, that no unforeseen delays, unexpected geological or other effects, equipment failures, permitting delays or labor or contract disputes are encountered, that the concession modification approval for the Gapowo B-1 well will be obtained, that the development plans of the Company and its co-venturers will not change, that the demand for oil and gas will be sustained, that the Company will continue to be able to access sufficient capital through financings, farm-ins or other participation arrangements to maintain its projects, and that global economic conditions will not deteriorate in a manner that has an adverse impact on the Company's business, its ability to advance its business strategy and the industry as a whole.  Forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking information.  Factors that could cause the forward-looking information in this news release to change or to be inaccurate include, but are not limited to, the risk that any of the assumptions on which such forward looking information is based vary or prove to be invalid, including that the Company or its subsidiaries is not able for any reason to obtain and provide the information necessary to secure required approvals, that unexpected geological results are encountered in Oklahoma, that completion techniques require further optimization, that production rates do not match the Company's assumptions, that very low or no production rates are achieved, that the Company is unable to access required capital, that occurrences such as those that are assumed will not occur, do in fact occur, and those conditions that are assumed will continue or improve, do not continue or improve, any of which could result in delays, cessation in planned work or loss of one or more concessions and have an adverse effect on the Company and its financial condition. These risks as well as the other risks and uncertainties applicable to exploration activities and the Company's business as set forth in the Company's management discussion and analysis and its annual information form both of which are available for viewing under the Company's profile at www.sedar.com. The Company undertakes no obligation to update these forward-looking statements, other than as required by applicable law.

SOURCE BNK Petroleum Inc.



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