BNK Announces 4th Quarter and Annual 2011 Results

All amounts are in US dollars unless otherwise indicated:

BNK’s President and Chief Executive Officer, Wolf Regener commented:

“In 2011 BNK invested $33 million in capital expenditures in the US and Europe and added over 900,000 acres in four new concessions in Spain and Germany, bringing total concession acreage to over 5 million acres on a gross and 4.4 million acres on a net basis in 5 distinct basins. Average production in the fourth quarter and year ended December 31, 2011 increased 33% and 35% respectively while both cash and working capital totaled approximately $40 million at year end 2011.

“In the fourth quarter 2011 BNK earned net income of $.7 million versus net income of $.2 million in the fourth quarter of 2010. Revenues between quarters increased 33% commensurate with the increase in production while other income increased $1.0 million primarily due to higher management fee income. Expenses increased $3.7 million between quarters primarily due to higher general and administrative as well as higher production and operating expenses and higher depletion and depreciation expenses partially offset by lower exploration and evaluation expenses and lower stock based compensation expense.

“Full year 2011 earnings were $.7 million versus a net loss of $3.7 million in 2010 on a 51% increase in net oil and gas revenues between years. Other income between years increased $4.2 million due to higher management fee income of $2.8 million, proceeds from the sale of seismic data of $1.2 million and other $.2 million. Expenses increased $8.4 million between years primarily due to higher general and administrative expenses and European legal restructuring costs coupled with higher depletion and depreciation expenses, higher production and operating expenses partially offset by lower exploration and evaluation expenses.

“The company is currently producing about 1,700 BOEPD from its Tishomingo Woodford shale field. During 2012 the Company anticipates drilling and/or participating in 7 gross (1.7 net) horizontal Woodford shale wells and is planning to test one (0.36 net) well in the Caney formation. Drilling is expected to begin in late May or early June pending rig availability.

“As previously announced in late February BNK began drilling the first well on one of its three Polish concessions held by its wholly owned Indiana subsidiary. The Miszewo T-1 well on its Trzebielino concession block is expected to take about 40 days to complete drilling and our expectation is that the shale will be thicker and richer organically than found in the Lebork S-1 well.

“In April 2012 the Company has scheduled further work on the Lebork S-1 well held by Saponis Investments Sp. z o.o. in which it has a 26.7% interest. The work includes pressure testing and other tests that will be used to finalize the re-stimulation program which will be scheduled once approved by the Saponis shareholders. The re-stimulation program is being designed to overcome the unanticipated pressures that were encountered in the first stimulation attempt.

“By June 2012 we anticipate that all 2D seismic data will be acquired on 407 kilometers on the Saponis concessions and 333 kilometers on the Indiana concessions. The objective of the seismic program is to further define basin structure and burial history as well as assist in the selection of individual well locations.

“In the fourth quarter BNK was awarded the 535,000 Weinbergen concession in central Germany, increasing total acreage in Germany to about 3 million acres in 3 basins. In 2012 the Company is continuing the process to obtain permits for its 2D seismic operations as part of its work program and to provide the necessary information for its drilling program.

“In the fourth quarter, in Spain, BNK was awarded a third concession totaling about 99,000 acres, bringing total acreage of its three current Spanish concessions to slightly over 400,000 acres. The environmental permitting process has been started for the first group of wells in two of the concessions.

“BNK has engaged financial advisors Macquarie Capital Markets Canada Ltd. and TD Bank Europe Limited to assist it in identifying and evaluating partners for development of select portions of the Company’s wholly owned European projects.

“Based on our most recent independent reserve evaluation of our oil and gas properties in the United States before tax net present value of our proved developed producing reserves increased by 18% while our total proved and probable reserves decreased 15% to $269 million from $315 million using a 10% discount factor while proved and probable reserves decreased 9% to 36.1 million boe.”

FOURTH QUARTER HIGHLIGHTS:

• Earnings were $.7 million versus earnings of $.2 million from the fourth quarter of 2010
• Capital expenditures were $10.0 million versus $8.7 million from the fourth quarter of 2010, an increase of 15%
• Average per day production from the Tishomingo field in Oklahoma increased to 2,066 versus 1,516 from the fourth quarter of 2010, an increase of 36%
• Average netbacks were $26.06 in the quarter versus $32.24 in the fourth quarter of 2010 or a decline of 19%
• In November BNK was awarded a 99,000 acre concession in the Sedano concession of the Cantabrian Basin in Northern Spain
• In December BNK was awarded a 535,000 acre concession in the Weinbergen concession in central Germany
• In December BNK completed an internal reorganization of its European assets to facilitate management and financing of those assets

Fourth Quarter 2011 to Fourth Quarter 2010

Oil and gas revenues net of royalties totaled $6,580,000 in the fourth quarter versus $4,940,000 in the fourth quarter of 2010. Oil revenues increased $196,000 or 7% as average oil prices increased 12% to $91.47 a barrel while average production per day declined 4%. Natural Gas Liquids (NGLs) revenue increased $873,000 or 40% due to average production per day increasing 169 barrels a day or 28% while average NGL prices increased 9% to $43.39 a barrel. Natural gas revenues increased 87% to $2,038,000 as average per day gas production increased 73% to 5,644 metric cubic feet per day (mcf/d) while average natural gas prices increased 8% to $3.92 a barrel. Production of natural gas and NGLs rose to a greater extent than oil as new wells brought on line were gas rich.

Other income increased $993,000 from $202,000 in the fourth quarter of 2010 primarily due to management fees recorded as Manager of drilling projects.

Production and operating expenses totaled $1,625,000 versus $444,000 in the fourth quarter of 2010 due to the effect of a 2010 retroactive adjustment, lowering production taxes by $1,115,000. The effect of this adjustment increased fourth quarter 2010 netbacks by $7.99 a barrel.

Depletion and depreciation expenses increased 65% to $2,306,000 due to a 36% increase in average daily production and an increased depletable base on which the depletion percentage is applied.

General and administrative expenses increased 112% to $4,592,000 due to higher legal costs primarily relating to the European corporate entities, higher salary and wage costs due to increased headcount and increased other professional fees including accounting, public relations and management fees in Europe.

Finance income increased 156% to $957,000 due to increased unrealized gain on warrant revaluation, increased foreign exchange gains due the strengthening of the Canadian dollar versus the US dollar, increased realized gains from financial commodity contracts, higher interest income partially offset by lower unrealized gains from financial commodity contracts.

Finance expense declined in the fourth quarter, contributing $902,000 to net income due to the effect of fluctuations in foreign currency gains and losses (primarily Canadian dollar versus US dollar) partially offset by higher interest expense.

Full Year 2011 versus Full Year 2010:

FULL YEAR HIGHLIGHTS:

• Average production increased 35% to 1,645 barrels per day
• Net oil and gas revenues increased 51% to $22,179,000 from $14,690,000
• Net income totaled $705,000 versus a loss of $3,677,000 in 2010
• Average netback per barrel increased 10% to $27.09
• Cash flow provided by operating activities totaled $2,318,000 versus a negative $6,835,000 in 2010
• Capital expenditures totaled $32,539,000 versus $32,281,000 in 2010 that included $12,000,000 to purchase the overriding royalty interest of its former lender that was recorded as an increase in property, plant and equipment in 2010
• Other income totaled $4,409,000 due to management fee income and from the sale of seismic data in Oklahoma
• A combined four new concessions were added in Spain and Germany, increasing total concession acreage to 5 million acres on a gross basis and 4.4 million acres on a net basis

Oil and gas revenues net of royalties totaled $22,179,000 in 2011 versus $14,690,000 in 2010. Oil revenues before royalties increased $3,182,000 or 43% as average oil prices increased $12.46 a barrel or 16% to $90.94 while average oil production per day increased 24% to 319 barrels per day. Natural gas liquid revenues (NGLs) before royalties increased $3,575,000 or 51% as average NGL prices increased 21% to $45.38 while average per day production increased 24%. Natural gas revenues before royalties increased $2,161,000 or 55% as average natural gas production increased 55% while average natural gas prices in 2011 were the same as 2010, averaging $4.07 a barrel.

Other income totaled $4,409,000 in 2011 due to $3,004,000 in management fees recorded in 2011 resulting from BNK’s position as Manager of drilling projects in Poland, $1,176,000 earned from the sale of seismic data in Oklahoma and $229,000 from an asset disposal. Management fees were earned for services provided to the drilling projects from their inception.

Exploration and evaluation expenses declined $3,395,000 due to Black Warrior write-offs in Alabama in 2010.

Production and operating expenses increased 57% to $5,916,000 due to the 35% increase in average production between years and due to the effect of a retroactive adjustment in 2010 for production taxes, lowering 2010 production and operating expenses by $1,115,000.

Depletion and depreciation expense increased $2,554,000 or 63% due to increased production of 35% and an increased depletable base on which the depletion rate is applied.

General and administrative expenses increased $5,885,000 primarily due to higher legal costs relating to the European assets of $.9 million, higher payroll and related costs due to increased headcount of $1.5 million, increased consulting, management, accounting and public relations costs of $1.2 million, increased travel costs of $.8 million, as well as higher rent of $.4 million, recruiting $.2 million and other costs.

Other legal costs totaling $1.2 million were incurred to reorganize the European assets to facilitate their management and financing.

Finance income increased $1,450,000 primarily due to unrealized gains on warrant revaluation and increased unrealized gain on financial commodity contracts.

Finance expense declined $723,000 due to lower interest expense.

Key Financial and Operating data follow:

The information outlined above is extracted from and should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2011 and the related management's discussion and analysis thereof, copies of which are available under the Company's profile at www.sedar.com.

Non-GAAP Measures

Funds from operations and funds from operations per common share are not defined by GAAP in Canada and are referred to as non-GAAP measures. Funds from operations are based on cash flow from operating activities as per the statement of cash flows before changes in non-cash working capital. Funds from operations per common share is calculated based on the weighted average number of common shares outstanding consistent with the calculation of net earnings (loss) per share.

For more details on non-GAAP measures, refer to BNK’s “Management’s Discussion and Analysis."

Non-IFRS Information

Netback per barrel and its components are calculated by dividing revenue, royalties and operating expenses by the Company's sales volume during the period. Netback per barrel is a non-IFRS measure but it is commonly used by oil and gas companies to illustrate the unit contribution of each barrel produced. This is a useful measure for investors to compare the performance of one entity with another. The non-IFRS measures referred to above do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures used by other companies.

The Company also uses the "barrels" (bbls) or "barrels of oil equivalent" (boe) reference in this report to reflect natural gas liquids and oil production and sales. All boe conversions are derived by converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil, representing the approximate energy equivalency.

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 proposed timing and expected results of exploratory work, commencement of drilling, and concession applications. Forward-looking information is based on plans and estimates of management at the date the information is provided and certain factors and assumptions of management, including that all required permits and approvals, funding from co-venturers and the necessary labor and equipment will be obtained, provided or available, as applicable, when required. Forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause plans, estimates, timing 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 permits, approvals, equipment and/or funding are delayed or available only on terms that are not acceptable to the Company, political and currency risks and other risks associated with exploration and development of oil and gas projects, including those set forth in the Company’s management’s discussion and analysis and annual information form filed under the Company’s profile on www.sedar.com.

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, Germany and Spain. 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.