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Last updated on April 19, 2014 at 13:20 EDT

Bankers Petroleum Announces 2013 Second Quarter Financial and Operational Results

August 14, 2013

Free Cash Flow of $9 Million and Q3 Average Production to Date 18,300
bopd

CALGARY, Aug. 14, 2013 /PRNewswire/ – Bankers Petroleum Ltd. (“Bankers” or the
“Company”) (TSX: BNK, AIM: BNK) is pleased to provide its 2013 second
quarter financial and operational results.  During the quarter, Bankers
achieved its second consecutive quarter of free cash flow and record
production levels.


    Results at a       Three months ended June 30 Six months ended June 30
    Glance

    ($000s, except as     2013   2012    % change    2013    2012 % change
    noted)

    Financial           

       Oil revenue     131,838 98,587         34% 264,400 201,255      31%

       Net operating    69,142 47,252         46% 142,307 100,723      41%
       income

       Net income       13,024 11,253         16%  27,201  19,018      43%

         Per share -      0.05   0.04         16%    0.11    0.08      41%
         basic ($)

         - diluted ($)    0.05   0.04         16%    0.11    0.08      43%

       Funds generated  61,717 43,159         43% 127,136  91,231      39%
       from operations

         Per share -      0.24   0.17         41%    0.50    0.36      39%
         basic ($)

       Capital          52,389 52,632           -  99,716 115,333    (14%)
       expenditures

    Operating           

       Average sales    18,008 14,169         27%  17,310  13,724      26%
       (bopd)

       Average price     80.45  76.46          5%   84.39   80.57       5%
       ($/barrel)

       Netback           42.19  36.65         15%   45.42   40.33      13%
       ($/barrel)

       Average Brent    102.43 108.29        (5%)  107.50  113.61     (5%)
       oil price
       ($/barrel)

                          June 30, 2013  December 31, 2012   June 30, 2012

    Cash and deposits            33,381             38,740          60,297

    Working capital             116,656             88,799         112,022

    Total assets                918,034            825,816         770,829

    Long-term debt               97,864             97,158          95,793

    Shareholders' equity        519,507            483,032         454,752

Highlights for the quarter and six months ended June 30, 2013 are:

        --  Average oil production was 17,886 barrels of oil per day (bopd)
            for the three months ended June 30, 2013, 6% higher than 16,919
            bopd in the first quarter of 2013 and 26% higher than 14,161
            bopd in the second quarter of 2012.  Average oil production for
            the third quarter to-date is approximately 18,300 bopd.

        --  Oil sales averaged 18,008 bopd for the second quarter of 2013,
            an increase of 8% compared to 16,605 bopd for the previous
            quarter and an increase of 27% compared to 14,169 bopd for the
            second quarter of 2012.  For the six months ended June 30,
            2013, oil sales were 17,310 bopd, an increase of 26% compared
            to 13,724 bopd for the comparable 2012 period.

        --  For the second quarter of 2013, revenue was $132 million
            ($80.45/bbl) compared to $133 million ($88.70/bbl) in the
            previous quarter and $99 million ($76.46/bbl) in the second
            quarter of 2012.  Revenue for the second quarter of 2013
            represented 79% of the Brent oil price of $102/bbl, compared to
            79% of the Brent oil price of $113/bbl in the previous quarter
            and 71% of the Brent oil price of $108/bbl in the second
            quarter of 2012.

        --  Royalties to the Albanian Government and related entities were
            $22 million (16% of revenue) for the second quarter of 2013
            compared to $17 million (17% of revenue) for the same quarter
            of 2012.  Total royalties were $45 million (17% of revenue) and
            $36 million (18% of revenue) for the six months ended June 30,
            2013 and 2012, respectively.

        --  For the three and six months periods ended June 30, 2013,
            operating, sales and transportation costs, originating from
            Albanian-based companies and their employees, were $41 million
            and $77 million, respectively, compared to $34 million and $64
            million for the comparable periods of 2012.

        --  The Company recorded net operating income (netback) of $69
            million ($42.19/bbl) in the second quarter of 2013, compared to
            $73 million ($48.96/bbl) in the previous quarter and $47
            million ($36.65/bbl) in the second quarter of 2012.  Net
            operating income was $142 million ($45.42/bbl) for the six
            months ended June 30, 2013, a 41% increase compared to $101
            million ($40.33/bbl) in the comparable 2012 period.

        --  For the second quarter of 2013, funds generated from operations
            were $62 million, compared to $65 million for the previous
            quarter and $43 million for the same period of 2012.

        --  Capital expenditures were $52 million in the second quarter of
            2013.  The Company drilled 39 wells during the quarter,
            comprised of 35 horizontal production wells and four horizontal
            lateral re-drill wells in the main area of the Patos-Marinza
            field.  In the second quarter of 2012, capital expenditures
            were $53 million.

        --  The Company continues to maintain a strong financial position
            at June 30, 2013 with cash of $33 million and working capital
            of $117 million.  At June 30, 2013, the Company had drawn $115
            million of its $230 million approved credit facilities.
            Working capital for December 31, 2012 and June 30, 2012 was $89
            million and $112 million, respectively.

        --  Both the International Finance Corporation (IFC) and European
            Bank for Reconstruction and Development (EBRD) have approved an
            extension of the Company's existing credit facility to
            September 2020.  No repayments are required until September
            2017, from which time the facility amount will decrease by 25%
            annually.  Collectively, the revolving loan facilities will
            increase to $200 million from the existing $100 million.
            Currently, $120 million is available and the additional $80
            million will be available as the Company continues to maintain
            its proved and probable reserves base and is conditional upon
            Brent oil prices remaining above $70/bbl. 

        --  The Company was successful in setting aside a separate
            assessment of excise tax on its importation and use of
            diluents.  The Courts have also ruled in favor of the Company
            for other cases heard, including the carbon and circulation
            taxes on diluent imports, which resulted in assessments to the
            Company totalling approximately $25 million.  The Company is
            now preparing to continue its defence at various levels of
            appeals.

Outlook  

The average third quarter 2013 production to date from the Patos-Marinza
oilfield in Albania is approximately 18,300 bopd, 2% higher than the
second quarter average.

The Company is pleased with performance of the horizontal drilling
program which continues to yield strong results.  For the second half
of 2013, the Company will continue to focus on development drilling in
the North-Central areas of the Patos-Marinza field with an estimated 30
horizontal wells per quarter adding to production levels.  Two water
disposal wells are planned for late in the third quarter and into the
fourth quarter to provide capacity expansion for growth. In addition,
two (2) to four (4) wells are projected for delineation in the outlying
areas of the field in the fourth quarter.

The expansion of water flood and polymer flood patterns continues with
additional wells to be converted to injection in the second half of
2013.  By year-end the Company will have three (3) water-flood patterns
in the upper Marinza reservoir with up to seven (7) injectors and three
(3) polymer-flood patterns in the lower Driza reservoir sands with up
to six (6) injectors in place with response expected in 2014.

In the second half of 2013, the Company will ramp up spending on surface
facilities including the addition of a satellite treatment facility and
tank storage expansion to increase treatment capacity and construction
of flow-lines to reduce trucking within the field where justified.

Drilling of two (2) wells in Kucova is projected in the fourth quarter
of 2013 to test production and collect fluid and reservoir
information.  In addition, existing adjacent wells are scheduled for
take-over from Albpetrol for further evaluation.

“I continue to be pleased with the operational success of the company
and our ability to meet or exceed our production guidance for five
consecutive quarters. The Board has now approved the potential
acquisition of a sixth drilling rig which, pending availability, should
enable Bankers to affirm the high-end of our annual guidance.  We look
forward to continued reliable, disciplined growth,” said David French,
President and CEO of Bankers Petroleum.


                                        BANKERS PETROLEUM LTD.

                     CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

       (Unaudited, expressed in thousands of US dollars, except per share
                                    amounts)

                                Three months ended       Six months ended
                                      June 30                 June 30

                                     2013       2012       2013       2012

    Revenues               $      131,838 $   98,587 $  264,400 $  201,255

    Royalties                    (21,673)   (17,214)   (44,991)   (36,368)

                                  110,165     81,373    219,409    164,887

    Unrealized gain                   (6)        244    (1,380)    (2,965)
    (loss) on financial
    commodity contract

                                  110,159     81,617    218,029    161,922

    Operating expenses             22,291     19,038     43,445     36,470

    Sales and                      18,732     15,083     33,657     27,694
    transportation
    expenses

    General and                     4,513      3,508     10,468      7,618
    administrative
    expenses

    Depletion and                  24,438     14,067     47,635     27,744
    depreciation 

    Share-based payments            3,103      1,447      6,361      5,683

                                   73,077     53,143    141,566    105,209

                                   37,082     28,474     76,463     56,713

    Net finance expense             3,616      1,860      5,556      4,717

    Income before income           33,466     26,614     70,907     51,996
    tax

    Deferred income tax          (20,442)   (15,361)   (43,706)   (32,978)
    expense

    Net income for the             13,024     11,253     27,201     19,018
    period

    Other comprehensive
    income (loss)

      Currency                      (510)      (505)      (862)          1
      translation
      adjustment

    Comprehensive income   $       12,514 $   10,748 $   26,339 $   19,019
    for the period

    Basic earnings per     $        0.051 $    0.044 $    0.107 $    0.076
    share

    Diluted earnings per   $        0.051 $    0.044 $    0.107 $    0.075
    share


                                       BANKERS PETROLEUM LTD.

                      CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

                   (Unaudited, expressed in thousands of US dollars)

                                                   ASSETS

                                                    June 30   December 31
                                                       2013          2012

    Current assets                                                       

      Cash and cash equivalents                   $  26,272    $   33,740

      Restricted cash                                 7,109         5,000

      Accounts receivable                            59,399        35,603

      Inventory                                      34,423        23,517

      Deposits and prepaid expenses                  40,215        30,265

      Financial commodity contract                      170         1,550

                                                    167,588       129,675

    Non-current assets                                                   

      Long-term receivable                           10,261        11,150

      Property, plant and equipment                 735,912       681,399

      Exploration and evaluation assets               4,273         3,592

                                                  $ 918,034    $  825,816

                                               LIABILITIES

    Current liabilities                                                  

      Accounts payable and accrued                $  40,022   $    38,787
      liabilities

      Current portion of long-term debt              10,910         2,089

                                                     50,932        40,876

    Non-current liabilities                                              

      Long-term debt                                 97,864        97,158

      Decommissioning obligation                     18,022        16,747

      Deferred tax liabilities                      231,709       188,003

                                                    398,527       342,784

                                        SHAREHOLDERS' EQUITY

    Share capital                                   337,148       334,764

    Contributed surplus                              77,187        69,435

    Currency translation reserve                      6,500         7,362

    Retained earnings                                98,672        71,471

                                                    519,507       483,032

                                                  $ 918,034    $  825,816


                                        BANKERS PETROLEUM LTD.

                             CONSOLIDATED STATEMENTS OF CASH FLOWS

                    (Unaudited, expressed in thousands of US dollars)

                               Three months ended        Six months ended
                                     June 30                  June 30

                                  2013         2012        2013        2012

    Cash provided by
    (used in):

    Operating activities                                                   

    Net income for the      $   13,024   $   11,253 $    27,201 $    19,018
    period

    Depletion and               24,438       14,067      47,635      27,744
    depreciation

    Accretion of                   829        1,199       1,978       2,326
    long-term debt

    Accretion of                   250          202         491         397
    decommissioning
    obligation

    Unrealized foreign           (268)        (126)       (448)         120
    exchange (gain) loss

    Deferred income tax         20,442       15,361      43,706      32,978
    expense

    Share-based payments         3,103        1,447       6,361       5,683

    Unwinding of discount        (700)            -     (1,441)           -
    of long-term
    receivable

    Revaluation loss of            593            -         273           -
    long-term receivable

    Unrealized (gain)                6        (244)       1,380       2,965
    loss on financial
    commodity contract

                                61,717       43,159     127,136      91,231

    Change in long-term            202            -       2,057           -
    receivable

    Change in non-cash         (7,137)      (6,775)    (44,949)    (12,614)
    working capital

                                54,782       36,384      84,244      78,617

    Investing activities                                                   

    Additions to              (51,842)     (51,306)    (99,035)   (113,451)
    property, plant and
    equipment

    Additions to                 (547)      (1,326)       (681)     (1,882)
    exploration and
    evaluation assets

    Restricted cash            (2,109)            -     (2,109)           -

    Change in non-cash             968      (3,467)       1,532     (4,109)
    working capital

                              (53,530)     (56,099)   (100,293)   (119,442)

    Financing activities                                                   

    Issue of shares for          1,309           31       1,410      12,177
    cash

    Financing costs            (1,994)            -     (1,994)       (750)

    Change in long-term        (9,136)        2,993       9,201      35,817
    debt

                               (9,821)        3,024       8,617      47,244

    Foreign exchange loss
    on cash and cash

    equivalents                    (6)        (162)        (36)       (135)

    Increase (decrease)        (8,575)     (16,853)     (7,468)       6,284
    in cash and cash
    equivalents

    Cash and cash               34,847       72,150      33,740      49,013
    equivalents,
    beginning of period

    Cash and cash           $   26,272   $   55,297 $    26,272 $    55,297
    equivalents, end of
    period

    Interest paid           $    2,566   $    1,521 $     2,788 $     1,722

    Interest received       $       73   $      218 $       118 $       278

Supporting Documents

The full Management Discussion and Analysis (MD&A), Financial Statements
and updated March corporate presentation are available on www.bankerspetroleum.com. The MD&A and Financial Statements will also be available on www.sedar.com.

Updated Corporate Presentation

For additional information on this operational update, please see the
August 2013 version of the Company’s corporate presentation at www.bankerspetroleum.com.

———

Caution Regarding Forward-looking Information

Information in this news release respecting matters such as the expected
future production levels from wells, future prices and netback, work
plans, anticipated total oil recovery of the Patos-Marinza and Kuçova
oilfields constitute forward-looking information. Statements containing
forward-looking information express, as at the date of this news
release, the Company’s plans, estimates, forecasts, projections,
expectations, or beliefs as to future events or results and are
believed to be reasonable based on information currently available to
the Company. 

Exploration for oil is a speculative business that involves a high
degree of risk. The Company’s expectations for its Albanian operations
and plans are subject to a number of risks in addition to those
inherent in oil production operations, including: that Brent oil prices
could fall resulting in reduced returns and a change in the economics
of the project; availability of financing; delays associated with
equipment procurement, equipment failure and the lack of suitably
qualified personnel; the inherent uncertainty in the estimation of
reserves; exports from Albania being disrupted due to unplanned
disruptions; and changes in the political or economic environment.

Production and netback forecasts are based on a number of assumptions
including that the rate and cost of well reactivations and well
recompletions of the past will continue and success rates and
production rates will be similar to those rates experienced for
previous well recompletions and reactivations; continued availability
of the necessary equipment, personnel and financial resources to
sustain the Company’s planned work program; continued political and
economic stability in Albania; the existence of reserves as expected;
the continued release by Albpetrol of areas and wells pursuant to the
Plan of Development and Addendum; the absence of unplanned disruptions;
the ability of the Company to successfully drill new wells and bring
production to market; and general risks inherent in oil and gas
operations.

Forward-looking statements and information are based on assumptions that
financing, equipment and personnel will be available when required and
on reasonable terms, none of which are assured and are subject to a
number of other risks and uncertainties described under “Risk Factors”
in the Company’s Annual Information Form and Management’s Discussion
and Analysis, which are available on SEDAR under the Company’s profile
at www.sedar.com.

There can be no assurance that forward-looking statements will prove to
be accurate. Actual results and future events could differ materially
from those anticipated in such statements. Readers should not place
undue reliance on forward-looking information and forward looking
statements.

About Bankers Petroleum Ltd.

Bankers Petroleum Ltd. is a Canadian-based oil and gas exploration and
production company focused on developing large oil and gas reserves. In
Albania, Bankers operates and has the full rights to develop the
Patos-Marinza heavy oilfield and has a 100% interest in the Kuçova
oilfield, and a 100% interest in Exploration Block F.  Bankers’ shares
are traded on the Toronto Stock Exchange and the AIM Market in London,
England under the stock symbol BNK.

 

SOURCE Bankers Petroleum Ltd.


Source: PR Newswire