BANKERS PETROLEUM ANNOUNCES 2014 FINANCIAL RESULTS

March 12th, 2015

Cash Position of $73 Million and 14% Increase in Oil Sales

CALGARY, March 12, 2015 /CNW/ – Bankers Petroleum Ltd. (“Bankers” or the “Company”) (TSX: BNK, AIM: BNK) is pleased to provide its 2014 financial results.  All amounts set out in this press release and listed in the tables below are in US dollars unless otherwise stated.

In 2014, Bankers made several key accomplishments including record levels of revenue of $583 million, adjusted funds generated from operations of $304 million, oil production of 20,690 barrels of oil per day (bopd) and capital investment of $291 million.

Results at a Glance

($000s, except as noted)

Year ended December 31

Results at a Glance

2014

2013

2012

Financial

Oil revenue

583,120

566,386

432,138

Net operating income

342,375

316,558

218,246

Net income

128,833

61,743

34,413

Basic (US$/share)

0.50

0.24

0.14

Diluted (US$/share)

0.49

0.24

0.14

Funds generated from operations

284,293

279,601

192,589

Adjusted funds generated from operations(1)

304,130

279,752

192,589

Basic (US$/share)

1.17

1.10

0.76

Capital expenditures

291,325

234,243

222,663

Operating

Average production (bopd)

20,690

18,169

15,020

Average sales (bopd)

20,679

18,173

14,808

Average Brent oil price (US$/barrel)

98.95

108.66

111.67

Average realized price (US$/barrel)

77.26

85.39

79.73

Netback (US$/barrel)

45.36

47.73

40.27

December 31

2014

2013

2012

Cash and restricted cash

73,036

31,706

38,740

Working capital

201,325

134,094

88,799

Total assets

1,284,846

1,007,148

825,816

Long-term debt

98,276

98,150

97,158

Shareholders’ equity

716,536

564,675

483,032

1. Represents funds generated from operations before non-recurring contract settlement expenses.

 

Highlights

Bankers reached several key financial and operational achievements during 2014 as described below:

Operational Highlights:

  • Average oil production was 20,690 barrels of oil per day (bopd) in 2014, 14% higher than the 2013 average production of 18,169 bopd.  Average oil production for the 2015 year-to-date is approximately 19,500 bopd.
  • Oil sales averaged 20,679 bopd in 2014, a 14% increase compared to 18,173 bopd in 2013.  Crude oil inventory at December 31, 2014 increased to 315,500 barrels from 311,000 barrels atDecember 31, 2013.
  • Capital expenditures in 2014 were $291 million, 24% higher compared to $234 million in 2013.  A total of 160 wells were drilled including 149 horizontal production wells, seven lateral re-drills, two water disposal wells and the Company’s first multi-lateral well in the Patos-Marinza field and its first horizontal well drilled in the Kuçova oilfield.  A total of 146 wells were drilled in 2013.
  • The Company continued the Enhanced Oil Recovery (EOR) program in 2014 with monitoring and expansion of flood patterns.  At the end of the year, 19 polymer flood and 4 water flood patterns were in place in the Patos-Marinza oilfield and continue to perform to model expectations. Reservoir pressure and production response are positive with good reservoir flood conformance.  The Company continues to be strongly encouraged by the results to date and plans to move forward with 20 to 30 additional conversions in 2015.
  • Bankers commenced Kuçova oilfield development in the Arreza pool with the takeover of 59 wells from Albpetrol in August 2014, reactivation of three wells and drilling of the first horizontal well in 2014.

Product Margin Highlights:

  • Operating and Sales and Transportation (S&T) costs, primarily originating from Albanian-based companies and their employees, were $155 million ($20.51/bbl) for 2014 compared to $156 millionfor 2013 ($23.44/bbl), an improvement of 13% on a per barrel basis.  Overall, operating and S&T costs improved by 21%, on a per barrel basis, from 2013 to 2014, taking into account the $1.91/bbl impact of excise tax for 2014.
  • Net operating income (netback) in 2014 was $342 million ($45.36/bbl) compared to $317 million($47.73/bbl) in 2013.
  • The Company focused on key infrastructure projects aimed at reducing costs and optimizing operations in the Patos-Marinza oilfield.  The field electrification project continued in the northern and central areas of the Patos-Marinza oilfield with realized energy cost savings.  Construction of the west water disposal line and northern flow line system started in 2014.  These projects target reductions in trucked volumes within the field.  Other infrastructure activities in 2014 include the commissioning of the Satellite 3 treating facility, installation of several Gas Oil Ratio (GOR) skids for gas capturing and measurement, as well as completed maintenance turnarounds of the main treating facilities.

Financial Highlights:

  • Revenue in 2014 was $583 million ($77.26/bbl) compared to $566 million ($85.39/bbl) in 2013.  Field price realization represented 78% of the Brent oil benchmark price ($98.95/bbl) as compared to 79% of the Brent price ($108.66/bbl) in 2013.   The reduction as a percentage of Brent compared to the previous year was mainly due to the commencement of domestic sales during 2014.
  • Royalties to the Albanian Government and related entities were $86 million (15% of revenue) during 2014 compared to $94 million (17% of revenue) for 2013.
  • During 2014, adjusted funds generated from operations were $304 million ($1.17 per share), a 9% increase compared to $280 million ($1.10 per share) for 2013.
  • The Company continues to maintain a strong financial position at December 31, 2014 with cash and restricted cash of $73 million and working capital of $201 million.  At December 31, 2014, the Company had drawn $104 million of its $224 million approved credit facilities.  At December 31, 2013, cash and restricted cash was $32 million and working capital was $134 million.
  • In August 2014, Bankers commenced delivery of crude oil to the domestic refinery, which is now under new ownership and management.  Bankers agreed to sell oil to an affiliate of this domestic refinery on a monthly basis until December 31, 2014 at 73% of Dated Brent (FOB Vlore equivalent) plus $40/tonne or approximately $6/bbl recovery against an outstanding accounts receivable balance.
  • In April 2014, the Company paid a $3 million premium to enter into financial commodity contracts representing 6,000 bopd at a floor price of $80/bbl of Dated Brent for 2015.  At December 31, 2014, the fair value of these contracts was $44 million.

Other Highlights in 2014:

  • The Oil Initially in Place (OIIP) resource assessment in Albania at year-end was 5.4 billion barrels, consistent with the OIIP resource assessment at the end of 2013.  Reserves on a proved basis were 125 million barrels compared to 147 million barrels at year-end 2013.  On a proved plus probable basis, reserves were 203 million barrels compared to 232 million barrels at year-end 2013.  The corresponding net present value (NPV) after tax (discounted at 10%) of the proved plus probable reserves was $1.8 billion at year-end compared to $2.2 billion in 2013, representingCAD$8.57/share and CAD$9.72/share, respectively.

Fiscal Terms Mitigation:

  • Bankers and the Government of Albania worked together to reach an agreement on mitigation of the 2014 fiscal changes.  The terms of the agreement were approved by Albpetrol and AKBN, and were ratified by the Council of Ministers on November 2, 2014.  The agreement is structured to allow excise and any applicable carbon and circulation taxes to be deducted from revenue and eligible for inclusion in the cost recovery pool for the Patos-Marinza concession to determine the Company’s taxable position.  This mechanism enables the near term impact on cash flow to be fully offset through a deferred and reduced profit tax burden which keeps the net asset value of the project whole and the economics of future investment consistent with the pre-2013 fiscal regime.

OUTLOOK

The Company’s reduced capital program in 2015 will be $153 million, funded from projected cash flow (based on an average $50/bbl Brent oil price) and existing cash resources.  Additionally, the Company’s 2015 hedge program, representing 6,000 bopd at $80/bbl Brent, will ensure sufficient funding to maintain a balanced program. The work program and budget include the following items:

  • Drilling of 60 horizontal wells focused on continuing development in the core area of the Patos-Marinza oilfield;
  • Continuation of the EOR program with the addition of 20 to 30 polymer and water injector conversions. The focus of the conversions planned is expansion of existing patterns, with several conversions testing new areas of the oilfield including higher viscosity fluids and thicker reservoir sands;
  • Continued focus on operational efficiencies in the field to expand product margins including the construction of emulsion flow-lines to reduce trucking costs, electrification and expansion of the gas gathering system to reduce energy costs and emissions, and a review of well construction and artificial lift design to improve well performance;
  • Expansion of the water disposal system to accommodate increased fluid handling requirements for the primary and EOR programs;
  • Drilling of one well in Kuçova and implementation of a flood pattern to commence EOR techniques in the oilfield;
  • Continued investment on environmental remediation and social initiatives as part of a sustained long-term effort to improve the physical environment, and to provide training programs and other community initiatives for the residents near the Company’s operations.

First Quarter Operational Update

Bankers intends to announce its first quarter 2015 Operational update on Tuesday, April 7, 2015.

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.

Continue reading BANKERS PETROLEUM ANNOUNCES 2014 FINANCIAL RESULTS

World Bank to help improve quality, access, and efficiency of Albania’s health care system

February 27, 2015

WASHINGTON, February 27, 2015—The World Bank Group’s Board of Executive Directors today approved Euro 32.1 million in IBRD financing for the Health System Improvement Project in Albania. The total project cost is Euro 36.1 million, with the remainder co-financed by the Government of Albania. The project will support improving the efficiency of care in selected hospitals in Albania, improving the management of information in the health system, and increasing financial access to health services.

Key health system performance indicators in Albania are mixed. While health outcomes are relatively strong by regional standards, quality of care is a significant concern. The sector suffers from inefficiencies and inequities. Out-of-pocket payments of patients accounts for more than half of total expenditures on health.  With only half of the poor covered by social health insurance, increased health spending has pushed more households into poverty. Unofficial payments remain common, particularly in public hospitals.

“The health sector reforms are complex, and there is still a large unfinished agenda,”said Tahseen Sayed, World Bank Country Manager for Albania. “Government has shown strong commitment to undertaking reforms in several key areas, including improving health financing systems and hospital services, pharmaceutical reforms, and expanding social health insurance. The new project will support the health sector reform agenda with the aim to improve access and efficiency of health care services.”

The project builds on the World Bank’s past engagement in the health sector. The project activities will support reforming the hospital sector, improving monitoring and management of service quality and efficiency through the establishment of a health management information system, and reforming the health financing system, including assessing options to expand insurance coverage within the available fiscal space.

“The main beneficiaries of the project include the overall population of Albania, who will benefit from improvements in the efficiency of hospital care services,” said Lorena Kostallari, World Bank Senior Operations Office and Project Leader. “By the end of the project life, it is expected to have a decrease in the total number of acute care beds by 800 beds in selected district hospitals, according to the Hospital Master Plan. As a result of pharmaceutical reform, a reduction by 25 percent in average prices for the 10 most common prescription medicines and the 10 most expensive hospital medicines is foreseen, which will positively influence on the financial protection from health expenditures. The project will enable an increase of health insurance coverage of up to 65 percent for the poor.”

Moreover, specific population groups, including those with priority chronic diseases, will benefit from improved primary care and reduced co-payments for essential, low-cost medicines. This will reduce out-of-pocket payment expenditures. Health sector stakeholders will benefit from capacity-building as well – around 700 staff in public health institutions, including the University Hospital Center of Tirana (QSUT) and regional hospitals, will benefit from training and capacity-building activities.

Since Albania joined the World Bank in 1991, a total of 84 projects comprising over US$2.1 billion of IDA credits and grants and IBRD loans have been provided to the country.

Source: Worldbank.org

BANKERS PETROLEUM ANNOUNCES 2014 YEAR-END RESERVES

March 2nd, 2015

203 Million Barrels of Proved plus Probable (2P) Reserves including 11.3 Million Barrels of EOR Reserves;NPV of US$1.8 billion

CALGARY, March 2, 2015 /CNW/ – Bankers Petroleum Ltd. (“Bankers” or the “Company”) (TSX: BNK, AIM: BNK) announces the results of its December 31, 2014, independent reserves evaluation. Evaluations were conducted by RPS Energy Canada Ltd. (RPS) for the Patos-Marinza oilfield, Albania, and by DeGolyer and McNaughton Canada Ltd. (D&M) for the Kuçova oilfield, Albania; and were prepared in accordance with Canadian National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities.

David French, President and CEO commented “This 2014 Reserves update marks an important strategic transition for Bankers.  First, we are pleased with the recognition of our Enhanced Oil Recovery (EOR) program with initial EOR Proved Developed Producing (PDP) and Proved Undeveloped (PUD) reserve bookings. We see EOR as an integral part of our future growth. The 76 patterns booked this year represent less than one-fifth of our current opportunity set at the floodable viscosity ranges in our field.  Second, we have experienced modest communication at 100 metre spacing in our core development area.  While this temporarily impacts our primary-only reserves per well, it will be the right answer for commercial EOR development and subsequent bookings.  Lastly, the shallower depths and higher viscosities of our southern non-core area appear commercially challenged at the current oil price. We will continue to solve for the right technical solution to access these areas, such as the multilateral test last year.  On balance, our ongoing efforts to reduce operating expenses and capital development, validate the potential for EOR, and solve the challenges of our heaviest sands to set us up well for the future.”

Overview

  • First time booking of EOR reserve volumes in Patos-Marinza oilfield at 2.0, 8.6, 11.3 and 13.4 million barrels on a PDP, Proved (1P), Proved plus Probable (2P), and Proved Probable plus Possible (3P) basis, respectively;
  • 1P Reserves decreased 15% to 125.0 million barrels with after tax value discounted at 10% down 40% to US$734 million (representing CAD$3.49 per share);
  • 2P Reserves decreased 12% to 203.3 million barrels with after tax value discounted at 10% down 20% to  US$1.8 billion (representing CAD$8.57 per share);
  • Reserve volume increases resulted from additional future development in the core areas of the Patos-Marinza field following improved rate and recovery performance from the polymer and water-flood EOR patterns implemented, including horizontal drilling on reduced spacing (100 metre) and between 20 to 30 injector conversions per year over the next two years;
  • Reserves volume decreases are largely attributed to deferred development in extension areas of the oilfield where commercial viability is less at current oil prices, secondary pressure support is not planned near term and production techniques are being tested for improved recovery in higher viscosity and lower temperature areas, including the Gorani and southern Driza reservoirs;
  • Main drivers for the decreased valuation are the lower price forecast, revised development activity to focus on core areas of the oilfield and technical revisions to reflect well performance in 200 metre and reduced spacing development in core and extension areas;
  • 2014 Company average production was 20,687 bopd for an annual total volume of 7.6 million barrels (6% of total proved reserves);
  • Reserves Life Index for 1P and 2P is 17 years and 27 years, respectively.

Total Company Reserves Summary

Gross Oil Reserves – Using Forecast Prices (Million barrels)

2014

2013

Patos-Marinza

Kuçova

Total Albania

Patos-Marinza

Kuçova

Total Albania

%

Proved

Developed Producing

36.3

0.1

36.4

40.3

40.3

-10

Developed Non-Producing

0.1

0.1

0.7

0.7

-83

Undeveloped

86.0

2.6

88.5

102.3

3.4

105.7

-16

Total Proved (1P)

122.3

2.8

125.0

143.3

3.4

146.7

-15

Probable

69.1

9.2

78.3

77.0

8.5

85.5

-8

Total Proved Plus Probable (2P)

191.4

12.0

203.3

220.3

11.9

232.2

-12

Possible

81.0

15.5

96.9

104.0

21.4

125.4

-23

Total Proved, Probable & Possible (3P)

272.8

27.5

300.3

324.3

33.3

357.6

-16

Patos-Marinza Contingent and Prospective Resources (Million barrels – P50 Probability Level)

2014

2013

%

Contingent Resource

512

505

1

Prospective Resource

315

259

22

Net Present Value at 10% – After Tax Using Forecast Prices (US$ millions)

2014

2013

%

Patos-Marinza

Kuçova

Total Albania

Patos-Marinza

Kuçova

Total Albania

Proved

Developed Producing

388

1

389

568

568

-32

Developed Non-Producing

1

1

11

11

-89

Undeveloped

327

17

344

614

23

637

-46

Total Proved

715

19

734

1,193

23

1,216

-40

Probable

968

100

1,068

926

98

1,024

4

Total Proved Plus Probable

1,683

119

1,802

2,119

121

2,240

-20

Possible

846

197

1,043

1,003

296

1,299

-20

Total Proved, Probable & Possible

2,529

316

2,845

3,122

417

3,539

-20

 

2014

2013

Reserves Value 10% Discounted, After Tax

CAD$/Share

US$/bbl

CAD$/Share

US$/bbl

1P reserves

$3.49

$5.87

$5.27

$8.29

2P reserves

$8.57

$8.86

$9.72

$9.65

3P reserves

$13.54

$9.47

$15.36

$9.90

Basic shares outstanding as of December 31, 2014, were approximately 261 million (285 million diluted).

Values are based on RPS (Patos-Marinza) and D&M (Kuçova) January 1, 2015, price forecast tables summarized below:

Reserves Evaluator Price Decks – Dated Brent

BRENT Oil Price Forecast US$/bbl

Year

RPS

D&M

2015

70.03

69.00

2016

74.64

75.40

2017

79.50

82.03

2018

84.50

88.90

2019

89.50

96.01

2020

93.85

97.85

2021

95.72

99.72

2022

97.64

101.64

2023

99.59

103.59

2024

101.58

105.58

2025

103.61

107.61

2026

+2.0% Thereafter

+2.0% Thereafter

 

Finding and Development Costs (F&D)

The future development capital has decreased with deferral of activity in the extension areas of the Patos-Marinza oilfield.  The resulting future horizontal well count has decreased from 995 to 882 in the 2P development case and from 984 to 870 in the 1P and 1,082 to 999 in the 3P cases.  In 2014, Bankers drilled 157 new horizontal production wells in Patos-Marinza.

Total future undiscounted capital costs for Patos-Marinza and Kuçova are projected to be US$2.0 billion, US$2.1 billion and US$2.4 billion on a 1P, 2P and 3P basis, respectively.  This represents a 14%, 13% and 11% decrease in future capital on a 1P, 2P, and 3P basis compared to the previous year.  The F&D costs, calculated as total future development capital divided by recoverable reserves excluding currently developed PDP and Proved Developed Non-Producing (PDNP) reserves, are summarized in the table below:

2014

2013

F&D Costs

US$/bbl

US$/bbl

1P reserves

$22.57

$20.45

2P reserves

$12.69

$12.08

3P reserves

$8.95

$7.85

Oil Initially in Place

In Patos-Marinza, the Oil Initially in Place (“OIIP”) volumes in the reserves area remain essentially the same at 2.3 billion barrels and the OIIP outside the reserves area at 2.8 billion barrels in 2014.

The Kuçova OIIP resource estimate remains at 297 million barrels.

Operational Update

The last ten day average production was 20,750 bopd, 2% higher than the fourth quarter of 2014 average.  All wells that had been temporarily shut-in due to limited surface access during the flooding are now returned to production.  These wells continue to be optimized and as they clean-up, are expected to resume previous rates throughout the remainder of the first quarter.

As previously announced, Bankers has now reduced its drilling activity to two drilling rigs.

Source: Bankers Petroleum