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Press release from CNW Group


Tuesday, July 05, 2011

BANKERS PETROLEUM OPERATIONAL UPDATE FOR THE SECOND QUARTER 201119:00 EDT Tuesday, July 05, 2011Current production rate is 13,150 bopdCALGARY, July 5, 2011 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK) (AIM: BNK) is pleased to announce the following operational update:Production and Oil PriceOil sales from the Patos-Marinza oilfield in Albania during the second quarter averaged 12,152 bopd compared to first quarter sales of 11,894 bopd. The last export shipment of approximately 54,000 barrels (equivalent to ~600 bopd for the quarter) scheduled for June 29th was delayed due to late vessel arrival to July 2nd and will be included in the next quarter oil sales.  Oil inventory on June 30th was 239,000 barrels, an increase of 71,000 barrels in the quarter (equivalent to ~800 bopd) from the March 31st inventory level of 168,000 barrels, as a result of additional new well site tanks and storage tanks at the export terminal requiring certain minimum operational volumes in each tank.Average production for the second quarter was 12,973 bopd representing a 7% increase from 12,147 bopd in the first quarter, yet approximately 1,200 bopd lower than forecast due to several operational challenges detailed below.  Current production is 13,150 bopd.The Patos-Marinza oilfield currently has shut-in production of 1,750 bopd. This volume is approximately 60% higher than normal, representing 1,000 bopd of additional productive capacity. Most of these wells are waiting on service rigs for workovers, a few are shut-in for proximity to new drilling and the remainder are wells with high water production shut-in to provide water disposal capacity for water from high productivity oil wells. To mitigate these challenges, additional service rigs are being sourced and new water disposal wells are being equipped to handle additional water disposal volumes from the field.The Patos-Marinza second quarter average oil price was US$77.02 per barrel (representing 66% of the Brent oil price of US$117.36 per barrel) an increase of 13% compared to the first quarter's average oil price of US$68.06 per barrel (65% of Brent). With the current differential between Brent and WTI, Patos-Marinza crude is presently priced at approximately 80% of WTI.Drilling UpdateNineteen (19) wells have been drilled during the second quarter, eighteen (18) horizontal production wells and one (1) vertical water disposal well. Fifteen (15) of these wells have been completed and are on production with three (3) awaiting completion including the third Gorani horizontal well test, the first two of which are currently producing at rates of 170 and 180 bopd.  The success of these two wells has now validated primary productivity from the Gorani formation in the northern area of the field and the Company intends to further develop this formation with the addition of a large number of horizontal wells to access more than 220 million barrels of oil in place assigned to the Gorani formation in this part of the field.Production rates from fifteen (15) horizontal wells drilled and put on production in the second quarter are averaging 180 bopd with strong initial production in the lower Gorani sands tested and continuing in the Driza (D1) sands.  Production rates from the sixteen (16) horizontal wells drilled in the first quarter are averaging 135 bopd and the average production from all seventy-five (75) producing horizontal wells in the field is 120 bopd per well at the end of the second quarter.Horizontal well decline analysis is continuing with current indication showing varied decline rates depending on formation, area of the field, and well optimization with current average declines of approximately 25% per year. High initial productivity wells are exhibiting 30 to 50% declines in the first six to twelve months followed by a leveling off in rate and reduced declines of 10 to 20% beyond the initial decline period. Please refer to the decline analysis by producing horizon available on the July 2011 Corporate Presentation at fourth drilling rig arrived in Albania in May and after start-up delays, the rig spud its first well on June 5th and is currently drilling its second well at the Patos-Marinza oilfield; this delay had a negative impact on the second quarter production numbers. The fifth drilling rig has now been contracted and is expected to be ready for drilling operations in October 2011. The Company's current estimates are to drill 79 horizontal wells and complete 82 well reactivations in 2011.Due to observed variance in productivity and decline rates of the horizontal wells versus forecast rates as well as the loss of some productivity from old vertical wells due to casing conditions of these wells, the Company is providing guidance that exit production in 2011 will now range from a high case of 20,000 bopd, likely case of 18,000, and a low case of 16,000 bopd.Well ReactivationsReactivation and recompletion work continued in the second quarter with fourteen (14) wells reactivated, nine (9) of which are on production and averaging 33 bopd per well. Current production from these wells is 300 bopd.  Production from nine (9) wells reactivated in the first quarter and on production is currently 230 bopd averaging 26 bopd per well.The current production split is 7,470 bopd (representing 57%) from new horizontal wells and 5,630 bopd from reactivated vertical wells.Thermal Program & Exploration Block "F"Road access and site construction for the thermal facilities have been completed. Drilling the vertical delineation well is scheduled for later this month to be followed immediately with two (2) thermal horizontal wells. The first 60-day steam injection cycle is scheduled for September 2011.Seismic reprocessing and interpretation on Block "F" is progressing to finalize the location for drilling the first gas exploration well in the fourth quarter.Infrastructure DevelopmentConstruction on the first phase of the crude oil sales pipeline, which connects the Patos-Marinza oilfield to the storage and loading Hub facility at Fier, is progressing and the project is scheduled for September 2011 completion. Social and environmental impact assessments for the second phase of the pipeline, from Fier to the export terminal at Vlore, are underway.Construction of the third and fourth oil treating train expansions of the Central Treatment Facility (CTF) are underway and on schedule for completion during the fourth quarter of 2011 and will increase the CTF capacity to 25,000 bopd.Construction of the Seman River bridge in the northern area of the Patos-Marinza oilfield is progressing with completion expected in December 2011, which will facilitate a larger drilling and reactivation program in the higher productivity area north of the river.KuçovaWater injection in one vertical well started in May 2011 and pressure and fluid level observations are being monitored in two vertical wells. With positive pressure build-up, the Company can expand the waterflood project and initiate production operations in 2012.Environmental InitiativesThe pilot remediation project in Sector 3 is moving ahead with continuing strong results with the mechanical (centrifuge) separation unit providing the best outcome in cleaning contaminated solids and residues from contaminated sites. The bio-remediation test process is also continuing yet due to the nature of this type of treatment, will take a longer period to provide results.For additional information on this operational update, please see the July 2011 version of the Company's corporate presentation at CallThe Management of Bankers will host a conference call on July 6, 2011 at 7:00am MDT to discuss this Operations Update. Following Management's presentation, there will be a question and answer session for analysts and investors.To participate in the conference call, please contact the conference operator ten minutes prior to the call at 1-888-231-8191 or 1-647-427-7450. A live audio web cast of the conference call will also be available on Bankers website at or by entering the following URL into your web browser The web cast will be archived two hours after the presentation on the website, and posted on the website for 90 days. A replay of the call will be available until July 20, 2011 by dialing 1-800-642-1687 or 1-416-849-0833 and entering access code 80070287.---------Caution Regarding Forward-looking InformationInformation 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 takeovers, well reactivations and well recompletions of the past will continue and success rates will be similar to those rates experienced for previous well recompletions/reactivations/development; that further wells taken over and recompleted will produce at rates similar to the average rate of production achieved from wells recompletions/reactivations/development in the past; 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 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.Review by Qualified PersonThis release was reviewed by Suneel Gupta, Executive Vice President and Chief Operating Officer of Bankers Petroleum Ltd., who is a "qualified person" under the rules and policies of AIM in his role with the Company and due to his training as a professional engineer (member of APEGGA) with over 20 years experience in domestic and international oil and gas operations.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.For further information: Abby Badwi Doug Urch Mark Hodgson President and Chief Executive Officer Executive VP, Finance and Chief Financial Officer VP, Business Development (403) 513-2694 (403) 513-2691 (403) 513-2695 Email: Website: AIM NOMAD: Canaccord Genuity Limited Ryan Gaffney/ Henry Fitzgerald-O'Connor +44 20 7050 6500 AIM JOINT BROKERS: Canaccord Genuity Limited Macquarie Capital Advisors Ryan Gaffney/ Henry Fitzgerald-O'Connor Ben Colegrave/Paul Connolly +44 20 7050 6500 +44 20 3037 5639