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Press release from PR Newswire

Bankers Petroleum Announces 2011 Second Quarter Financial and Operational Results

Thursday, August 11, 2011

Bankers Petroleum Announces 2011 Second Quarter Financial and Operational Results20:00 EDT Thursday, August 11, 2011 Record Quarter of Production and Financial Results CALGARY, Aug. 11, 2011 /PRNewswire/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK) (AIM: BNK) is pleased to provide its 2011 second quarter financial and operational results.  The complete reporting package, consisting of Management's Discussion and Analysis along with Financial Statements and Notes, is posted on the Company's website www.bankerspetroleum.com and SEDAR: www.sedar.com. Results at a Glance (US$000, except as noted)(1) Three months ended June 30 Six months ended June 30   2011 2010 Change 2011 2010 Change Oil revenue 85,184 42,147 102% 157,920 77,296 104% Net operating income 47,244 20,353 132% 87,078 35,992 142% Net income 10,800 3,300 227% 22,019 2,937 650%   Per share - basic ($) 0.044 0.014 214% 0.089 0.013 585%   - diluted ($) 0.042 0.014 200% 0.086 0.012 617% Funds generated from operations 42,913 17,941 139% 73,172 31,755 130%   Per share - basic ($) 0.174 0.078 123% 0.296 0.138 114% Capital expenditures 69,388 28,724 142% 121,318 54,894 121% Average production (bopd) 12,152 9,830 24% 12,024 9,060 33% Average price ($/barrel) 77.03 47.12 63% 72.56 47.14 54% Netback ($/barrel) 42.72 22.76 88% 40.02 21.95 82%             June 30 2011 June 30 2010 Change   December 31 2010 Change Cash and deposits 81,429 57,418 42%   108,119 (25%) Working capital 98,222 59,417 65%   130,920 (25%) Total assets 565,340 337,007 68%   465,598 21% Long-term bank loans 31,630 22,691 39%   21,815 45% Shareholders' equity 389,959 232,737 68%   346,267 13% (1) Effective January 1, 2011, and retroactive to January 1, 2010, the Company adopted International Financial Reporting Standards (IFRS).  Previously, the Company prepared its Financial Statements in accordance with Canadian Generally Accepted Accounting Principles (GAAP).   The transition has not resulted in any material variation from prior periods.  Full details on the transition adjustments are contained in the Notes to the Consolidated Interim Financial Statements. Highlights for the quarter ended June 30, 2011 are: Production averaged 12,152 bopd, an increase of 24% compared to the same period in 2010.  Production at June 30, 2011 was 13,150 bopd. Revenue increased 17% to $85.2 million ($77.03/bbl) in the second quarter of 2011 from $72.7 million ($67.95/bbl) in the first quarter of 2011 and by 102% from $42.1 million ($47.12/bbl) in the second quarter of 2010. Net operating income (netback) increased 19% to $47.2 million ($42.72/bbl) in the second quarter of 2011 from $39.8 million ($37.22/bbl) during the first quarter of 2011 and by 132% from $20.4 million ($22.76/bbl) in the second quarter of 2010. Funds generated from operations increased by 42% to $42.9 million in the second quarter of 2011 from $30.3 million over the first quarter of 2011 and by 139% from $17.9 million in the second quarter of 2010. Capital expenditures for the second quarter of 2011 were $69.4 million and included drilling 18 horizontal wells and one (1) vertical water disposal well, as well as 14 reactivations and related infrastructure/expansion projects.  During the same period of 2010, capital expenditures were $28.7 million. The Company continues to maintain a strong financial position with cash of $81.4 million and working capital of $98.2 million at June 30, 2011.  Working capital for December 31, 2010 and June 30, 2010 was $130.9 million and $59.4 million, respectively. Operational Update Current production at the Patos-Marinza oilfield is 13,400 bopd. Of the 1,750 bopd of reported shut-in production in early July, 800 bopd have been put back on production and the additional oil inventory available for sale at the end of the second quarter was sold during the month of July reflecting record sales of 494,000 barrels. A new service rig was delivered in early August and another is due for delivery in October. The thermal pilot program in the southwest area of the Patos-Marinza oilfield has now commenced. The vertical delineation well is drilling near total depth. Several cores have been cut and the rig will commence drilling the first of two horizontal thermal wells once casing has been set on the delineation well. The horizontal wells are targeting the thick Driza 1 sandstone where visual core inspection shows the zone to have excellent porosity and is fully saturated with oil. Steam injection is expected to commence in the fourth quarter of 2011 upon completion of the surface facilities construction. Outlook Despite the current equity sell off in financial markets and recent decline in oil prices, Bankers' financial position remains strong with $81 million in cash and minimal long-term debt of $31 million. In addition, Patos- Marinza crude sales agreements are based on Brent crude price which is currently at a 27% premium to WTI. Cash on hand and cash generated from operations are projected to be sufficient to fund Bankers capital program for 2011 and beyond, based on $100/bbl Brent price average for this year and $85/bbl for 2012 and beyond. The financial oil hedge agreements entered into by the Company earlier this year are an additional risk management protection strategy against declining commodity prices. For additional information, please see an updated version of the Company's corporate presentation on www.bankerspetroleum.com.  BANKERS PETROLEUM LTD.  CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  (Unaudited, expressed in thousands of US dollars, except per share amounts)     Three months ended June 30   Six months ended June 30     2011   2010   2011   2010                   Revenues   $ 85,184   $ 42,147   $ 157,920   $ 77,296 Royalties   (13,062)   (8,367)   (26,817)   (15,557)     72,122   33,780   131,103   61,739                   Operating expenses   14,637   8,892   26,234   16,817 Sales and transportation expenses   10,241   4,535   17,791   8,930 General and administrative expenses   3,580   2,327   6,438   4,783 Depletion and depreciation   9,127   5,084   17,392   9,468 Share-based payments   2,327   1,451   6,972   5,155 Unrealized loss on financial commodity contracts   615   -   2,016   -     40,527   22,289   76,843   45,153     31,595   11,491   54,260   16,586                   Finance income   98   487   405   1,214 Finance expense   (2,061)   (1,479)   (4,309)   (2,915)     (1,963)   (992)   (3,904)   (1,701)                   Income before income tax   29,632   10,499   50,356   14,885 Deferred income tax expense   (18,832)   (7,199)   (28,337)   (11,948) Net income for the period   10,800   3,300   22,019   2,937                   Other comprehensive income (loss)                    Currency translation adjustment   439   (1,141)   2,253   303 Comprehensive income for the period $ 11,239 $ 2,159 $ 24,272 $ 3,240                   Basic earnings per share $ 0.044 $ 0.014 $ 0.089 $ 0.013 Diluted earnings per share $ 0.042 $ 0.014 $ 0.086 $ 0.012                   BANKERS PETROLEUM LTD. CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Unaudited, expressed in thousands of US dollars)   ASSETS                 June 30 2011   December 31 2010 Current assets                 Cash and cash equivalents        $ 74,929   $ 106,619   Restricted cash         6,500   1,500   Accounts receivable         44,504   29,233   Inventory         15,487   4,199   Deposits and prepaid expenses         13,553   16,624           154,973   158,175 Non-current assets                 Deferred financing costs         -   13,980   Financial commodity contracts         4,572   -   Property, plant and equipment         405,795   293,443         $ 565,340 $ 465,598 LIABILITIES Current liabilities                  Accounts payable and accrued liabilities       $ 54,612   $  23,241    Current portion of long-term debt         2,139   4,014           56,751   27,255 Non-current liabilities                 Long-term debt         18,683   21,815   Decommissioning obligation         7,971   6,622   Deferred tax liabilities         91,976   63,639           175,381   119,331 SHAREHOLDERS' EQUITY Share capital         317,591   309,379 Warrants         1,597   1,597 Contributed surplus         39,343   28,135 Accumulated other comprehensive income         8,347   6,094 Retained earnings         23,081   1,062           389,959   346,267         $ 565,340 $ 465,598   BANKERS PETROLEUM LTD.   CONSOLIDATED STATEMENTS OF CASH FLOWS   (Unaudited, expressed in thousands of US dollars)     Three months ended June 30   Six months ended June 30     2011   2010   2011   2010 Cash provided by (used in):                 Operating activities                   Net income for the period $ 10,800 $ 3,300 $ 22,019 $ 2,937   Depletion and depreciation   9,127   5,084   17,392   9,468   Finance expenses (including accretion)   2,061   1,479   4,309   2,915   Interest paid   (842)   (937)   (1,152)   (1,102)   Foreign exchange (gain) loss   (7)   365   (133)   434   Deferred income tax expense   18,832   7,199   28,337   11,948   Share-based payments   2,327   1,451   6,972   5,155   Unrealized loss on financial commodity contracts   615   -   2,016   -   Cash premiums paid for financial commodity contracts   -   -   (6,588)   -     42,913   17,941   73,172   31,755   Change in non-cash working capital   5,349   (647)   (2,663)   (2,325)     48,262   17,294   70,509   29,430 Investing activities                   Additions to property, plant and equipment   (69,388)   (28,724)   (121,318)   (54,894)   Restricted cash   (5,000)   -   (5,000)   -   Change in non-cash working capital   4,554   2,093   10,542   7,115     (69,834)   (26,631)   (115,776)   (47,779) Financing activities                   Issue of shares for cash   2,163   1,386   5,293   5,802   Financing costs   (4)   (20)   (30)   (172)   Increase (decrease) in long-term debt   13,353   912   7,940   (755)   Share issue costs   -   (158)   -   (158)   Note receivable   -   2,749   -   2,749   Short-term deposits   -   9,075   -   7,275   Change in non-cash working capital   -   143   -   143     15,512   14,087   13,203   14,884 Foreign exchange gain (loss) on cash and cash equivalents   (365)   (969)   374   (112) Increase (decrease) in cash and cash equivalents   (6,425)   3,781   (31,690)   (3,577) Cash and cash equivalents, beginning of period   81,354   52,137   106,619   59,495 Cash and cash equivalents, end of period $ 74,929 $ 55,918 $ 74,929 $ 55,918 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.For further information: <table valign="top" border="0"> <tr> <td> Abby Badwi   </td> <td> President and Chief Executive Officer     </td> <td>   </td> <td> (403) 513-2694 </td> </tr> <tr> <td> Doug Urch   </td> <td> Executive VP, Finance and Chief Financial Officer   </td> <td>   </td> <td> (403) 513-2691 </td> </tr> <tr> <td> Mark Hodgson   </td> <td> VP, Business Development      </td> <td>   </td> <td> (403) 513-2695 </td> </tr> <tr> <td colspan="4">   </td> </tr> <tr> <td colspan="4"> Email: <a href="mailto:investorrelations@bankerspetroleum.com">investorrelations@bankerspetroleum.com</a> </td> </tr> <tr> <td colspan="4"> Website: <a href="http://www.bankerspetroleum.com">www.bankerspetroleum.com</a> </td> </tr> <tr> <td colspan="4">   </td> </tr> <tr> <td colspan="4"> <i><b>AIM NOM</b></i><i><b>AD: </b></i> </td> </tr> <tr> <td colspan="4"> Canaccord Genuity Limited </td> </tr> <tr> <td colspan="4"> Ryan Gaffney/ Henry Fitzgerald-O'Connor </td> </tr> <tr> <td colspan="4"> +44 20 7050 6500 </td> </tr> <tr> <td colspan="4">   </td> </tr> <tr> <td colspan="4"> <i><b>AIM JOINT </b></i><i><b>BROKERS:</b></i> </td> </tr> <tr> <td> Canaccord Genuity Limited       </td> <td colspan="3"> Macquarie Capital Advisors </td> </tr> <tr> <td> Ryan Gaffney/ Henry Fitzgerald-O'Connor     </td> <td colspan="3"> Ben Colegrave/Paul Connolly </td> </tr> <tr> <td> +44 20 7050 6500        </td> <td colspan="3"> +44 20 3037 5639 </td> </tr> </table> <p>   </p>