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Press release from PR Newswire

Bankers Petroleum Announces 2012 Second Quarter Financial and Operational Results

Monday, August 13, 2012

Bankers Petroleum Announces 2012 Second Quarter Financial and Operational Results08:00 EDT Monday, August 13, 2012 Record Quarter of Production CALGARY, Aug. 13, 2012 /PRNewswire/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2012 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$000, except as noted) Three months ended June 30 Six months ended June 30   2012 2011 Change 2012 2011 Change Oil revenue 98,587 85,184 16% 201,255 157,920 27% Net operating income 47,252 47,244 - 100,723 87,078 16% Net income 11,253 10,800 4% 19,018 22,019 (14%)   Per share - basic ($) 0.044 0.044 - 0.076 0.089 (15%)     - diluted ($) 0.044 0.042 5% 0.075 0.086 (13%) Funds generated from operations 43,159 43,220 - 91,231 73,168 25%   Per share - basic ($) 0.171 0.175 (2%) 0.363 0.296 23% Capital expenditures 52,632 69,388 (24%) 115,333 121,318 (5%) Average sales (bopd) 14,169 12,152 17% 13,724 12,024 14% Average price ($/barrel) 76.46 77.03 (1%) 80.57 72.56 11% Netback ($/barrel) 36.65 42.72 (14%) 40.33 40.02 1%                   June 30 2012 December 31 2011 June 30 2011 Cash and deposits       60,297 54,013 81,429 Working capital       112,022 80,282 98,222 Total assets       770,829 661,216 565,340 Long-term debt       95,793 46,692 18,683 Shareholders' equity       454,752 412,679 389,959 Highlights for the quarter and six months ended June 30, 2012 are: Oil sales averaged 14,169 bopd for the second quarter of 2012, an increase of 17% compared to 12,152 bopd for the same period in 2011 and an increase of 7% compared to 13,279 bopd for the preceding quarter.  For the first half of 2012, oil sales increased 14% to 13,724 bopd from 12,024 bopd for the comparable 2011 period. Revenue for the second quarter of 2012 increased by 16% to $98.6 million ($76.46/bbl) from $85.2 million ($77.03/bbl) in the second quarter of 2011.  Revenue for the second quarter of 2012 represented 71% of the Brent oil price of $108/bbl.  Revenue for the first six months of 2012 totalled $201.3 million ($80.57/bbl), an increase of 27% from $157.9 million (72.56/bbl) for the first six months of 2011. Royalties to the Albanian Government and related entities were $17.2 million for the second quarter of 2012 (representing 17% of total revenue) and $13.1 million for the second quarter of 2011.  Total royalties were $36.4 million and $26.8 million for the six months ended June 30, 2012 and 2011, respectively. In the second quarter of 2012, operating, sales and transportation costs originating from Albanian based companies and their employees were $34.1 million, compared with $24.9 million for the second quarter of 2011. The Company recorded net operating income (netback) of $47.3 million ($36.65/bbl) in the second quarter of 2012, compared to $47.2 million ($42.72/bbl) in the same period of 2011.  On a six months basis, net operating income totalled $100.7 million ($40.33/bbl) for 2012, an increase from $87.1 million ($40.02/bbl) in 2011. Funds generated from operations for the second quarters of 2012 and 2011 were $43.2 million.  For the six months ended June 30, 2012, funds generated from operations were $91.2 million as compared to $73.2 million for the six months ended June 30, 2011. Capital expenditures were $52.6 million in the second quarter of 2012.  The Company drilled 38 wells during the quarter, comprised of 36 horizontal wells, one water injection well and one exploration well in Block "F".  Re-activation and re-completion work continued during the quarter.  During the same period of 2011, capital expenditures were $69.4 million.  For the first six months of 2012, capital expenditures totalled $115.3 million, a reduction of 5% from $121.3 million for the comparable 2011 six months period. The Company continues to maintain a strong financial position at June 30, 2012 with cash of $60.3 million and working capital of $112.0 million.  Working capital for December 31, 2011 and June 30, 2011 was $80.3 million and $98.2 million, respectively. Operational Update and Outlook The average third quarter 2012 production to date is 15,400 bopd, 9% higher than the second quarter 2012 rate of 14,169 bopd. The Company continues to focus on improvements to address operational challenges associated with mature heavy oilfield development including interference from old well bores, sand production, and water disposal capacity.  Horizontal wells that have demonstrated good production, but have liner access issues, are being reviewed for clean-out and production resumption or re-drilling of the lateral section and completion with improved tubular strength. The first re-drill is planned for late in the third quarter.  Further expansion of the water disposal capacity with additional wells and higher pressure and volume injection pumps is planned for the fourth quarter. Work continues on water control in existing and future drilling fairways to improve the water-cut performance on new wells by restricting water influx from some legacy vertical wells with poor integrity existing in the field.  A number of wells have exhibited improved water-cuts as a result of the water control initiative. The second steam cycle for thermal well 5201 was completed in mid-July and the well was immediately placed on its second production cycle. The well is currently flowing back at a rate of 570 barrels of fluid per day, 97% BS&W and 3% heavy viscous oil. The production cycle will continue for several more weeks to recover the remaining steam equivalent injected volumes of water and observe the gradual change of temperature and oil water rates. The data collected will be utilized alongside results from the thermal coring program of 4 wells beginning in the third quarter to determine the follow up location for the pilot program. "While the rates from the D1 in this area were restricted due to high viscosity, the result of mobilization of the oil tells us that the reservoir is receptive to thermal extraction. Now, with the new coring rig on its way into the country, Bankers will begin the process of delineating the Western and Southern flanks of the field to select the optimal location for the second pilot." said Abby Badwi, President and Chief Executive Officer. For additional information, please see an updated version of the Company's August corporate presentation on www.bankerspetroleum.com. Bankers Petroleum is expanding and has several exciting career opportunities available for both Calgary and Albania.  Please visit our website for full details on these career opportunities and to see how to apply. 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       2012   2011   2012   2011                     Revenues   $ 98,587 $ 85,184 $ 201,255 $ 157,920 Royalties     (17,214)   (13,062)   (36,368)   (26,817)       81,373   72,122   164,887   131,103 Unrealized gain (loss) on financial commodity contracts     244   (615)   (2,965)   (2,016)       81,617   71,507   161,922   129,087                     Operating expenses     19,038   14,637   36,470   26,234 Sales and transportation expenses     15,083   10,241   27,694   17,791 General and administrative expenses     3,508   3,580   7,618   6,438 Depletion and depreciation      14,067   9,127   27,744   17,392 Share-based payments     1,447   2,327   5,683   6,972       53,143   39,912   105,209   74,827       28,474   31,595   56,713   54,260                     Net finance expense     1,860   1,963   4,717   3,904                     Income before income tax     26,614   29,632   51,996   50,356 Deferred income tax expense     (15,361)   (18,832)   (32,978)   (28,337) Net income for the period     11,253   10,800   19,018   22,019                     Other comprehensive income (loss)                     Currency translation adjustment     (505)   439   1   2,253 Comprehensive income for the period   $ 10,748 $ 11,239 $ 19,019 $ 24,272                     Basic earnings per share   $ 0.044 $ 0.044 $ 0.076 $ 0.089                     Diluted earnings per share   $ 0.044 $ 0.042 $ 0.075 $ 0.086   BANKERS PETROLEUM LTD. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited, expressed in thousands of US dollars)   ASSETS             June 30 2012   December 31 2011 Current assets                      Cash and cash equivalents            $ 55,297   $ 49,013   Restricted cash             5,000    5,000   Accounts receivable             50,944    56,006   Inventory             24,977    14,412   Deposits and prepaid expenses             24,761    17,463   Financial commodity contracts             719    3,684               161,698    145,578 Non-current assets                      Property, plant and equipment             609,131    515,638             $ 770,829  $ 661,216   LIABILITIES Current liabilities                    Accounts payable and accrued liabilities         $ 48,187   $ 52,109   Current portion of long-term debt           1,489    13,187             49,676    65,296 Non-current liabilities                    Long-term debt           95,793    46,692   Decommissioning obligation           14,643    13,561   Deferred tax liabilities           155,965     122,988             316,077    248,537   SHAREHOLDERS' EQUITY Share capital              332,450    318,021 Warrants             -    1,540 Contributed surplus             59,816    49,651 Currency translation reserve             6,410    6,409 Retained earnings             56,076    37,058               454,752    412,679             $ 770,829  $ 661,216   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       2012   2011   2012   2011 Cash provided by (used in):                   Operating activities                     Net income for the period   $ 11,253 $ 10,800 $ 19,018 $ 22,019   Depletion and depreciation     14,067   9,127   27,744   17,392   Amortization of deferred financing costs     -   -   -   734   Accretion of long-term debt     1,199   748   2,326   748   Accretion of decommissioning obligation     202   99   397   194   Unrealized foreign exchange (gain) loss     (126)   672   120   1,344   Deferred income tax expense     15,361   18,832   32,978   28,337   Share-based payments     1,447   2,327   5,683   6,972   Unrealized (gain) loss on financial commodity contracts     (244)   615   2,965   2,016   Cash premiums paid for financial commodity contracts     -   -   -   (6,588)       43,159   43,220   91,231   73,168   Change in non-cash working capital     (6,775)   5,042   (12,614)   (2,659)       36,384   48,262   78,617   70,509 Investing activities                     Additions to property, plant and equipment     (52,632)   (69,388)   (115,333)   (121,318)   Restricted cash     -   (5,000)   -   (5,000)   Change in non-cash working capital     (3,467)   4,554   (4,109)   10,542       (56,099)   (69,834)   (119,442)   (115,776) Financing activities                     Issue of shares for cash     31   2,163   12,177   5,293   Financing costs     -   (4)   (750)   (30)   Increase in long-term debt     2,993   13,353   35,817   7,940       3,024   15,512   47,244   13,203 Foreign exchange gain (loss) on cash and cash equivalents     (162)   (365)   (135)   374 Increase (decrease) in cash and cash equivalents     (16,853)   (6,425)   6,284   (31,690) Cash and cash equivalents, beginning of period     72,150   81,354   49,013   106,619 Cash and cash equivalents, end of period   $ 55,297 $ 74,929 $ 55,297 $ 74,929                     Interest paid   $ 1,521 $ 842 $ 1,722 $ 1,152 Interest received   $ 218 $ 225 $ 278 $ 363   BANKERS PETROLEUM LTD. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited, expressed in thousands of US dollars, except number of common shares)     Number of common shares   Share capital   Warrants   Contributed surplus   Currency translation reserve   Retained earnings   Total Balance at December 31, 2010   244,794,990     $ 309,379 $ 1,597 $ 28,135 $ 6,094 $ 1,062 $ 346,267                                    Share-based payments   -     -   -   14,127     -   -    14,127 Options exercised   2,686,779     8,212   -   (2,919)     -   -    5,293 Net income for the period   -     -   -   -     -   22,019    22,019 Currency translation adjustment   -     -   -   -     2,253   -    2,253 Balance at June 30, 2011   247,481,769     $ 317,591      $ 1,597 $ 39,343 $ 8,347 $ 23,081 $ 389,959                                    Share-based payments   -     -   -   10,358     -   -    10,358 Options exercised   41,667     136   -   (50)     -   -    86 Warrants exercised   174,333     461   (57)   -     -   -    404 Share issue costs   -     (167)   -   -     -   -    (167) Net income for the period   -     -   -   -     -   13,977    13,977 Currency translation adjustment   -     -   -   -     (1,938)   -    (1,938) Balance at December 31, 2011   247,697,769 $ 318,021 $ 1,540 $ 49,651 $ 6,409 $ 37,058   $ 412,679                                    Share-based payments   -     -   -   10,877     -   -   10,877 Options exercised   553,945     1,833   -   (719)     -   -   1,114 Warrants exercised   4,672,991     12,596   (1,533)   -     -   -   11,063 Warrants expired   -     -   (7)   7     -   -   - Net income for the period   -     -   -   -     -   19,018   19,018 Currency translation adjustment   -     -   -   -     1   -   1 Balance at June 30, 2012   252,924,705 $ 332,450 $ - $ 59,816 $ 6,410 $ 56,076 $ 454,752 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: <p> </p> <p> Abby Badwi, President and Chief Executive Officer, (403) 513-2694<br/> Doug Urch, Executive VP, Finance and Chief Financial Officer, (403) 513-2691<br/> Mark Hodgson, VP, Business Development, (403) 513-2695 </p> <p> Email: <a href="mailto:investorrelations@bankerspetroleum.com">investorrelations@bankerspetroleum.com</a><br/> Website: <a href="http://www.bankerspetroleum.com">www.bankerspetroleum.com</a> </p> <p> AIM NOMAD:<br/> Canaccord Genuity Limited<br/> Henry Fitzgerald-O'Connor<br/> +44 207 523 8000 </p> <p> AIM JOINT BROKERS:<br/> Canaccord Genuity Limited<br/> Ryan Gaffney/ Henry Fitzgerald-O'Connor<br/> +44 207 523 8000 </p> <p> Macquarie Capital Advisors<br/> Paul Connolly<br/> +44 203 037 5639 </p>