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Press release from CNW Group

Bankers Petroleum Announces 2012 Third Quarter Financial and Operational Results

Monday, November 12, 2012

Bankers Petroleum Announces 2012 Third Quarter Financial and Operational Results08:00 EST Monday, November 12, 2012Record Quarter of Production and Cash Flows CALGARY, Nov. 12, 2012 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2012 third quarter financial and operational results.  The complete reporting package, consisting of Management's Discussion and Analysis along with the Financial Statements and Notes, is posted on the Company's website www.bankerspetroleum.com and on SEDAR: www.sedar.com.Results at a Glance (US$000, except as noted)Three months endedSeptember 30Nine months endedSeptember 30 20122011Change20122011ChangeOil revenue115,05493,65023%316,309251,57026%Net operating income58,15944,89830%158,882131,97620%Net income12,27413,696(10%)31,29235,715(12%) Per share- basic ($)0.0490.055(11%)0.1240.145(14%)  - diluted ($)0.0480.054(11%)0.1230.140(12%)Funds generated from operations(1)48,30842,09915%139,539115,26721% Per share- basic ($)0.1910.17012%0.5540.46719%Capital expenditures53,52665,147(18%)168,859186,465(9%)Average sales (bopd)15,71513,66715%14,39312,57814%Average price ($/barrel)79.5874.487%80.2173.269%Netback ($/barrel)40.2335.7113%40.2938.435%(1) Includes a $3.9 million payment for a financial commodity contract in August 2012.           September 302012December 312011September 302011Cash and cash on deposits 40,112 54,013 53,243Working capital 106,537 80,282 73,491Total assets 810,017 661,216 612,348Long-term debt 97,016 46,692 20,187Shareholders' equity 471,907 412,679 405,955              Highlights for the quarter and nine months ended September 30, 2012 are:For the third quarter of 2012, oil sales averaged 15,715 bopd, an increase of 15% compared to 13,667 bopd for the same period in 2011 and an increase of 11% compared to 14,169 bopd for the preceding quarter.  For the nine months ended September 30, 2012, oil sales increased 14% to 14,393 bopd from 12,578 bopd for the comparable 2011 period.Revenue for the third quarter of 2012 increased by 23% to $115.1 million ($79.58/bbl) from $93.7 million ($74.48/bbl) in the same period of 2011.  Revenue for the third quarter of 2012 represented 73% of the Brent oil price of $110/bbl.  Revenue for the nine month 2012 period totalled $316.3 million ($80.21/bbl), an increase of 26% from $251.6 million ($73.26/bbl) for the same period of 2011.Royalties to the Albanian Government and related entities were $23.3 million and $18.5 million for the third quarter of 2012 and 2011, respectively (both representing 20% of total revenue).  Total royalties were $59.6 million and $45.3 million for the nine months ended September 30, 2012 and 2011, respectively.Operating, sales and transportation costs in the third quarter of 2012, originating from Albanian-based companies and their employees, were $33.6 million, compared with $30.3 million for the third quarter of 2011.The Company recorded net operating income (netback) of $58.2 million ($40.23/bbl) in the third quarter of 2012, an increase of 30% compared to $44.9 million ($35.71/bbl) in the same period of 2011.  For the nine months ended September 30, 2012, net operating income totalled $158.9 million ($40.29/bbl), a 20% increase from $132.0 million ($38.43/bbl) for the same period in 2011.Funds generated from operations for the third quarter of 2012 were $48.3 million, a 15% increase compared to $42.1 million for the third quarter of 2011.  For the nine months ended September 30, 2012, funds generated from operations were $139.5 million as compared to $115.3 million for the nine months ended September 30, 2011. Included in funds generated from operations is a payment of $3.9 million for a financial commodity contract in August 2012.Capital expenditures in the third quarter of 2012 were $53.5 million.  The Company drilled 34 wells during the quarter, comprised of 31 horizontal wells, one lateral re-drill sidetrack well, and two core wells in the southern area of the field.  Re-activation and re-completion work continued during the quarter.  During the same period of 2011, capital expenditures were $65.1 million.  For the nine months ended September 30, 2012, capital expenditures totalled $168.9 million, a reduction of 9% from $186.5 million for the comparable 2011 period.During the third quarter of 2012, Bankers participated in the bid evaluation process for the privatization of the Albanian national oil company "Albpetrol Sh.A".  Although Bankers' participation was unsuccessful, the winning bid value of EUR 850 million attributed to Albpetrol's assets enhances Bankers oilfields' valuation and also demonstrates the Company's commitment to expand its business activities in Albania.At September 30, 2012, total deposits and prepaid expenses were $29.2 million compared to $17.5 million at the end of December 2011, of which $16.6 million and $1.2 million, respectively, is paid to the Albanian court as deposits for procedure purposes on several legal cases.  The recoverability of these amounts is dependent on the outcome of these cases.  As of September 30, 2012, these amounts were considered recoverable.The Company is in the process of challenging assessments from the Albanian Government Tax Director negating the previous exemption relief from carbon and circulation taxes on diluent imports.  These assessments represent a total of $15 million covering the last five years. The Company was successful in setting aside a recently introduced separate excise tax assessment amounting to $8 million on the Company's importation and use of diluent.  Other audits have also resulted in an additional assessment of previously exempted Value Added Taxes for some of Bankers' subcontractors.  Bankers has urged the Government of Albania to re-consider its position before proceeding with implementation of this assessment and is hopeful that these contractual exemptions will continue to be applied.The Company continues to maintain a strong financial position at September 30, 2012 with cash of $40.1 million and working capital of $106.5 million.  Working capital for December 31, 2011 and September 30, 2011 was $80.3 million and $73.5 million, respectively.Financial Update Bankers has commenced discussions with EBRD and IFC, its reserve-based lenders, for an increase to its $110 million credit facility and a term extension that would extend existing repayments, currently scheduled to commence in October 2013.  The existing 2009 facility was based on 2008 year-end reserves; subsequent reserve increases have significantly expanded the Company's borrowing base.Operational Update and OutlookThe average fourth quarter 2012 production to date from the Patos-Marinza oilfield in Albania was 16,100 barrels of oil per day ("bopd"), 3% higher than the third quarter average.The Company has made several improvements to address operational challenges associated with mature heavy oilfield development including interference from old well bores, sand production, and water disposal capacity. Five (5) previously drilled wells that were shut-in due to liner failure in late 2011 have been re-drilled with a lateral sidetrack through the cased section of the wellbore and a new higher grade steel liner with redesigned slot configuration for additional strength has been run in the new lateral legs. The wells were successfully completed and are currently producing at a cumulative production rate of 500 bopd (average of 100 bopd per well). Additional candidate wells are being prepared for lateral re-drilling and installation of improved tubulars with three (3) re-drill sidetracks planned for the remainder of the fourth quarter and several more in the first half of next year to restore shut-in production from similar wells that have demonstrated good production capability, but are restricted due to liner failure concerns.The Company continues to be pleased with the results of the horizontal drilling program, along with the results of lateral section re-drills initiated in the third quarter and continuing into the fourth quarter and first part of 2013.For additional information, please see an updated version of the Company's November 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 September 30 Nine months endedSeptember 30   2012 2011 2012 2011          Revenues $115,054$93,650$316,309$251,570Royalties  (23,259) (18,457) (59,627) (45,274)   91,795 75,193 256,682 206,296Unrealized gain (loss) on financial commodity contracts  (1,085) 4,998 (4,050) 2,982   90,710 80,191 252,632 209,278          Operating expenses  20,229 17,328 56,699 43,562Sales and transportation expenses  13,407 12,967 41,101 30,758General and administrative expenses  3,999 3,536 11,617 9,974Depletion and depreciation   15,644 9,591 43,388 26,983Share-based payments  1,953 2,515 7,636 9,487   55,232 45,937 160,441 120,764   35,478 34,254 92,191 88,514          Net finance expense  3,732 146 8,449 4,050          Income before income tax   31,746 34,108 83,742 84,464Deferred income tax expense  (19,472) (20,412) (52,450) (48,749)Net income for the period  12,274 13,696 31,292 35,715          Other comprehensive income (loss)          Currency translation adjustment  820 (2,626) 821 (373)Comprehensive income for the period $13,094$11,070$32,113$35,342          Basic earnings per share $0.049$0.055$0.124$0.145          Diluted earnings per share $0.048$0.054$0.123$0.140          BANKERS PETROLEUM LTD.CONSOLIDATED STATEMENTS OF FINANCIAL POSITION(Unaudited, expressed in thousands of US dollars) ASSETS       September 302012 December 312011Current assets            Cash and cash equivalents       $21,695  $49,013 Restricted cash       18,417  5,000 Accounts receivable       75,646  56,006 Inventory       11,912  14,412 Deposits and prepaid expenses       29,162  17,463 Financial commodity contracts       2  3,684        156,834  145,578Non-current assets            Financial commodity contract       3,530  - Property, plant and equipment       649,653  515,638       $810,017 $661,216 LIABILITIESCurrent liabilities           Accounts payable and accrued liabilities    $48,808  $ 52,109  Current portion of long-term debt     1,489  13,187      50,297  65,296Non-current liabilities          Long-term debt     97,016  46,692 Decommissioning obligation     15,360  13,561 Deferred tax liabilities     175,437   122,988      338,110  248,537 SHAREHOLDERS' EQUITYShare capital       332,450  318,021Warrants       -  1,540Contributed surplus       63,877  49,651Currency translation reserve       7,230  6,409Retained earnings       68,350  37,058        471,907  412,679       $810,017 $661,216          BANKERS PETROLEUM LTD.CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited, expressed in thousands of US dollars)          Three months endedSeptember 30 Nine months endedSeptember 30  2012 2011 2012 2011Cash provided by (used in):        Operating activities         Net income for the period$12,274$13,696$31,292$35,715 Depletion and depreciation 15,644 9,591 43,388 26,983 Amortization of deferred financing costs - - - 734 Accretion of long-term debt 1,239 845 3,565 1,593 Accretion of decommissioning obligation 211 115 608 309 Unrealized foreign exchange (gain) loss 328 (77) 448 1,267 Deferred income tax expense 19,472 20,412 52,450 48,749 Share-based payments 1,953 2,515 7,636 9,487 Unrealized (gain) loss on financial commodity contracts 1,085 (4,998) 4,050 (2,982) Cash premiums paid for financial commodity contracts (3,898) - (3,898) (6,588)  48,308 42,099 139,539 115,267 Change in non-cash working capital (16,153) (15,352) (28,767) (18,011)  32,155 26,747 110,772 97,256Investing activities         Additions to property, plant and equipment (53,526) (65,147) (168,859) (186,465) Restricted cash (13,417) - (13,417) (5,000) Change in non-cash working capital 736 5,095 (3,373) 15,637  (66,207) (60,052) (185,649) (175,828)Financing activities         Issue of shares for cash - 54 12,177 5,347 Financing costs - - (750) (30) Increase in long-term debt 290 6,579 36,107 14,519 Share issue costs - (167) - (167)  290 6,466 47,534 19,669Foreign exchange gain (loss) on cash and cash equivalents  160 (1,347) 25 (973)Decrease in cash and cash equivalents (33,602) (28,186) (27,318) (59,876)Cash and cash equivalents, beginning of period 55,297 74,929 49,013 106,619Cash and cash equivalents, end of period $21,695$46,743$21,695$46,743         Interest paid$253$197$1,975$1,349Interest received$43$80$321$443          BANKERS PETROLEUM LTD.CONSOLIDATED STATEMENT OF CHANGES IN EQUITY(Unaudited, expressed in thousands of US dollars, except number of common shares)  Number ofcommonshares Sharecapital Warrants Contributedsurplus Currencytranslationreserve Retainedearnings Total Balance at December 31, 2010 244,794,990$309,379$1,597$28,135  $6,094$1,062$346,267                    Share-based payments -   - - 19,166   - -  19,166Options exercised 2,721,779   8,303 - (2,956)   - -  5,347Share issue costs -   (167) - -   - -  (167)Net income for the period -   - - -   - 35,715  35,715Currency translation adjustment -   - - -   (373) -  (373)Balance at September 30, 2011 247,516,769$317,515$1,597  $44,345  $5,721$36,777 $405,955                    Share-based payments -   - - 5,319   - -  5,319Options exercised 6,667   45 - (13)   - -  32Warrants exercised 174,333   461 (57) -   - -  404Net income for the period -   - - -   - 281  281Currency translation adjustment -   - - -   688 -  688Balance at December 31, 2011 247,697,769$318,021$1,540 $49,651  $6,409$37,058 $412,679                    Share-based payments -   - - 14,938   - - 14,938Options exercised 553,945   1,833 - (719)   - - 1,114Warrants exercised 4,672,991   12,596 (1,533) -   - - 11,063Warrants expired -   - (7) 7   - - -Net income for the period -   - - -   - 31,292 31,292Currency translation adjustment -   - - -   821 - 821Balance at September 30, 2012 252,924,705$332,450$-  $63,877  $7,230$68,350$471,907                   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: Abby Badwi President and Chief Executive Officer (403) 513-2694 Doug Urch Executive VP, Finance and Chief Financial Officer (403) 513-2691 Mark Hodgson VP, Business Development (403) 513-2695 Email: investorrelations@bankerspetroleum.com Website: www.bankerspetroleum.com AIM NOMAD: Canaccord Genuity Limited Henry Fitzgerald-O'Connor +44 20 7050 8000 AIM JOINT BROKERS: Canaccord Genuity Limited Henry Fitzgerald-O'Connor +44 20 7050 8000 Macquarie Capital Advisors Paul Connolly +44 20 3037 5639