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Press release from PR Newswire

Bankers Petroleum announces 2012 financial results

Friday, March 15, 2013

Bankers Petroleum announces 2012 financial results08:00 EDT Friday, March 15, 2013 16% increase in Oil Sales and 30% increase in Cash Flow CALGARY, March 15, 2013 /PRNewswire/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK) (AIM: BNK) is pleased to provide its 2012 Financial Results. In 2012, Bankers accomplished several key achievements including record production and cash flow.  The Company also invested $222.7 million in capital expenditures during 2012.             Results at a Glance (US$000, except as noted)             Year ended December 31     2012   2011     Change (%)  Oil revenue 432,138   339,918     27 Net operating income 218,246   169,653     29 Net income 34,413   35,996     (4)   Per share - basic ($) 0.136   0.146     (7)           - diluted ($) 0.136   0.141     (4) Funds generated from operations 192,589   147,940     30   Per share - basic ($) 0.763   0.559     36 Capital expenditures 222,663   242,754     (8)               Average sales (bopd) 14,808   12,784     16 Average price ($/barrel) 79.73   72.84     9 Netback ($/barrel) 40.27   36.36     11                    December 31       2012       2011 Cash and deposits   38,740       54,013 Working capital   88,799       80,282 Total assets   825,816       661,216 Long-term debt   97,158       46,692 Shareholders' equity   483,032       412,679           2012 Highlights: Average oil production was 15,020 barrels of oil per day (bopd) 15% higher than 2011 average production of 13,051 bopd. Oil sales averaged 14,808 bopd, compared to 12,784 bopd in 2011, an increase of 16%, primarily as a result of the Company's ongoing horizontal drilling program along with continuation of well reactivations. Revenue increased by 27% to $432.1 million ($79.73/bbl) from $339.9 million ($72.84/bbl) in 2011.  Field price realization represented 71% of the Brent oil price ($112/bbl) as compared to 65% of the Brent price ($111/bbl) in 2011. Royalties to the Albanian Government and related entities were $78.4 million, 23% higher than $63.9 million for 2011. Operating and sales and transportation costs, originating from Albanian-based companies and their employees, were $135.5 million, compared with $106.3 million for 2011. The Company recorded net operating income (netback) of $218.2 million ($40.27/bbl), an increase of 29% compared to $169.7 million ($36.36/bbl) in 2011. Funds generated from operations were $192.6 million, a 30% increase compared to $147.9 million for 2011.  The fourth quarter of 2012 represents the first time that funds generated from operations of $53.0 million, nearly covered capital expenditures of $53.8 million. The Original Oil in Place (OOIP) resource assessment in Albania at year-end was 5.4 billion barrels compared to 8.0 billion barrels in 2011.  Reserves on a proved basis were 139.4 million barrels compared to 172.4 million barrels in 2011.  On a proved plus probable basis, reserves were 225.7 million barrels compared to 267.1 million barrels in 2011.  The corresponding net present value (NPV) after tax (discounted at 10%) of the proved plus probable reserves was $1.9 billion at year-end compared to $2.0 billion in 2011. Capital expenditures were $222.7 million compared to $242.8 million in 2011.  A total of 128 wells were drilled, including 112 horizontal production wells, seven lateral re-drills, four vertical core delineation wells, and four water disposal wells in the Patos-Marinza field, plus one exploration well in Block "F".  In 2011, 84 total wells were drilled. Several Patos-Marinza crude oil sales agreements, representing the majority of the export volumes for 2013 are priced at an average of 80% of the Brent oil benchmark, an increase of 14% over the 2012 oil price of 71% of Brent oil. Data collection and analysis for secondary and enhanced recovery planning continued in 2012 with the objective to identify the most suitable reservoir layers and areas of the field to initiate water flood, polymer flood and enhanced oil recovery programs, starting in 2013. With data collected from the first thermal pilot and additional information including special core analysis of the expanded 2012 coring program, prospect areas are being selected and evaluated to design a second thermal pilot. Block "F" contains several seismically defined structural and amplitude anomalies prospective for oil and natural gas.  The first exploration well was drilled in 2012 and the second exploration location has been selected and site construction is underway and this well is expected to spud in the second quarter of 2013. The central treatment facility (CTF) is being expanded with construction of third crude oil sales tank to increase storage capacity and improve operational flexibility in the Patos-Marinza field. Planning and construction for a new satellite facility in the north-central area of the field is also underway for scheduled completion in the third quarter of 2013.  This facility, along with additional cascade treating facilities and in-field flow-lines, will improve crude oil treating performance in the field. Planning and application to gain preliminary approvals for the second phase of the crude oil sales pipeline, extending 35 kilometer from Fier to the export terminal at Vlore, is underway and will continue through 2013. Environmental legacy clean-up as part of the water control program continues to improve the condition of the oilfield and demonstrate improvement in oil rates and reduced water-cuts in wells and areas affected by water influx issues.  Over 220 existing wells were isolated in 2012. The Company has initiated design and construction of a commercial scale sludge treatment operation to help reclaim oil from the sludge on old leases and from ecological pits in the production area as part of on-going lease clean-up activities. The Company continues to maintain a strong financial position at December 31, 2012 with cash of $38.7 million and working capital of $88.8 million.  Cash and working capital for December 31, 2011 was $54.0 million and $80.3 million, respectively. The Company is in the final approval stages regarding its credit facility expansion with the International Finance Corporation (IFC) and European Bank for Reconstruction and Development (EBRD), its existing reserve-based lenders.  It is expected that the new credit facility will envelope the existing $110 million facility, resulting in a new facility having similar terms as the original.  The original 2009 facility had a six-year term with repayments scheduled in the latter three years. In August 2012, the Company entered into a financial commodity contract representing 4,000 bopd at a floor price of $80/bbl Brent for 2013. The Company continues to challenge assessments from the Albanian Government Tax Directorate through the Albanian Courts.  In addition to the success in setting aside a recently introduced separate assessment of excise tax on the Company's importation and use of diluent, over the past few months, the Courts have ruled in favor of Bankers for all other cases heard, including the carbon and circulation taxes on diluent imports, which resulted in recent assessments to the Company totalling over $17 million.  The Company is now preparing to continue its defense from various levels of appeals. Operational Update First quarter 2013 year-to-date average production is 16,850 bopd.  Bankers intends to issue the first quarter 2013 operational update and host conference call on Friday, April 5, 2013. Outlook The Company's capital program in 2013 will be $247 million, fully funded from projected cash flow based on an average $102.50 Brent oil price. The work program and budget will include the following: Drilling of approximately 120 horizontal and vertical wells with 70-80% of the wells focused on increasing production and 20-30% focused on data collection for improved secondary and tertiary recovery techniques in the Patos-Marinza oilfield. Continuing the water control and environmental clean-up program with over 200 legacy vertical well isolations to improve new well performance and expanding water disposal capacity with additional wells. Initiating water flood and polymer flood operations and drilling additional core wells for assessing future thermal development plans. Progressing with social and environmental impact assessments and preliminary approvals for construction of the 35 kilometer second phase of the 70,000 bopd crude oil sales pipeline from the Fier Hub to the Vlore export terminal. Drilling new wells and expanding water flood activities at the Kuçova oilfield. Drilling an exploration well on Block "F" and identification of further prospects. Continuing with the environmental stewardship and social initiatives in our area of operations. 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.   BANKERS PETROLEUM LTD. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31 (Expressed in thousands of US dollars, except per share amounts)     2012   2011   Revenues $ 432,138 $ 339,918 Royalties (78,361)   (63,941) 353,777   275,977 Realized loss on financial commodity contracts (6,588)   - Unrealized gain (loss) on financial commodity contracts     556     (2,904)       347,745     273,073               Operating expenses 77,953   60,864 Sales and transportation expenses 57,578   45,460 General and administrative expenses 16,050   13,773 Depletion and depreciation   65,937   40,367 Share-based payments 11,205   11,041 228,723   171,505       119,022     101,568     Net finance expense 19,594   6,223     Income before income tax   99,428     95,345 Deferred income tax expense (65,015)   (59,349) Net income for the year 34,413   35,996   Other comprehensive income     Currency translation adjustment     953     315 Comprehensive income for the year   $ 35,366   $ 36,311       Basic earnings per share   $ 0.136   0.146               Diluted earnings per share $ 0.136   $ 0.141                 BANKERS PETROLEUM LTD. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT DECEMBER 31 (Expressed in thousands of US dollars)   ASSETS 2012   2011 Current assets         Cash and cash equivalents $ 33,740   $ 49,013 Restricted cash 5,000   5,000   Accounts receivable 35,603   56,006   Inventory 23,517     14,412   Deposits and prepaid expenses 30,265     17,463   Financial commodity contracts 1,550     3,684   129,675     145,578 Non-current assets       Long-term receivable 11,150     - Property, plant and equipment   681,399   514,184 Exploration and evaluation assets   3,592     1,454   $ 825,816   $ 661,216     LIABILITIES   Current liabilities           Accounts payable and accrued liabilities $ 38,787    $ 52,109 Current portion of long-term debt   2,089     13,187   40,876     65,296 Non-current liabilities           Long-term debt   97,158     46,692 Decommissioning obligation   16,747     13,561 Deferred tax liabilities   188,003     122,988     342,784     248,537   SHAREHOLDERS' EQUITY     Share capital 334,764     318,021 Warrants   -     1,540 Contributed surplus 69,435     49,651 Currency translation reserve   7,362     6,409 Retained earnings   71,471     37,058     483,032     412,679 $ 825,816   $ 661,216               BANKERS PETROLEUM LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31 (Expressed in thousands of US dollars)                   2012     2011 Cash provided by (used in):               Operating activities                 Net income for the year     $ 34,413   $ 35,996   Depletion and depreciation       65,937     40,367   Amortization of deferred financing costs       -     734   Accretion of long-term debt       4,791     2,555   Accretion of decommissioning obligation       829     460   Unrealized foreign exchange loss       636     1,122   Deferred income tax expense       65,015     59,349   Share-based payments       11,205     11,041   Discount of long-term receivable       7,629     -   Realized loss on financial commodity contracts       6,588     -   Unrealized (gain) loss on financial commodity contracts       (556)     2,904   Cash premiums paid for financial commodity contracts       (3,898)     (6,588)         192,589     147,940   Change in long-term receivable       (18,779)     -   Change in non-cash working capital       (12,064)     (15,743)         161,746     132,197 Investing activities                 Additions to property, plant and equipment       (220,525)     (241,300)   Additions to exploration and evaluation assets       (2,138)     (1,454)   Restricted cash       -     (3,500)   Change in non-cash working capital       (2,762)     6,786         (225,425)     (239,468) Financing activities                 Issue of shares for cash       13,555     5,783   Financing costs       (750)     (30)   Increase in long-term debt       35,537     44,543   Share issue costs       -     (167)         48,342     50,129 Foreign exchange gain (loss) on cash and cash equivalents       64     (464) Decrease in cash and cash equivalents       (15,273)     (57,606) Cash and cash equivalents, beginning of year       49,013     106,619 Cash and cash equivalents, end of year     $ 33,740   $ 49,013                 Interest paid     $ 4,788   $ 2,362 Interest received     $ 438   $ 574                   BANKERS PETROLEUM LTD. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (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   -     -     -     24,485     -     -     24,485 Options exercised   2,728,446     8,348     -     (2,969)     -     -     5,379 Warrants exercised   174,333     461     (57)     -     -     -     404 Share issue costs   -     (167)     -     -   -       -     (167) Net income for the year   -     -     -     -   -       35,996     35,996 Currency translation adjustment   -     -     -     -     315     -     315 Balance at December 31, 2011   247,697,769   $ 318,021   $ 1,540   $ 49,651   $ 6,409   $ 37,058   $ 412,679                                           Share-based payments   -     -     -     21,432     -     -     21,432 Options exercised   1,457,890     4,147     -     (1,655)     -     -     2,492 Warrants exercised   4,672,991     12,596     (1,533)     -     -     -     11,063 Warrants expired   -     -     (7)     7     -     -     - Net income for the year   -     -     -     -     -     34,413     34,413 Currency translation adjustment   -     -     -     -     953     -     953 Balance at December 31, 2012   253,828,650   $ 334,764   $ -   $ 69,435   $ 7,362   $ 71,471   $ 483,032                                           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 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 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. Review by Qualified Person This release was reviewed by Suneel Gupta, Executive Vice President and COO 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 petroleum 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. SOURCE Bankers Petroleum Ltd.For further information: <p> Abby Badwi<br/> President and Chief Executive Officer<br/> (403) 513-2694 </p> <p> Doug Urch<br/> Executive VP, Finance and Chief Financial Officer<br/> (403) 513-2691 </p> <p> Mark Hodgson<br/> VP, Business Development<br/> (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> <i><b>AIM NOMAD:</b></i><br/> Canaccord Genuity Limited<br/> Henry Fitzgerald-O'Connor<br/> +44 0 207 523 8000 </p> <p> <i><b>AIM BROKER:</b></i><br/> FirstEnergy Capital LLP<br/> Hugh Sanderson / David van Erp<br/> +44 0 207 448 0200 </p>