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Press release from PR Newswire

Bankers Petroleum Announces 2013 First Quarter Financial and Operational Results

Thursday, May 09, 2013

Bankers Petroleum Announces 2013 First Quarter Financial and Operational Results

08:00 EDT Thursday, May 09, 2013

Realised Free Cash Flow and Record Production; Current Production 17,500 bopd

CALGARY, May 9, 2013 /PRNewswire/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2013 first quarter financial and operational results.  During the quarter, Bankers achieved several key milestones, including its first quarter of free cash flow and record production levels.

Results at a Glance Three months ended March 31
(US$000s, except as noted)       2013 2012 Change (%)
Oil revenue       132,562 102,668 29%
Net operating income       73,165 53,471 37%
Net income       14,177 7,765 83%
  Per share - basic ($)       0.06 0.03 81%
  - diluted       0.06 0.03 81%
Funds generated from operations       65,419 48,072 36%
  Per share - basic ($)       0.26 0.19 34%
Capital expenditures       47,327 62,701 (25%)
             
Average sales (bopd)       16,605 13,279 25%
Average price ($/barrel)       88.70 84.96 4%
Netback ($/barrel)       48.96 44.24 11%
         
        March 31, 2013  December 31, 2012  March 31, 2012
Cash and deposits       39,847 38,740 77,150
Working capital       108,497 88,799 118,989
Total assets       899,669 825,816 747,029
Long-term debt       99,488 97,158 92,009
Shareholders' equity       501,404 483,032 441,101

Highlights for the quarter ended March 31, 2013 are:

  • Average oil production was 16,919 barrels of oil per day (bopd), 5% higher than 16,168 bopd in the fourth quarter of 2012 and 20% higher than 14,119 bopd in the first quarter of 2012.  Production for the second quarter to-date is approximately 17,500 bopd.
  • Oil sales averaged 16,605 bopd for the first quarter of 2013, an increase of 25% compared to 13,279 bopd for the same period in 2012 and an increase of 4% compared to 16,033 bopd for the preceding quarter.
  • Revenue for the first quarter of 2013 increased by 14% to $133 million ($88.70/bbl) from $116 million ($78.53/bbl) in the previous quarter and by 29% from $103 million ($84.96/bbl) in the same quarter of 2012.  Revenue for the first quarter of 2013 represented 79% of the Brent oil price of $113/bbl, compared to 71% of the Brent oil price of $110/bbl in the previous quarter and 72% of the Brent oil price of $119/bbl in the first quarter of 2012.
  • Royalties to the Albanian Government and related entities were $23 million (18% of revenue) for the first quarter of 2013 compared to $19 million (19% of revenue) for the same quarter of 2012.  Total royalties for 2012 were $78 million (18% of revenue).
  • Operating, sales and transportation costs in the first quarter of 2013, originating from Albanian-based companies and their employees, were $36 million, compared to $30 million for the first quarter of 2012.
  • In the first quarter of 2013, the Company recorded net operating income (netback) of $73 million ($48.96/bbl), an increase of 37% compared to $53 million ($44.24/bbl) in the same period of 2012.  Net operating income was $59 million ($40.25/bbl) for the fourth quarter of 2012.
  • Funds generated from operations were $65 million for the first quarter of 2013, a 36% increase compared to $48 million for the first quarter of 2012, and a 23% increase from $53 million for the fourth quarter of 2012.
  • Capital expenditures in the first quarter of 2013 were $47 million.  The Company drilled 32 wells during the quarter, comprised of 31 horizontal production wells and one horizontal lateral re-drill well in the main area of the Patos-Marinza field.  Reactivation and re-completion work continued during the quarter.  In the first quarter of 2012, capital expenditures were $63 million.
  • The Company continues to maintain a strong financial position at March 31, 2013 with cash of $40 million and working capital of $108 million.  Working capital for December 31, 2012 and March 31, 2012 was $89 million and $119 million, respectively.
  • Both the International Finance Corporation (IFC) and European Bank for Reconstruction and Development (EBRD) have approved an extension of the Company's existing credit facility to September 2020, subject to final documentation.  No repayments are required until September 2017, from which time the facility amount will decrease by 25% annually.  Collectively, the revolving loan facilities will increase to $200 million from the existing $100 million.  Availability upon documentation completion will be $120 million; the additional $80 million will be available as the Company continues to maintain its proved and probable reserves base and is conditional upon Brent oil prices remaining above $70/bbl. 
  • The Company was successful in setting aside a recently introduced separate assessment of excise tax on its importation and use of diluents.  Over the past few months, the Courts have also ruled in favor of Bankers for other cases heard, including the carbon and circulation taxes on diluent imports, which resulted in recent assessments to the Company totalling approximately $21 million.  The Company is now preparing to continue its defence at various levels of appeals.

Outlook  

The average second quarter 2013 production to date from the Patos-Marinza oilfield in Albania is approximately 17,500 barrels of oil per day ("bopd"), 4% higher than the first quarter average.

The Company continues to be pleased with the results of the horizontal drilling program, along with the results of lateral section re-drills.  Improvements to drilling practices, fluid systems, well construction, and drilling pace per well has yielded good production additions from the new wells with the five drilling rig program in the central and northern areas of the Patos Marinza field.  The average drill time has improved to roughly 12 days per well improving the cost per well. Additional equipment in being reviewed for replacing existing equipment with fit for purpose, more efficient equipment to further improve performance and cost per well throughout the year and into next year.

Infrastructure expansion plans are underway for additional storage capacity, treating efficiency, and cost efficiencies in fuel and diluent usage. The third sales tank at the Central Treating Facility ("CTF") is being constructed with projected commissioning in the third quarter 2013.  Pad cascade facilities and a satellite facility are being constructed to improve remote treating prior to final stage processing to sales specification at the CTF.  Planning for the second phase of the sales pipeline is underway with application for preliminary approval pending later this year.  Expansion plans for the Petrolifera Terminal are also being reviewed to enhance storage and export capacity at the Vlore port facilities.

The Company has made several improvements over the past year to optimize production with improved down-hole pump run lives, reduced rod and tubular wear, and reduced well servicing frequency.  With the addition of automation on the wells, production monitoring will allow further improvements to well performance.

The secondary recovery testing program is underway with water injection into one pattern in the Upper Marinza reservoir zone and polymer injection into a Lower Driza reservoir.  Pending good injectivity results, the patterns will be expanded with additional injectors and the offset producers will be monitored for pressure and production responses.

Well take-overs in the Kuçova field are pending along with new well drilling to expand the water-flood pattern into the Arreza pool.  The Block "F" exploration well is ready to spud and will commence during the second quarter 2013.

CEO Message  

David French, President and CEO of Bankers Petroleum commented "I am quite pleased with our quarterly results and the operational performance of the company.  Strong production delivery and the evolution of free cash flow sets us up well for the year.  Having just returned from Albania, I come back with a clear picture of the growth opportunity before us.  We have the skills and resources to reward investors with reliable organic growth and are doing the right things to determine the timing and prize of enhanced recovery.  This is a great time in the story of Bankers." 

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31
(Unaudited, expressed in thousands of US dollars, except per share amounts)
           
              2013   2012
                   
Revenues           $ 132,562 $ 102,668
Royalties             (23,318)   (19,154)
              109,244   83,514
Unrealized loss on financial commodity contract             (1,374)   (3,209)
              107,870   80,305
                   
Operating expenses             21,154   17,432
Sales and transportation expenses             14,925   12,611
General and administrative expenses             5,955   4,110
Depletion and depreciation              23,197   13,677
Share-based payments             3,258   4,236
              68,489   52,066
              39,381   28,239
                   
Net finance expense             1,940   2,857
                   
Income before income tax             37,441   25,382
Deferred income tax expense             (23,264)   (17,617)
Net income for the period             14,177   7,765
                   
Other comprehensive income (loss)                  
  Currency translation adjustment             (352)   506
Comprehensive income for the period           $ 13,825 $ 8,271
                   
Basic earnings per share           $ 0.056 $ 0.031
                     
Diluted earnings per share           $ 0.055 $ 0.031
                   

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, expressed in thousands of US dollars)
 
ASSETS
            March 31 2013   December 31 2012
Current assets                   
  Cash and cash equivalents            $ 34,847   $ 33,740
  Restricted cash             5,000    5,000
  Accounts receivable             62,829    35,603
  Inventory             41,942    23,517
  Deposits and prepaid expenses             33,875    30,265
  Financial commodity contract             176    1,550
              178,669    129,675
Non-current assets                   
  Long-term receivable             10,356    11,150
  Property, plant and equipment             706,918    681,399
  Exploration and evaluation assets             3,726    3,592
            $ 899,669  $ 825,816
 
LIABILITIES
Current liabilities                 
   Accounts payable and accrued liabilities         $ 50,800   $  38,787
   Current portion of long-term debt           19,372    2,089
            70,172    40,876
Non-current liabilities                 
  Long-term debt           99,488    97,158
  Decommissioning obligation           17,338    16,747
  Deferred tax liabilities           211,267     188,003
            398,265    342,784
 
SHAREHOLDERS' EQUITY
Share capital              334,935    334,764
Contributed surplus             73,811    69,435
Currency translation reserve             7,010    7,362
Retained earnings             85,648    71,471
              501,404    483,032
            $ 899,669  $ 825,816
                 

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31
(Unaudited, expressed in thousands of US dollars)
         
              2013   2012
Cash provided by (used in):                  
Operating activities                  
  Net income for the period           $ 14,177 $ 7,765
  Depletion and depreciation             23,197   13,677
  Accretion of long-term debt             1,149   1,127
  Accretion of decommissioning obligation             241   195
  Unrealized foreign exchange (gain) loss             (180)   246
  Deferred income tax expense             23,264   17,617
  Share-based payments             3,258   4,236
  Unwinding of discount of long-term receivable             (741)   -
  Revaluation gain of long-term receivable             (320)   -
  Unrealized loss on financial commodity contract             1,374   3,209
              65,419   48,072
  Change in long-term receivable             1,855   -
  Change in non-cash working capital             (37,812)   (5,839)
              29,462   42,233
Investing activities                  
  Additions to property, plant and equipment             (47,193)   (62,145)
  Additions to exploration and evaluation assets             (134)   (556)
  Change in non-cash working capital             564   (642)
              (46,763)   (63,343)
Financing activities                  
  Issue of shares for cash             101   12,146
  Financing costs             -   (750)
  Increase in long-term debt             18,337   32,824
              18,438   44,220
Foreign exchange gain (loss) on cash and cash equivalents           (30)   27
Increase in cash and cash equivalents             1,107   23,137
Cash and cash equivalents, beginning of period             33,740   49,013
Cash and cash equivalents, end of period           $ 34,847 $ 72,150
                   
Interest paid           $ 222 $ 201
Interest received           $ 45 $ 60
                   

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, 2011 247,697,769 $ 318,021 $ 1,540 $ 49,651   $ 6,409 $ 37,058   $ 412,679
                                
Share-based payments -     -   -   8,005     -   -    8,005
Options exercised 530,612     1,781   -   (698)     -   -    1,083
Warrants exercised 4,672,991     12,596   (1,533)   -     -   -    11,063
Warrants expired -     -   (7)   7     -   -    -
Net income for the period -     -   -   -     -   7,765    7,765
Currency translation adjustment -     -   -   -     506   -    506
Balance at March 31, 2012 252,901,372   $ 332,398 $ - $ 56,965   $ 6,915 $ 44,823   $ 441,101
                                
Share-based payments -     -   -   13,427     -   -    13,427
Options exercised 927,278     2,366   -   (957)     -   -    1,409
Net income for the period -     -   -   -     -   26,648    26,648
Currency translation adjustment -     -   -   -     447   -    447
Balance at December 31, 2012 253,828,650  $ 334,764 $ - $ 69,435   $ 7,362 $ 71,471   $ 483,032
                                
Share-based payments -     -   -   4,446     -   -   4,446
Options exercised 43,334     171   -   (70)     -   -   101
Net income for the period -     -   -   -     -   14,177   14,177
Currency translation adjustment -     -   -   -     (352)   -   (352)
Balance at March 31, 2013 253,871,984    $ 334,935 $ - $ 73,811   $ 7,010 $ 85,648 $ 501,404

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.

Updated Corporate Presentation

For additional information on this operational update, please see the May 2013 version of the Company's corporate presentation at www.bankerspetroleum.com.

Annual General Special Meeting

Bankers Petroleum invites all shareholders to attend its Annual General Special Meeting to be held on Tuesday, May 21 at The Metropolitan Centre, Calgary Alberta. This years' meeting will be held in the Travoli room at 3:00 pm (MST).

---------

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> David French  <br/> President and Chief Executive Officer    <br/> (403) 513-6930 </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 20 7050 6500 </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>

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