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Press release from PR Newswire

Bankers Petroleum Announces 2013 Second Quarter Financial and Operational Results

Wednesday, August 14, 2013

Bankers Petroleum Announces 2013 Second Quarter Financial and Operational Results

08:00 EDT Wednesday, August 14, 2013

Free Cash Flow of $9 Million and Q3 Average Production to Date 18,300 bopd

CALGARY, Aug. 14, 2013 /PRNewswire/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2013 second quarter financial and operational results.  During the quarter, Bankers achieved its second consecutive quarter of free cash flow and record production levels.

Results at a Glance Three months ended June 30 Six months ended June 30
($000s, except as noted) 2013 2012 % change 2013 2012 % change
Financial              
  Oil revenue 131,838 98,587 34% 264,400 201,255 31%
  Net operating income 69,142 47,252 46% 142,307 100,723 41%
  Net income 13,024 11,253 16% 27,201 19,018 43%
    Per share - basic ($) 0.05 0.04 16% 0.11 0.08 41%
    - diluted ($) 0.05 0.04 16% 0.11 0.08 43%
  Funds generated from operations 61,717 43,159 43% 127,136 91,231 39%
    Per share - basic ($) 0.24 0.17 41% 0.50 0.36 39%
  Capital expenditures 52,389 52,632 - 99,716 115,333 (14%)
Operating  
  Average sales (bopd) 18,008 14,169 27% 17,310 13,724 26%
  Average price ($/barrel) 80.45 76.46 5% 84.39 80.57 5%
  Netback ($/barrel) 42.19 36.65 15% 45.42 40.33 13%
  Average Brent oil price ($/barrel) 102.43 108.29 (5%) 107.50 113.61 (5%)
           
        June 30, 2013 December 31, 2012 June 30, 2012
Cash and deposits       33,381 38,740 60,297
Working capital       116,656 88,799 112,022
Total assets       918,034 825,816 770,829
Long-term debt       97,864 97,158 95,793
Shareholders' equity       519,507 483,032 454,752

Highlights for the quarter and six months ended June 30, 2013 are:

  • Average oil production was 17,886 barrels of oil per day (bopd) for the three months ended June 30, 2013, 6% higher than 16,919 bopd in the first quarter of 2013 and 26% higher than 14,161 bopd in the second quarter of 2012.  Average oil production for the third quarter to-date is approximately 18,300 bopd.
  • Oil sales averaged 18,008 bopd for the second quarter of 2013, an increase of 8% compared to 16,605 bopd for the previous quarter and an increase of 27% compared to 14,169 bopd for the second quarter of 2012.  For the six months ended June 30, 2013, oil sales were 17,310 bopd, an increase of 26% compared to 13,724 bopd for the comparable 2012 period.
  • For the second quarter of 2013, revenue was $132 million ($80.45/bbl) compared to $133 million ($88.70/bbl) in the previous quarter and $99 million ($76.46/bbl) in the second quarter of 2012.  Revenue for the second quarter of 2013 represented 79% of the Brent oil price of $102/bbl, compared to 79% of the Brent oil price of $113/bbl in the previous quarter and 71% of the Brent oil price of $108/bbl in the second quarter of 2012.
  • Royalties to the Albanian Government and related entities were $22 million (16% of revenue) for the second quarter of 2013 compared to $17 million (17% of revenue) for the same quarter of 2012.  Total royalties were $45 million (17% of revenue) and $36 million (18% of revenue) for the six months ended June 30, 2013 and 2012, respectively.
  • For the three and six months periods ended June 30, 2013, operating, sales and transportation costs, originating from Albanian-based companies and their employees, were $41 million and $77 million, respectively, compared to $34 million and $64 million for the comparable periods of 2012.
  • The Company recorded net operating income (netback) of $69 million ($42.19/bbl) in the second quarter of 2013, compared to $73 million ($48.96/bbl) in the previous quarter and $47 million ($36.65/bbl) in the second quarter of 2012.  Net operating income was $142 million ($45.42/bbl) for the six months ended June 30, 2013, a 41% increase compared to $101 million ($40.33/bbl) in the comparable 2012 period.
  • For the second quarter of 2013, funds generated from operations were $62 million, compared to $65 million for the previous quarter and $43 million for the same period of 2012.
  • Capital expenditures were $52 million in the second quarter of 2013.  The Company drilled 39 wells during the quarter, comprised of 35 horizontal production wells and four horizontal lateral re-drill wells in the main area of the Patos-Marinza field.  In the second quarter of 2012, capital expenditures were $53 million.
  • The Company continues to maintain a strong financial position at June 30, 2013 with cash of $33 million and working capital of $117 million.  At June 30, 2013, the Company had drawn $115 million of its $230 million approved credit facilities.  Working capital for December 31, 2012 and June 30, 2012 was $89 million and $112 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.  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.  Currently, $120 million is available and 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 separate assessment of excise tax on its importation and use of diluents.  The Courts have also ruled in favor of the Company for other cases heard, including the carbon and circulation taxes on diluent imports, which resulted in assessments to the Company totalling approximately $25 million.  The Company is now preparing to continue its defence at various levels of appeals.

Outlook  

The average third quarter 2013 production to date from the Patos-Marinza oilfield in Albania is approximately 18,300 bopd, 2% higher than the second quarter average.

The Company is pleased with performance of the horizontal drilling program which continues to yield strong results.  For the second half of 2013, the Company will continue to focus on development drilling in the North-Central areas of the Patos-Marinza field with an estimated 30 horizontal wells per quarter adding to production levels.  Two water disposal wells are planned for late in the third quarter and into the fourth quarter to provide capacity expansion for growth. In addition, two (2) to four (4) wells are projected for delineation in the outlying areas of the field in the fourth quarter.

The expansion of water flood and polymer flood patterns continues with additional wells to be converted to injection in the second half of 2013.  By year-end the Company will have three (3) water-flood patterns in the upper Marinza reservoir with up to seven (7) injectors and three (3) polymer-flood patterns in the lower Driza reservoir sands with up to six (6) injectors in place with response expected in 2014.

In the second half of 2013, the Company will ramp up spending on surface facilities including the addition of a satellite treatment facility and tank storage expansion to increase treatment capacity and construction of flow-lines to reduce trucking within the field where justified.

Drilling of two (2) wells in Kucova is projected in the fourth quarter of 2013 to test production and collect fluid and reservoir information.  In addition, existing adjacent wells are scheduled for take-over from Albpetrol for further evaluation.

"I continue to be pleased with the operational success of the company and our ability to meet or exceed our production guidance for five consecutive quarters. The Board has now approved the potential acquisition of a sixth drilling rig which, pending availability, should enable Bankers to affirm the high-end of our annual guidance.  We look forward to continued reliable, disciplined growth," said David French, President and CEO of Bankers Petroleum.

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
      2013   2012   2013   2012
                   
Revenues   $ 131,838 $ 98,587 $ 264,400 $ 201,255
Royalties     (21,673)   (17,214)   (44,991)   (36,368)
      110,165   81,373   219,409   164,887
                   
Unrealized gain (loss) on financial commodity contract     (6)   244   (1,380)   (2,965)
      110,159   81,617   218,029   161,922
                   
Operating expenses     22,291   19,038   43,445   36,470
Sales and transportation expenses           18,732   15,083   33,657   27,694
General and administrative expenses     4,513   3,508   10,468   7,618
Depletion and depreciation      24,438   14,067   47,635   27,744
Share-based payments     3,103   1,447   6,361   5,683
      73,077   53,143   141,566   105,209
      37,082   28,474   76,463   56,713
                   
Net finance expense     3,616   1,860   5,556   4,717
                   
Income before income tax     33,466   26,614   70,907   51,996
Deferred income tax expense     (20,442)   (15,361)   (43,706)   (32,978)
Net income for the period     13,024   11,253   27,201   19,018
                   
Other comprehensive income (loss)                  
  Currency translation adjustment     (510)   (505)   (862)   1
Comprehensive income for the period   $ 12,514 $ 10,748 $ 26,339 $ 19,019
                   
Basic earnings per share   $ 0.051 $ 0.044 $ 0.107 $ 0.076
                   
Diluted earnings per share   $ 0.051 $ 0.044 $ 0.107 $ 0.075

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, expressed in thousands of US dollars)
 
ASSETS
            June 30 2013   December 31 2012
Current assets                   
  Cash and cash equivalents            $ 26,272   $ 33,740
  Restricted cash             7,109    5,000
  Accounts receivable             59,399    35,603
  Inventory             34,423    23,517
  Deposits and prepaid expenses             40,215    30,265
  Financial commodity contract             170    1,550
              167,588    129,675
Non-current assets                   
  Long-term receivable             10,261    11,150
  Property, plant and equipment             735,912    681,399
  Exploration and evaluation assets             4,273    3,592
            $ 918,034  $ 825,816
 
LIABILITIES
Current liabilities                 
  Accounts payable and accrued liabilities         $ 40,022   $  38,787
  Current portion of long-term debt           10,910    2,089
            50,932    40,876
Non-current liabilities                 
  Long-term debt           97,864    97,158
  Decommissioning obligation           18,022    16,747
  Deferred tax liabilities           231,709     188,003
            398,527    342,784
 
SHAREHOLDERS' EQUITY
Share capital            337,148    334,764
Contributed surplus             77,187    69,435
Currency translation reserve             6,500    7,362
Retained earnings             98,672    71,471
              519,507    483,032
            $ 918,034  $ 825,816

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
      2013   2012   2013   2012
Cash provided by (used in):                  
Operating activities                  
Net income for the period   $ 13,024 $ 11,253 $ 27,201 $ 19,018
Depletion and depreciation     24,438   14,067   47,635   27,744
Accretion of long-term debt     829   1,199   1,978   2,326
Accretion of decommissioning obligation     250   202   491   397
Unrealized foreign exchange (gain) loss     (268)   (126)   (448)   120
Deferred income tax expense     20,442   15,361   43,706   32,978
Share-based payments     3,103   1,447   6,361   5,683
Unwinding of discount of long-term receivable     (700)   -   (1,441)   -
Revaluation loss of long-term receivable     593   -   273   -
Unrealized (gain) loss on financial commodity contract     6   (244)   1,380   2,965
      61,717   43,159   127,136   91,231
Change in long-term receivable     202   -   2,057   -
Change in non-cash working capital     (7,137)   (6,775)   (44,949)   (12,614)
      54,782   36,384   84,244   78,617
Investing activities                  
                     
Additions to property, plant and equipment     (51,842)   (51,306)   (99,035)   (113,451)
Additions to exploration and evaluation assets     (547)   (1,326)   (681)   (1,882)
Restricted cash     (2,109)   -   (2,109)   -
Change in non-cash working capital     968   (3,467)   1,532   (4,109)
      (53,530)   (56,099)   (100,293)   (119,442)
Financing activities                  
Issue of shares for cash     1,309   31   1,410   12,177
Financing costs     (1,994)   -   (1,994)   (750)
Change in long-term debt     (9,136)   2,993   9,201   35,817
      (9,821)   3,024   8,617   47,244
                     
Foreign exchange loss on cash and cash                  
equivalents     (6)   (162)   (36)   (135)
Increase (decrease) in cash and cash equivalents     (8,575)   (16,853)   (7,468)   6,284
Cash and cash equivalents, beginning of period     34,847   72,150   33,740   49,013
Cash and cash equivalents, end of period   $ 26,272 $ 55,297 $ 26,272 $ 55,297
                   
                     
Interest paid   $ 2,566 $ 1,521 $ 2,788 $ 1,722
Interest received   $ 73 $ 218 $ 118 $ 278

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 August 2013 version of the Company's corporate presentation at www.bankerspetroleum.com.

---------

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 target="_blank" href="mailto:investorrelations@bankerspetroleum.com">investorrelations@bankerspetroleum.com</a><br/> Website: <a target="_blank" 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>

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