Bankers Petroleum Announces 2013 Financial Results

$45 Million Free Cash Flow and 23% Increase in Oil Sales

CALGARY, March 13, 2014 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK) (AIM: BNK) is pleased to provide its 2013 financial results.

In 2013, Bankers attained several key accomplishments including its first year of free cash flow, record oil production and sales.  The Company invested $234 million in capital expenditures during 2013. All amounts listed below are in US dollars unless otherwise stated.

               
Results at a Glance              
               
($000s, except as noted)     Year ended December 31
Results at a Glance     2013   2012   2011
Financial              
  Oil revenue     566,386   432,138   339,918
  Net operating income     316,558   218,246   169,653
  Net income     61,743   34,413   35,996
    Per share - basic (US$)     0.24   0.14   0.15
      - diluted (US$)     0.24   0.14   0.14
  Funds generated from operations     279,601   192,589   147,940
    Per share - basic (US$)     1.10   0.76   0.60
  Capital expenditures     234,243   222,663   242,754
Operating              
  Average sales (bopd)     18,173   14,808   12,784
  Average Brent oil price ($/barrel)     108.66   111.67   111.26
  Average realized price ($/barrel)     85.39   79.73   72.84
  Netback ($/barrel)     47.73   40.27   36.36
               
      December 31
      2013   2012   2011
Cash and deposits     31,706   38,740   54,013
Working capital     134,094   88,799   80,282
Total assets     1,007,148   825,816   661,216
Long-term debt     98,150   97,158   46,692
Shareholders' equity     564,675   483,032   412,679

Highlights

Bankers made several key financial and operational achievements during 2013:

Financial Highlights

  • In 2013, revenue increased by 31% to $566 million ($85.39/bbl) from $432 million ($79.73/bbl) in 2012.  Field price realization represented 79% of the Brent oil benchmark price ($108.66/bbl) as compared to 71% of the Brent price ($111.67/bbl) in 2012.
  • Royalties to the Albanian Government and related entities were $94 million (17% of revenue) compared to $78 million (18% of revenue) for 2012.
  • Funds generated from operations were $280 million, a 45% increase compared to $193 million for 2012.  2013 represents the first year that funds generated from operations exceeded annual capital expenditures of $234 million.
  • The Company continues to maintain a strong financial position at December 31, 2013 with cash of $32 million and working capital of $134 million.  Cash and working capital at December 31, 2012 was $39 million and $89 million, respectively.
  • In May 2013, both the International Finance Corporation (IFC) and European Bank for Reconstruction and Development (EBRD) 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 have increased to $200 million from $100 million at year-end 2012.
  • In July 2013, the Company entered into financial commodity contracts representing 6,000 bopd at a floor price of $80/bbl Brent for 2014.

Primary Drilling Program Highlights

  • Average oil production from the Patos-Marinza oilfield was 18,169 barrels of oil per day (bopd) in 2013, 21% higher than the 2012 average production of 15,020 bopd.  Average oil production for the first quarter of 2014 to-date is approximately 19,800 bopd.
  • Oil sales averaged 18,173 bopd compared to 14,808 bopd in 2012, an increase of 23%, primarily as a result of the Company's ongoing horizontal drilling and recompletion programs, focused on bringing high productivity wells on stream.
  • Capital expenditures were $234 million compared to $223 million in 2012.  A total of 146 wells were drilled, including 135 horizontal production wells and 10 lateral re-drills in the Patos-Marinza field, plus one exploration well in Block "F".  A total of 128 wells were drilled in 2012.

Expansion of Product Margin Highlights

  • Operating and sales and transportation costs, originating from Albanian-based companies and their employees, were $156 million ($23.44/bbl) compared to $136 million for 2012 ($25.00/bbl).
  • For the year ended December 31, 2013, the Company recorded net operating income (netback) of $317 million ($47.73/bbl), an increase of 45% compared to $218 million ($40.27/bbl) in 2012.
  • The average realized price in 2013 for Patos-Marinza crude oil was 79% of the Brent oil benchmark, an increase of 11% over the 2012 oil price of 71% of Brent.
  • The Company continued to focus on key infrastructure projects aimed at reducing cost and optimizing operations in the field, including maintenance turnaround of major treating facilities.  Several cascade tank systems on individual well pads have been completed and both a new sludge handling and satellite treating facility are in the final stages of construction and will commence operation in 2014.  Additional work on flow-lines, sour treatment facilities and cascade systems continue.  Optimization of the treating process has significantly reduced the diluent blend and has improved the sales specification of the crude oil.
  • The technical review, including route selection, surface land access and social and environmental impact assessments for the second phase of the crude oil pipeline from the Fier Hub to the export terminal at Vlore is underway.  Expansion of the Petrolifera Italo Albanese (PIA) Vlore Terminal is under design for additional storage and shipping channel dredging.

Other Highlights in 2013 

  • In 2013, Bankers invested $6 million in environmental and social initiatives; the Company has invested over $20 million in environmental and social initiatives since 2009.
  • The Oil Initially in Place (OIIP) resource assessment in Albania at year-end was 5.4 billion barrels, consistent with the OIIP at the end of 2012.  Reserves on a proved basis were 147 million barrels, 5% higher than 139 million barrels at year-end 2012.  On a proved plus probable basis, reserves were 232 million barrels, an increase of 3% compared to 226 million barrels at year-end 2012.  The corresponding net present value (NPV) after tax (discounted at 10%) of the proved plus probable reserves increased by 20% to $2.2 billion at year-end compared to $1.9 billion in 2012.
  • The Company continues Enhanced Oil Recovery (EOR) techniques, monitoring and expanding on its water flood and polymer flood patterns.  Initial production response in the Lower Driza (D5 reservoir sand) is expected in the first half of 2014, as the first two polymer injectors commenced in this zone early 2013.  Injection performance has been maintained at target rates with no premature breakthrough of fluids to offset producers, which is indicative of good reservoir conformance.  Reservoir pressure is rising and is following current projection models.  During 2013, Bankers implemented three water flood injectors in the Upper Marinza and five polymer flood injectors in three separate Lower Driza reservoir sands in the core area of the Patos-Marinza field.  Further plans to convert up to 14 additional wells for polymer and water injection are underway in 2014.
  • Block "F" contains several seismically defined structural and amplitude anomalies prospective for oil and natural gas.  The second exploration well was drilled in 2013, completing the Company's two well obligation on the block.  The well reached a total depth of 2,776 meters, however petrophysical and geological information indicated that the well did not encounter any hydrocarbon bearing zones that would merit testing and was suspended.  Technical evaluation of the block will continue and Bankers is reviewing several other prospects including a 3D seismic program in 2014.

Appointment of David French to the Board of Directors

Bankers is pleased to announce the appointment of David French, President and Chief Executive Officer (CEO) of Bankers Petroleum, to its Board of Directors, effective immediately.

Mr. French joined Bankers as President and CEO a year ago and has led the Company to reach several milestones in that time, including record production, free cash flow and operational efficiency improvements. Mr. French continues to lead the Company with a disciplined approach to delivering consistent, reliable growth to its shareholders.

Robert Cross, Chairman of the Board commented "Mr. French's wide range of international oil and gas experience and direct insight into the Company will be a valuable asset to the Board.  His strong leadership skills and relationships in the investment community will continue to have a positive and driving influence on the performance of the Company for many years to come".

First Quarter Operational Update

First quarter 2014 year-to-date average production is 19,800 bopd.  Bankers intends to issue the first quarter 2014 operational update and host a conference call on Tuesday, April 8, 2014.

Outlook

The Company's capital program in 2014 will be $313 million, funded from projected cash flow and existing cash based on an average $100 per barrel Brent oil price. The work program and budget will include the following:

  • Drilling of 150 - 170 horizontal and vertical wells with 80 - 90% of the wells focused on increasing production and 10 - 20% focused on delineation and data collection for improved development and recovery performance in the Patos-Marinza oilfield.
  • Expansion of the water flood and polymer flood programs with the addition of up to 14 conversions as well as testing and evaluation of the existing patterns implemented in 2013.
  • Continued focus on operational efficiencies in the field to expand product margins including gas gathering, emulsion flow-lines, satellite treating facilities, storage tanks, and field electrification.
  • Continued management of offset existing wellbores for observation, water control, and suspension as well as expanding the water disposal system to manage the increased development.
  • Planning and design of sales infrastructure expansion on the second phase crude oil pipeline from the Fier Hub facilities to the Vlore Port and increased storage and shipping channel dredging at the port.
  • Drilling of two horizontal wells at the Kuçova oilfield and reactivation of existing vertical wells.
  • Acquisition of 100 km2 of 3D seismic with 20 km2 on Block "F" to further evaluate prospects as part of the second exploration phase on the block and 80 km2 in the central and northern region of the Patos-Marinza field to further determine the deeper and extension potential of the field.
  • Investment of $7 million on environmental remediation and social initiatives as part of a sustained long-term effort to improve the physical environment, along with training programs and other community initiatives for the residents near the Company's 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)
           
      2013   2012
           
Revenues   $ 566,386 $ 432,138
Royalties     (94,294)   (78,361)
      472,092   353,777
Realized loss on financial commodity contracts     (3,898)   (6,588)
Unrealized gain (loss) on financial commodity contracts     (1,555)   556
      466,639   347,745
           
Operating expenses     88,510   77,953
Sales and transportation expenses     67,024   57,578
General and administrative expenses     21,363   16,050
Depletion and depreciation      99,554   65,937
Share-based compensation     11,527   11,205
      287,978   228,723
      178,661   119,022
           
Net finance expense     18,712   19,594
           
Income before income tax     159,949   99,428
Deferred income tax expense     (98,206)   (65,015)
Net income for the year     61,743   34,413
           
Other comprehensive income (loss)          
Currency translation adjustment     (1,017)   953
Comprehensive income for the year   $ 60,726 $ 35,366
           
Basic earnings per share   $ 0.243 $ 0.136
           
Diluted earnings per share   $ 0.241 $ 0.136
           

 
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31
(Expressed in thousands of US dollars)
 
ASSETS
        2013     2012
Current assets              
  Cash and cash equivalents      $ 24,597   $ 33,740
  Restricted cash       7,109     5,000
  Accounts receivable       53,981     35,603
  Inventory       38,025      23,517
  Deposits and prepaid expenses       44,956      30,265
  Financial commodity contracts       734     1,550
        169,402     129,675
Non-current assets               
  Long-term receivable       7,019     11,150
  Property, plant and equipment       823,908     681,399
  Exploration and evaluation assets       6,819     3,592
      $ 1,007,148   $ 825,816
 
LIABILITIES
Current liabilities               
  Accounts payable and accrued liabilities     $ 33,812   $ 38,787
  Current portion of long-term debt       1,496     2,089
        35,308     40,876
Non-current liabilities              
  Long-term debt       98,150     97,158
  Decommissioning obligation       22,806     16,747
  Deferred tax liabilities       286,209     188,003
        442,473     342,784
 
SHAREHOLDERS' EQUITY
Share capital       340,305     334,764
Contributed surplus       84,811     69,435
Currency translation reserve       6,345     7,362
Retained earnings       133,214     71,471
        564,675     483,032
      $ 1,007,148   $ 825,816
               

             
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
(Expressed in thousands of US dollars)
               
      2013     2012
Cash provided by (used in):              
Operating activities              
  Net income for the year     $ 61,743   $ 34,413
  Depletion and depreciation       99,554     65,937
  Accretion of long-term debt       2,805     4,791
  Accretion of decommissioning obligation       1,019     829
  Unrealized foreign exchange (gain) loss       (756)     636
  Deferred income tax expense       98,206     65,015
  Share-based compensation       11,527     11,205
  Discount and revaluation of long-term receivable       4,687     7,629
  Realized loss on financial commodity contracts       3,898     6,588
  Unrealized (gain) loss on financial commodity contracts       1,555     (556)
  Cash premiums paid for financial commodity contracts       (4,637)     (3,898)
        279,601     192,589
  Change in long-term receivable       (556)     (18,779)
  Change in non-cash working capital       (54,403)     (12,064)
        224,642     161,746
Investing activities              
  Additions to property, plant and equipment       (231,016)     (220,525)
  Additions to exploration and evaluation assets       (3,227)     (2,138)
  Restricted cash       (2,109)     -
  Change in non-cash working capital       1,851     (2,762)
        (234,501)     (225,425)
Financing activities              
  Issue of shares for cash       3,332     13,555
  Financing costs       (1,994)     (750)
  Change in long-term debt       (813)     35,537
        525     48,342
Foreign exchange gain on cash and cash equivalents       191     64
Decrease in cash and cash equivalents       (9,143)     (15,273)
Cash and cash equivalents, beginning of year       33,740     49,013
Cash and cash equivalents, end of year     $ 24,597   $ 33,740
               
Interest paid     $ 5,811   $ 4,788
Interest received     $ 159   $ 438
                 
             

 
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, 2011   247,697,769   $ 318,021   $ 1,540   $ 49,651   $ 6,409   $ 37,058 $ 412,679
                                       
Share-based compensation   -     -     -     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
                                       
Share-based compensation   -     -     -     17,585     -     -   17,585
Options exercised   1,853,261     5,541     -     (2,209)     -     -   3,332
Net income for the year   -     -     -     -     -     61,743   61,743
Currency translation adjustment   -     -     -     -     (1,017)     -   (1,017)
                                       
Balance at December 31, 2013   255,681,911     $ 340,305     $ -   $ 84,811   $ 6,345   $ 133,214 $ 564,675
                                       
                                       

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.

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, 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:

David French
President and Chief Executive Officer
(403) 513-6930

Doug Urch
Executive VP, Finance and Chief Financial Officer
(403) 513-2691

Laura Bechtel
Investor Relations Analyst
(403) 513-3428

Email: investorrelations@bankerspetroleum.com
Website: www.bankerspetroleum.com

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