Bankers Petroleum Announces 2014 First Quarter Financial and Operational Results

Record High Netback of $55.75/bbl and Q2 Average Production to Date 20,150 bopd

CALGARY, May 8, 2014 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2014 first quarter financial and operational results.

During the quarter Bankers achieved record high netbacks of $55.75 per barrel, and free cash flow of $23 million. All amounts listed below are in US dollars unless otherwise stated.

Results at a Glance       Three months ended March 31
($000s, except as noted)       2014   2013   % change
Financial                
   Oil revenue       144,985   132,562   9%
   Net operating income       92,491   73,165   26%
   Net income       24,992   14,177   76%
    Basic and diluted ($/share)       0.10   0.06   73%
   Funds generated from operations       83,109   65,419   27%
    Basic ($/share)       0.32   0.26   23%
   Capital expenditures       59,865   47,327   26%
Operating                
  Average production (bopd)       19,911   16,919   18%
   Average sales (bopd)       18,435   16,605   11%
   Average Brent oil price ($/barrel)       108.21   112.57   (4%)
   Average realized price ($/barrel)       87.39   88.70   (1%)
   Netback ($/barrel)       55.75   48.96   14%
                 
                 
        March 31, 2014   December 31, 2013   March 31, 2013
Cash and restricted cash       56,172   31,706   39,847
Working capital       160,346   134,094   108,497
Total assets       1,077,580   1,007,148   899,669
Long-term debt       98,374   98,150   99,488
Shareholders' equity       595,918   564,675   501,404

Highlights for the quarter ended March 31, 2014 are:

Primary Drilling Program Highlights:

  • Average oil production for the three months ended March 31, 2014 was 19,911 barrels of oil per day (bopd), 3% higher as compared to 19,303 bopd in the previous quarter and 18% higher than 16,919 bopd in the first quarter of 2013.

  • For the first quarter of 2014, oil sales averaged 18,435 bopd compared to 19,710 bopd for the previous quarter and 16,605 bopd for the first quarter of 2013.  Due to marine weather conditions, an export scheduled at the end of March was delayed until early April resulting in crude oil inventory increasing by 43% to 444,000 barrels at March 31, 2014.

  • Capital expenditures were $60 million in the first quarter of 2014.  The Company drilled 34 wells during the quarter, comprised of 29 horizontal production wells, three horizontal lateral re-drill wells and two water disposal wells in the main area of the Patos-Marinza oilfield.  Capital expenditures were $68 million and $47 million for the previous quarter and the first quarter of 2013, respectively.

Expansion of Product Margin Highlights:

  • For the three months ended March 31, 2014, operating, sales and transportation costs, originating from Albanian-based companies and their employees, were $31 million ($18.41/bbl) as compared to $39 million ($21.59/bbl) for the preceding quarter and $36 million ($24.14/bbl) for the first quarter of 2013.

  • Net operating income (netback) in the first quarter of 2014 and the fourth quarter of 2013 remained consistent at $92 million, however, on a per barrel basis, increased 10% to $55.75/bbl from $50.48/bbl.  Compared to the first quarter of 2013, net operating income for the first quarter of 2014 increased 26% from $73 million ($48.96/bbl).

Financial Highlights:

  • Revenue for the first quarter of 2014 was $145 million ($87.39/bbl) compared to $155 million ($85.66/bbl) in the previous quarter and $133 million ($88.70/bbl) in the first quarter of 2013.  Field price realization represented 81% of the Brent oil benchmark price ($108.21/bbl) for the first quarter of 2014 compared to 78% of the Brent oil price ($109.24/bbl) in the previous quarter and 79% of the Brent oil price ($112.57/bbl) in the first quarter of 2013.

  • For the first quarter of 2014, royalties to the Albanian Government and related entities were $22 million (15% of revenue) as compared to $25 million (16% of revenue) in the previous quarter and $23 million (18% of revenue) for the first quarter of 2013.

  • Funds generated from operations for the first quarter of 2014 were $83 million, a 2% increase compared to $81 million for the previous quarter and a 27% increase compared to $65 million for the first quarter of 2013.

  • The Company continues to maintain a strong financial position at March 31, 2014, with cash of $56 million and working capital of $160 million.  At March 31, 2014, the Company had drawn $105 million of its $225 million approved credit facilities.  Working capital for December 31, 2013 and March 31, 2013 was $134 million and $108 million, respectively.

Outlook

The Company continues to execute on its three part strategy to deliver steady and reliable growth through the primary drilling program, expanding its product margin through surface-level improvements and validating the potential of polymer and water flood in the field.

The second quarter 2014 quarter-to-date average production is 20,150 bopd from the Patos-Marinza oilfield in Albania, 1.2% higher than the first quarter average of 19,911 bopd.  Focus in April has been development drilling in the centre of the field with more wells per pad, leading to a deferral of some production to the latter half of the quarter. The Company expects overall production growth for the second quarter to be consistent with guidance.

All six drilling rigs are active in the main area of the oilfield.  In the second quarter, the Company will drill an estimated thirty-nine (39) horizontal production wells and commence operation of both the third satellite facility and the sludge treatment facility. Other infrastructure projects include additional flow lines to reduce infield trucking, new well-pad cascade treating facilities and construction of the new equipment warehouse.

Bankers will continue to expand on the polymer and water flood program as planned with up to five (5) additional well conversions to injection in the second quarter.  Early-stage results of the first few patterns will be shared with the investment community in June.

Effective April 1, 2014, excise tax becomes effective pursuant to the fiscal changes proposed by the Government of Albania at the end of 2013.  Based on the current diluent blend rate and diesel usage, the expected financial impact will add approximately $5.00/bbl to the operating and sales and transportation costs.  Mitigation discussions are ongoing with the Government as to how such current costs will be reflected in cost recovery and offset within the profit tax framework.

The Company intends to issue the second quarter 2014 operational update and host a conference call on Tuesday, July 8, 2014.

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 THREE MONTHS ENDED MARCH 31
(Unaudited, expressed in thousands of US dollars, except per share amounts)
           
              2014   2013
                   
Revenues           $ 144,985 $ 132,562
Royalties             (21,948)   (23,318)
              123,037   109,244
Unrealized loss on financial commodity contracts             (465)   (1,374)
              122,572   107,870
                   
Operating expenses             20,170   21,154
Sales and transportation expenses             10,376   14,925
General and administrative expenses             6,044   5,955
Depletion and depreciation              26,693   23,197
Share-based compensation             1,468   3,258
              64,751   68,489
              57,821   39,381
                   
Net finance expense             (3,813)   (1,940)
                   
Income before income tax             54,008   37,441
Deferred income tax expense             (29,016)   (23,264)
Net income for the period             24,992   14,177
                   
Other comprehensive loss                  
Currency translation adjustment             (234)   (352)
Comprehensive income for the period           $ 24,758 $ 13,825
                   
Basic earnings per share           $ 0.097 $ 0.056
Diluted earnings per share           $ 0.095 $ 0.055
                   

 
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, expressed in thousands of US dollars)
 
ASSETS
            March 31
2014
  December 31
2013
Current assets                   
  Cash and cash equivalents            $ 51,172     $ 24,597
  Restricted cash             5,000    7,109
  Accounts receivable             66,966    53,981
  Inventory             26,068    38,025
  Deposits and prepaid expenses             56,386    44,956
  Financial commodity contracts             269    734
              205,861    169,402
Non-current assets                   
  Long-term receivable             7,224    7,019
  Property, plant and equipment             857,659    823,908
  Exploration and evaluation assets             6,836    6,819
            $ 1,077,580     $ 1,007,148
 
LIABILITIES
Current liabilities                 
   Accounts payable and accrued liabilities         $ 44,315     $ 33,812
   Current portion of long-term debt           1,200    1,496
            45,515    35,308
Non-current liabilities                 
  Long-term debt           98,374    98,150
  Decommissioning obligation           22,548    22,806
  Deferred tax liabilities           315,225     286,209
            481,662    442,473
 
SHAREHOLDERS' EQUITY
Share capital           346,716    340,305
Contributed surplus             84,885    84,811
Currency translation reserve             6,111    6,345
Retained earnings             158,206    133,214
              595,918    564,675
            $ 1,077,580  $ 1,007,148

 
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31
(Unaudited, expressed in thousands of US dollars)
         
              2014   2013
Cash provided by (used in):                  
Operating activities                  
  Net income for the period           $ 24,992 $ 14,177
  Depletion and depreciation             26,693   23,197
  Accretion of long-term debt             451   1,149
  Accretion of decommissioning obligation             274   241
  Unrealized foreign exchange gain             (45)   (180)
  Deferred income tax expense             29,016   23,264
  Share-based compensation             1,468   3,258
  Discount and revaluation of long-term receivable             (205)   (1,061)
  Unrealized loss on financial commodity contracts             465   1,374
                83,109   65,419
  Change in long-term receivable             -   1,855
  Change in non-cash working capital             (2,759)   (37,812)
                80,350   29,462
Investing activities                  
  Additions to property, plant and equipment             (59,848)   (47,193)
  Additions to exploration and evaluation assets             (17)   (134)
  Restricted cash             2,109   -
  Change in non-cash working capital             804   564
                (56,952)   (46,763)
Financing activities                  
  Issue of shares for cash             3,848   101
  Financing costs             (433)   -
  Change in long-term debt             (296)   18,337
              3,119   18,438
Foreign exchange gain (loss) on cash and cash equivalents             58   (30)
Increase in cash and cash equivalents             26,575   1,107
Cash and cash equivalents, beginning of period             24,597   33,740
Cash and cash equivalents, end of period           $ 51,172 $ 34,847
                   
Interest paid           $ 73 $ 222
Interest received           $ 222 $ 45

 
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   Contributed
surplus
  Currency
translation
reserve
  Retained
earnings
  Total
Balance at December 31, 2012   253,828,650      $ 334,764 $ 69,435   $ 7,362 $ 71,471   $ 483,032
                              
Share-based compensation   -     -   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
                              
Share-based compensation   -     -   13,139     -   -    13,139
Options exercised   1,809,927     5,370   (2,139)     -   -    3,231
Net income for the period   -     -   -     -   47,566    47,566
Currency translation adjustment   -     -   -     (665)   -    (665)
Balance at December 31, 2013   255,681,911     $ 340,305 $ 84,811   $ 6,345 $ 133,214 $ 564,675
                             
Share-based compensation   -     -   2,637     -   -   2,637
Options exercised   1,649,694     5,634   (2,344)     -   -   3,290
Warrants exercised   200,000     777   (219)     -   -   558
Net income for the period   -     -   -     -   24,992   24,992
Currency translation adjustment   -     -   -     (234)   -   (234)
Balance at March 31, 2014   257,531,605      $ 346,716 $ 84,885   $ 6,111 $ 158,206 $ 595,918

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

AIM NOMAD:
Canaccord Genuity Limited
Henry Fitzgerald-O'Connor
+44 0 207 523 8000

AIM BROKER:
FirstEnergy Capital LLP
Hugh Sanderson / David van Erp
+44 0 207 448 0200

Profil de l'entreprise

Bankers Petroleum Ltd.

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