Bankers Petroleum Achieves Quarter-Over-Quarter Growth in Third Quarter 2007



    Positive Results and Natural Gas Sales in Oklahoma Lead to Potential
    Development Project

    Unless otherwise noted, all figures contained in this release are in
    U.S. dollars.

    CALGARY, Nov. 8 /CNW/ - Bankers Petroleum Ltd. (TSX: BNK, AIM: BNK) today
announced strong results and continued quarter-over-quarter growth in its
third quarter of 2007. Revenue for the quarter increased 77% to $16.4 million
compared to $9.4 million in the third quarter of 2006. Net operating income
grew to $8.8 million in the quarter from $4.3 million in the comparable period
in 2006. Funds from operations were $6.4 million, compared to $3.0 million for
the third quarter of 2006.
    "Continued production growth, strength in our export capacity and
increased international oil prices have resulted in further gains to our
netback to almost $20 in the quarter," said Richard Wadsworth, President. "We
are proving our ability to add value from our primary production efforts, and
are stepping forward in our strategy to increase reservoir recovery and
production from secondary and enhanced oil recovery technologies. The start-up
of testing and steam injection from our thermal steam project will provide
valuable data for expansion of our pilot in 2008."
    Mr. Wadsworth continued, "In the U.S., we've made significant progress in
a very short period in the Ardmore basin: our first vertical and horizontal
wells were put on production at 3.1 mmcfe/d gross; our second horizontal well
is testing with rates around 2.1 mmcfe/d gross; our third horizontal well is
drilled; and our fourth horizontal well spudded. With these initial results we
believe this basin has the potential for a solid development project that will
add significant upside for the Company and its shareholders."

    
    Third Quarter Highlights:

    -   Average crude oil production was 4,979 bopd compared to 4,746 bopd
        for the second quarter of 2007 and 4,000 bopd for the third
        quarter of 2006, increases of 5% and 24% respectively.

    -   Exit crude oil production for September 2007 was approximately
        5,000 bopd.

    -   Bankers began selling natural gas from its Oklahoma properties in
        September.

    -   Consolidated oil and gas revenue rose 77% to $16.4 million from
        $9.2 million in the comparable period in 2006, and 27% from
        $12.9 million in the second quarter of 2007.

    -   The netback in Albania improved to $19.93 per barrel from $16.14
        in the preceding quarter and $12.44 per barrel for the third
        quarter of 2006.

    -   Net operating income was $8.8 million, an increase of 105% and 40%
        from the same period in 2006 and the second quarter of 2007,
        respectively.

    -   Net income for the period was $264,000 compared to net income of
        $600,000 and loss of $208,000 for the preceding quarter and the
        third quarter of 2006. Net income was lower as compared to the
        second quarter of 2007 due to the rapidly accelerating non-cash
        future income tax expense.

    -   Funds from operations increased 34% to $6.4 million from $4.8 million
        for the second quarter of 2007, and 118% from $3.0 million for the
        third quarter of 2006.

    -   Bankers' available debt facility increased by $10.0 million to
        $31.0 million.

    -   Construction of the Company's thermal steam pilot was completed and
        testing and steam injection commenced in October.

    -   Approximately 55% of the Company's Albanian crude oil production was
        exported during the third quarter at an average price of $44.37 per
        barrel.

    -   In Oklahoma, Bankers began selling natural gas and liquids from the
        Nickel Hill No. 1-26 and Greenway 35-1H wells. Initial production
        rates were:

        -  The vertical Nickel Hill No. 1-26 well: approximately 900 mcfe/d.

        -  The Greenway 35-1H well: approximately 2.2 mmcfe/d.

    -   Bankers second successful Oklahoma horizontal well, the WLC 17-1H
        well, commenced initial production at approximately 2.1 mmcfe/d.

    -   In Texas, Bankers finished drilling the horizontal leg of
        the Cogdell No. 64-1 well in the Atoka A, Granite Wash Sand
        formation. Early results during drilling indicate good natural gas
        shows from the sand.
    

    Conference Call:

    A conference call to discuss these results will be held Friday,
November 9 at 9:00 a.m. MDT, 11:00 a.m. EDT, 4:00 p.m. BDT. To participate in
the conference call, please dial 1-800-594-3615 or 1-416-644-3426
approximately 10 minutes prior to the call. A live and archived audio webcast
of the conference call will also be available on Bankers' website at
www.bankerspetroleum.com.

    About Bankers Petroleum Ltd.

    Bankers Petroleum Ltd. is a Canadian-based oil and gas exploration and
production company focused on opportunities in unconventional petroleum
assets. Bankers holds interests in four prospects in the Northern and Central
regions of the United States, where it is currently pursuing the exploration
of shale gas plays. It also operates in the Patos-Marinza oilfield in Albania
pursuant to a license agreement, producing heavy oil. Bankers' shares are
traded on the Toronto Stock Exchange and the AIM Market in London, England
under the ticker symbol BNK.

    
                     MANAGEMENT'S DISCUSSION AND ANALYSIS
    

    The following is management's discussion and analysis (MD&A) of Bankers
Petroleum Ltd.'s (Bankers or the Company) operating and financial results for
the three and nine month periods ended September 30, 2007, compared to the
preceding quarter and the corresponding period in the prior year, as well as
information and expectations concerning the Company's outlook based on
currently available information. The MD&A should be read in conjunction with
the unaudited interim financial statements for the three and nine month
periods ended September 30, 2007 and the audited financial statements and MD&A
for the year ended December 31, 2006. Additional information relating to
Bankers, including its Annual Information Form, is on SEDAR at www.sedar.com
or on the Company's website at www.bankerspetroleum.com. All dollar values are
expressed in U.S. dollars, unless otherwise indicated.
    This report is prepared as of November 8, 2007.

    NON-GAAP MEASURES

    Funds from operations is a non-GAAP measure that represents cash
generated from (used in) operating activities before changes in non-cash
working capital. The Company considers this a key measure as it demonstrates
its ability to generate the cash flow necessary to fund future growth.
    Netback per barrel and its components are calculated by dividing revenue,
royalties, operating, sales and transportation expenses by the gross sales
volume during the period. Netback per barrel is a non-GAAP measure but it is
commonly used by oil and gas companies to illustrate the unit contribution of
each barrel produced.
    Net operating income is similarly a non-GAAP measure that represents
revenue net of royalties and operating and sales and transportation expenses.
The Company believes that net operating income is a useful supplemental
measure to analyze operating performance and provide an indication of the
results generated by the Company's principal business activities prior to the
consideration of other income and expenses.
    The non-GAAP measures referred to above do not have any standardized
meaning prescribed by GAAP and therefore may not be comparable to similar
measures used by other companies.

    CAUTION REGARDING FORWARD-LOOKING INFORMATION

    Certain information contained in this news release and MD&A respecting
the Company and the Company's properties constitute forward-looking
statements. The use of any of the words "target", "intends", "plans",
"anticipate", "continue", "estimate", "expect", "may", "will", "project",
"should", "believe" and similar expressions are intended to identify
forward-looking statements. Such forward-looking information, including but
not limited to statements as to production targets, timing of the Company's
planned work and development programs and management's belief as to the
potential of certain properties, are based on certain assumptions and involve
known and unknown risks, uncertainties and other factors which may cause the
actual results of the Company and its operations to be materially different
from estimated costs or results expressed or implied by such forward-looking
statements.
    Assumptions on which such forward-looking statements are based include
but are not limited to: availability of funds for capital expenditures, a
consistent and improving success rate for well re-completions at Patos
Marinza, continued successful drilling results from the U.S. exploration
program, increasing production as contemplated by the PoD, ability to increase
reservoir recovery and production through secondary and enhanced oil recovery
methods, potential to acquire upstream opportunities that result in higher
values, stable costs, availability of equipment and personnel when required
for both the Company's U.S. and Albania operations, continuing favourable
relations with Albanian governmental agencies and continuing strong demand for
oil and natural gas.
    Such factors include, among others general risks and uncertainties
associated with exploration, petroleum operations and risks associated with
equipment procurement and equipment failure as well as those described under
"Risk Factors" in the Company's Annual Information Form and in each management
discussion and analysis. Although the Company has attempted to take into
account important factors that could cause actual costs or results to differ
materially, there may be other factors that cause costs of the Company's
program or results not to be as anticipated, estimated or intended. There can
be no assurance that such statements will prove to be accurate as actual
results and future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue reliance on
forward-looking information.

    REVIEW BY QUALIFIED PERSON

    This interim report was reviewed by Richard Wadsworth, President 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 with over 14 years experience in domestic and
international oil and gas operations.

    
    OVERVIEW
                            Three months ended        Nine months ended
                               September 30              September 30
                        -------------------------- --------------------------
    Results at a Glance    2007     2006        %     2007     2006        %
    -------------------------------------------------------------------------
    Financial ($000s,
     except as noted)
    Oil and gas revenue  16,392    9,240       77   40,044   22,336       79
    Net operating income  8,834    4,316      105   19,520    9,417      107
    Income (loss) for
     the period             264     (208)     227     (186)  (1,454)      87
    Funds from
     operations           6,420    2,950      118   14,064    6,925      103
    Additions to
     property, plant
     and equipment       26,119   12,853      103   63,390   55,353       15
    Total assets                                   185,652  127,106       46
    Shareholders' equity                           135,200  115,002       18

    Operating
    Albania - crude oil
      Average daily
       production (bopd)  4,979    4,000       24    4,704    3,263       44
      Average sales
       volume (bopd)      4,753    3,776       26    4,486    3,149       42
      Average price
       ($/barrel)         37.14    26.63       39    32.57    25.97       25
      Netback ($/barrel)  19.93    12.44       60    15.97    10.95       46
    U.S. - natural gas
     and condensate
      Average sales
       volume (mmcf/d)      502        -      n/a      502        -      n/a
      Average sales
       volume (bopd)         26        -      n/a       26        -      n/a
      Average natural gas
       price ($/mcf)       5.18        -      n/a     5.18        -      n/a
      Average condensate
       price ($/barrel)   71.46        -      n/a    71.46        -      n/a


    Bankers continued to increase production, revenues, netback and funds from
operations during the three month period ended September 30, 2007:

    -   Average crude oil production was 4,979 bopd compared to 4,746 bopd
        for the second quarter of 2007 and 4,000 bopd for the third quarter
        of 2006, increases of 5% and 24% respectively.

    -   Exit crude oil production for September 2007 was approximately
        5,000 bopd.

    -   Bankers began selling natural gas from its Oklahoma properties in
        September.

    -   Higher production and average oil price resulted in increased
        revenues of $16.4 million for the quarter compared to $12.9 million
        in the preceding quarter and $9.2 million for the same period in
        2006.

    -   Netback improved to $19.93 per barrel from $16.14 per barrel in the
        preceding quarter and $12.44 per barrel for the third quarter of
        2006, increases of 23% and 60% respectively.

    -   Net operating income was $8.8 million, an increase of 105% and 40%
        from the same period in 2006 and the second quarter of 2007,
        respectively.

    -   Net income for the period was $264,000 compared to net income of
        $600,000 and loss of $208,000 for the preceding quarter and the
        third quarter of 2006. Net income was lower as compared to the
        second quarter of 2007 due to the rapidly accelerating non-cash
        future income tax expense.

    -   Funds from operations increased 34% to $6.4 million from $4.8 million
        for the second quarter of 2007, and 118% from $3.0 million for the
        third quarter of 2006.
    

    Albania

    The Company exported 55% of its crude oil during the third quarter of
2007 at an average price of $44.37 per barrel. In comparison, exports made up
60% of the sales during the previous quarter at an average price of $36.15 per
barrel.
    Continued high export volumes and prices led to a substantially higher
average oil price in the quarter. The Company averaged $37.14 per barrel
compared to an average of $32.89 per barrel for the previous quarter and
$26.63 for the third quarter of 2006, increases of 13% and 39% respectively.
    In October, the construction of the Company's thermal steam project was
completed and testing and steam injection commenced. It is anticipated that
the pilot will provide valuable data on injection parameters and assumptions
in order to optimize operations for an expanded steam pilot during 2008.
    During the quarter, the Company commenced sales to a third export
refinery, executing on its plan to increase its export sales in the future.
Bankers' success in obtaining improved export prices for its Albanian crude
has significantly increased netback and offset the impact of lower than
anticipated production growth.

    United States

    In Oklahoma, Bankers began selling natural gas and liquids from the
Nickel Hill No. 1-26 and Greenway 35-1H wells in September. Other events in
the quarter include:

    
    -   The Greenway 35-1H well had an initial production rate of
        approximately 2.2 mmcfe/d.

    -   Bankers second successful horizontal well, the WLC 17-1H well,
        commenced production at an initial rate of approximately 2.1 mmcfe/d.

    -   Bankers completed the drilling of a third horizontal well, the
        Brock 9-1H, which will be fracture stimulated in the fourth quarter.
    

    Bankers is hopeful that it will soon be able to move its Ardmore basin
acreage into a development phase in 2008 as it continues to define the
potential of the Palo Duro basin.

    In Texas, Bankers completed drilling the horizontal leg of the Cogdell
No. 64-1 well in the Atoka A, Granite Wash Sand formation. Early results
during drilling indicate good natural gas shows from the sand.
    In addition, Bankers drilled the Black 4 No. 1 well, which targeted what
was perceived to be a more thermally mature portion of the basin. Initial
results have had limited natural gas flows from some sand intervals. The well
is currently shut-in for pressure build-up tests in the sands. A fracture
stimulation of the Bend shale interval is being planned that incorporates new
techniques recommended by Core Laboratories N.V. (CoreLabs).
    A basin-wide core study is in the final stages of being completed by
CoreLabs that incorporates all core, log, fracture and production data from
the previous wells drilled in the Palo Duro that Bankers has access to.
Bankers believes that the application of these techniques, together with
focusing on the more thermally mature portion of the basin, will positively
affect future production rates from the Bend shale formation.

    DISCUSSION OF OPERATING RESULTS

    Production and Revenue

    During the quarter, production increased as more wells were re-activated
and worked over in Albania, bringing the active well count to 168 from 163 in
the preceding quarter. As at September 30, 2007, the Company also had 70 wells
waiting for servicing and reactivation. Average production increased to
4,979 bopd during the quarter from 4,746 bopd for the preceding quarter and
from 4,000 bopd from the same period a year ago. The production increase
during the quarter was less than contemplated due to the factors that are
mainly external to reservoir performance (see "Operations Update" section).
    During the quarter, the Company exported approximately 55% of its crude
oil mainly to two refineries in Italy at an average price of $44.37 per
barrel. In September, Bankers commenced test shipments to a third refinery. By
comparison, during the second quarter exports made up 60% of sales at an
average price of $36.15 per barrel. Bankers intends to maintain exports at or
above 50% during the fourth quarter in order to continue to capture the
significant difference between domestic and export prices.
    Domestic sale price averaged $28.31 per barrel during the period compared
to $28.10 per barrel for the preceding quarter and $23.48 per barrel for the
same period in 2006. The Company's average oil price for the quarter was
$37.14 per barrel, up from $32.89 per barrel for the preceding quarter and
$26.63 per barrel for the same period in 2006.
    Combined oil and gas revenues for the quarter were $16.4 million up from
$12.9 million for the quarter ended June 30, 2007, and $9.2 million for the
corresponding quarter a year ago, increases of 27% and 77% respectively.
    The Company commenced sales of natural gas and liquids from its U.S.
operations in September 2007. Revenue for the month amounted to $153,000 for
net production of 23,817 mcf.

    Royalties, Direct Expenses and Netbacks

    Royalties are calculated pursuant to the Petroleum Agreement with
Albpetrol Sh. A (Albpetrol) in Albania and consist of Albpetrol's pre-existing
production and a 1% gross overriding royalty on production. Royalties
increased to $4.40 per barrel from $4.28 per barrel in the second quarter and
$3.04 per barrel for the corresponding period in 2006. The slight increase in
royalties during the third quarter of 2007 was related to wells taken over
from Albpetrol that increased pre-existing production without a corresponding
increase in the Company's incremental production due to slower than
anticipated growth. Increases in the domestic sale price from $23.48 per
barrel in September 2006 and $28.10 per barrel in June 2007 to $28.31 per
barrel in September 2007 also contributed to the unit increase in royalties as
royalties are calculated based on domestic sales price.
    Operating expenses per barrel increased moderately to $10.37 per barrel
from $9.91 per barrel in the preceding quarter and $9.05 per barrel for the
corresponding period in 2006. This increase was due to higher personnel,
down-hole equipment, repairs and maintenance and energy costs without a
commensurate increase in production
    Sales and transportation expenses decreased slightly to $2.44 per barrel
from $2.56 per barrel in the preceding quarter and increased from $2.10 per
barrel for the same period in 2006. The change was directly related to
fluctuations in export levels.
    The Company's netback per barrel for Albania improved significantly to
$19.93 per barrel from $16.14 per barrel in the preceding quarter and $12.44
per barrel for the same period in 2006. The increase is due to higher oil
prices received from export shipments.

    
                            Three months ended        Nine months ended
                               September 30              September 30
                        -------------------------- --------------------------
    Netback - Albania      2007     2006        %     2007     2006        %
    -------------------------------------------------------------------------
    Average price
     ($/barrel)           37.14    26.63       39    32.57    25.97       25
    Royalties              4.40     3.04       45     4.12     3.02       37
    Sales and
     transportation        2.44     2.10       16     2.33     1.84       27
    Operating             10.37     9.05       15    10.16    10.17        -
                        -------------------------- --------------------------
    Netback ($/barrel)    19.93    12.44       60    15.97    10.95       46
                        -------------------------- --------------------------
                        -------------------------- --------------------------
    

    General and Administrative Expenses

    General and administrative expenses (G&A) before capitalization were
$2.8 million for the quarter compared to $2.4 million for the preceding
quarter and $1.7 million for the same period in 2006. The increase in G&A over
the second quarter was mainly due to the effect of the strengthening Canadian
dollar against its U.S. counterpart. This increase compared to the same period
in 2006 also reflects higher personnel costs due to additional employees,
higher consulting fees and travel expenses related to the Company's operating
and financing activities.
    During the quarter, the Company charged $2.0 million of G&A to operations
and capitalized $807,000. During the preceding quarter the comparable figures
were $1.8 million and $592,000. For the corresponding period in 2006, the
Company charged $1.4 million of G&A to operations and capitalized $325,000.
Capitalized G&A were directly related to acquisition, exploration and
development activities in Albania and the United States.

    Depletion, Depreciation and Accretion

    Depletion, depreciation and accretion (DDA) expense for the quarter ended
September 30, 2007 was $2.2 million compared to $1.9 million for the preceding
quarter. For the same period in 2006, DDA was $1.2 million. Depletion expense
on a per barrel basis was $4.46 for the quarter compared to $4.02 and $3.11,
respectively, for the preceding quarter and the same period in 2006.

    
    Future Income Tax Expense

    Future income tax expense relates to the Albanian operations and results
from the following:

    ($ millions)                                               2007     2006
    -------------------------------------------------------------------------
    Net book value of property,
     plant and equipment net of asset
     retirement obligations                                    86.2     51.4
    Cost recovery pool                                        (68.5)   (45.2)
                                                   --------------------------
    Timing difference                                          17.7      6.1
                                                   --------------------------
                                                   --------------------------
    Future income tax liability @ 50% as
     at September 30                                            8.8      3.1

    Less:
    Future income tax liability as at
     December 31, 2006 and 2005                                 3.1      0.3
                                                   --------------------------
    Future income tax expense for the period                    5.7      2.8
                                                   --------------------------
                                                   --------------------------
    

    The high effective income tax rate resulting from future income tax
expense of $5.7 million in relation to income before taxes of $5.5 million is
due to the Canadian U.S. expenses not providing any relief from taxes in
Albania.
    The cost recovery pool represents deductions for income taxes in Albania.
Bankers is presently not paying cash taxes in any jurisdiction.

    Income and Funds from Operations

    The Company recorded net income of $264,000 ($0.00 per share) during the
quarter compared to a net income of $600,000 ($0.00 per share) for the
preceding period and a loss of $208,000 ($0.00 per share) for the third
quarter of 2006.
    Bankers generated funds from operations of $6.4 million during the
quarter compared to $4.8 million for the preceding quarter and $3.0 million
for the same period in 2006. The increase in funds from operations reflects
mainly higher oil prices obtained during the period.

    OPERATIONS UPDATE

    Albania

    Bankers continues to implement its work program for 2007 through well
take-overs and re-activations, bringing on new production. Production is
currently over 5,000 bopd and is expected to increase slightly throughout the
remainder of the year. Lower than anticipated production levels are believed
to be due to several factors that are mainly external to reservoir performance
including: the previously announced water disposal constraints; unanticipated
serious mechanical wellbore and isolation failures; increased water production
coming from shallower and deeper water bearing zones; and a shortage of rig
workover capacity and specialized well servicing equipment.
    Bankers is reviewing the foregoing factors in depth and has undertaken
several initiatives to address the concerns, including:

    
    -   Adding water disposal capacity in November through the deepening of
        several disposal wells;

    -   Improving its workover capabilities;

    -   Increasing service rig availability: two additional service rigs are
        scheduled to arrive in mid-November and December, which will assist
        in accelerating well workovers;

    -   Reviewing its strategy around well re-completion practices; and

    -   Considering an infill drilling program in 2008.
    

    While the existing production challenges are a concern and will require
more time and resources to correct, it is believed that the difference between
actual and target production may be re-captured through implementation of the
initiatives listed above.
    Bankers commenced the testing and injection of steam into an existing
well during October. The objective of these tests is twofold: to learn the
reservoir response and to implement the steaming techniques in field
conditions. The completion of tests is expected to lead to an expanded steam
pilot in late 2008 that would involve the drilling of new directional wells
from a single pad location, including building the necessary production
facilities for initial cyclic steam injection followed by steam flooding.
Final approvals for this program are being sought from Albpetrol and the
Albanian government.
    The Albanian government recently appointed an advisor for the
privatization of ARMO, the state owned refineries. At this time, it is
believed that the government is anticipating the privatization process to be
completed in mid-2008. Bankers continues to monitor progress of the
privatization and review other upstream opportunities in order to seize the
potential upstream/downstream synergies, which is expected to not only
increase reservoir recovery and production but may result in the Company
extracting a higher value for its production.

    United States

    Bankers has significantly advanced the development of its Oklahoma
Woodford shale prospect in Carter and Johnston Counties with the following
results:

    
    -   Achieved three successful producing wells:

        -  The vertical Nickel Hill No. 1-26 discovery well, which began
           sales at approximately 900 mcfe/d in September;

        -  The Greenway No. 35-1H, which had an initial production rate of
           approximately 2.2 mmcfe/d. This well was drilled and fractured
           through the upper, middle and lower Woodford intervals, which
           provided insight into how different levels of the formation
           react to fracture stimulation; and

        -  Bankers' second horizontal well in the basin, the WLC 17-1H,
           began production at an initial production rate of approximately
           2.1 mmcfe/d of natural gas and liquids after fracture
           stimulation. The well is currently shut-in after recovering
           approximately 62 percent of the fracture fluid, awaiting pipeline
           hookup.

    -   Finished construction of gathering lines and tied into a facility to
        handle production from this basin; first natural gas production and
        sales from the Nickel Hill No. 1-26 and Greenway No. 35-1H wells
        occurred during September.

    -   Completed drilling and running casing in the horizontal portion of
        the Brock 9-1H well. Fracture stimulation of the well is expected to
        occur in the fourth quarter.

        -  The drilling rig has moved to the next well to be drilled on
           Bankers acreage in this project, the Brock 4-1H well. Fracture
           stimulation of both of the Brock wells is planned for the same
           time.

    -   Acquired the majority of the data for the Company's 115 square mile,
        3D seismic survey in Carter and Johnston Counties to aid in the
        development of its acreage. Pending weather, it is anticipated that
        the acquisition of the 3D seismic survey will be completed in
        November.

    As Bankers progresses with its drilling program, costs are decreasing
significantly with each well. It is estimated that this will positively impact
the economics for Bankers' shale gas development. In addition, as more is
learned about the reservoir, Bankers anticipates that it may also be able to
increase the productivity of the wells by fine-tuning its fracture stimulation
techniques.

    In Palo Duro, Texas, Bankers is progressing with its exploration program
in what it considers the core area of the basin, which the Company believes
has the best potential productive Bend shale and Granite Wash Sands over its
acreage holdings.

    Key events within this core area included:

    -   The Company completed drilling the horizontal leg of the Cogdell
        No. 64-1 well in the Atoka A, Granite Wash Sand formation, where
        fracture stimulation of the original vertical wellbore generated
        encouraging results of approximately 325 mcf/d. Early results during
        drilling indicate good natural gas shows from the sand.

        -  It is Bankers' goal to increase the flow rate achieved from the
           vertical wellbore. Horizontal drilling often substantially
           increases flow rates over that of vertical wells.

    -   The Black 4 No. 1 well targeted what was perceived to be a more
        thermally mature portion of the basin. Initial results have had
        limited natural gas flows from some sand intervals; the well is
        currently shut-in for pressure build-up tests of the sand intervals.
        A fracture stimulation of the Bend shale interval is being planned
        that incorporates new techniques recommended by CoreLabs.

        -  Once repeatability is shown by establishing productivity from
           the shale, Bankers can begin drilling horizontal wells in the
           shale with a view to increasing the productivity of the wells.

    -   A basin-wide core study is in the final stages of being completed by
        CoreLabs that incorporates all core, log, fracture and production
        data from the previous wells drilled in Palo Duro to which Bankers
        has access.

        -  The analysis of the cores taken in the Palo Duro basin wells
           has confirmed that the rocks contain substantial volumes of gas
           and have some unique rock properties that may require different
           stimulation/completion techniques than those commonly used in
           other shale basins. Bankers believes that the application of
           these techniques, together with focusing on the more thermally
           mature portion of the basin, will positively affect future
           production rates from the Bend shale formation.

        -  Additional tests are currently being conducted on the whole
           cores from the Burleson Ranch well to further clarify the
           findings and to determine fracture fluid incompatibilities
           that may have caused some of the previous performance issues.
    

    Bankers' near-term goals for the Palo Duro basin are to improve on
results from the previously drilled vertical wells and demonstrate
repeatability; and to utilize horizontal wells to attempt to increase
production rates substantially over vertical well rates. Further exploration
and development activities will be influenced by the results of these wells.

    In New York, Bankers is currently planning the acquisition of 2D seismic
on its existing acreage to help evaluate the hydrothermal dolomite concept,
which the Company believes has more potential for success than the original
Trenton resource play. Regionally, over 125 million barrels of oil and 200 BCF
of gas have been produced from Trenton/Blackriver hydrothermal dolomite fields
by other operators.
    In Mississippi and Alabama, Bankers is continuing with Pottsville Tight
Gas Sands and Floyd shale prospect development through additional geologic and
geophysical work on the Black Warrior Basin project.

    Subsequent Events

    In November, Bankers announced the appointment of Abdel F. (Abby) Badwi
in the role of Strategic Advisor, Doug Urch as Financial Advisor and Ian
McMurtrie as Technical Advisor to the Company. In addition, Mr. Badwi will be
appointed to the Board of Directors of Bankers upon completion of a private
placement by the new appointees and has agreed to assume the position of Chief
Executive Officer of Bankers on February 1, 2008. Richard Wadsworth will
continue as President and will become Chief Operating Officer at that time.
    Messrs. Badwi, Urch and McMurtrie have agreed to purchase, on a
non-brokered private placement basis, an aggregate of 4.4 million units of the
Company, at a price of $0.50 per unit. The $2.2 million in proceeds from the
placement will be added to the Company's working capital. Each unit will
comprise one common share of the Company and one non-transferrable share
purchase warrant, each warrant entitling the holder, subject to certain
conditions, to acquire on exercise one additional common share of the Company,
at a price of $1.00 for a period of three years from the date of issue. The
private placement is subject to TSX approval and is expected to close prior to
the end of November.

    
    CAPITAL EXPENDITURES

                                        Three months ended  Nine months ended
                                           September 30        September 30
    -------------------------------------------------------------------------
    ($000)                                   2007     2006     2007     2006
    -------------------------------------------------------------------------

    Albania                                13,010    9,467   37,216   31,014
    United States                          13,053    2,948   25,937   23,861
    Canada                                     56      438      237      478
                                         ------------------------------------
                                           26,119   12,853   63,390   55,353
                                         ------------------------------------
                                         ------------------------------------
    

    The Company incurred $11.1 million in capital expenditures in Albania
during the quarter for well re-activations and $4.3 million on central
treatment facilities. The balance of the expenditures was related to
miscellaneous asset acquisitions and capitalized G&A. The capital expenditures
were offset by a decrease in prepayments to suppliers of $3.4 million for
equipment in transit to Albania. For the same period in 2006, the Company
incurred $9.5 million in capital expenditures in Albania, $7.9 million of
which was incurred in well re-activations and the balance was primarily
related to increase in field inventory and miscellaneous asset acquisitions.
    In the United States, the Company incurred $11.5 million on the drilling
and evaluation of wells drilled and tested in Texas and Oklahoma. Lease
acquisition costs were $1.4 million. The balance of the capital expenditures
was related to seismic acquisition, reprocessing and capitalized G&A. The
Company incurred $2.9 million in capital expenditure in United States for the
same period in 2006 of which $865,000 million was incurred in lease
acquisitions and the balance on drilling, testing and other asset
acquisitions.

    ASSET RETIREMENT OBLIGATIONS

    Bankers estimated its undiscounted asset retirement obligations in
Albania as $13.6 million based on the 300 wells taken over from Albpetrol to
date. This amount will be settled at the end of the Company's 25-year license
of which 24 years are remaining. The net present value of $1.7 million of
asset retirement obligations was estimated based on a credit-adjusted risk
free rate of 9%. Asset retirement obligations were increased to $1.9 million
at September 30, 2007 as a result of accretion.
    In the United States, the Company estimated the total undiscounted amount
required to settle the asset retirement obligations as $667,000. These
obligations are expected to be settled in 15 years based on internal
estimates. The undiscounted liability has been discounted using a credit
adjusted risk-free interest rate of 5.5% to arrive at asset retirement
obligations of $433,000.

    LIQUIDITY AND CAPITAL RE

SOURCES As of September 30, 2007, the Company had cash resources of approximately $8.9 million. During the quarter, Raiffeisen Bank Sh.a in Albania increased Bankers' operating line facility by $10.0 million to $16.0 million, of which $5.0 million was available at the end of the quarter. The remaining capital expenditures in Albania for 2007 are estimated to be between $8.0 and $9.0 million of which the majority is associated with an accelerated well re-activation program. The Company expects to fund this capital program from funds from operations estimated at approximately $7.0 million and the remaining available debt facility. In the U.S., the remaining capital expenditures are estimated at approximately $6.5 million. Cash resources currently available are sufficient to fund the remainder of the 2007 exploration program. The Company is currently reviewing various financing options for commercial development of the Oklahoma field and its 2008 U.S. exploration program. RELATED PARTY TRANSACTIONS Bankers contracts with a Canadian drilling company for the provision of rigs and other oil well services at industry competitive rates. Victor Redekop, a Director of Bankers, is a principal shareholder and officer of this company. During the quarter ended September 30, 2007, the Company transacted $2.6 million of services compared to $2.4 million for the preceding quarter and $2.1 million for the corresponding period in 2006. The services can be terminated upon 60 days notice at the election of the Company. Bankers also paid $14,000 (three months ended June 30, 2007 - $13,000; three months ended September 30, 2006 - $13,000) for rent and office services to a company related by way of common directors. COMMITMENTS In March 2006, the Company's Plan of Development for the Patos Marinza heavy oilfield in Albania was approved by the Albanian National Agency of Natural Resources (AKBN). Under the Plan of Development, the Company estimated the remaining capital expenditures as at January 1, 2007 to be between $124.8 million to $183.3 million during the life of the Patos Marinza project. The estimated capital expenditures during the next five years are as follows: ($ millions) Case I Case II ------------------------------------------------------------------------- 2007 38.3 42.2 2008 31.6 29.4 2009 9.5 41.6 2010 10.9 15.5 2011 9.5 10.7 Remaining 25.0 43.9 ------------------------------------------------------------------------- 124.8 183.3 ------------------------------------------------------------------------- ------------------------------------------------------------------------- The difference between Case I and Case II relates to maximum future production levels. Under the Petroleum Agreement, Bankers is required to submit an annual program to AKBN that includes the nature and the amount of capital expenditures to be incurred during that year. Significant deviations in this annual program from the Plan of Development will be subject to AKBN approval. The Petroleum Agreement provides that disagreements between the parties will be referred to an independent expert whose decision will be binding. The Company has the right to relinquish a portion or all of the contract area. If only a portion of the contract area is relinquished then the Company will continue to conduct petroleum operations on the portion it retains and the future capital expenditures will be adjusted accordingly. In the event that Bankers is not able to generate sufficient capital resources, it may be required to renegotiate the Plan of Development or relinquish all or part of the contract area. The Company spent $37.2 million towards its 2007 commitment during the nine months ended September 30, 2007. Office Premises The Company has long-term lease commitments for its office space in Canada and Albania. The minimum lease payments for the next five years are as follow: ($000s, except as noted) ------------------------------------------------------------------------- 2007 $ 90 2008 233 2009 172 2010 172 2011 172 Thereafter 7 ---------- $ 846 ---------- ---------- Term Loan The $15.0 million term loan is repayable in equal monthly instalments over a 48-month period. As at September 30, 2007, the entire available term loan was drawn down, of which $3.8 million was classified as a current liability and $11.2 million as long-term debt. Principal repayments of the term loan over the next five years are as follows: ($000s, except as noted) ------------------------------------------------------------------------- 2007 940 2008 3,515 2009 3,515 2010 3,515 2011 3,515 ---------- $ 15,000 ---------- ---------- QUARTERLY SUMMARY Below is a summary of Bankers' performance over the last eight quarters. Sept 30, June 30, March 31, Dec 31, Sept 30, ($000s, except as noted) 2007 2007 2007 2006 2006 ------------------------------------------------------------------------- Albania - crude oil Average daily production (bopd) 4,979 4,746 4,380 4,165 4,000 Average sales volume (bopd) 4,753 4,314 4,388 4,113 3,776 Average price ($/barrel) 37.14 32.89 27.19 24.44 26.63 Royalties 4.40 4.28 3.65 3.04 3.04 Sales and transportation 2.44 2.56 1.96 1.77 2.10 Operating 10.37 9.91 10.16 9.88 9.05 -------------------------------------------- Netback ($/barrel) 19.93 16.14 11.42 9.75 12.44 -------------------------------------------- -------------------------------------------- U.S. - natural gas and condensate Average sales volume (mmcf/d) 502 - - - - Average sales volume (bopd) 26 - - - - Average natural gas price ($/mcf) 5.18 - - - - Average condensate price ($/barrel) 71.46 - - - - Oil and gas revenues 16,392 12,913 10,739 9,250 9,240 Royalties 1,922 1,682 1,440 1,149 1,055 Sales and transportation 1,068 1,007 775 670 728 Operating 4,568 4,048 4,014 3,737 3,141 -------------------------------------------- Net operating income 8,834 6,176 4,510 3,694 4,316 -------------------------------------------- -------------------------------------------- General and administrative 1,975 1,824 1,659 1,916 1,422 Funds from operations 6,420 4,792 2,852 1,588 2,950 Income (loss) for the period 264 600 (1,173) (107) (208) Basic and diluted loss per share - - - - - Total assets 185,652 175,550 168,005 138,030 127,106 Term loan (including current portion) 15,000 15,000 12,268 2,000 - June 30, March 31, Dec 31, ($000s, except as noted) 2006 2006 2005 ------------------------------------------------------------------------- Albania - crude oil Average daily production (bopd) 3,193 2,579 2,173 Average sales volume (bopd) 3,175 2,474 2,184 Average price ($/barrel) 25.64 25.55 23.13 Royalties 2.98 3.05 2.77 Sales and transportation 1.66 1.68 1.20 Operating 9.91 12.31 12.46 --------------------------- Netback ($/barrel) 11.09 8.51 6.69 --------------------------- --------------------------- U.S. - natural gas and condensate Average sales volume (mmcf/d) - - - Average sales volume (bopd) - - - Average natural gas price ($/mcf) - - - Average condensate price (bopd) - - - Oil and gas revenues 7,407 5,689 4,644 Royalties 860 679 564 Sales and transportation 480 373 241 Operating 2,862 2,741 2,246 --------------------------- Net operating income 3,205 1,896 1,593 --------------------------- --------------------------- General and administrative 1,450 972 904 Funds from (used in) operations 3,251 723 650 Loss for the period (253) (993) (755) Basic and diluted loss per share - - - Total assets 124,321 98,930 56,846 Term loan (including current portion) - - - OUTSTANDING SHARE DATA There were approximately 448 million shares outstanding as at September 30, 2007 and November 8, 2007. In addition, the Company had approximately 67 million stock options and warrants outstanding as of the same dates. PRINCIPAL BUSINESS RISKS Bankers' business and results of operations are subject to a number of risks and uncertainties, including but not limited to the following: Exploration, development, production and marketing of oil and natural gas involves a wide variety of risks, which include but are not limited to the uncertainty of finding oil and gas in commercial quantities, securing markets for existing reserves, commodity price fluctuations, exchange and interest rate exposure and changes to government regulations, including regulations relating to prices, taxes, royalties and environmental protection. The oil and gas industry is intensely competitive and the Company competes with a large number of companies with greater resources. Bankers' ability to increase its reserves in the future will depend not only on its ability to develop its current properties but also on its ability to acquire new prospects and producing properties. The acquisition, exploration and development of new properties also require that sufficient capital from outside sources will be available to the Company in a timely manner. The availability of equity or debt financing is affected by many factors many of which are beyond the control of the Company, including but not limited to market conditions and commodity price changes. If the Company is not able to obtain financing when required in reasonable terms it may be required to put current plans on hold or decline on new opportunities. Bankers' ability to service its debt is dependent upon its ability to generate sufficient funds from operations to repay the principle and meet covenants. Bankers has a significant investment in Albania. There are a number of risks associated with conducting foreign operations over which the Company has no control, including political instability, potential and actual civil disturbances, ability to repatriate funds, changes in laws affecting foreign ownership and existing contracts, environmental regulations, oil and gas prices, production regulations, royalty rates, income tax law changes, potential expropriation of property without fair compensation and restriction on exports. Additional risks that may affect the Company and its operations are set out in its AIF filed under the Company's profile on www.sedar.com. CHANGES IN ACCOUNTING POLICIES On January 1, 2007, the Company adopted the new Canadian accounting standards for financial instruments - recognition and measurement and financial instruments - presentation and disclosures. Prior periods have not been restated. Financial Instruments - Recognition and Measurement This new standard requires all financial instruments within its scope, including all derivatives, to be recognized on the balance sheet initially at fair value. Subsequent measurement of all financial assets and liabilities except those held-for-trading and available for sale are measured at amortized cost determined using the effective interest rate method. Held-for-trading financial assets are measured at fair value with changes in fair value recognized in earnings. Available-for-sale financial assets are measured at fair value with changes in fair value recognized in comprehensive income and reclassified to earnings when derecognized or impaired. Embedded Derivatives On adoption, the Company elected to recognize, as separate assets and liabilities, only those embedded derivatives in hybrid instruments issued, acquired or substantively modified after January 1, 2003. The Company did not identify any material embedded derivatives which required separate recognition and measurement. Two new Canadian accounting standards have been issued which will require additional disclosure in the Company's financial statements commencing January 1, 2008 about the Company's financial instruments as well as its capital and how it is managed. INTERNAL CONTROLS Disclosure controls and procedures have been designed to ensure that information required to be disclosed by the Company is accumulated and communicated to the Company's management, as appropriate, to allow timely decisions regarding required disclosure. The President and Chief Financial Officer have concluded, based on their evaluation as of September 30, 2007 that the Company's disclosure controls and procedures are effective to provide reasonable assurance that material information related to the Company, including its consolidated subsidiaries, is made known to them by others within those entities. During the three months ended September 30, 2007, there have been no changes in the Company's internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect the Company's internal controls over financial reporting. OUTLOOK In Albania, Bankers is confident that the production growth from primary techniques will continue to progress towards the Company's long-term goal of 10,000 bopd by 2010, despite recent challenges. Over the next few months, the Company will evaluate the field and implement initiatives to overcome any short-term issues and re-capture production growth momentum. The Company has so far exceeded its average crude oil price estimate for the year due to increased exports at better than anticipated prices. Continuing exports and the strength in the world oil prices should result in netbacks and funds from operations that will be comparable to the third quarter results. Bankers has begun implementation of several initiatives that have the potential to add significant long-term value to the Company. The testing of the cyclical steaming equipment is expected to lead to a new enhanced oil recovery (EOR) cyclic steam project that will be undertaken during 2008. As not one single technology will work effectively across the entire field due to the varying multiple zones and depths of the reservoir, Bankers will undertake appropriate projects in a step-by-step fashion. Further studies and engineering are underway to pursue potential integration, secondary and other EOR technologies that will be undertaken during 2008. Bankers is looking to these initiatives as a means of significantly increasing production and reservoir recovery in the Patos Marinza oilfield. In the United States, Bankers has achieved its goal of first natural gas production in Oklahoma, progressing towards its production target of 4.0 mmcfe/d exit in 2007. Positive results from the Company's first successful horizontal wells have led to preliminary work on a commercial development program in Oklahoma for 2008. In Texas, Bankers is progressing with its exploration program in what it considers the core area of the Palo Duro basin, where the Company has tested natural gas at rates that warrant further exploration. The Company will continue to define the potential of the basin through its activities over the remainder of 2007. Bankers continues its progress towards unlocking the value of its portfolio of assets that offer substantial upside opportunities for its shareholders both in the near and over the long-term. The Company has experienced some challenges, but is confident it will continue its growth trend by focusing on strategies to increase reservoir recovery, reserves, production and funds from operations for the future. BANKERS PETROLEUM LTD. CONSOLIDATED BALANCE SHEETS (Unaudited, expressed in Thousands of United States dollars) ------------------------------------------------------------------------- ASSETS September 30 December 31 2007 2006 ------------------------- Current assets Cash and cash equivalents $ 8,855 $ 6,329 Investment (Note 2) 1,783 - Accounts receivable 10,507 7,214 Crude oil inventory 1,219 713 Deposits and prepaid expenses 1,696 1,121 ------------------------- 24,060 15,377 Property, plant and equipment (Note 3) 161,592 122,653 ------------------------- $185,652 $138,030 ------------------------- ------------------------- LIABILITIES Current liabilities Operating loan (Note 4) $ 10,967 $ 4,772 Accounts payable and accrued liabilities 13,272 11,369 Current portion of term loan (Note 4) 3,750 125 ------------------------- 27,989 16,266 Term loan (Note 4) 11,250 1,875 Asset retirement obligations (Note 5) 2,365 1,593 Future income tax liability (Note 6) 8,848 3,126 SHAREHOLDERS' EQUITY Share capital (Note 7) 134,820 116,696 Warrants (Note 7) 2,004 - Contributed surplus (Note 7) 7,311 4,456 Deficit (6,168) (5,982) Accumulated other comprehensive loss (2,767) - ------------------------- 135,200 115,170 ------------------------- $185,652 $138,030 ------------------------- ------------------------- Commitments (Note 10) See accompanying notes to consolidated financial statements. BANKERS PETROLEUM LTD. CONSOLIDATED STATEMENT OF CHANGES IN DEFICIT, COMPREHENSIVE LOSS AND ACCUMULATED OTHER COMPREHENSIVE LOSS (Unaudited, expressed in Thousands of United States dollars) ------------------------------------------------------------------------- Three months ended Nine months ended September 30 September 30 ------------------------------------ 2007 2006 2007 2006 Deficit Balance, beginning of period $(6,432) $(5,667) $(5,982) $(4,421) Net income (loss) for the period 264 (208) (186) (1,454) ------------------------------------ Balance, end of period $(6,168) $(5,875) $(6,168) $(5,875) ------------------------------------ ------------------------------------ Comprehensive Loss Net income (loss) for the period $ 264 $ (208) $ (186) $(1,454) Unrealized loss on investment (Note 2) (2,767) - (2,767) - ------------------------------------ Comprehensive loss $(2,503) $ (208) $(2,953) $(1,454) ------------------------------------ ------------------------------------ Accumulated Other Comprehensive Loss Balance, beginning of period $ - $ - $ - $ - Unrealized loss on investment (2,767) - (2,767) - ------------------------------------ Balance, end of period $(2,767) $ - $(2,767) $ - ------------------------------------ ------------------------------------ See accompanying notes to consolidated financial statements. BANKERS PETROLEUM LTD. CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30 (Unaudited, expressed in Thousands of United States dollars, Except PerShare Amounts) ------------------------------------------------------------------------- Three months ended Nine months ended September 30 September 30 ------------------ ----------------- 2007 2006 2007 2006 ------------------ ----------------- Revenue Oil and gas revenue $16,392 $9,240 $40,044 $22,336 Royalties (1,922) (1,055) (5,044) (2,594) ------------------------------------ 14,470 8,185 35,000 19,742 ------------------------------------ Expenses Operating 4,568 3,141 12,630 8,744 Sales and transportation 1,068 728 2,850 1,581 General and administrative 1,975 1,422 5,458 3,844 Interest and bank charges 242 - 553 - Interest on term loan 338 - 876 - Stock-based compensation (Note 7) 1,015 706 2,505 2,450 Depletion, depreciation and accretion 2,197 1,226 6,023 3,138 ------------------------------------ 11,403 7,223 30,895 19,757 ------------------------------------ 3,335 962 4,105 (15) ------------------------------------ Other income Interest 151 88 487 482 Foreign exchange gain (loss) (10) (32) 944 870 ------------------------------------ 141 56 1,431 1,352 ------------------------------------ Income before income taxes 3,208 1,018 5,536 1,337 Future income tax expense (Note 6) (2,944) (1,226) (5,722) (2,791) ------------------------------------ Net income (loss) for the period 264 (208) (186) (1,454) Deficit, beginning of period (6,432) (5,667) (5,982) (4,421) ------------------------------------ Deficit, end of period $(6,168) $(5,875) $(6,168) $(5,875) ------------------------------------ ------------------------------------ Basic and diluted earnings (loss) per share $ 0.00 $ (0.00) $ (0.00) $ (0.00) ------------------------------------ ------------------------------------ See accompanying notes to consolidated financial statements. BANKERS PETROLEUM LTD. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30 (Unaudited, expressed in Thousands of United States dollars) ------------------------------------------------------------------------- Three months ended Nine months ended September 30 September 30 ------------------ ----------------- 2007 2006 2007 2006 ------------------ ----------------- Cash provided by (used in) Operating activities Net income (loss) for the period $ 264 $ (208) $ (186) $(1,454) Items not involving cash: Depletion, depreciation and accretion 2,197 1,226 6,023 3,138 Future income tax expense 2,944 1,226 5,722 2,791 Stock-based compensation 1,015 706 2,505 2,450 ------------------------------------ 6,420 2,950 14,064 6,925 Change in non-cash working capital (Note 11) 194 2,038 (4,010) (2,791) ------------------------------------ 6,614 4,988 10,054 4,134 ------------------------------------ Investing activities Additions to property, plant and equipment (26,119) (12,853) (63,390) (55,353) Proceeds from sale of property, plant and equipment - - 15,000 - Change in non-cash working capital (Note 11) 2,961 (1,339) 1,539 3,485 ------------------------------------ (23,158) (14,192) (46,851) (51,868) ------------------------------------ Financing activities Issue of common shares and warrants for cash, net of issue costs - 2.274 20,128 43,208 Operating loan 6,496 - 6,195 - Term loan - - 13,000 - ------------------------------------ 6,496 2,274 39,323 43,208 ------------------------------------ Increase (decrease) in cash and cash equivalents (10,048) (6,930) 2,526 (4,526) Cash and cash equivalents, beginning of period 18,903 15,933 6,329 13,529 ------------------------------------ Cash and cash equivalents, end of period (Note 11) $ 8,855 $ 9,003 $ 8,855 $ 9,003 ------------------------------------ ------------------------------------ See accompanying notes to consolidated financial statements. Notes to the Consolidated Financial Statements (unaudited, expressed in Thousands of U.S. dollars) 1. BASIS OF PRESENTATION The interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP). Certain information and note disclosures normally included in financial statements prepared in accordance with Canadian GAAP have been condensed or omitted. These interim consolidated financial statements should be read together with the audited consolidated financial statements and the accompanying notes for the year ended December 31, 2006. In the opinion of the Company, its unaudited interim consolidated financial statements contain all adjustments necessary in order to present a fair statement of the results of the interim periods presented. The preparation of interim financial statements is based on accounting principles and practices consistent with those used in the preparation of annual financial statements, except for the following changes in accounting policies: On January 1, 2007, the Company adopted the new Canadian accounting standards for financial instruments - recognition and measurement and financial instruments - presentation and disclosures. Prior periods have not been restated. Financial instruments - recognition and measurement This new standard requires all financial instruments within its scope, including all derivatives, to be recognized on the balance sheet initially at fair value. Subsequent measurement of all financial assets and liabilities except those held-for-trading and available for sale are measured at amortized cost determined using the effective interest rate method. Held-for-trading financial assets are measured at fair value with changes in fair value recognized in earnings. Available-for-sale financial assets are measured at fair value with changes in fair value recognized in comprehensive income and reclassified to earnings when impaired. Cash and cash equivalents are held-to-maturity investments and the fair values approximate their carrying value due to their short-term nature. Accounts receivable, operating loan, accounts payable and accrued liabilities are classified as loans and receivables and the fair value approximates their carrying value due to the short-term nature of these instruments. The term loan is classified as a loan and its fair value approximates its carrying value as it bears interest at market rates. The Company has not designated any financial instruments as held-for-trading. The Company has designated its investment in the units of Palo Duro Energy Inc. as available-for-sale. The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned operating subsidiaries, Bankers Petroleum Albania Ltd. and Bankers Petroleum (U.S.) Inc. Unless where otherwise noted, the unaudited interim consolidated financial statements and their accompanying notes are presented in thousands of United States dollars. Certain prior period figures have been re-classified to conform to the current period's presentation. 2. INVESTMENT 2007 2006 --------------------------------------------------------------------- 15,152,142 units of Palo Duro Energy Inc. $ 1,733 $ - Other 50 - --------------------------------------------------------------------- $ 1,783 $ - --------------------------------------------------------------------- --------------------------------------------------------------------- In May 2007, the Company sold a 27% working interest in the Palo Duro basin, Texas to a wholly owned U.S. subsidiary of a Canadian public company. This transaction was satisfied by a payment of $15 million in cash and the issue of 15,152,142 units of Palo Duro Energy Inc. valued at $4.5 million. Each unit consists of one common share and one half of one common share purchase warrant. Each warrant entitles the holder to acquire an additional common share at a price of CAD $0.50 per share until March 21, 2009. As at September 30, 2007 the Company has not sold any of the shares and the quoted market value of the investment at that date was $1,733. Accordingly, an unrealized loss of $2,767 was recorded in other comprehensive loss and the investment is written down to its market value. 3. PROPERTY, PLANT AND EQUIPMENT The following table summarizes the Company's property, plant and equipment as at September 30, 2007 and December 31, 2006: 2007 2006 ------------------------------------------- Accumu- lated depletion and deprecia- Net Book Net Book Cost tion Value Value ------------------------------------------- Oil and gas properties - Albania $ 98,922 $ 12,216 $ 86,706 $ 55,084 Oil and gas properties - United States 73,091 42 73,049 66,520 Equipment, furniture and fixtures 2,384 547 1,837 1,049 ------------------------------------------- $ 174,397 $ 12,805 $ 161,592 $ 122,653 ------------------------------------------- ------------------------------------------- The depletion expense calculation for the three and nine month periods ended September 30th, 2007 for the United States cost centre excludes $66,864 (2006 - $66,520) relating to unproved properties. The Company capitalized general and administrative expenses of $807 and $2,198 during the three and nine month periods ended September 30, 2007 ($325 and $825 for the corresponding periods in 2006) in Albania and the United States that were directly related to exploration and development activities. Depletable assets for the depletion calculation for the nine months ended September 30, 2007 included $101,000 (2006 - $81,000) for estimated future development costs associated with proved undeveloped reserves in Albania. 4. TERM AND OPERATING LOAN FACILITY The term and operating loan facility is comprised of a $16 million operating loan and a $15 million five-year term loan. The facility is secured by all of the assets of Bankers Petroleum Albania Ltd., assignment of proceeds from the Albanian domestic and export crude oil sales contracts, a pledge of the common shares of Bankers Petroleum Albania Ltd., and a guarantee by the Company. (a) Operating Loan The operating loan has a one year term and bears interest at one year LIBOR plus 3.5%. The term of the operating loan may be extended for further twelve month periods up to four times upon request by the Company and acceptance by the lender. As at September 30, 2007, $10,967 of the operating loan was drawn down. (b) Term Loan The term loan has no scheduled repayments during the first twelve months after which it is repayable in equal monthly instalments over a 48-month period. The term loan bears interest at one year LIBOR plus 4.5%. As at September 30, 2007, the entire term loan was drawn down of which $3,750 was classified as a current liability and $11,250 as long-term debt. Principal repayments of the term loan over the five years are as follows: --------------------------------------------------------------------- 2007 $ 940 2008 3,515 2009 3,515 2010 3,515 2011 3,515 ---------- $ 15,000 ---------- ---------- 5. ASSET RETIREMENT OBLIGATIONS In Albania, the Company estimated the total undiscounted amount required to settle the asset retirement obligations at $13,565. These obligations will be settled at the end of the Company's 25-year license of which 24 years are remaining. The undiscounted liability has been discounted using a credit-adjusted risk-free interest rate of 9% to arrive at asset retirement obligations of $1,932, as at September 30, 2007. In the United States, the Company estimated the total undiscounted amount required to settle the asset retirement obligations at $667. These obligations are expected to be settled in 15 years. The undiscounted liability has been discounted using a credit-adjusted risk-free interest rate of 5.5% to arrive at asset retirement obligations of $433, as at September 30, 2007. --------------------------------------------------------------------- Asset retirement obligations, December 31, 2006 $ 1,593 Liabilities incurred during the period 656 Accretion 116 ---------- Asset retirement obligations, September 30, 2007 $ 2,365 ---------- ---------- 6. FUTURE INCOME TAX LIABILITY Future income tax expense relates to the Albanian operations and results from the following: 2007 2006 --------------------------------------------------------------------- Net book value of property, plant and equipment net of asset retirement obligations $ 86,176 $ 51,373 Cost recovery pool (68,481) (45,226) ---------------------- Timing difference $ 17,695 $ 6,147 ---------------------- ---------------------- Future income tax liability @ 50% as at September 30 $ 8,848 $ 3,073 Less: Future income tax liability as at December 31, 2006 and 2005 3,126 282 ---------------------- Future income tax expense for the period $ 5,722 $ 2,791- ---------------------- ---------------------- The high effective income tax rate resulting from future income tax expense of $5,722 in relation to income before taxes of $5,536 is due to the Canadian and the U.S. expenses not providing any relief from taxes in Albania. The cost recovery pool represents deductions for income taxes in Albania. 7. SHAREHOLDERS' EQUITY (a) Share Capital and Contributed Surplus Authorized Unlimited number of common shares with no par value. Issued Number of Contributed Common Shares Amount Surplus --------------------------------------------------------------------- Balance, December 31, 2005 327,986,533 $ 53,205 $ 2,014 Shares issued pursuant to a private placement 50,000,000 43,200 - Issue of common shares for oil and gas properties 25,971,715 20,000 - Exercise of compensation options 784,636 381 - Shares issued on exercise of warrants 7,323,750 2,608 - Share issuance costs - (2,698) - Stock-based compensation - - 2,442 ---------------------------------------- Balance, December 31, 2006 412,066,634 116,696 4,456 Shares issued pursuant to a public offering 36,042,858 19,227 - Share issuance costs - (1,103) - Stock-based compensation - - 2,855 ---------------------------------------- Balance, September 30, 2007 448,109,492 $ 134,820 $ 7,311 ---------------------------------------- ---------------------------------------- Weighted average number of common shares used in the calculation of basic loss per share was 448,109,492 and 440,320,010 for the three and nine month periods ended September 30, 2007 (408,909,069 and 381,048,029 for the same periods in 2006). The weighted average number of common shares used in the calculation of diluted earnings per share was 451,458,624 for the three month period ended September 30, 2007. In March 2007, the Company issued an aggregate of 36,042,858 units at a price of CDN$0.70 per unit on a bought-deal basis, resulting in net proceeds of approximately $20,119 after commissions and share issue expenses. Each unit consists of one common share and one-half of one common share purchase warrant. The Company determined the fair value of warrants as CDN$0.15 using the Black-Scholes option pricing model. As a result, $2,307 of the proceeds were allocated to warrants. Each whole warrant will entitle the holder to purchase one common share of the Company at a price of CDN$0.90 for a period of five years from the closing of the offering. (b) Warrants A summary of the changes in warrants is presented below. Weighted Average Exercise Number of Price Warrants Amount (CAD $) --------------------------------------------------------------------- Balance, December 31, 2006 15,902,023 $ - 0.95 Warrants issued pursuant to a public offering 18,021,429 2,307 0.90 Issue costs (303) ---------------------------------------- Balance, September 30, 2007 33,923,452 $ 2,004 0.92 ---------------------------------------- ---------------------------------------- The following table summarizes the outstanding and exercisable warrants at September 30, 2007. Weighted Average Number of Warrants Expiry Date Exercise Price (CAD $) --------------------------------------------------------------------- 15,902,023 November 10, 2009 0.95 18,021,429 January 14, 2012 0.90 ------------------ 33,923,452 ------------------ ------------------ (c) Stock Options A summary of the changes in stock options is presented below: Number of Weighted Average Options Exercise Price (CAD $) --------------------------------------------------------------------- Balance, December 31, 2006 23,530,000 0.83 Options granted 9,935,000 0.59 Options forfeited (760,000) 0.82 -------------------------------------- Balance, September 30, 2007 32,705,000 0.75 -------------------------------------- -------------------------------------- (d) Stock-based Compensation Using the fair value method for stock-based compensation, the Company calculated stock-based compensation expense for the three and nine month periods ended September 30, 2007 as $1,107 and $2,855 ($706 and $2,450 for the same periods in 2006) for the stock options vested and/or granted to officers, directors, employees and service providers. Of these amounts, $1,015 and $2,505 ($706 and $2,450 for the same periods in 2006) was charged to earnings and $92 and $350 (nil for the same periods in 2006) were capitalized. The Company determined these amounts using the Black-Scholes option pricing model assuming no dividends were paid. The weighted average fair market value per option granted in the three and nine month periods ended September 30, 2007 and 2006 and the assumption used in their determination were as follows: Three months ended Nine months ended September 30 September 30 --------------------------------------------------------------------- 2007 2006 2007 2006 --------------------------------------------------------------------- Weighted average fair value per option $0.31 $0.42 $0.35 $0.46 Risk-free interest rate (%) 4.51 3.66 4.22 3.63 Average volatility (%) 66 63 67 54 Expected life (years) 5 5 5 5 8. SEGMENTED INFORMATION The Company defines its reportable segments based on geographic locations. Nine months ended United September 30, 2007 Albania States Canada Total --------------------------------------------------------------------- Revenue Oil and gas revenue, net of royalties $ 34,847 $ 153 $ - $ 35,000 ------------------------------------------- Expenses Operating 12,441 189 - 12,630 Sales and transportation 2,850 - - 2,850 General and administrative 1,898 731 2,829 5,458 Interest and bank charges 553 - 553 Interest on term loan 876 - - 876 Stock-based compensation 567 486 1,452 2,505 Depletion, depreciation and accretion 5,875 81 67 6,023 ------------------------------------------- 25,060 1,487 4,348 30,985 ------------------------------------------- Segment income (loss) 9,787 (1,334) (4,348) 4,105 -------------------------------- Other income 1,431 Future income tax expense (5,722) ------------------------------------------- Loss for the period $ (186) ------------------------------------------- ------------------------------------------- Assets, September 30, 2007 $ 99,297 $ 75,887 $ 10,468 $ 185,652 ------------------------------------------- ------------------------------------------- Additions to property, plant and equipment $ 37,216 $ 25,937 $ 237 $ 63,390 ------------------------------------------- ------------------------------------------- Cash proceeds from sale of property, plant and equipment $ - $ 15,000 $ - $ 15,000 ------------------------------------------- ------------------------------------------- Nine months ended United September 30, 2006 Albania States Canada Total --------------------------------------------------------------------- Revenue Oil and gas revenue, net of royalties $ 19,742 $ - $ - $ 19,742 ------------------------------------------- Expenses Operating 8,744 - - 8,744 Sales and transportation 1,581 - - 1,581 General and administrative 1,534 410 1,900 3,844 Stock-based compensation 576 560 1,314 2,450 Depletion, depreciation and accretion 3,099 10 29 3,138 ------------------------------------------- 15,534 980 3,243 19,757 ------------------------------------------- Segment income (loss) 4,208 (980) (3,243) (15) -------------------------------- Other income 1,352 Future income tax expense (2,791) ------------------------------------------- Loss for the period $ (1,454) ------------------------------------------- ------------------------------------------- Assets, September 30, 2006 $ 57,415 $ 61,352 $ 8,339 $ 127,106 ------------------------------------------- ------------------------------------------- Additions to property, plant and equipment $ 31,386 $ 23,905 $ 62 $ 55,353 ------------------------------------------- ------------------------------------------- Three months ended United September 30, 2007 Albania States Canada Total --------------------------------------------------------------------- Revenue Oil and gas revenue, net of royalties $ 14,317 153 - 14,470 ------------------------------------------- Expenses Operating 4,535 33 - 4,568 Sales and transportation 1,068 - - 1,068 General and administrative 757 196 1,022 1,975 Interest and bank charges 242 242 Interest on term loan 338 - - 338 Stock-based compensation 183 235 597 1,015 Depletion, depreciation and accretion 2,113 57 27 2,197 ------------------------------------------- 9,236 521 1,646 11,403 ------------------------------------------- Segment income (loss) 5,081 (368) (1,646) 3,067 -------------------------------- Other income 141 Future income tax expense (2,944) ------------------------------------------- Income for the period $ 264 ------------------------------------------- ------------------------------------------- Additions to property, plant and equipment $ 13,010 $ 13,053 $ 56 $ 26,119 ------------------------------------------- ------------------------------------------- Three months ended United September 30, 2006 Albania States Canada Total --------------------------------------------------------------------- Revenue Oil and gas revenue, net of royalties $ 8,185 $ - $ - $ 8,185 ------------------------------------------- Expenses Operating 3,141 - - 3,141 Sales and transportation 728 - - 728 General and administrative 567 195 660 1,422 Stock-based compensation 313 129 264 706 Depletion, depreciation and accretion 1,210 5 11 1,226 ------------------------------------------- 5,959 329 935 7,223 ------------------------------------------- Segment income (loss) 2,226 (329) (935) 962 -------------------------------- Other income 56 Future income tax expense (1,226) ------------------------------------------- Loss for the period $ (208) ------------------------------------------- ------------------------------------------- Additions to property, plant and equipment $ 9,839 $ 2,992 $ 22 $ 12,853 ------------------------------------------- ------------------------------------------- 9. RELATED PARTY TRANSACTIONS Bankers contracts with a Canadian drilling company, whose principal shareholder and officer is a Director of Bankers, for the provision of rigs and other oil well services at industry competitive rates. Bankers also incurs legal, rent and office services with companies related by way of common directors and/or officers. During the three and nine month periods ended September 30, 2007 and 2006, the company incurred the following expenses with these parties: Three months ended Nine months ended September 30 September 30 --------------------------------------------------------------------- 2007 2006 2007 2006 --------------------------------------------------------------------- Legal fees $16 $33 $243 $296 Rent and office services 14 13 39 42 Rigs and oil well servicing 2,602 2,123 6,998 6,421 At September 30, 2007 and 2006, included in accounts payable and accrued liabilities are the following amounts which are payable to companies related by way of directors and/or officers in common: 2007 2006 --------------------------------------------------------------------- Legal fees $ 25 $ 56 Oil well servicing 1,466 1,145 These transactions, occurring in the normal course of operations, are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. 10. COMMITMENTS a) Capital Expenditures In March 2006, the Company's Plan of Development for the Patos Marinza heavy oilfield in Albania was approved by Albanian National Agency of Natural Resources (AKBN). Under the Plan of Development submitted to AKBN, the Company estimated the remaining capital expenditures as at January 1, 2007 between $125 million to $183 million during the life of the Patos Marinza project. The estimated capital expenditures during the next five years are as follows: ($ millions) Case I Case II --------------------------------------------------------------------- 2007 38.3 42.2 2008 31.6 29.4 2009 9.5 41.6 2010 10.9 15.5 2011 9.5 10.7 Remaining 25.0 43.9 --------------------------------------------------------------------- 124.8 183.3 --------------------------------------------------------------------- --------------------------------------------------------------------- The difference between Case I and Case II relates to maximum future production levels. The Petroleum Agreement stipulates that the Company submit to AKBN each year an annual program which includes the nature and the amount of capital expenditures to be incurred in that year. Significant deviations in this annual program from the Plan of Development will be subject to AKBN approval. Disagreements between the parties will be referred to an independent expert whose decision will be binding. The Company has the right to relinquish a portion or all of the contract area. Any relinquishment will reduce the associated capital expenditure commitments. If only a portion of the contract area is relinquished then the Company will continue to conduct petroleum operations on the portion retained and the future capital expenditures will be adjusted accordingly. The Company spent $37.2 million towards its 2007 commitment during the nine months period ended September 30, 2007. b) Office Premises The Company leases office premises. The minimum lease payments for the next five years are as follows: ($000s) --------------------------------------------------------------------- 2007 $ 90 2008 233 2009 172 2010 172 2011 172 Thereafter 7 ----------- $ 846 ----------- ----------- 11. SUPPLEMENTAL CASH FLOW INFORMATION Three months ended Nine months ended September 30 September 30 --------------------------------------------------------------------- 2007 2006 2007 2006 --------------------------------------------------------------------- Operating activities (Increase) in decrease in current assets Accounts receivable $ 1,085 2,232 $ (3,293) (1,001) Crude oil inventory (209) (255) (506) (255) Deposit and prepaid expenses 431 105 (575) (196) Increase in (decrease) in current liabilities Accounts payable and accrued liabilities (1,113) (44) 364 (1,339) -------------------------------------------- $ 194 2,038 $ (4,010) (2,791) -------------------------------------------- -------------------------------------------- Investing activities (Decrease) increase in current liabilities Accounts payable and accrued liabilities $ 2,961 (1,339) $ 1,539 3,485 -------------------------------------------- -------------------------------------------- Cash and cash equivalents Cash $ 929 3,365 $ 929 3,365 Fixed income investments 7,926 5,638 7,926 5,638 -------------------------------------------- $ 8,855 9,003 $ 8,855 9,003 -------------------------------------------- -------------------------------------------- Interest paid $ 573 - $ 1,422 - -------------------------------------------- --------------------------------------------

For further information:

For further information: Susan J. Soprovich, VP, Investor Relations and
Corporate Governance, Ph: (403) 513-2681, Email:
investorrelations@bankerspetroleum.com, Website: www.bankerspetroleum.com; AIM
NOMAD: Canaccord Adams Limited, Ryan Gaffney/Adam Janikowski, +44 20 7050
6500

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Bankers Petroleum Ltd.

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