Bankers Petroleum Announces 2014 Financial Results

Cash Position of $73 Million and 14% Increase in Oil Sales

CALGARY, March 12, 2015 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2014 financial results.  All amounts set out in this press release and listed in the tables below are in US dollars unless otherwise stated.

In 2014, Bankers made several key accomplishments including record levels of revenue of $583 million, adjusted funds generated from operations of $304 million, oil production of 20,690 barrels of oil per day (bopd) and capital investment of $291 million.

Results at a Glance

($000s, except as noted)


Year ended December 31

Results at a Glance



2014

2013

2012

Financial







Oil revenue


583,120

566,386

432,138


Net operating income


342,375

316,558

218,246


Net income


128,833

61,743

34,413



Basic (US$/share)



0.50

0.24

0.14



Diluted (US$/share)



0.49

0.24

0.14


Funds generated from operations


284,293

279,601

192,589


Adjusted funds generated from operations(1)


304,130

279,752

192,589



Basic (US$/share)




1.17

1.10

0.76


Capital expenditures


291,325

234,243

222,663

Operating







Average production (bopd)


20,690

18,169

15,020


Average sales (bopd)


20,679

18,173

14,808


Average Brent oil price (US$/barrel)


98.95

108.66

111.67


Average realized price (US$/barrel)


77.26

85.39

79.73


Netback (US$/barrel)


45.36

47.73

40.27










December 31




2014

2013

2012

Cash and restricted cash



73,036

31,706

38,740

Working capital



201,325

134,094

88,799

Total assets



1,284,846

1,007,148

825,816

Long-term debt



98,276

98,150

97,158

Shareholders' equity



716,536

564,675

483,032








1. Represents funds generated from operations before non-recurring contract settlement expenses.

 

Highlights

Bankers reached several key financial and operational achievements during 2014 as described below:

Operational Highlights:

  • Average oil production was 20,690 barrels of oil per day (bopd) in 2014, 14% higher than the 2013 average production of 18,169 bopd.  Average oil production for the 2015 year-to-date is approximately 19,500 bopd.

  • Oil sales averaged 20,679 bopd in 2014, a 14% increase compared to 18,173 bopd in 2013.  Crude oil inventory at December 31, 2014 increased to 315,500 barrels from 311,000 barrels at December 31, 2013. 

  • Capital expenditures in 2014 were $291 million, 24% higher compared to $234 million in 2013.  A total of 160 wells were drilled including 149 horizontal production wells, seven lateral re-drills, two water disposal wells and the Company's first multi-lateral well in the Patos-Marinza field and its first horizontal well drilled in the Kuçova oilfield.  A total of 146 wells were drilled in 2013.

  • The Company continued the Enhanced Oil Recovery (EOR) program in 2014 with monitoring and expansion of flood patterns.  At the end of the year, 19 polymer flood and 4 water flood patterns were in place in the Patos-Marinza oilfield and continue to perform to model expectations. Reservoir pressure and production response are positive with good reservoir flood conformance.  The Company continues to be strongly encouraged by the results to date and plans to move forward with 20 to 30 additional conversions in 2015.

  • Bankers commenced Kuçova oilfield development in the Arreza pool with the takeover of 59 wells from Albpetrol in August 2014, reactivation of three wells and drilling of the first horizontal well in 2014.

Product Margin Highlights:

  • Operating and Sales and Transportation (S&T) costs, primarily originating from Albanian-based companies and their employees, were $155 million ($20.51/bbl) for 2014 compared to $156 million for 2013 ($23.44/bbl), an improvement of 13% on a per barrel basis.  Overall, operating and S&T costs improved by 21%, on a per barrel basis, from 2013 to 2014, taking into account the $1.91/bbl impact of excise tax for 2014.

  • Net operating income (netback) in 2014 was $342 million ($45.36/bbl) compared to $317 million ($47.73/bbl) in 2013.

  • The Company focused on key infrastructure projects aimed at reducing costs and optimizing operations in the Patos-Marinza oilfield.  The field electrification project continued in the northern and central areas of the Patos-Marinza oilfield with realized energy cost savings.  Construction of the west water disposal line and northern flow line system started in 2014.  These projects target reductions in trucked volumes within the field.  Other infrastructure activities in 2014 include the commissioning of the Satellite 3 treating facility, installation of several Gas Oil Ratio (GOR) skids for gas capturing and measurement, as well as completed maintenance turnarounds of the main treating facilities.

Financial Highlights:

  • Revenue in 2014 was $583 million ($77.26/bbl) compared to $566 million ($85.39/bbl) in 2013.  Field price realization represented 78% of the Brent oil benchmark price ($98.95/bbl) as compared to 79% of the Brent price ($108.66/bbl) in 2013.   The reduction as a percentage of Brent compared to the previous year was mainly due to the commencement of domestic sales during 2014.

  • Royalties to the Albanian Government and related entities were $86 million (15% of revenue) during 2014 compared to $94 million (17% of revenue) for 2013. 

  • During 2014, adjusted funds generated from operations were $304 million ($1.17 per share), a 9% increase compared to $280 million ($1.10 per share) for 2013.

  • The Company continues to maintain a strong financial position at December 31, 2014 with cash and restricted cash of $73 million and working capital of $201 million.  At December 31, 2014, the Company had drawn $104 million of its $224 million approved credit facilities.  At December 31, 2013, cash and restricted cash was $32 million and working capital was $134 million

  • In August 2014, Bankers commenced delivery of crude oil to the domestic refinery, which is now under new ownership and management.  Bankers agreed to sell oil to an affiliate of this domestic refinery on a monthly basis until December 31, 2014 at 73% of Dated Brent (FOB Vlore equivalent) plus $40/tonne or approximately $6/bbl recovery against an outstanding accounts receivable balance.   

  • In April 2014, the Company paid a $3 million premium to enter into financial commodity contracts representing 6,000 bopd at a floor price of $80/bbl of Dated Brent for 2015.  At December 31, 2014, the fair value of these contracts was $44 million.

Other Highlights in 2014:

  • The Oil Initially in Place (OIIP) resource assessment in Albania at year-end was 5.4 billion barrels, consistent with the OIIP resource assessment at the end of 2013.  Reserves on a proved basis were 125 million barrels compared to 147 million barrels at year-end 2013.  On a proved plus probable basis, reserves were 203 million barrels compared to 232 million barrels at year-end 2013.  The corresponding net present value (NPV) after tax (discounted at 10%) of the proved plus probable reserves was $1.8 billion at year-end compared to $2.2 billion in 2013, representing CAD$8.57/share and CAD$9.72/share, respectively.

Fiscal Terms Mitigation:

  • Bankers and the Government of Albania worked together to reach an agreement on mitigation of the 2014 fiscal changes.  The terms of the agreement were approved by Albpetrol and AKBN, and were ratified by the Council of Ministers on November 2, 2014.  The agreement is structured to allow excise and any applicable carbon and circulation taxes to be deducted from revenue and eligible for inclusion in the cost recovery pool for the Patos-Marinza concession to determine the Company's taxable position.  This mechanism enables the near term impact on cash flow to be fully offset through a deferred and reduced profit tax burden which keeps the net asset value of the project whole and the economics of future investment consistent with the pre-2013 fiscal regime.

OUTLOOK

The Company's reduced capital program in 2015 will be $153 million, funded from projected cash flow (based on an average $50/bbl Brent oil price) and existing cash resources.  Additionally, the Company's 2015 hedge program, representing 6,000 bopd at $80/bbl Brent, will ensure sufficient funding to maintain a balanced program. The work program and budget include the following items:

  • Drilling of 60 horizontal wells focused on continuing development in the core area of the Patos-Marinza oilfield;

  • Continuation of the EOR program with the addition of 20 to 30 polymer and water injector conversions. The focus of the conversions planned is expansion of existing patterns, with several conversions testing new areas of the oilfield including higher viscosity fluids and thicker reservoir sands;

  • Continued focus on operational efficiencies in the field to expand product margins including the construction of emulsion flow-lines to reduce trucking costs, electrification and expansion of the gas gathering system to reduce energy costs and emissions, and a review of well construction and artificial lift design to improve well performance;

  • Expansion of the water disposal system to accommodate increased fluid handling requirements for the primary and EOR programs;

  • Drilling of one well in Kuçova and implementation of a flood pattern to commence EOR techniques in the oilfield;

  • Continued investment on environmental remediation and social initiatives as part of a sustained long-term effort to improve the physical environment, and to provide training programs and other community initiatives for the residents near the Company's operations. 

First Quarter Operational Update

Bankers intends to announce its first quarter 2015 Operational update on Tuesday, April 7, 2015.

Supporting Documents

The full Management Discussion and Analysis (MD&A), Financial Statements and updated March corporate presentation are available on www.bankerspetroleum.com. The MD&A and Financial Statements will also be available on www.sedar.com.


BANKERS PETROLEUM LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of US dollars, except per share amounts)









2014



2013









Revenues


$

583,120



$

566,386

Royalties



(85,966)




(94,294)




497,154




472,092

Realized loss on financial commodity contracts



(1,188)




(3,898)

Unrealized gain (loss) on financial commodity contracts



45,226




(1,555)




541,192




466,639









Operating expenses



95,317




88,510

Sales and transportation expenses



59,462




67,024

General and administrative expenses



22,189




21,212

Contract settlement expenses



19,837




151

Depletion and depreciation 



116,458




99,554

Share-based compensation



5,721




11,527




318,984




287,978




222,208




178,661









Net finance expense



(6,182)




(18,712)









Income before income tax



216,026




159,949

Deferred income tax expense



(87,193)




(98,206)

Net income for the year



128,833




61,743









Other comprehensive loss








Currency translation adjustment



(1,935)




(1,017)

Comprehensive income for the year


$

126,898



$

60,726









Basic earnings per share


$

0.497



$

0.243









Diluted earnings per share


$

0.486



$

0.241

















 

BANKERS PETROLEUM LTD.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS AT DECEMBER 31

(Expressed in thousands of US dollars)







ASSETS




2014


2013

Current assets








Cash and cash equivalents



$

68,036


$

24,597


Restricted cash




5,000



7,109


Accounts receivable




81,612



53,981


Inventory




10,008



38,025


Deposits and prepaid expenses




62,984



44,956


Financial commodity contracts




44,170



734





271,810



169,402

Non-current assets








Long-term receivable




-



7,019


Property, plant and equipment




1,004,508



823,908


Exploration and evaluation assets




8,528



6,819




$

1,284,846


$

1,007,148








LIABILITIES

Current liabilities








Accounts payable and accrued liabilities



$

69,285


$

33,812


Current portion of long-term debt




1,200



1,496





70,485



35,308

Non-current liabilities








Long-term debt




98,276



98,150


Decommissioning obligation




26,147



22,806


Deferred tax liabilities




373,402



286,209




568,310



442,473









SHAREHOLDERS' EQUITY

Share capital




363,670



340,305

Contributed surplus




86,409



84,811

Currency translation reserve




4,410



6,345

Retained earnings




262,047



133,214





716,536



564,675




$

1,284,846


$

1,007,148

 


BANKERS PETROLEUM LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of US dollars)









2014


2013

Cash provided by (used in):







Operating activities







Net income for the year



$

128,833

$

61,743

Depletion and depreciation




116,458


99,554

Accretion of long-term debt




1,350


2,805

Accretion of decommissioning obligation




1,139


1,019

Unrealized foreign exchange gain




(649)


(756)

Deferred income tax expense




87,193


98,206

Share-based compensation




5,721


11,527

Discount and revaluation (gain) loss of long-term receivable




(12,316)


4,687

Realized loss on financial commodity contracts




4,637


3,898

Unrealized (gain) loss on financial commodity contracts




(45,226)


1,555

Cash premiums paid for financial commodity contracts




(2,847)


(4,637)





284,293


279,601

Change in long-term receivable




19,335


(556)

Change in non-cash working capital




2,767


(54,403)





306,395


224,642

Investing activities







Additions to property, plant and equipment




(289,616)


(231,016)

Additions to exploration and evaluation assets




(1,709)


(3,227)

Restricted cash




2,109


(2,109)

Change in non-cash working capital




15,064


1,851





(274,152)


(234,501)

Financing activities







Issue of shares for cash




13,923


3,332

Financing costs




(435)


(1,994)

Change in long-term debt




(1,496)


(813)





11,992


525

Foreign exchange gain (loss) on cash and cash equivalents



(796)


191

Increase (decrease) in cash and cash equivalents




43,439


(9,143)

Cash and cash equivalents, beginning of year




24,597


33,740

Cash and cash equivalents, end of year



$

68,036

$

24,597








Interest paid



$

6,530

$

5,811

Interest received



$

409

$

159









 

BANKERS PETROLEUM LTD.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Expressed in thousands of US dollars, except number of common shares)



Number

of common

 shares

 

Share

capital

 

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


-


-


17,585


-


-


17,585

Options exercised


1,853,261


5,541


(2,209)


-


-


3,332

Net income for the year


-


-


-


-


61,743


61,743

Currency translation adjustment


-


-


-


(1,017)


-


(1,017)














Balance at December 31, 2013


255,681,911

$

340,305

$

84,811

$

6,345

$

133,214

$

564,675













Share-based compensation


-


-


11,040


-


-


11,040

Options exercised


5,002,482


21,804


(9,004)


-


-


12,800

Warrants exercised


400,000


1,561


(438)


-


-


1,123

Net income for the year


-


-


-


-


128,833


128,833

Currency translation adjustment


-


-


-


(1,935)


-


(1,935)














Balance at December 31, 2014


261,084,393

$

363,670

$

86,409

$

4,410

$

262,047

$

716,536
























 

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

RELATED LINKS
http://www.bankerspetroleum.com/

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