Bankers Petroleum Announces 2014 Year-End Reserves

203 Million Barrels of Proved plus Probable (2P) Reserves including 11.3 Million Barrels of EOR Reserves;
NPV of US$1.8 billion

CALGARY, March 2, 2015 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) announces the results of its December 31, 2014, independent reserves evaluation. Evaluations were conducted by RPS Energy Canada Ltd. (RPS) for the Patos-Marinza oilfield, Albania, and by DeGolyer and McNaughton Canada Ltd. (D&M) for the Kuçova oilfield, Albania; and were prepared in accordance with Canadian National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities.

David French, President and CEO commented "This 2014 Reserves update marks an important strategic transition for Bankers.  First, we are pleased with the recognition of our Enhanced Oil Recovery (EOR) program with initial EOR Proved Developed Producing (PDP) and Proved Undeveloped (PUD) reserve bookings. We see EOR as an integral part of our future growth. The 76 patterns booked this year represent less than one-fifth of our current opportunity set at the floodable viscosity ranges in our field.  Second, we have experienced modest communication at 100 metre spacing in our core development area.  While this temporarily impacts our primary-only reserves per well, it will be the right answer for commercial EOR development and subsequent bookings.  Lastly, the shallower depths and higher viscosities of our southern non-core area appear commercially challenged at the current oil price. We will continue to solve for the right technical solution to access these areas, such as the multilateral test last year.  On balance, our ongoing efforts to reduce operating expenses and capital development, validate the potential for EOR, and solve the challenges of our heaviest sands to set us up well for the future."

Overview

  • First time booking of EOR reserve volumes in Patos-Marinza oilfield at 2.0, 8.6, 11.3 and 13.4 million barrels on a PDP, Proved (1P), Proved plus Probable (2P), and Proved Probable plus Possible (3P) basis, respectively;
  • 1P Reserves decreased 15% to 125.0 million barrels with after tax value discounted at 10% down 40% to US$734 million (representing CAD$3.49 per share);
  • 2P Reserves decreased 12% to 203.3 million barrels with after tax value discounted at 10% down 20% to  US$1.8 billion (representing CAD$8.57 per share);
  • Reserve volume increases resulted from additional future development in the core areas of the Patos-Marinza field following improved rate and recovery performance from the polymer and water-flood EOR patterns implemented, including horizontal drilling on reduced spacing (100 metre) and between 20 to 30 injector conversions per year over the next two years;
  • Reserves volume decreases are largely attributed to deferred development in extension areas of the oilfield where commercial viability is less at current oil prices, secondary pressure support is not planned near term and production techniques are being tested for improved recovery in higher viscosity and lower temperature areas, including the Gorani and southern Driza reservoirs;
  • Main drivers for the decreased valuation are the lower price forecast, revised development activity to focus on core areas of the oilfield and technical revisions to reflect well performance in 200 metre and reduced spacing development in core and extension areas;
  • 2014 Company average production was 20,687 bopd for an annual total volume of 7.6 million barrels (6% of total proved reserves);
  • Reserves Life Index for 1P and 2P is 17 years and 27 years, respectively.

Total Company Reserves Summary

Gross Oil Reserves – Using Forecast Prices (Million barrels)








2014


2013




Patos-
Marinza

Kuçova

Total
Albania


Patos-
Marinza

Kuçova

Total
Albania


%

Proved











Developed Producing

36.3

0.1

36.4


40.3

-

40.3


-10


Developed Non-Producing

-

0.1

0.1


0.7

-

0.7


-83


Undeveloped

86.0

2.6

88.5


102.3

3.4

105.7


-16

Total Proved (1P)

122.3

2.8

125.0


143.3

3.4

146.7


-15

Probable

69.1

9.2

78.3


77.0

8.5

85.5


-8

Total Proved Plus Probable (2P)

191.4

12.0

203.3


220.3

11.9

232.2


-12

Possible

81.0

15.5

96.9


104.0

21.4

125.4


-23

Total Proved, Probable & Possible (3P)

272.8

27.5

300.3


324.3

33.3

357.6


-16











Patos-Marinza Contingent and Prospective Resources (Million barrels – P50 Probability Level)














2014



2013



%

Contingent Resource



512



505



1

Prospective Resource



315



259



22











Net Present Value at 10% - After Tax Using Forecast Prices (US$ millions)








2014


2013


%


Patos-
Marinza

Kuçova

Total
Albania


Patos-
Marinza

Kuçova

Total
Albania



Proved











Developed Producing

388

1

389


568

-

568


-32


Developed Non-Producing

-

1

1


11

-

11


-89


Undeveloped

327

17

344


614

23

637


-46

Total Proved

715

19

734


1,193

23

1,216


-40

Probable

968

100

1,068


926

98

1,024


4

Total Proved Plus Probable

1,683

119

1,802


2,119

121

2,240


-20

Possible

846

197

1,043


1,003

296

1,299


-20

Total Proved, Probable & Possible

2,529

316

2,845


3,122

417

3,539


-20











 










2014


2013

Reserves Value
10% Discounted, After Tax



CAD$/Share


US$/bbl


CAD$/Share


US$/bbl


1P reserves



$3.49


$5.87


$5.27


$8.29


2P reserves



$8.57


$8.86


$9.72


$9.65


3P reserves



$13.54


$9.47


$15.36


$9.90









Basic shares outstanding as of December 31, 2014, were approximately 261 million (285 million diluted).

Values are based on RPS (Patos-Marinza) and D&M (Kuçova) January 1, 2015, price forecast tables summarized below:

Reserves Evaluator Price Decks – Dated Brent

BRENT Oil Price Forecast US$/bbl

Year

RPS

D&M

2015

70.03

69.00

2016

74.64

75.40

2017

79.50

82.03

2018

84.50

88.90

2019

89.50

96.01

2020

93.85

97.85

2021

95.72

99.72

2022

97.64

101.64

2023

99.59

103.59

2024

101.58

105.58

2025

103.61

107.61

2026

+2.0% Thereafter

+2.0% Thereafter

 

Finding and Development Costs (F&D)

The future development capital has decreased with deferral of activity in the extension areas of the Patos-Marinza oilfield.  The resulting future horizontal well count has decreased from 995 to 882 in the 2P development case and from 984 to 870 in the 1P and 1,082 to 999 in the 3P cases.  In 2014, Bankers drilled 157 new horizontal production wells in Patos-Marinza.  

Total future undiscounted capital costs for Patos-Marinza and Kuçova are projected to be US$2.0 billion, US$2.1 billion and US$2.4 billion on a 1P, 2P and 3P basis, respectively.  This represents a 14%, 13% and 11% decrease in future capital on a 1P, 2P, and 3P basis compared to the previous year.  The F&D costs, calculated as total future development capital divided by recoverable reserves excluding currently developed PDP and Proved Developed Non-Producing (PDNP) reserves, are summarized in the table below:













2014



2013

F&D Costs




US$/bbl



US$/bbl

1P reserves




$22.57



$20.45

2P reserves




$12.69



$12.08

3P reserves




$8.95



$7.85









Oil Initially in Place

In Patos-Marinza, the Oil Initially in Place ("OIIP") volumes in the reserves area remain essentially the same at 2.3 billion barrels and the OIIP outside the reserves area at 2.8 billion barrels in 2014.

The Kuçova OIIP resource estimate remains at 297 million barrels.

Operational Update

The last ten day average production was 20,750 bopd, 2% higher than the fourth quarter of 2014 average.  All wells that had been temporarily shut-in due to limited surface access during the flooding are now returned to production.  These wells continue to be optimized and as they clean-up, are expected to resume previous rates throughout the remainder of the first quarter.

As previously announced, Bankers has now reduced its drilling activity to two drilling rigs.

Further details, including the March 2015 Corporate Presentation, are available on the Company's website www.bankerspetroleum.com.

Conference Call

Bankers' Management will host a conference call on March 2, 2015 at 6:30 am MST (8:30 am EST, 1:30 pm GMT) to discuss this reserves report. Following Management's presentation, there will be a question and answer session for analysts and investors.

To participate in the conference call, please contact the conference operator ten minutes prior to the call at 1-888-231-8191 or 1-647-427-7450.  A live audio web cast of the conference call will also be available on Bankers website  at www.bankerspetroleum.com or by entering the following URL into your web browser http://www.newswire.ca/en/webcast/detail/1488471/1657241.

The web cast will be archived two hours after the presentation on the website, and posted on the website for 90 days.  A replay of the call will be available until March 16, 2015 by dialing 1-855-859-2056 or 1-416-849-0833 and entering access code 89799223.

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.

Review by Qualified Person

This release was reviewed by Suneel Gupta, Executive Vice President and Chief Operating Officer 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 (member of APEGA) with over 20 years' experience in domestic and international oil and gas operations. 

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

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