Bankers Petroleum Announces 2015 Financial Results

Cash Position of $69 Million and Balanced 2015 Capital Program

CALGARY, March 10, 2016 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2015 financial results.  All amounts set out in this press release and listed in the tables below are in US dollars unless otherwise stated.

In 2015, Bankers prioritized the strength of its balance sheet by carrying out a $144 million capital expenditure program fully-funded with 2015 funds generated from operations and maintaining cash and restricted cash of $69 million.

Results at a Glance


($000s, except as noted)

Year ended December 31

Results at a Glance

2015

2014

2013

Financial





Oil revenue



286,634

583,120

566,386


Net operating income



123,114

342,375

316,558


Net income (loss)



(3,614)

128,833

61,743



Basic (US$/share)



(0.01)

0.50

0.24



Diluted (US$/share)



(0.01)

0.49

0.24


Funds generated from operations



151,529

284,293

279,601


Adjusted funds generated from operations(1)



151,914

304,130

279,752



Basic (US$/share)



0.58

1.17

1.10


Capital expenditures



144,013

291,325

234,243

Operating







Average production (bopd)



19,385

20,690

18,169


Average sales (bopd)



19,545

20,679

18,173


Average Brent oil price (US$/barrel)



52.39

98.95

108.66


Average realized price (US$/barrel)



40.18

77.26

85.39


Netback (US$/barrel)



17.25

45.36

47.73


Cash margin (US$/barrel)



26.09

46.68

47.73










As at December 31




2015

2014

2013

Cash and restricted cash



69,141

73,036

31,706

Working capital



159,868

201,325

134,094

Total assets



1,261,390

1,284,846

1,007,148

Long-term debt



98,628

98,276

98,150

Shareholders' equity



719,294

716,536

564,675

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

Highlights

Bankers reached several key financial and operational achievements during 2015 as described below:

Operational Highlights:

  • Average oil production was 19,385 barrels of oil per day (bopd) in 2015, 6% lower than the 2014 average production of 20,690 bopd.  Average oil production for 2016 year-to-date is approximately 17,425 bopd.
  • Oil sales averaged 19,545 bopd in 2015, a 5% decrease compared to 20,679 bopd in 2014.  Crude oil inventory at December 31, 2015 decreased to 256,500 barrels from 315,500 barrels at December 31, 2014. 
  • Capital expenditures in 2015 were $144 million, 51% lower compared to $291 million in 2014.  A total of 61 wells were drilled including 52 horizontal production wells, four lateral re-drills, two water disposal wells, one multi-lateral well, one suspended well  in the Patos-Marinza field and one horizontal well drilled in the Kuçova oilfield.  A total of 160 wells were drilled in 2014.
  • The Company continued the Enhanced Oil Recovery (EOR) program in 2015 with monitoring and expansion of flood patterns.  At the end of the year, 48 polymer flood and five 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 16 additional conversions in 2016.

Product Margin Highlights:

  • Operating and Sales and Transportation (S&T) costs, primarily originating from Albanian-based companies and their employees, were $123 million ($17.31/bbl) for 2015 compared to $155 million ($20.51/bbl) for 2014, an improvement of 16% on a per barrel basis.
  • Net operating income (netback) in 2015 was $123 million ($17.25/bbl) compared to $342 million ($45.36/bbl) in 2014.
  • Cash margin for December 31, 2015 was $26.09/bbl compared to $46.68/bbl in 2014. Cash margin represents netback inclusive of the realized gain on commodity contracts and recovery against a legacy accounts receivable.

Financial Highlights:

  • Revenue in 2015 was $287 million ($40.18/bbl) compared to $583 million ($77.26/bbl) in 2014.  Field price realization represented 77% of the Brent oil benchmark price ($52.39/bbl) as compared to 78% of the Brent price ($98.95/bbl) in 2014.   The reduction as a percentage of Brent compared to the previous year was mainly due to an increase in domestic sales during 2015.
  • Royalties to the Albanian Government and related entities were $40 million (14% of revenue) during 2015 compared to $86 million (15% of revenue) for 2014. 
  • During 2015, adjusted funds generated from operations were $152 million ($0.58 per share) compared to $304 million ($1.17 per share) for 2014.
  • The Company continues to maintain a strong financial position at December 31, 2015 with cash and restricted cash of $69 million and working capital of $161 million. At the end of 2015, the Company had drawn $119 million from its credit facilities, as compared to $104 million at the end of 2014. At December 31, 2014, cash and restricted cash was $73 million and working capital was $201 million.
  • During 2015, the Company entered into three costless collar hedging contracts for 2016, representing 4,000 bopd at an average floor price of $54.31/bbl and average ceiling price of $57.29/bbl of Dated Brent. At December 31, 2015, the fair value of these contracts was $20 million. The 2015 hedge program represented a gain of $58 million, and comprised a good portion of funds generated from operations.
  • Subsequent to December 31, 2015, the Company has signed a formal binding agreement with the Albanian National Agency for Natural Resources (AKBN) and the Minister of Energy and Industry to engage a third-party international auditor to assist in resolving the outstanding cost recovery audit.

Other Highlights in 2015:

  • The Oil Initially in Place (OIIP) resource assessment in Albania at year-end 2015 was 5.8 billion barrels, compared to the 5.4 billion barrels of OIIP resource assessment at the end of 2014. Reserves on a proved basis were 126 million barrels compared to 125 million barrels at year-end 2014. On a proved plus probable basis, reserves were 202 million barrels compared to 203 million barrels at year-end 2014. The corresponding net present value (NPV) after tax (discounted at 10%) of the proved plus probable reserves was $1.4 billion at year-end 2015 compared to $1.8 billion at December 31, 2014, representing CAD$7.49/share and CAD$8.57/share, respectively.
  • During 2015, the Company, through an open tender, acquired an 85% interest in the rights to explore the Püspökladány concession within the Pannonian Basin located in north eastern Hungary. The Company will operate the license and fund its share of the work commitment, estimated at €12.3 million, over the next three and a half years. The work commitment includes acquiring 200km2 of 3D seismic and drilling of three exploration wells.  Subsequent to the year end, this concession agreement was finalized with the government of Hungary, represented by the Minister of National Development.

Outlook

The 2016 capital program prioritizes management's strategy to maintain a strong balance sheet during the current period of low oil prices, maximizing activity to fit within cash flow.  Bankers' activity will focus on maintaining the EOR program, managing existing production and drilling new horizontal wells in the second half of the year, if pricing allows.  Base maintenance capital at the Patos-Marinza oilfield would require capital expenditure of approximately $24 million, additional activities included in the 2016 capital program are outlined as follows:

  • Continuation of the EOR program with the additional 16 planned polymer conversions;
  • Facilities and infrastructure activities which include optimization of existing wells and some improvements aimed at lowering operating costs, improving treating capability and managing water handling needs;
  • Drilling of 16 horizontal wells focused on continuing development in the core area of the Patos-Marinza oilfield in the second half of the year as pricing allows;
  • Continued investment in 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.

The 2016 capital budget and work program is based on an average annual Brent oil price assumption of $46.25/bbl; $42.50/bbl in the first half of the year, with some pricing improvement assumed for the second half average of $50.00/bbl.  Additionally, commencing in the second half of 2015, Bankers began to build upon its 2016 hedging strategy by placing costless collar contracts with an average floor of $52.09/bbl and an average ceiling of $54.64/bbl on 5,000 bopd for 2016 (all prices are referenced to Dated Brent).

First Quarter Operational Update

Bankers intends to announce its first quarter 2016 Operational update on Tuesday, April 5, 2016.

Annual General Meeting

Bankers Petroleum will host its annual general meeting of shareholders of Bankers Petroleum Ltd. at The Metropolitan Centre, Strand/Tivoli Room, on Wednesday, May 18, 2016 at 3:00 pm MDT.  The Metropolitan Centre is located at 333- 4th Avenue SW, Calgary, Alberta.

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 (LOSS)

FOR THE YEARS ENDED DECEMBER 31

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








2015


2014






Revenues

$

286,634

$

583,120

Royalties


(40,070)


(85,966)

Revenues, net of royalties


246,564


497,154

Realized gain (loss) on financial commodity contracts


58,151


(1,188)

Unrealized gain (loss) on financial commodity contracts


(21,323)


45,226

Total operating revenues


283,392


541,192






Operating expenses


84,667


95,317

Sales and transportation expenses


38,783


59,462

General and administrative expenses


20,992


22,189

Contract settlement expenses


385


19,837

Depletion and depreciation 


119,534


116,458

Share-based compensation


4,213


5,721

Provision for bad debt expense


17,099


-

Total expenses


285,673


318,984

Operating income (loss)


(2,281)


222,208






Net finance expense


(17,375)


(6,182)






Income (loss) before income tax


(19,656)


216,026

Income tax (expense) recovery






Current





(765)


-


Deferred





16,807


(87,193)



16,042


(87,193)

Net income (loss) for the year


(3,614)


128,833






Other comprehensive loss





Currency translation adjustment


(2,893)


(1,935)

Comprehensive income (loss) for the year

$

(6,507)

$

126,898






Basic earnings (loss) per share

$

(0.014)

$

0.497






Diluted earnings (loss) per share

$

(0.014)

$

0.486














BANKERS PETROLEUM LTD.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS AT DECEMBER 31

(Expressed in thousands of US dollars)


ASSETS



2015



2014

Current assets







Cash and cash equivalents

$

51,963


$

68,036


Restricted cash


17,178



5,000


Accounts receivable


56,592



81,612


Inventory


4,597



10,008


Deposits and prepaid expenses


67,514



62,984


Financial commodity contracts


20,000



44,170



217,844



271,810

Non-current assets







Property, plant and equipment


1,034,791



1,004,508


Exploration and evaluation assets


8,755



8,528


$

1,261,390


$

1,284,846







LIABILITIES

Current liabilities







Accounts payable and accrued liabilities

$

39,156


$

69,285


Income tax liability


765



-


Current portion of long-term debt


18,055



1,200



57,976



70,485

Non-current liabilities







Long-term debt


98,628



98,276


Decommissioning obligation


29,264



26,147


Deferred tax liabilities


356,228



373,402



542,096



568,310







SHAREHOLDERS' EQUITY

Share capital


365,045



363,670

Contributed surplus


94,299



86,409

Currency translation reserve


1,517



4,410

Retained earnings


258,433



262,047



719,294



716,536


$

1,261,390


$

1,284,846








BANKERS PETROLEUM LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of US dollars)









2015


2014

Cash provided by (used in):







Operating activities








Net income (loss) for the year



$

(3,614)

$

128,833


Depletion and depreciation




119,534


116,458


Accretion of long-term debt




961


1,350


Accretion of decommissioning obligation




1,308


1,139


Unrealized foreign exchange (gain) loss




3,900


(649)


Current income tax expense




765


-


Deferred income tax expense (recovery)




(16,807)


87,193


Share-based compensation




4,213


5,721


Discount and revaluation gain of long-term receivable




-


(12,316)


Provision for bad debt expense




17,099


-


Realized loss on financial commodity contracts




2,847


4,637


Unrealized (gain) loss on financial commodity contracts




21,323


(45,226)


Cash premiums paid for financial commodity contracts




-


(2,847)





151,529


284,293


Change in long-term receivable




-


19,335


Change in non-cash working capital




(8,985)


2,767





142,544


306,395

Investing activities








Additions to property, plant and equipment




(143,786)


(289,616)


Additions to exploration and evaluation assets




(227)


(1,709)


Restricted cash




(12,178)


2,109


Change in non-cash working capital




(17,734)


15,064





(173,925)


(274,152)

Financing activities








Issue of shares for cash




722


13,923


Financing costs




-


(435)


Change in long-term debt




15,655


(1,496)





16,377


11,992

Foreign exchange loss on cash and cash equivalents



(1,069)


(796)

Increase (decrease) in cash and cash equivalents




(16,073)


43,439

Cash and cash equivalents, beginning of year




68,036


24,597








Cash and cash equivalents, end of year



$

51,963

$

68,036








Interest paid



$

6,742

$

6,530

Interest received



$

256

$

409










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, 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














Share-based compensation


-


-


8,543


-


-


8,543

Options exercised


339,935


1,375


(653)


-


-


722

RSUs exercised


133,056


-


-


-


-


-

Net income (loss) for the year


-


-


-


-


(3,614)


(3,614)

Currency translation adjustment


-


-


-


(2,893)


-


(2,893)














Balance at December 31, 2015


261,557,384

$

365,045

$

94,299

$

1,517

$

258,433

$

719,294

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 and Eastern Europe.  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".  In 2015 Bankers acquired an 85% interest in the rights to explore the Püspökladány Block concession within the Pannonian Basin located in north eastern Hungary.  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 / Wei Loon Yap, +44 0 207 523 8000; AIM BROKER: FirstEnergy Capital LLP, Hugh Sanderson / David van Erp, +44 0 207 448 0200


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