CALGARY, June 4, 2012 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the
"Company") (TSX: BNK, AIM:BNK) is pleased to provide the following
Average production for April and May 2012 was 13,800 barrels of oil per
day ("bopd"), and average production for May 2012 was 14,150 bopd.
First five months 2012 production average of 14,000 bopd represents a
7% growth over 2011 production.
Horizontal Drilling Performance
New horizontal drilling in the central and northern areas of the field
in 2012 has encountered good results with flow rates north of the river
averaging 170 bopd and wells in the North Central region averaging 90
bopd. To follow up on this positive performance, the remainder of the
2012 drilling program will utilize 4 rigs to drill high impact Driza
and Gorani wells focused on steady production additions in these areas
of the field. The 5th rig will be used for core and delineation wells in other part of the
fields, and to drill water disposal wells and an exploration well into
Three (3) type curves for horizontal wells in the Patos-Marinza oilfield
have been added to the Corporate Presentation representing the majority
of the wells drilled to date and additional production performance.
Results are consistent with previously forecasted 40-50% declines in
production during the transient phase, followed by a shallower 15-30%
decline as well performance transitions into a steady state phase.
While results across the field and in different zones vary, the future
development program will continue to focus on those areas of the field
which can yield the best results.
Secondary recovery methods are being reviewed to enhance both the
ultimate recovery and also the pace of recovery through stemming the
above stated natural reservoir declines. Indications are present in the
field that secondary flooding will be effective. The Company is
planning to gather core data for special core analysis and establishing
water-flood and polymer-flood pilots over the next several months to
validate the potential for secondary recovery processes.
Wellbore Construction Improvements
Drilling procedures, sand production, and localized tectonics within the
field area are believed to be the main causes of recent liner
mechanical integrity concerns in some of the horizontal wells. Wellbore
construction has been an ongoing focus of the technical team and
several improvements are being implemented, including liner and
slotting design for additional strength and adjusted drilling
techniques for better down-hole conditions. As these improvements are
implemented by the fourth quarter, they are expected to largely
mitigate concerns in the go-forward program. While the impact of
wellbore construction has contributed to lower production results in
the first part of the year, liner and slotting configuration adjustment
for optimum performance is not uncommon in heavy oil developments and
the Company believes the solutions discussed will aid in rectifying the
situation within the next few quarters.
Water control initiatives in the field continue with over 200 old
vertical wells now plugged to prevent water cross-flow, which impacted
existing and new production in both re-activated vertical wells and
several new horizontal wells. The expansion of the Company's water
disposal capacity in the first quarter has enabled many of the shut-in
high water cut wells to be brought back on line. The Company expects to
see a gradual increase of oil production from these wells as the water
cut decreases over time.
Included in the Company's plans is the utilization of third party
consultants and oilfield service providers with global experience in
similar old oilfield developments, to help provide the needed solutions
on a collaborative basis with Bankers' technical and operational teams
towards production and reserves enhancements.
Laboratory results from the oil sample recovered from the first cycle of
the thermal pilot have shown viscosity measurements of over 100,000
centipoise at reservoir temperature and demonstrated oil mobility can
occur at temperatures over 90 degrees Celsius. To achieve optimum
results in the second phase of the pilot, steam will be injected for a
shorter 30 day cycle at over 250 degrees Celsius and the well will be
put on production after a few days soak period to enable higher
temperatures during flow-back and production. The second steam
injection cycle is expected to commence this month.
Exploration Block "F"
The Company intends to drill the second Block "F" exploration well in
the fourth quarter. Seismic modeling and detailed interpretation of a
large turbidite prospect is underway. Work has also commenced to gain
lease access and the approvals to construct the road necessary for the
2012 Budget and Liquidity
The Company will continue to maintain a strong balance sheet, especially
considering this global economic uncertainty. As a development company
with significant production, Bankers can rely on a relatively
consistent cash flow to fund its project growth. The work program
maintains sufficient flexibility to be modified, if needed, to fit
within expected cash resources, thereby focusing capital program
spending during lower oil prices towards maintaining and supporting
production levels. The Company has stress-tested its liquidity at
various Brent oil price levels and additionally, by way of a hedge
executed in 2011, has secured a floor price of US$80 Brent oil price
for 25% of its production in 2012.
On the basis of Bankers independent reserve valuation at December 2011,
the existing borrowing base covenants show that nearly $300 million of
debt capacity is supported by proved reserves. The existing $110
million credit facilities, held jointly with the European Bank for
Reconstruction and Development ("EBRD") and the International Finance
Corporation ("IFC"), are mid-way through their initial six year term.
Under the terms of these facilities, and with the expectation that cash
flow will be in excess of capital program requirements, principal
repayments will commence in October 2013 and over the remaining two
years. The Company expects to open discussions with its lenders early
next year to extend the facility, thereby deferring the repayment
requirements. At the end of March, 2012, the Company renewed its US$20
million revolving loan with Raiffeisen bank for another two years.
With its $215 million capital program, Bankers anticipates delivering
growth in production for 2012, however, until the Company completes a
full assessment and determines the time needed to implement and see
positive results from the wellbore construction and water control
initiatives, the Company will not be providing production guidance for
Updated Corporate Presentation
For additional information on this update, please see the June 2012
version of the Company's corporate presentation and also a new presentation titled Technical and Operational Progress Update
Dated June 4, 2012 at www.bankerspetroleum.com.
The Management of Bankers will host a conference call on June 4, 2012 at
2:30PM MDT to discuss this Technical and Operational Update. Following
Management's presentation, there will be a question and answer session
for analysts and investors. As questions will not be able to be asked
from the dial in live, please forward any questions to firstname.lastname@example.org during the webcast and we will attempt to incorporate them into the
If you wish to participate in the Capital Markets Day Webcast please
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
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 engineer (member of
APEGGA) 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 and 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:
President and Chief Executive Officer
Executive VP, Finance and Chief Financial Officer
VP, Business Development
Canaccord Genuity Limited
+44 20 7050 6500
AIM JOINT BROKERS:
Canaccord Genuity Limited
Ryan Gaffney/ Henry Fitzgerald-O'Connor
+44 20 7050 6500
Macquarie Capital Advisors
+44 20 3037 5639