Exit production rate exceeds 12,100 bopd
CALGARY, Jan. 11 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to announce the following operational update:
Production and Oil Price
Oil sales from the Patos-Marinza oilfield in Albania during the fourth quarter averaged 10,424 bopd compared to third quarter sales of 9,826 bopd, an increase of 6%. Average production for the fourth quarter was 10,838 bopd and oil inventory on December 31, 2010 was approximately 145,000 barrels. The exit production rate for 2010 exceeded 12,100 bopd. Sales achieved record levels for December, averaging 13,500 bopd.
The Patos-Marinza fourth quarter's average oil price was US$53.13 per barrel representing 61% of the Brent oil price, compared to third quarter's average oil price of US$46.61 per barrel (61% of Brent), an increase of 14%.
Eighteen (18) horizontal wells have been drilled during the fourth quarter. Fifteen (15) of these wells have been completed and are on production, and three (3) are being placed on production in the first half of January 2011. Production rates from the last fifteen (15) horizontal wells drilled are averaging 195 bopd. These most recent wells are producing from five (5) different pay zones and include four (4) full length lateral wells in the Driza 1 reservoir sand averaging 275 bopd, two of which are producing in excess of 350 bopd. Average production from 48 horizontal wells is 135 bopd.
Four (4) vertical oil wells have also been drilled in the western extension of the field during the year. One vertical oil well commenced drilling before the end of the fourth quarter in the southern extension of the field.
Re-activation work resumed in the fourth quarter with five (5) wells re-completed in the new production area north of the Semani River following the takeover of the first group of 52 wells. The wells were brought on production in late December and are in the early stages of production clean up. In addition to the wells north of the river, three (3) wells were re-completed south of the river. Well re-activations have now returned to normal activity levels.
The drilling site for the first of two (2) delineation wells is being finalized; the delineation wells will provide geological control for the two (2) horizontal thermal wells. The location of the thermal program will be located in the shallower southern area of the Patos portion of the field where existing primary producing wells in the Driza and Gorani formation have produced 10o API gravity oil.
Thermal production casing, horizontal thermal liner and the first major facilities equipment have arrived in Albania. Facilities and production equipment will continue to arrive over the next 6 weeks. The 25 million BTU/hr steam generator is currently in transit to Albania with arrival forecast for the end of February.
Construction of the extra tankage at the Petrolifera Terminal at the Port of Vlore is near completion with scheduled commissioning in February. This will increase the storage capacity from 80,000 barrels to 160,000 barrels improving export shipping logistics and enabling larger crude oil cargoes.
Construction on the first phase of the crude oil sales pipeline which connects the Patos-Marinza field to the Fier Hub has commenced. Materials and contractor equipment continue to arrive in country. Supervisory staff and contractor personnel will be arriving in Albania next week to commence installation of the pipeline. Depending on weather conditions, the project is scheduled to take four to six months for completion.
Design and planning continue on the Central Treatment Facility (CTF) expansion. The CTF currently has two processing trains in operation to handle approximately 8,000 bopd per train. With the addition of the third processing train the CTF will be able to handle over 20,000 bopd of net oil production. Construction is scheduled to start in the second quarter of 2011.
Bankers, through its subsidiary Sherwood International, assumed the first twelve (12) wells and gathering facility for operations in the Kuçova oilfield on December 27, 2010. Mobilization of equipment and personnel is underway to commence well workover activity in late January. The first well to be tested is F-38 in the Ferma pool for casing integrity and reservoir injectivity for waterflooding operations. The well will be set up for water injection with the offset producing wells observed for waterflood response and subsequently optimized for production as required. The initial response may take six to nine months from initial water injection. The Kuçova field contains 295 million barrels of Oil-in-Place with a current recovery in the order of 9%, which has the potential to be improved to 20% under waterflood implementation.
The pilot remediation project in Sector III initiated by Bankers to promote the most effective eventual clean-up of legacy damage within the field has commenced. Waste is currently being gathered in the first target area and is being remediated using thermal technologies. The pilot clean-up project is expected to be completed in six to nine months and will serve as an operational roadmap for a wider environmental initiative for the Patos-Marinza oilfield in Albania.
On December 31, 2010, Bankers held US$107 million of cash and working capital was approximately US$134 million, exclusive of debt. No funds were drawn from the US$110 million credit facility from the European Bank for Reconstruction and Development and the International Finance Corporation. The Company continued to utilize US$26 million of the Raiffeisen credit facility.
Bankers' January Corporate Presentation is now available on its website. www.bankerspetroleum.com
The Management of Bankers will host a conference call on January 11, 2011 at 8:00am MST to discuss this operational update. 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/viewEvent.cgi?eventID=3362040
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 January 25, 2011 by dialing 1-800-642-1687 or 1-416-849-0833 and entering access code 36490625.
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 and gas 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 and gas production operations, including: that commodity 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 new wells, 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; approval of the Addendum to the Plan of Development; 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 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: Abby Badwi, President and Chief Executive Officer, (403) 513-2694; Doug Urch, Executive VP, Finance and Chief Financial Officer, (403) 513-2691; Mark Hodgson, VP, Business Development, (403) 513-2695; Email: firstname.lastname@example.org; Website: www.bankerspetroleum.com; AIM NOMAD: Canaccord Genuity Limited, Ryan Gaffney, Henry Fitzgerald-O'Connor, +44 20 7050 6500; AIM JOINT BROKERS: Canaccord Genuity Limited, Ryan Gaffney, Henry Fitzgerald-O'Connor, +44 20 7050 6500; Macquarie Capital Advisors, Ben Colegrave, Paul Connolly, +44 20 3037 5639