Six Percent Production Growth and Record Number of Wells Drilled in the Third Quarter
CALGARY, Oct. 6, 2014 /CNW/ - Bankers Petroleum Ltd. (Bankers or the Company) (TSX: BNK, AIM: BNK) is pleased to announce the Company's third quarter operational update.
Production, Sales and Oil Prices
Average production from the Patos-Marinza oilfield in Albania for the third quarter of 2014 was 21,865 barrels of oil per day (bopd), 6.0% higher than 20,630 bopd in the second quarter of 2014.
Record high oil sales during the quarter averaged 22,003 bopd, 1.7% higher than the previous quarter average of 21,627 bopd. On a year to date basis for the first three quarters of 2014, the sales averaged 20,701 bopd, 13.9% higher than the average sales in 2013. Crude oil inventory at September 30, 2014, decreased 3.2% to 342,500 barrels, 11,500 barrels lower than 354,000 barrels at June 30, 2014.
The Patos-Marinza third quarter average oil price was approximately $78.66 per barrel (representing 77% of the Brent oil price of $101.85 per barrel), as compared with the second quarter average oil price of $86.68 per barrel (representing 79% of the Brent oil price of $109.63 per barrel). Crude sales to the export market during the third quarter made up the majority at 72% of the total sales (net of in-kind royalties) at an average export pricing of 80% of the Brent oil price.
Renewal of delivery of crude oil to the domestic refinery on a temporary basis
In August, Bankers commenced delivery of crude oil to the domestic refiner, ARMO, under new ownership and management. The temporary contract enables the restart of the refinery to test the commercial viability of the refinery system. Bankers agreed to sell on a monthly basis not to exceed 6 months to an affiliate of ARMO at 73% of Brent (FOB Vlore equivalent) plus $40/tonne or approximately $6/bbl recovery against an existing accounts receivable balance. All sales are fully secured by letters of credit. More information on the impact of these repayments will be available with the third quarter financials.
No determination has been made on volumes to be available for domestic use in 2015. The Company is in the process of reviewing its sales contracts for the 2015 calendar year and volume commitments for next year will be determined over the next few months.
A record forty-five (45) wells were drilled and rig released during the third quarter in the main area of the Patos-Marinza oilfield: forty-four (44) horizontal production wells and the Company's first multi-lateral well. Thirty-five (35) of these wells were completed and are on production with the remaining ten (10) to be placed on production in October pending drilling rig move off the pad, well completions and facilities tie-in.
Initial Multi-Lateral Well Results
Bankers drilled its first pilot multi-lateral well with dual legs into the Gorani formation in August and placed the well on initial clean-up and evaluation on August 24th. The well has been tested for over 30 days reaching an average rate of more than 200 bopd.
The Company is very encouraged by the early-stage performance of the dual laterals and will continue to produce the well on extended test and evaluate the mechanical integrity and lateral accessibility over the next few months. This adds another tool to our drilling program, which will enable us to target locations with heavy oil mobility concerns and thinner pay zones to expand our development and improve recovery at good capital efficiency. Additional multi-lateral equipment is being procured for 2015.
Secondary Recovery Program
The polymer flood and water flood patterns in the Patos Marinza oilfield continue to perform better than expected and deliver positive response from the eighteen (18) polymer and three (3) water flood patterns installed at the end of the third quarter. Reservoir pressure and production response are rising and above current projection models with injection performance achieving target rates indicative of good reservoir conformance.
Nine (9) wells were converted to polymer injection in the third quarter. Three (3) injectors expanded the Lower Driza patterns in the southern region of the main field and six (6) injectors were installed in a new area in the central region of the main field where the reservoir and fluid properties are amenable to polymer flooding with thick pay zones. This completes the conversion program planned for this year ahead of schedule.
To-date, Bankers has implemented three (3) water flood injectors in the Upper Marinza zone (M0 reservoir sand) in the central region, twelve (12) polymer flood injectors in Lower Driza zones spread evenly between the D5, D4, and D3 reservoir sands in the southern region, and six (6) polymer injectors spread evenly in the three Lower Driza zones in the central region of the main Patos Marinza field.
The Company is very encouraged by the potential of polymer flooding additional patterns in Patos Marinza and are moving forward with procuring dry polymer chemical, mixing equipment and pumping skids to support further expansion of the program in 2015.
In the third quarter, thirty (30) wells were electrified in the northern and central areas of the Patos-Marinza oilfield in accordance with our strategy to reduce energy costs. The electrification program will be accelerated in the fourth quarter with plans to electrify sixty (60) to seventy-five (75) additional wells.
Emulsion gathering projects in the northern and western areas of the main field are progressing with engineering plans completed and equipment ordered. Both projects are on track to be completed in the first half of 2015 and will significantly reduce the in-field trucked volumes and reduce operating costs over the next year.
Bankers remains focused on key infrastructure projects aimed at reducing costs and optimizing operations including the gas gathering system, new inventory storage yard, emulsion treating, and sour treatment facilities.
Updated Corporate Presentation
For additional information on this Operational Update please see the Company's October 2014 corporate presentation at www.bankerspetroleum.com.
The Management of Bankers will host a conference call on October 6, 2014, at 6:30 am MDT 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/detail/1416110/1572802.
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 December 10, 2014 by dialing 1-855-859-2056 or 1-416-849-0833 and entering access code 10317494.
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.
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