Bankers Petroleum provides technical and operational progress update

CALGARY, June 4, 2012 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM:BNK) is pleased to provide the following update.


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 Block F.

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

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.

Thermal Program

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 well location.

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 this year.

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

Conference Call

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 during the webcast and we will attempt to incorporate them into the Q&A.

If you wish to participate in the Capital Markets Day Webcast please register at


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

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:

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




Canaccord Genuity Limited
Henry Fitzgerald-O'Connor
+44 20 7050 6500


Canaccord Genuity Limited
Ryan Gaffney/ Henry Fitzgerald-O'Connor
+44 20 7050 6500

Macquarie Capital Advisors 
Paul Connolly 
+44 20 3037 5639

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Bankers Petroleum Ltd.

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