Bankers Petroleum Announces 2012 Second Quarter Financial and Operational Results

Record Quarter of Production

CALGARY, Aug. 13, 2012 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2012 second quarter financial and operational results.  The complete reporting package, consisting of Management's Discussion and Analysis along with Financial Statements and Notes, is posted on the Company's website www.bankerspetroleum.com and SEDAR: www.sedar.com.

Results at a Glance (US$000, except as noted)			Three months ended June 30			Six months ended June 30
			2012	2011	Change	2012	2011	Change
Oil revenue			98,587	85,184	16%	201,255	157,920	27%
Net operating income			47,252	47,244	-	100,723	87,078	16%
Net income			11,253	10,800	4%	19,018	22,019	(14%)
	Per share	- basic ($)	0.044	0.044	-	0.076	0.089	(15%)
		- diluted ($)	0.044	0.042	5%	0.075	0.086	(13%)
Funds generated from operations			43,159	43,220	-	91,231	73,168	25%
	Per share	- basic ($)	0.171	0.175	(2%)	0.363	0.296	23%
Capital expenditures			52,632	69,388	(24%)	115,333	121,318	(5%)
Average sales (bopd)			14,169	12,152	17%	13,724	12,024	14%
Average price ($/barrel)			76.46	77.03	(1%)	80.57	72.56	11%
Netback ($/barrel)			36.65	42.72	(14%)	40.33	40.02	1%
						June 30 2012	December 31 2011	June 30 2011
Cash and deposits						60,297	54,013	81,429
Working capital						112,022	80,282	98,222
Total assets						770,829	661,216	565,340
Long-term debt						95,793	46,692	18,683
Shareholders' equity						454,752	412,679	389,959

Highlights for the quarter and six months ended June 30, 2012 are:

• Oil sales averaged 14,169 bopd for the second quarter of 2012, an increase of 17% compared to 12,152 bopd for the same period in 2011 and an increase of 7% compared to 13,279 bopd for the preceding quarter.  For the first half of 2012, oil sales increased 14% to 13,724 bopd from 12,024 bopd for the comparable 2011 period.
• Revenue for the second quarter of 2012 increased by 16% to $98.6 million ($76.46/bbl) from $85.2 million ($77.03/bbl) in the second quarter of 2011.  Revenue for the second quarter of 2012 represented 71% of the Brent oil price of $108/bbl.  Revenue for the first six months of 2012 totalled $201.3 million ($80.57/bbl), an increase of 27% from $157.9 million (72.56/bbl) for the first six months of 2011.
• Royalties to the Albanian Government and related entities were $17.2 million for the second quarter of 2012 (representing 17% of total revenue) and $13.1 million for the second quarter of 2011.  Total royalties were $36.4 million and $26.8 million for the six months ended June 30, 2012 and 2011, respectively.
• In the second quarter of 2012, operating, sales and transportation costs originating from Albanian based companies and their employees were $34.1 million, compared with $24.9 million for the second quarter of 2011.
• The Company recorded net operating income (netback) of $47.3 million ($36.65/bbl) in the second quarter of 2012, compared to $47.2 million ($42.72/bbl) in the same period of 2011.  On a six months basis, net operating income totalled $100.7 million ($40.33/bbl) for 2012, an increase from $87.1 million ($40.02/bbl) in 2011.
• Funds generated from operations for the second quarters of 2012 and 2011 were $43.2 million.  For the six months ended June 30, 2012, funds generated from operations were $91.2 million as compared to $73.2 million for the six months ended June 30, 2011.
• Capital expenditures were $52.6 million in the second quarter of 2012.  The Company drilled 38 wells during the quarter, comprised of 36 horizontal wells, one water injection well and one exploration well in Block "F".  Re-activation and re-completion work continued during the quarter.  During the same period of 2011, capital expenditures were $69.4 million.  For the first six months of 2012, capital expenditures totalled $115.3 million, a reduction of 5% from $121.3 million for the comparable 2011 six months period.
• The Company continues to maintain a strong financial position at June 30, 2012 with cash of $60.3 million and working capital of $112.0 million.  Working capital for December 31, 2011 and June 30, 2011 was $80.3 million and $98.2 million, respectively.

Operational Update and Outlook

The average third quarter 2012 production to date is 15,400 bopd, 9% higher than the second quarter 2012 rate of 14,169 bopd.

The Company continues to focus on improvements to address operational challenges associated with mature heavy oilfield development including interference from old well bores, sand production, and water disposal capacity.  Horizontal wells that have demonstrated good production, but have liner access issues, are being reviewed for clean-out and production resumption or re-drilling of the lateral section and completion with improved tubular strength. The first re-drill is planned for late in the third quarter.  Further expansion of the water disposal capacity with additional wells and higher pressure and volume injection pumps is planned for the fourth quarter. Work continues on water control in existing and future drilling fairways to improve the water-cut performance on new wells by restricting water influx from some legacy vertical wells with poor integrity existing in the field.  A number of wells have exhibited improved water-cuts as a result of the water control initiative.

The second steam cycle for thermal well 5201 was completed in mid-July and the well was immediately placed on its second production cycle. The well is currently flowing back at a rate of 570 barrels of fluid per day, 97% BS&W and 3% heavy viscous oil. The production cycle will continue for several more weeks to recover the remaining steam equivalent injected volumes of water and observe the gradual change of temperature and oil water rates. The data collected will be utilized alongside results from the thermal coring program of 4 wells beginning in the third quarter to determine the follow up location for the pilot program.

"While the rates from the D1 in this area were restricted due to high viscosity, the result of mobilization of the oil tells us that the reservoir is receptive to thermal extraction. Now, with the new coring rig on its way into the country, Bankers will begin the process of delineating the Western and Southern flanks of the field to select the optimal location for the second pilot." said Abby Badwi, President and Chief Executive Officer.

For additional information, please see an updated version of the Company's August corporate presentation on www.bankerspetroleum.com.

Bankers Petroleum is expanding and has several exciting career opportunities available for both Calgary and Albania.  Please visit our website for full details on these career opportunities and to see how to apply.

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, expressed in thousands of US dollars, except per share amounts)
				Three months ended June 30				Six months ended June 30
				2012		2011		2012		2011
Revenues			$	98,587	$	85,184	$	201,255	$	157,920
Royalties				(17,214)		(13,062)		(36,368)		(26,817)
				81,373		72,122		164,887		131,103
Unrealized gain (loss) on financial commodity contracts				244		(615)		(2,965)		(2,016)
				81,617		71,507		161,922		129,087
Operating expenses				19,038		14,637		36,470		26,234
Sales and transportation expenses				15,083		10,241		27,694		17,791
General and administrative expenses				3,508		3,580		7,618		6,438
Depletion and depreciation				14,067		9,127		27,744		17,392
Share-based payments				1,447		2,327		5,683		6,972
				53,143		39,912		105,209		74,827
				28,474		31,595		56,713		54,260
Net finance expense				1,860		1,963		4,717		3,904
Income before income tax				26,614		29,632		51,996		50,356
Deferred income tax expense				(15,361)		(18,832)		(32,978)		(28,337)
Net income for the period				11,253		10,800		19,018		22,019
Other comprehensive income (loss)
	Currency translation adjustment			(505)		439		1		2,253
Comprehensive income for the period			$	10,748	$	11,239	$	19,019	$	24,272
Basic earnings per share			$	0.044	$	0.044	$	0.076	$	0.089
Diluted earnings per share			$	0.044	$	0.042	$	0.075	$	0.086

 

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, expressed in thousands of US dollars)
ASSETS
								June 30 2012			December 31 2011
Current assets
	Cash and cash equivalents					$		55,297	$		49,013
	Restricted cash							5,000			5,000
	Accounts receivable							50,944			56,006
	Inventory							24,977			14,412
	Deposits and prepaid expenses							24,761			17,463
	Financial commodity contracts							719			3,684
								161,698			145,578
Non-current assets
	Property, plant and equipment							609,131			515,638
						$		770,829	$		661,216
LIABILITIES
Current liabilities
	Accounts payable and accrued liabilities					$		48,187	$		52,109
	Current portion of long-term debt							1,489			13,187
								49,676			65,296
Non-current liabilities
	Long-term debt							95,793			46,692
	Decommissioning obligation							14,643			13,561
	Deferred tax liabilities							155,965			122,988
								316,077			248,537
SHAREHOLDERS' EQUITY
Share capital								332,450			318,021
Warrants								-			1,540
Contributed surplus								59,816			49,651
Currency translation reserve								6,410			6,409
Retained earnings								56,076			37,058
								454,752			412,679
						$		770,829	$		661,216

 

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, expressed in thousands of US dollars)
			Three months ended June 30					Six months ended June 30
				2012		2011		2012		2011
Cash provided by (used in):
Operating activities
	Net income for the period		$	11,253	$	10,800	$	19,018	$	22,019
	Depletion and depreciation			14,067		9,127		27,744		17,392
	Amortization of deferred financing costs			-		-		-		734
	Accretion of long-term debt			1,199		748		2,326		748
	Accretion of decommissioning obligation			202		99		397		194
	Unrealized foreign exchange (gain) loss			(126)		672		120		1,344
	Deferred income tax expense			15,361		18,832		32,978		28,337
	Share-based payments			1,447		2,327		5,683		6,972
	Unrealized (gain) loss on financial commodity contracts			(244)		615		2,965		2,016
	Cash premiums paid for financial commodity contracts			-		-		-		(6,588)
				43,159		43,220		91,231		73,168
	Change in non-cash working capital			(6,775)		5,042		(12,614)		(2,659)
				36,384		48,262		78,617		70,509
Investing activities
	Additions to property, plant and equipment			(52,632)		(69,388)		(115,333)		(121,318)
	Restricted cash			-		(5,000)		-		(5,000)
	Change in non-cash working capital			(3,467)		4,554		(4,109)		10,542
				(56,099)		(69,834)		(119,442)		(115,776)
Financing activities
	Issue of shares for cash			31		2,163		12,177		5,293
	Financing costs			-		(4)		(750)		(30)
	Increase in long-term debt			2,993		13,353		35,817		7,940
				3,024		15,512		47,244		13,203
Foreign exchange gain (loss) on cash and cash equivalents				(162)		(365)		(135)		374
Increase (decrease) in cash and cash equivalents				(16,853)		(6,425)		6,284		(31,690)
Cash and cash equivalents, beginning of period				72,150		81,354		49,013		106,619
Cash and cash equivalents, end of period			$	55,297	$	74,929	$	55,297	$	74,929
Interest paid			$	1,521	$	842	$	1,722	$	1,152
Interest received			$	218	$	225	$	278	$	363

 

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited, expressed in thousands of US dollars, except number of common shares)
		Number of common shares			Share capital			Warrants			Contributed surplus			Currency translation reserve			Retained earnings			Total
Balance at December 31, 2010		244,794,990	$		309,379	$		1,597	$		28,135	$		6,094	$		1,062	$		346,267
Share-based payments		-			-			-			14,127			-			-			14,127
Options exercised		2,686,779			8,212			-			(2,919)			-			-			5,293
Net income for the period		-			-			-			-			-			22,019			22,019
Currency translation adjustment		-			-			-			-			2,253			-			2,253
Balance at June 30, 2011		247,481,769	$		317,591	$		1,597	$		39,343	$		8,347	$		23,081	$		389,959
Share-based payments		-			-			-			10,358			-			-			10,358
Options exercised		41,667			136			-			(50)			-			-			86
Warrants exercised		174,333			461			(57)			-			-			-			404
Share issue costs		-			(167)			-			-			-			-			(167)
Net income for the period		-			-			-			-			-			13,977			13,977
Currency translation adjustment		-			-			-			-			(1,938)			-			(1,938)
Balance at December 31, 2011		247,697,769	$		318,021	$		1,540	$		49,651	$		6,409	$		37,058	$		412,679
Share-based payments		-			-			-			10,877			-			-			10,877
Options exercised		553,945			1,833			-			(719)			-			-			1,114
Warrants exercised		4,672,991			12,596			(1,533)			-			-			-			11,063
Warrants expired		-			-			(7)			7			-			-			-
Net income for the period		-			-			-			-			-			19,018			19,018
Currency translation adjustment		-			-			-			-			1			-			1
Balance at June 30, 2012		252,924,705	$		332,450	$		-	$		59,816	$		6,410	$		56,076	$		454,752

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 reactivations and well recompletions of the past will continue and success rates and production rates will be similar to those rates experienced for previous well recompletions and reactivations; 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, 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.

Abby Badwi, President and Chief Executive Officer, [phone]
Doug Urch, Executive VP, Finance and Chief Financial Officer, [phone]
Mark Hodgson, VP, Business Development, [phone]

Email: [email protected]
Website: www.bankerspetroleum.com

AIM NOMAD:
Canaccord Genuity Limited
Henry Fitzgerald-O'Connor
[phone]

AIM JOINT BROKERS:
Canaccord Genuity Limited
Ryan Gaffney/ Henry Fitzgerald-O'Connor
[phone]

Macquarie Capital Advisors
Paul Connolly
[phone]