Bankers Petroleum Announces 2014 First Quarter Financial and Operational Results

Record High Netback of $55.75/bbl and Q2 Average Production to Date 20,150 bopd

CALGARY, May 8, 2014 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2014 first quarter financial and operational results.

During the quarter Bankers achieved record high netbacks of $55.75 per barrel, and free cash flow of $23 million. All amounts listed below are in US dollars unless otherwise stated.

Results at a Glance											Three months ended March 31
($000s, except as noted)											2014					2013				% change
Financial
		Oil revenue									144,985					132,562				9%
		Net operating income									92,491					73,165				26%
		Net income									24,992					14,177				76%
			Basic and diluted ($/share)								0.10					0.06				73%
		Funds generated from operations									83,109					65,419				27%
			Basic ($/share)								0.32					0.26				23%
		Capital expenditures									59,865					47,327				26%
Operating
		Average production (bopd)									19,911					16,919				18%
		Average sales (bopd)									18,435					16,605				11%
		Average Brent oil price ($/barrel)									108.21					112.57				(4%)
		Average realized price ($/barrel)									87.39					88.70				(1%)
		Netback ($/barrel)									55.75					48.96				14%
											March 31, 2014					December 31, 2013				March 31, 2013
Cash and restricted cash											56,172					31,706				39,847
Working capital											160,346					134,094				108,497
Total assets											1,077,580					1,007,148				899,669
Long-term debt											98,374					98,150				99,488
Shareholders' equity											595,918					564,675				501,404

Highlights for the quarter ended March 31, 2014 are:

Primary Drilling Program Highlights:

• Average oil production for the three months ended March 31, 2014 was 19,911 barrels of oil per day (bopd), 3% higher as compared to 19,303 bopd in the previous quarter and 18% higher than 16,919 bopd in the first quarter of 2013.
  
  
• For the first quarter of 2014, oil sales averaged 18,435 bopd compared to 19,710 bopd for the previous quarter and 16,605 bopd for the first quarter of 2013.  Due to marine weather conditions, an export scheduled at the end of March was delayed until early April resulting in crude oil inventory increasing by 43% to 444,000 barrels at March 31, 2014.
  
  
• Capital expenditures were $60 million in the first quarter of 2014.  The Company drilled 34 wells during the quarter, comprised of 29 horizontal production wells, three horizontal lateral re-drill wells and two water disposal wells in the main area of the Patos-Marinza oilfield.  Capital expenditures were $68 million and $47 million for the previous quarter and the first quarter of 2013, respectively.

Expansion of Product Margin Highlights:

• For the three months ended March 31, 2014, operating, sales and transportation costs, originating from Albanian-based companies and their employees, were $31 million ($18.41/bbl) as compared to $39 million ($21.59/bbl) for the preceding quarter and $36 million ($24.14/bbl) for the first quarter of 2013.
  
  
• Net operating income (netback) in the first quarter of 2014 and the fourth quarter of 2013 remained consistent at $92 million, however, on a per barrel basis, increased 10% to $55.75/bbl from $50.48/bbl.  Compared to the first quarter of 2013, net operating income for the first quarter of 2014 increased 26% from $73 million ($48.96/bbl).

Financial Highlights:

• Revenue for the first quarter of 2014 was $145 million ($87.39/bbl) compared to $155 million ($85.66/bbl) in the previous quarter and $133 million ($88.70/bbl) in the first quarter of 2013.  Field price realization represented 81% of the Brent oil benchmark price ($108.21/bbl) for the first quarter of 2014 compared to 78% of the Brent oil price ($109.24/bbl) in the previous quarter and 79% of the Brent oil price ($112.57/bbl) in the first quarter of 2013.
  
  
• For the first quarter of 2014, royalties to the Albanian Government and related entities were $22 million (15% of revenue) as compared to $25 million (16% of revenue) in the previous quarter and $23 million (18% of revenue) for the first quarter of 2013.
  
  
• Funds generated from operations for the first quarter of 2014 were $83 million, a 2% increase compared to $81 million for the previous quarter and a 27% increase compared to $65 million for the first quarter of 2013.
  
  
• The Company continues to maintain a strong financial position at March 31, 2014, with cash of $56 million and working capital of $160 million.  At March 31, 2014, the Company had drawn $105 million of its $225 million approved credit facilities.  Working capital for December 31, 2013 and March 31, 2013 was $134 million and $108 million, respectively.

Outlook

The Company continues to execute on its three part strategy to deliver steady and reliable growth through the primary drilling program, expanding its product margin through surface-level improvements and validating the potential of polymer and water flood in the field.

The second quarter 2014 quarter-to-date average production is 20,150 bopd from the Patos-Marinza oilfield in Albania, 1.2% higher than the first quarter average of 19,911 bopd.  Focus in April has been development drilling in the centre of the field with more wells per pad, leading to a deferral of some production to the latter half of the quarter. The Company expects overall production growth for the second quarter to be consistent with guidance.

All six drilling rigs are active in the main area of the oilfield.  In the second quarter, the Company will drill an estimated thirty-nine (39) horizontal production wells and commence operation of both the third satellite facility and the sludge treatment facility. Other infrastructure projects include additional flow lines to reduce infield trucking, new well-pad cascade treating facilities and construction of the new equipment warehouse.

Bankers will continue to expand on the polymer and water flood program as planned with up to five (5) additional well conversions to injection in the second quarter.  Early-stage results of the first few patterns will be shared with the investment community in June.

Effective April 1, 2014, excise tax becomes effective pursuant to the fiscal changes proposed by the Government of Albania at the end of 2013.  Based on the current diluent blend rate and diesel usage, the expected financial impact will add approximately $5.00/bbl to the operating and sales and transportation costs.  Mitigation discussions are ongoing with the Government as to how such current costs will be reflected in cost recovery and offset within the profit tax framework.

The Company intends to issue the second quarter 2014 operational update and host a conference call on Tuesday, July 8, 2014.

Supporting Documents

The full Management Discussion and Analysis (MD&A), Financial Statements and updated March corporate presentation are available on www.bankerspetroleum.com. The MD&A and Financial Statements will also be available on www.sedar.com.

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31
(Unaudited, expressed in thousands of US dollars, except per share amounts)
							2014		2013
Revenues						$	144,985	$	132,562
Royalties							(21,948)		(23,318)
							123,037		109,244
Unrealized loss on financial commodity contracts							(465)		(1,374)
							122,572		107,870
Operating expenses							20,170		21,154
Sales and transportation expenses							10,376		14,925
General and administrative expenses							6,044		5,955
Depletion and depreciation							26,693		23,197
Share-based compensation							1,468		3,258
							64,751		68,489
							57,821		39,381
Net finance expense							(3,813)		(1,940)
Income before income tax							54,008		37,441
Deferred income tax expense							(29,016)		(23,264)
Net income for the period							24,992		14,177
Other comprehensive loss
Currency translation adjustment							(234)		(352)
Comprehensive income for the period						$	24,758	$	13,825
Basic earnings per share						$	0.097	$	0.056
Diluted earnings per share						$	0.095	$	0.055

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, expressed in thousands of US dollars)
ASSETS
									March 31 2014			December 31 2013
Current assets
	Cash and cash equivalents					$			51,172	$		24,597
	Restricted cash								5,000			7,109
	Accounts receivable								66,966			53,981
	Inventory								26,068			38,025
	Deposits and prepaid expenses								56,386			44,956
	Financial commodity contracts								269			734
									205,861			169,402
Non-current assets
	Long-term receivable								7,224			7,019
	Property, plant and equipment								857,659			823,908
	Exploration and evaluation assets								6,836			6,819
						$			1,077,580	$		1,007,148
LIABILITIES
Current liabilities
	Accounts payable and accrued liabilities					$			44,315	$		33,812
	Current portion of long-term debt								1,200			1,496
									45,515			35,308
Non-current liabilities
	Long-term debt								98,374			98,150
	Decommissioning obligation								22,548			22,806
	Deferred tax liabilities								315,225			286,209
									481,662			442,473
SHAREHOLDERS' EQUITY
Share capital									346,716			340,305
Contributed surplus									84,885			84,811
Currency translation reserve									6,111			6,345
Retained earnings									158,206			133,214
									595,918			564,675
						$			1,077,580	$		1,007,148

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31
(Unaudited, expressed in thousands of US dollars)
									2014		2013
Cash provided by (used in):
Operating activities
	Net income for the period						$		24,992	$	14,177
	Depletion and depreciation								26,693		23,197
	Accretion of long-term debt								451		1,149
	Accretion of decommissioning obligation								274		241
	Unrealized foreign exchange gain								(45)		(180)
	Deferred income tax expense								29,016		23,264
	Share-based compensation								1,468		3,258
	Discount and revaluation of long-term receivable								(205)		(1,061)
	Unrealized loss on financial commodity contracts								465		1,374
									83,109		65,419
	Change in long-term receivable								-		1,855
	Change in non-cash working capital								(2,759)		(37,812)
									80,350		29,462
Investing activities
	Additions to property, plant and equipment								(59,848)		(47,193)
	Additions to exploration and evaluation assets								(17)		(134)
	Restricted cash								2,109		-
	Change in non-cash working capital								804		564
									(56,952)		(46,763)
Financing activities
	Issue of shares for cash								3,848		101
	Financing costs								(433)		-
	Change in long-term debt								(296)		18,337
									3,119		18,438
Foreign exchange gain (loss) on cash and cash equivalents									58		(30)
Increase in cash and cash equivalents									26,575		1,107
Cash and cash equivalents, beginning of period									24,597		33,740
Cash and cash equivalents, end of period							$		51,172	$	34,847
Interest paid							$		73	$	222
Interest received							$		222	$	45

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			Contributed surplus			Currency translation reserve			Retained earnings				Total
Balance at December 31, 2012		253,828,650	$		334,764	$		69,435	$		7,362	$		71,471	$			483,032
Share-based compensation		-			-			4,446			-			-				4,446
Options exercised		43,334			171			(70)			-			-				101
Net income for the period		-			-			-			-			14,177				14,177
Currency translation adjustment		-			-			-			(352)			-				(352)
Balance at March 31, 2013		253,871,984	$		334,935	$		73,811	$		7,010	$		85,648	$			501,404
Share-based compensation		-			-			13,139			-			-				13,139
Options exercised		1,809,927			5,370			(2,139)			-			-				3,231
Net income for the period		-			-			-			-			47,566				47,566
Currency translation adjustment		-			-			-			(665)			-				(665)
Balance at December 31, 2013		255,681,911	$		340,305	$		84,811	$		6,345	$		133,214	$			564,675
Share-based compensation		-			-			2,637			-			-				2,637
Options exercised		1,649,694			5,634			(2,344)			-			-				3,290
Warrants exercised		200,000			777			(219)			-			-				558
Net income for the period		-			-			-			-			24,992				24,992
Currency translation adjustment		-			-			-			(234)			-				(234)
Balance at March 31, 2014		257,531,605	$		346,716	$		84,885	$		6,111	$		158,206	$			595,918

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.

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.

David French
President and Chief Executive Officer
403-513-6930

Doug Urch
Executive VP, Finance and Chief Financial Officer
403-513-2691

Laura Bechtel
Investor Relations Analyst
403-513-3428

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

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