Bankers Petroleum Announces 2014 Second Quarter Financial and Operational Results

Netback of $53.89/bbl and Q3 Average Production to Date 21,500 bopd

CALGARY, Aug. 13, 2014 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK) (AIM: BNK) is pleased to provide its 2014 second quarter financial and operational results.

During the quarter, Bankers achieved a netback of $53.89 per barrel and free cash flow of $22 million. All amounts listed below are in US dollars unless otherwise stated.

Results at a Glance							Three months ended June 30								Six months ended June 30
($000s, except as noted)							2014					2013	% change		2014		2013		% change
Financial
			Oil revenue				170,531					131,838	29%		315,516		264,400		19%
			Net operating income				106,019					69,142	53%		198,510		142,307		39%
			Net income				27,196					13,024	109%		52,188		27,201		92%
				Basic ($/share)			0.11					0.05	120%		0.20		0.11		82%
				Diluted ($/share)			0.10					0.05	100%		0.20		0.11		82%
			Funds generated from operations				93,713					61,717	52%		176,822		127,136		39%
				Basic ($/share)			0.36					0.24	50%		0.69		0.50		38%
			Capital expenditures				71,501					52,389	36%		131,366		99,716		32%
Operating
			Average production (bopd)				20,630					17,886	15%		20,272		17,404		16%
			Average sales (bopd)				21,620					18,008	20%		20,036		17,310		16%
			Average Brent oil price ($/barrel)				109.67					102.43	7%		108.93		107.50		1%
			Average realized price ($/barrel)				86.68					80.45	8%		87.00		84.39		3%
			Netback ($/barrel)				53.89					42.19	28%		54.74		45.42		21%
													June 30, 2014				December 31, 2013		June 30, 2013
Cash and restricted cash													54,827				31,706		33,381
Working capital													191,023				134,094		116,656
Total assets													1,150,878				1,007,148		918,034
Long-term debt													98,198				98,150		97,864
Shareholders' equity													634,708				564,675		519,507

Highlights for the quarter ended June 30, 2014 are:

Primary Drilling Program Highlights:

• Average oil production for the three months ended June 30, 2014 was 20,630 barrels of oil per day (bopd), 4% higher as compared to 19,911 bopd in the previous quarter and 15% higher than 17,886 bopd in the second quarter of 2013.  For the six months ended June 30, 2014, average oil production was 20,272 bopd, 16% higher than 17,404 bopd for the same period in 2013.
• Oil sales for the second quarter of 2014 averaged 21,620 bopd, a 17% increase compared to 18,435 bopd for the previous quarter and 20% increase compared to 18,008 bopd for the second quarter of 2013.  Crude oil inventory at June 30, 2014 decreased to 354,000 barrels, 90,000 barrels lower than 444,000 barrels at March 31, 2014, with inclusion of the export cargo that carried over from the first quarter into the first few days of the second quarter.  Oil sales for the six months ended June 30, 2014 were 20,036 bopd, an increase of 16% from 17,310 bopd for the comparable 2013 period.
• Second quarter capital expenditures in 2014 were $72 million.  The Company drilled 42 wells during the quarter, comprised of 39 horizontal production wells and three horizontal lateral re-drill wells in the main area of the Patos-Marinza oilfield.  Capital expenditures were $60 million for the previous quarter and $52 million for the second quarter of 2013.

Expansion of Product Margin Highlights:

• For the three and six months ended June 30, 2014, operating, sales and transportation costs, originating from Albanian-based companies and their employees, were $39 million ($19.99/bbl) and $70 million ($19.27/bbl), respectively, compared to $41 million ($25.03/bbl) and $77 million ($24.61/bbl) for the same periods in 2013.
• In the second quarter of 2014, net operating income (netback) was $106 million ($53.89/bbl), a 15% increase compared to $92 million ($55.75/bbl) and a 53% increase compared to $69 million ($42.19/bbl) in the previous quarter and second quarter of 2013, respectively.  Net operating income for the six months ended June 30, 2014 was $199 million ($54.74/bbl) compared to $142 million ($45.42/bbl) in the comparable 2013 period.

Financial Highlights:

• Revenue for the second quarter of 2014 was $171 million ($86.68/bbl), an increase of 18% from $145 million ($87.39/bbl) in the previous quarter and an increase of 29% from $132 million ($80.45/bbl) in the second quarter of 2013.  Field price realization represented 79% of the Brent oil benchmark price ($109.67/bbl) for the second quarter of 2014 compared to 81% of the Brent oil price ($108.21/bbl) in the previous quarter and 79% of the Brent oil price ($102.43/bbl) in the second quarter of 2013.  The reduction as a percentage of Brent compared to the previous quarter was due to spot market sales during the quarter.
• For the second quarter of 2014, royalties to the Albanian Government and related entities were $25 million (15% of revenue) as compared to $22 million (15% of revenue) in the previous quarter and $22 million (16% of revenue) for the second quarter of 2013.  For the six months ended June 30, 2014, royalties were $47 million (15% of revenue) compared to $45 million (17% of revenue) for the comparable period in 2013.
• For the second quarter of 2014, funds generated from operations were $94 million, a 13% increase compared to $83 million for the previous quarter and a 52% increase compared to $62 million for the second quarter of 2013.  Funds generated from operations for the six months period ended June 30, 2014 were $177 million, a 39% increase from $127 million for the same period in 2013.
• The Company continues to maintain a strong financial position at June 30, 2014, with cash of $55 million and working capital of $191 million.  At June 30, 2014, the Company had drawn $104 million of its $224 million approved credit facilities.  Working capital for December 31, 2013 and June 30, 2013 was $134 million and $117 million, respectively.
• Subsequent to June 30, 2014, the Company received approximately $31 million of Value Added Tax (VAT) reimbursement, of the $52 million owed to the Company at the end of the quarter.  Bankers anticipates that the reimbursement mechanism will continue to run smoothly and to receive the remaining balance as well as ongoing VAT repayments in a timely manner.

Outlook

In the second half of 2014, the Company will remain focused on its three part strategy to deliver steady and reliable growth through the development drilling program, expanding product margins through surface-level improvements and continuing to validate the polymer and water flood projects through expansion into new areas of the field.

The third quarter 2014 average production to date is 21,500 bopd from the Patos-Marinza oilfield, 4.2% higher than the second quarter average of 20,630 bopd.  Development drilling with six rigs continues in the main part of the field along with drilling and completion of Bankers' first dual lateral well in the Gorani formation.  Mechanical drilling operations went smoothly and the well will be brought on production shortly.

The Company plans to expand its polymer and water flood patterns further with conversion of up to an additional ten (10) wells in the second half of the year; three (3) polymer flood injector conversions in the third quarter and the remaining six (6) polymer flood conversions and one (1) water flood conversion in the fourth quarter.

Infrastructure projects continue with commissioning of the sludge treatment and sour cascade tank facilities.  Other projects ongoing in the third quarter include additional flow lines to reduce infield trucking, electrification of well pads to reduce energy consumption, and installation of a new polymer mixing skid along with associated pipelines for the polymer and water flood programs.

The 3D seismic shoot over the central and northern areas of Patos-Marinza and eastern region of Block F is underway.  Data acquisition is projected to be complete by the end of third quarter followed by processing in the fourth quarter.

Discussions between Bankers' Management and the Government of Albania regarding the previously announced fiscal changes and tax law related amendments, continue to progress. The Company has now received written assurances from the Government that a financial offset will be offered to mitigate the impact of fiscal changes implemented in 2014. A formal agreement is expected to be finalized in the third quarter.

The Company intends to issue the third quarter 2014 operational update and host a conference call on Monday, October 6, 2014.

Supporting Documents

The full Management Discussion and Analysis (MD&A), Financial Statements and updated August 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
(Unaudited, expressed in thousands of US dollars, except per share amounts)
			Three months ended June 30				Six months ended June 30
			2014		2013		2014		2013
Revenues		$	170,531	$	131,838	$	315,516	$	264,400
Royalties			(25,178)		(21,673)		(47,126)		(44,991)
			145,353		110,165		268,390		219,409
Unrealized loss on financial commodity contracts			(2,307)		(6)		(2,772)		(1,380)
			143,046		110,159		265,618		218,029
Operating expenses			24,808		22,291		44,978		43,445
Sales and transportation expenses			14,526		18,732		24,902		33,657
General and administrative expenses			6,444		4,513		12,488		10,468
Depletion and depreciation			27,983		24,438		54,676		47,635
Share-based compensation			999		3,103		2,467		6,361
			74,760		73,077		139,511		141,566
			68,286		37,082		126,107		76,463
Net finance expense			(3,994)		(3,616)		(7,807)		(5,556)
Income before income tax			64,292		33,466		118,300		70,907
Deferred income tax expense			(37,096)		(20,442)		(66,112)		(43,706)
Net income for the period			27,196		13,024		52,188		27,201
Other comprehensive income (loss)
Currency translation adjustment			434		(510)		200		(862)
Comprehensive income for the period		$	27,630	$	12,514	$	52,388	$	26,339
Basic earnings per share		$	0.105	$	0.051	$	0.202	$	0.107
Diluted earnings per share		$	0.102	$	0.051	$	0.197	$	0.107

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, expressed in thousands of US dollars)
ASSETS
										June 30 2014			December 31 2013
Current assets
Cash and cash equivalents							$			44,827	$		24,597
Restricted cash										10,000			7,109
Accounts receivable										106,791			53,981
Inventory										13,044			38,025
Deposits and prepaid expenses										58,379			44,956
Financial commodity contracts										6			734
										233,047			169,402
Non-current assets
Long-term receivable										7,224			7,019
Financial commodity contracts										803			-
Property, plant and equipment										902,717			823,908
Exploration and evaluation assets										7,087			6,819
							$			1,150,878	$		1,007,148
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities							$			40,824	$		33,812
Current portion of long-term debt										1,200			1,496
										42,024			35,308
Non-current liabilities
Long-term debt										98,198			98,150
Decommissioning obligation										23,627			22,806
Deferred tax liabilities										352,321			286,209
										516,170			442,473
SHAREHOLDERS' EQUITY
Share capital										362,178			340,305
Contributed surplus										80,583			84,811
Currency translation reserve										6,545			6,345
Retained earnings										185,402			133,214
										634,708			564,675
							$			1,150,878	$		1,007,148

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
				2014			2013			2014			2013
Cash provided by (used in):
Operating activities
	Net income for the period		$	27,196		$	13,024		$	52,188		$	27,201
	Depletion and depreciation			27,983			24,438			54,676			47,635
	Accretion of long-term debt			598			829			1,049			1,978
	Accretion of decommissioning obligation			272			250			546			491
	Unrealized foreign exchange (gain) loss			109			(268)			64			(448)
	Deferred income tax expense			37,096			20,442			66,112			43,706
	Share-based compensation			999			3,103			2,467			6,361
	Discount and revaluation of long-term receivable			-			(107)			(205)			(1,168)
	Unrealized loss on financial commodity contracts			2,307			6			2,772			1,380
	Cash premiums paid for financial commodity contracts			(2,847)			-			(2,847)			-
				93,713			61,717			176,822			127,136
	Change in long-term receivable			-			202			-			2,057
	Change in non-cash working capital			(33,979)			(7,137)			(36,738)			(44,949)
				59,734			54,782			140,084			84,244
Investing activities
	Additions to property, plant and equipment			(71,250)			(51,842)			(131,098)			(99,035)
	Additions to exploration and evaluation assets			(251)			(547)			(268)			(681)
	Restricted cash			(5,000)			(2,109)			(2,891)			(2,109)
	Change in non-cash working capital			1,694			968			2,498			1,532
				(74,807)			(53,530)			(131,759)			(100,293)
Financing activities
	Issue of shares for cash			9,212			1,309			13,060			1,410
	Financing costs			(2)			(1,994)			(435)			(1,994)
	Change in long-term debt			(600)			(9,136)			(896)			9,201
				8,610			(9,821)			11,729			8,617
Foreign exchange gain (loss) on cash and cash equivalents				118			(6)			176			(36)
Increase (decrease) in cash and cash equivalents				(6,345)			(8,575)			20,230			(7,468)
Cash and cash equivalents, beginning of period				51,172			34,847			24,597			33,740
Cash and cash equivalents, end of period			$	44,827		$	26,272		$	44,827		$	26,272
Interest paid			$	3,358		$	2,566		$	3,431		$	2,788
Interest received			$	52		$	73		$	274		$	118

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 payments		-				-				8,726				-				-				8,726
Options exercised		648,399				2,384				(974)				-				-				1,410
Net income for the period		-				-				-				-				27,201				27,201
Currency translation adjustment		-				-				-				(862)				-				(862)
Balance at June 30, 2013		254,477,049		$		337,148		$		77,187		$		6,500		$		98,672		$		519,507
Share-based compensation		-				-				8,859				-				-				8,859
Options exercised		1,204,862				3,157				(1,235)				-				-				1,922
Net income for the period		-				-				-				-				34,542				34,542
Currency translation adjustment		-				-				-				(155)				-				(155)
Balance at December 31, 2013		255,681,911		$		340,305		$		84,811		$		6,345		$		133,214		$		564,675
Share-based compensation		-				-				4,587				-				-				4,587
Options exercised		4,613,648				20,312				(8,377)				-				-				11,935
Warrants exercised		400,000				1,561				(438)				-				-				1,123
Net income for the period		-				-				-				-				52,188				52,188
Currency translation adjustment		-				-				-				200				-				200
Balance at June 30, 2014		260,695,559		$		362,178		$		80,583		$		6,545		$		185,402		$		634,708

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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