Bankers Petroleum Announces 2015 Second Quarter Financial and Operational Results

Second Quarter Cash Margin of US$29.52/bbl

CALGARY, Aug. 13, 2015 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2015 second quarter financial and operational results. 

During the quarter, Bankers achieved a cash margin of US$29.52 per barrel and netback of US$23.24 per barrel. All amounts listed in this news release are in US dollars unless otherwise stated.

Results at a Glance			Three months ended June 30							Six months ended June 30
(US$000s, except as noted)			2015				2014	% change		2015		2014		% change
Financial
	Oil revenue		85,707				170,531	(50%)		158,111		315,516		(50%)
	Net operating income		41,503				106,019	(61%)		66,371		198,510		(67%)
	Net income (loss)		(10,462)				27,196	(138%)		(9,583)		52,188		(118%)
		Basic (US$/share)	(0.04)				0.11	(136%)		(0.04)		0.20		(120%)
		Diluted (US$/share)	(0.04)				0.10	(140%)		(0.04)		0.20		(120%)
	Funds generated from operations		50,230				93,713	(46%)		75,120		176,822		(58%)
		Basic (US$/share)	0.19				0.36	(47%)		0.29		0.69		(58%)
		Basic (CAD$/share)	0.24				0.40	(40%)		0.36		0.75		(52%)
	Capital expenditures		37,567				71,501	(47%)		87,512		131,366		(33%)
Operating
	Average production (bopd)		20,050				20,630	(3%)		19,909		20,272		(2%)
	Average sales (bopd)		19,626				21,620	(9%)		19,953		20,036		(0%)
	Average Brent oil price (US$/barrel)		61.88				109.67	(44%)		57.84		108.93		(47%)
	Average realized price (US$/barrel)		47.99				86.68	(45%)		43.78		87.00		(50%)
	Netback (US$/barrel)		23.24				53.89	(57%)		18.38		54.74		(66%)
	Cash margin (US$/barrel)		29.52				53.89	(45%)		26.39		54.74		(52%)
						June 30, 2015		December 31, 2014				June 30, 2014
Cash and restricted cash					39,589			73,036				54,827
Working capital					160,909			201,325				191,023
Total assets					1,257,837			1,284,846				1,150,878
Long-term debt					98,459			98,276				98,198
Shareholders' equity					710,245			716,536				634,708

Highlights for the period ended June 30, 2015 are:

Operational Highlights:

• Average oil production for the three months ended June 30, 2015 was 20,050 barrels of oil per day (bopd) compared to 19,767 bopd in the previous quarter and 20,630 bopd in the second quarter of 2014.  For the six months ended June 30, 2015, average oil production was 19,909 bopd compared to 20,272 bopd for the same period in 2014.
• Oil sales for the second quarter of 2015 averaged 19,626 bopd compared to 20,283 bopd for the previous quarter and 21,620 bopd for the second quarter of 2014.  Crude oil inventory at June 30, 2015 increased to 307,000 barrels compared to 270,000 barrels at March 31, 2015.  For the six months ended June 30, 2015, oil sales were 19,953 bopd compared to 20,036 bopd for the same period in 2014.
• Capital expenditures during the second quarter of 2015 were $38 million.  The Company drilled 12 wells during the quarter, comprised of 10 horizontal production wells, one water disposal well and one suspended well at the Patos-Marinza oilfield.  Capital expenditures were $50 million for the previous quarter and $72 million for the second quarter of 2014. 

Product Margin Highlights:

• For the three months and six months ended June 30, 2015, operating costs and sales and transportation (S&T) costs, originating from Albanian-based companies and their employees, were $32 million ($17.86/bbl) and $69 million ($19.18/bbl), respectively, reduced from $39 million ($19.99/bbl) and $70 million ($19.27/bbl) for the same periods in 2014.  Operating and S&T costs improved by 13%, on a per barrel basis, from the first quarter of 2015 to the second quarter of 2015. 
• In the second quarter of 2015, net operating income (netback) was $42 million ($23.24/bbl) compared to $25 million ($13.62/bbl) for the previous quarter and $106 million ($53.89/bbl) for the second quarter of 2014.  Net operating income for the six months ended June 30, 2015 was $66 million ($18.38/bbl) compared to $199 million ($54.74/bbl) for the same period in 2014.
• Cash margin for the second quarter of 2015 was $29.52/bbl compared to $23.32/bbl in the previous quarter and $53.89/bbl in the second quarter of 2014.  Cash margin represents netback inclusive of the realized gain on commodity contracts and recovery against an outstanding accounts receivable balance.  Cash margin for the six months ended June 30, 2015 was $26.39/bbl compared to $54.74/bbl for the same period in 2014.

Financial Highlights:

• Revenue was $86 million ($47.99/bbl) for the second quarter of 2015, compared to $72 million ($39.66/bbl) in the previous quarter and $171 million ($86.68/bbl) in the second quarter of 2014.  Field price realization represented 78% of the Brent oil benchmark price ($61.88/bbl) for the second quarter of 2015 compared to 74% of the Brent oil benchmark price ($53.94/bbl) in the previous quarter and 79% of the Brent oil benchmark price ($109.67/bbl) in the second quarter of 2014.  The increase, as a percentage of Brent, compared to the previous quarter was mainly due to higher export sales during the second quarter of 2015.  For the six months ended June 30, 2015, revenue was $158 million ($43.78/bbl) compared to $316 million ($87.00/bbl) for the same period in 2014.
• Royalties to the Albanian Government and related entities during the second quarter of 2015 were $12 million (14% of revenue) compared to $10 million (14% of revenue) for the previous quarter and $25 million (15% of revenue) for the second quarter of 2014.  For the six months ended June 30, 2015, royalties were $22 million (14% of revenue) compared to $47 million (15% of revenue) for the same period in 2014.
• Funds generated from operations for the second quarter of 2015 were $50 million (US$0.19 per share, CAD$0.24 per share) compared to $25 million (US$0.10 per share, CAD$0.12 per share) for the previous quarter and $94 million (US$0.36 per share, CAD$0.40 per share) for the second quarter of 2014.  Funds generated from operations for the six months ended June 30, 2015 were $75 million (US$0.29 per share, CAD$0.36 per share) compared to $177 million (US$0.69 per share, CAD$0.75 per share) for the same period in 2014.
• The Company continues to maintain a strong financial position at June 30, 2015, with cash of $40 million and working capital of $161 million.  At June 30, 2015, the Company had drawn $114 million of its $223 million approved credit facilities.  Working capital for December 31, 2014 and June 30, 2014 was $201 million and $191 million, respectively.
• Bankers recognized realized gains of $10 million ($5.52/bbl) and $24 million ($6.64/bbl) on financial commodity contracts during the three and six months periods ended June 30, 2015, respectively.  The financial commodity contracts represent 6,000 bopd at a floor price of $80/bbl of Dated Brent for 2015.  At June 30, 2015, the fair value of these contracts was $21 million.

OUTLOOK

The Company continues to carry out its 2015 capital program as planned based on an annual average oil price of $50/bbl of Dated Brent by managing spending to cash flow.  Bankers' activities in the third quarter focus on its three part strategy to deliver reliable and repeatable low cost horizontal wells through the primary drilling program, to expand its product margin through surface-level improvements and to accelerate the enhanced oil recovery program.

The 2015 third quarter-to-date average production is 19,500 bopd from the Patos-Marinza and Kuçova oilfields in Albania, slightly lower than the second quarter average of 20,050 bopd.  Twelve (12) horizontal production wells are scheduled for drilling in the third quarter in the main area of the Patos-Marinza oilfield.   

Infrastructure and facilities projects in the third quarter include the final stages of construction of the northern emulsion gathering flow line system, and the inlet vessels at Satellite 3.  When commissioned later in the third quarter, this will complete the main facilities for the northern area of the oilfield.  The Company's second commercial polymer skid is expected to be commissioned within the quarter, supporting the southernmost patterns of the secondary recovery program.  The vapor recovery units at Pad H and Pad D are planned to be completed by the end of the quarter with commissioning in the fourth quarter.  These two projects will capture additional gas to be used to offset diesel, propane and electricity costs.  In addition, the Company expects to begin construction of the high-voltage power line for the water disposal system which will increase power reliability and support future expansion of the water disposal system.

The Company will continue to expand on the polymer and water flood program with one (1) water and five (5) polymer conversions in the third quarter. 

The Company intends to issue the third quarter 2015 operational update and host a conference call on Wednesday, October 7, 2015.

Supporting Documents

The full Management Discussion and Analysis (MD&A), Financial Statements and updated 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 (LOSS)
(Unaudited, expressed in thousands of US dollars, except per share amounts)
				Three months ended June 30				Six months ended June 30
				2015		2014		2015		2014
Revenues			$	85,707	$	170,531	$	158,111	$	315,516
Royalties				(12,306)		(25,178)		(22,450)		(47,126)
				73,401		145,353		135,661		268,390
Realized gain on financial commodity contracts				9,856		-		23,986		-
Unrealized loss on financial commodity contracts				(20,798)		(2,307)		(22,837)		(2,772)
				62,459		143,046		136,810		265,618
Operating expenses				22,132		24,808		45,627		44,978
Sales and transportation expenses				9,766		14,526		23,663		24,902
General and administrative expenses				5,188		6,097		9,840		11,969
Contract settlement expenses				40		347		395		519
Depletion and depreciation				30,830		27,983		60,949		54,676
Share-based compensation				721		999		1,903		2,467
				68,677		74,760		142,377		139,511
				(6,218)		68,286		(5,567)		126,107
Net finance expense				(1,590)		(3,994)		(10,478)		(7,807)
Income (loss) before income tax				(7,808)		64,292		(16,045)		118,300
Deferred income tax recovery (expense)				(2,654)		(37,096)		6,462		(66,112)
Net income (loss) for the period				(10,462)		27,196		(9,583)		52,188
Other comprehensive income (loss)
Currency translation adjustment				115		434		(1,305)		200
Comprehensive income (loss) for the period			$	(10,347)	$	27,630	$	(10,888)	$	52,388
Basic earnings (loss) per share			$	(0.040)	$	0.105	$	(0.037)	$	0.202
Diluted earnings (loss) per share			$	(0.040)	$	0.102	$	(0.037)	$	0.197

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, expressed in thousands of US dollars)
ASSETS
								June 30 2015			December 31 2014
Current assets
Cash and cash equivalents						$			33,817	$		68,036
Restricted cash									5,772			5,000
Accounts receivable									87,161			81,612
Inventory									6,132			10,008
Deposits and prepaid expenses									61,226			62,984
Financial commodity contracts									21,333			44,170
									215,441			271,810
Non-current assets
Property, plant and equipment									1,033,741			1,004,508
Exploration and evaluation assets									8,655			8,528
						$			1,257,837	$		1,284,846
LIABILITIES
Current liabilities
	Accounts payable and accrued liabilities					$			42,465	$		69,285
	Current portion of long-term debt								12,067			1,200
									54,532			70,485
Non-current liabilities
Long-term debt									98,459			98,276
Decommissioning obligation									27,661			26,147
Deferred tax liabilities									366,940			373,402
									547,592			568,310
SHAREHOLDERS' EQUITY
Share capital									365,045			363,670
Contributed surplus									89,631			86,409
Currency translation reserve									3,105			4,410
Retained earnings									252,464			262,047
									710,245			716,536
							$		1,257,837	$		1,284,846

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
				2015		2014		2015		2014
Cash provided by (used in):
Operating activities
	Net income (loss) for the period		$	(10,462)	$	27,196	$	(9,583)	$	52,188
	Depletion and depreciation			30,830		27,983		60,949		54,676
	Accretion of long-term debt			250		598		500		1,049
	Accretion of decommissioning obligation			321		272		636		546
	Unrealized foreign exchange loss			5,118		109		4,340		64
	Deferred income tax (recovery) expense			2,654		37,096		(6,462)		66,112
	Share-based compensation			721		999		1,903		2,467
	Discount and revaluation of long-term receivable			-		-		-		(205)
	Unrealized loss on financial commodity contracts			20,798		2,307		22,837		2,772
	Cash premiums paid for financial commodity contracts			-		(2,847)		-		(2,847)
				50,230		93,713		75,120		176,822
	Change in non-cash working capital			(26,856)		(33,979)		(19,017)		(36,738)
				23,374		59,734		56,103		140,084
Investing activities
	Additions to property, plant and equipment			(37,567)		(71,250)		(87,385)		(131,098)
	Additions to exploration and evaluation assets			-		(251)		(127)		(268)
	Restricted cash			(181)		(5,000)		(772)		(2,891)
	Change in non-cash working capital			(7,216)		1,694		(12,934)		2,498
				(44,964)		(74,807)		(101,218)		(131,759)
Financing activities
	Issue of shares for cash			511		9,212		722		13,060
	Financing costs			-		(2)		-		(435)
	Change in long-term debt			2,505		(600)		10,267		(896)
				3,016		8,610		10,989		11,729
Foreign exchange gain (loss) on cash and cash equivalents				140		118		(93)		176
Increase (decrease) in cash and cash equivalents				(18,434)		(6,345)		(34,219)		20,230
Cash and cash equivalents, beginning of period				52,251		51,172		68,036		24,597
Cash and cash equivalents, end of period			$	33,817	$	44,827	$	33,817	$	44,827
Interest paid			$	3,095	$	3,358	$	3,140	$	3,431
Interest received			$	55	$	52	$	151	$	274

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS 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, 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
Share-based compensation		-		-		6,453		-		-		6,453
Options exercised		388,834		1,492		(627)		-		-		865
Net income for the period		-		-		-		-		76,645		76,645
Currency translation adjustment		-		-		-		(2,135)		-		(2,135)
Balance at December 31, 2014		261,084,393	$	363,670	$	86,409	$	4,410	$	262,047	$	716,536
Share-based compensation		-		-		3,875		-		-		3,875
Options exercised		339,935		1,375		(653)		-		-		722
Net loss for the period		-		-		-		-		(9,583)		(9,583)
Currency translation adjustment		-		-		-		(1,305)		-		(1,305)
Balance at June 30, 2015		261,424,328	$	365,045	$	89,631	$	3,105	$	252,464	$	710,245

------------

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; AIM NOMAD: Canaccord Genuity Limited, Henry Fitzgerald-O'Connor/Wei Loon Yap, [phone]; AIM BROKER: FirstEnergy Capital LLP, Hugh Sanderson / David van Erp, [phone]