Record Year with 2014 Average Production of 20,687 bopd
CALGARY, Jan. 6, 2015 /CNW/ - Bankers Petroleum Ltd. (Bankers or the Company) (TSX: BNK, AIM: BNK) is pleased to announce the Company's fourth quarter operational update.
Bankers achieved 14% growth in 2014 with average production of 20,687 bopd compared to 2013's average production of 18,169 bopd. For the fourth quarter 2014, average production from the Patos-Marinza oilfield in Albania was 20,324 bopd.
In November, the Company elected to shut-in production from several higher water-cut wells due to reduced water handling capacity after a disposal pump failure. The replacement parts needed for the pump are due to arrive in country by mid-January and disposal rates will be resumed throughout the balance of the first quarter. Two additional water disposal wells are planned in later in 2015 to provide additional water handling capacity.
While a large amount of uncertainty around oil prices will have an impact on the level of capital deployment, Bankers is carefully evaluating the economic return of each well in the field on a regular basis. The Company will continue to manage work-over activity and operational practices of marginal volumes in accordance with the current economic environment.
Sales and Oil Prices
In 2014, oil sales averaged 20,678 bopd, 14% higher than the average sales in 2013. During the fourth quarter, oil sales averaged 20,619 bopd, 6% lower than the previous quarter average of 21,992 bopd. Crude oil inventory at December 31, 2014 decreased to 315,500 barrels compared to 342,500 barrels at September 30, 2014.
The Patos-Marinza fourth quarter average oil price was approximately $57.31 per barrel (representing 75% of Brent oil price of $76.27 per barrel), as compared with the third quarter average oil price of $78.55 per barrel (representing 77% of Brent oil price of $101.85 per barrel). Sales to the export market during the fourth quarter represented 64% of total sales (net of in-kind royalties), at an average export price of 77% of Brent oil price.
Bankers continues to maintain its 2015 hedge program covering 6,000 bopd whereby the difference between the monthly Brent price and $80/bbl is received within the first week of the following month. For December 2014, the cash settlement represented US$3.3 million. At December 31, 2014, the 2015 hedge represented a valuation of US$44 million.
In 2014, Bankers drilled a record total of 160 horizontal wells. In the fourth quarter, thirty-nine (39) wells were drilled and rig released: thirty-seven (37) horizontal wells plus one (1) lateral re-drill were in the main area of the Patos-Marinza oilfield and the Company's first horizontal well was drilled in Kuçova. Thirty (30) of these wells including the Kuçova well were completed and are on production with the remaining nine (9) to be placed on production in January pending drilling rig move off the pad, well completions and facilities tie-in.
As previously announced, Bankers has chosen to lay down two (2) of its drilling rigs in December, with a third to follow in early January. The Company will continue to drill utilizing a three (3) rig program and projects 85 – 90 new horizontal wells in 2015 pending oil prices.
Secondary Recovery Program
The polymer flood and water flood patterns in the Patos-Marinza oilfield continue to perform to model expectations from the nineteen (19) polymer and four (4) water flood patterns installed at the end of the fourth quarter. Reservoir pressure and production response are positive with good reservoir flood conformance. Peak rates are being managed to control draw-down across the laterals of the producers in all patterns to establish stable operating conditions.
Two (2) additional wells were converted to injection in the fourth quarter bringing the total number of implemented patterns to four (4) water flood injectors in the Upper Marinza (M0 reservoir sand), thirteen (13) polymer flood injectors in the Lower Driza spread evenly between the D5, D4, and D3 reservoir sands with an additional injector in the D3 sand in the southern region, and six (6) polymer injectors spread evenly in the three Lower Driza zones in the central region of the field.
The Company continues to be strongly encouraged by the results to date and plans to move forward with 25 – 30 additional conversions in 2015.
The field electrification project continued in the northern and central areas of the Patos-Marinza oilfield with the conversion of 68 wells in the fourth quarter. With the good cost savings performance, the electrification program will carry-on in 2015 with plans to electrify up to 250 wells throughout the year.
Construction of the west water disposal line is over half completed, with commissioning expected in the first quarter. Construction of the north gathering oil line is scheduled to commence in the first quarter of 2015 with completion mid-year. Both projects will target reductions in trucked volumes within the field and reduce operating costs over the year. The third gathering system, the west oil flow-line project, has been temporarily deferred under the current oil price environment.
Other infrastructure activities include the commissioning of the Satellite 3 treating facility, installation of several GOR skids for gas capturing and measurement as well as maintenance turnarounds of main treating facilities.
Updated Corporate Presentation
For additional information on this Operational Update please see the Company's January 2015 corporate presentation at www.bankerspetroleum.com.
The Management of Bankers will host a conference call on January 6, 2015, at 6:30 am MDT to discuss this Operational Update. Following Management's presentation there will be a question and answer session for analysts and investors.
To participate in the conference call, please contact the conference operator ten minutes prior to the call at 1-888-231-8191 or 1-647-427-7450. A live audio web cast of the conference call will also be available on Bankers website at www.bankerspetroleum.com or by entering the following URL into your web browser, http://www.newswire.ca/en/webcast/detail/1467845/1633727.
The web cast will be archived two hours after the presentation on the website, and posted on the website for 90 days. A replay of the call will be available until January 20, 2015 by dialing 1-855-859-2056 or 1-416-849-0833 and entering access code 60030326.
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.
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 petroleum engineer (member of APEGA) 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, 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: 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, +44 0 207 523 8000; AIM BROKER: FirstEnergy Capital LLP, Hugh Sanderson / David van Erp, +44 0 207 448 0200