Deal to Provide Funds for Exploration and Development in Texas and
CALGARY, Jan. 30 /CNW/ - Bankers Petroleum Ltd. (TSX: BNK, AIM: BNK) is
pleased to announce that it has entered into a letter of understanding with
Peninsula Merchant Syndications Corp. (Peninsula) to sell 27% of its working
interest in its approximate 375,000 net acres in the Palo Duro basin, Texas.
Peninsula is a private merchant bank controlled by Sam Magid, a former
founding partner of Salman Partners. The total consideration to be paid for
the acreage is US$19.5 million, of which a minimum of US$15.0 million will be
in cash. Bankers will continue as operator for its exploration activities in
the Palo Duro basin.
The cash received from the sale will be utilized to fund Bankers' 2007
U.S. exploration budget in the Palo Duro basin as well as the development
program in Oklahoma, where the Company anticipates it will have its first
natural gas production tied-in by summer. The transaction is expected to close
prior to March 31, 2007, subject to satisfaction of certain conditions
including completion of formal documentation.
"We're pleased to have made this partnership with Peninsula, which
underlines the potential of the Palo Duro basin," said Richard Wadsworth,
President. "Both management teams have a similar view about the prospective
value of the Palo Duro basin and philosophies towards the methodology to
develop this asset. We look forward to a successful business relationship as
we continue our work in determining the best way to economically develop the
hydrocarbons in this basin."
Palo Duro Basin Activity Update
Bankers is expecting to commence drilling its Cogdell No.1-64 well in the
next week. This well offsets the legacy Cogdell No.1-1 well that had produced
at a reported 2.8 million cubic feet of natural gas per day over a three day
test before being shut-in and experiencing mechanical problems. Bankers is
focusing on the Bend Group interval, utilizing underbalanced air drilling
techniques in order to minimize reservoir damage. This follows the apparent
success of another operator in the basin that had encouraging early results
using the same technique.
Two additional wells are planned to be drilled in the basin over the next
four months. Bankers is also in the planning and permitting stage for a 3D
seismic program over a portion of its ground.
Caution Regarding Forward-looking Information
Information in this news release respecting the proposed transaction with
Peninsula Merchant Syndications Corp. and planned work programs on the
Company's US properties and anticipated results of such programs constitutes
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.
The transaction with Peninsula is subject to certain conditions that may
or may not be satisfied within the time frame anticipated or at all. If
Peninsula does not complete the acquisition for any reason, the Company's work
programs for which the proceeds are intended to be used may have to be
curtailed and funding sought from other sources. There is no assurance that
such funding will be available to the Company on reasonable terms or at all
and any financing could dilute the Company's interest in its properties or be
dilutive to existing shareholders. Exploration for natural gas is a
speculative business that involves a high degree of risk. Few wells that are
drilled are ultimately developed commercially. Attainment of commercial
production is dependent upon a number of factors and subject to risks
including, but not limited to the ability to establish economic flow rates,
ultimate hydrocarbon recoveries, future pipeline capacity, and availability of
the necessary equipment, personnel and financial resources. There is no
assurance that expenditures made by the Company on its US properties will
result in discovery of commercial qualities of natural gas. 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.
Review by Qualified Person
This operations update was reviewed by Richard Wadsworth, President 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 with over 14 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 opportunities in unconventional petroleum
assets. Bankers holds interests in four prospects in the Northern and Central
regions of the United States, where it is currently pursuing the exploration
of shale gas plays. It also operates in the Patos-Marinza oilfield in Albania
pursuant to a license agreement, producing heavy oil. Bankers' shares are
traded on the Toronto Stock Exchange and the AIM Market in London, England
under the ticker symbol BNK.
For further information:
For further information: Susan J. Soprovich, VP, Investor Relations and
Corporate Governance, (403) 541-5313, Email:
firstname.lastname@example.org, Website: www.bankerspetroleum.com