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Bankers Petroleum announces 2012 financial results

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16% increase in Oil Sales and 30% increase in Cash Flow

CALGARY, March 15, 2013 /PRNewswire/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK) (AIM: BNK) is pleased to provide its 2012 Financial Results.

In 2012, Bankers accomplished several key achievements including record production and cash flow.  The Company also invested $222.7 million in capital expenditures during 2012.

           
Results at a Glance (US$000, except as noted)          
  Year ended December 31  
  2012   2011     Change
(%) 
Oil revenue 432,138   339,918     27
Net operating income 218,246   169,653     29
Net income 34,413   35,996     (4)
  Per share - basic ($) 0.136   0.146     (7)
          - diluted ($) 0.136   0.141     (4)
Funds generated from operations 192,589   147,940     30
  Per share - basic ($) 0.763   0.559     36
Capital expenditures 222,663   242,754     (8)
             
Average sales (bopd) 14,808   12,784     16
Average price ($/barrel) 79.73   72.84     9
Netback ($/barrel) 40.27   36.36     11
             
     December 31  
    2012       2011
Cash and deposits   38,740       54,013
Working capital   88,799       80,282
Total assets   825,816       661,216
Long-term debt   97,158       46,692
Shareholders' equity   483,032       412,679
         

2012 Highlights:

  • Average oil production was 15,020 barrels of oil per day (bopd) 15% higher than 2011 average production of 13,051 bopd.

  • Oil sales averaged 14,808 bopd, compared to 12,784 bopd in 2011, an increase of 16%, primarily as a result of the Company's ongoing horizontal drilling program along with continuation of well reactivations.

  • Revenue increased by 27% to $432.1 million ($79.73/bbl) from $339.9 million ($72.84/bbl) in 2011.  Field price realization represented 71% of the Brent oil price ($112/bbl) as compared to 65% of the Brent price ($111/bbl) in 2011.

  • Royalties to the Albanian Government and related entities were $78.4 million, 23% higher than $63.9 million for 2011.

  • Operating and sales and transportation costs, originating from Albanian-based companies and their employees, were $135.5 million, compared with $106.3 million for 2011.

  • The Company recorded net operating income (netback) of $218.2 million ($40.27/bbl), an increase of 29% compared to $169.7 million ($36.36/bbl) in 2011.

  • Funds generated from operations were $192.6 million, a 30% increase compared to $147.9 million for 2011.  The fourth quarter of 2012 represents the first time that funds generated from operations of $53.0 million, nearly covered capital expenditures of $53.8 million.

  • The Original Oil in Place (OOIP) resource assessment in Albania at year-end was 5.4 billion barrels compared to 8.0 billion barrels in 2011.  Reserves on a proved basis were 139.4 million barrels compared to 172.4 million barrels in 2011.  On a proved plus probable basis, reserves were 225.7 million barrels compared to 267.1 million barrels in 2011.  The corresponding net present value (NPV) after tax (discounted at 10%) of the proved plus probable reserves was $1.9 billion at year-end compared to $2.0 billion in 2011.

  • Capital expenditures were $222.7 million compared to $242.8 million in 2011.  A total of 128 wells were drilled, including 112 horizontal production wells, seven lateral re-drills, four vertical core delineation wells, and four water disposal wells in the Patos-Marinza field, plus one exploration well in Block "F".  In 2011, 84 total wells were drilled.

  • Several Patos-Marinza crude oil sales agreements, representing the majority of the export volumes for 2013 are priced at an average of 80% of the Brent oil benchmark, an increase of 14% over the 2012 oil price of 71% of Brent oil.

  • Data collection and analysis for secondary and enhanced recovery planning continued in 2012 with the objective to identify the most suitable reservoir layers and areas of the field to initiate water flood, polymer flood and enhanced oil recovery programs, starting in 2013.

  • With data collected from the first thermal pilot and additional information including special core analysis of the expanded 2012 coring program, prospect areas are being selected and evaluated to design a second thermal pilot.

  • Block "F" contains several seismically defined structural and amplitude anomalies prospective for oil and natural gas.  The first exploration well was drilled in 2012 and the second exploration location has been selected and site construction is underway and this well is expected to spud in the second quarter of 2013.

  • The central treatment facility (CTF) is being expanded with construction of third crude oil sales tank to increase storage capacity and improve operational flexibility in the Patos-Marinza field.

  • Planning and construction for a new satellite facility in the north-central area of the field is also underway for scheduled completion in the third quarter of 2013.  This facility, along with additional cascade treating facilities and in-field flow-lines, will improve crude oil treating performance in the field.

  • Planning and application to gain preliminary approvals for the second phase of the crude oil sales pipeline, extending 35 kilometer from Fier to the export terminal at Vlore, is underway and will continue through 2013.

  • Environmental legacy clean-up as part of the water control program continues to improve the condition of the oilfield and demonstrate improvement in oil rates and reduced water-cuts in wells and areas affected by water influx issues.  Over 220 existing wells were isolated in 2012.

  • The Company has initiated design and construction of a commercial scale sludge treatment operation to help reclaim oil from the sludge on old leases and from ecological pits in the production area as part of on-going lease clean-up activities.

  • The Company continues to maintain a strong financial position at December 31, 2012 with cash of $38.7 million and working capital of $88.8 million.  Cash and working capital for December 31, 2011 was $54.0 million and $80.3 million, respectively.

  • The Company is in the final approval stages regarding its credit facility expansion with the International Finance Corporation (IFC) and European Bank for Reconstruction and Development (EBRD), its existing reserve-based lenders.  It is expected that the new credit facility will envelope the existing $110 million facility, resulting in a new facility having similar terms as the original.  The original 2009 facility had a six-year term with repayments scheduled in the latter three years.

  • In August 2012, the Company entered into a financial commodity contract representing 4,000 bopd at a floor price of $80/bbl Brent for 2013.

  • The Company continues to challenge assessments from the Albanian Government Tax Directorate through the Albanian Courts.  In addition to the success in setting aside a recently introduced separate assessment of excise tax on the Company's importation and use of diluent, over the past few months, the Courts have ruled in favor of Bankers for all other cases heard, including the carbon and circulation taxes on diluent imports, which resulted in recent assessments to the Company totalling over $17 million.  The Company is now preparing to continue its defense from various levels of appeals.

Operational Update

First quarter 2013 year-to-date average production is 16,850 bopd.  Bankers intends to issue the first quarter 2013 operational update and host conference call on Friday, April 5, 2013.

Outlook

The Company's capital program in 2013 will be $247 million, fully funded from projected cash flow based on an average $102.50 Brent oil price. The work program and budget will include the following:

  • Drilling of approximately 120 horizontal and vertical wells with 70-80% of the wells focused on increasing production and 20-30% focused on data collection for improved secondary and tertiary recovery techniques in the Patos-Marinza oilfield.
  • Continuing the water control and environmental clean-up program with over 200 legacy vertical well isolations to improve new well performance and expanding water disposal capacity with additional wells.
  • Initiating water flood and polymer flood operations and drilling additional core wells for assessing future thermal development plans.
  • Progressing with social and environmental impact assessments and preliminary approvals for construction of the 35 kilometer second phase of the 70,000 bopd crude oil sales pipeline from the Fier Hub to the Vlore export terminal.
  • Drilling new wells and expanding water flood activities at the Kuçova oilfield.
  • Drilling an exploration well on Block "F" and identification of further prospects.
  • Continuing with the environmental stewardship and social initiatives in our area of operations.

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 YEARS ENDED DECEMBER 31
(Expressed in thousands of US dollars, except per share amounts)


 




 



2012
  2011





 
Revenues
$ 432,138
$ 339,918
Royalties

(78,361)  
(63,941)



353,777  
275,977
Realized loss on financial commodity contracts

(6,588)  
-
Unrealized gain (loss) on financial commodity contracts     556     (2,904)
      347,745     273,073

 

 

 

 
 
 

 
Operating expenses

77,953  
60,864
Sales and transportation expenses

57,578
  45,460
General and administrative expenses

16,050
  13,773
Depletion and depreciation  
65,937  
40,367
Share-based payments

11,205  
11,041



228,723  
171,505
      119,022     101,568




   
Net finance expense

19,594  
6,223

 



 


Income before income tax

  99,428     95,345
Deferred income tax expense

(65,015)
  (59,349)
Net income for the year

34,413
  35,996




 

Other comprehensive income



 
  Currency translation adjustment     953     315

Comprehensive income for the year

 

$

35,366
 
$

36,311



     
Basic earnings per share   $ 0.136
  0.146
             
Diluted earnings per share
$ 0.136   $ 0.141

 

 

 

 
 
 

 

 
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31
(Expressed in thousands of US dollars)
 
ASSETS



2012  
2011
Current assets
       

Cash and cash equivalents $ 33,740   $ 49,013

Restricted cash
5,000  
5,000
  Accounts receivable
35,603  
56,006
  Inventory
23,517     14,412
  Deposits and prepaid expenses
30,265     17,463
  Financial commodity contracts
1,550     3,684
 
129,675     145,578
Non-current assets  
   

Long-term receivable
11,150     -

Property, plant and equipment   681,399  
514,184

Exploration and evaluation assets   3,592     1,454
  $ 825,816   $ 661,216
   
LIABILITIES  
Current liabilities          

Accounts payable and accrued liabilities $ 38,787    $ 52,109

Current portion of long-term debt   2,089     13,187

  40,876     65,296
Non-current liabilities
         

Long-term debt   97,158     46,692

Decommissioning obligation   16,747     13,561

Deferred tax liabilities   188,003     122,988

    342,784     248,537
 
SHAREHOLDERS' EQUITY  
  Share capital
334,764     318,021

Warrants   -     1,540

Contributed surplus
69,435     49,651

Currency translation reserve   7,362     6,409

Retained earnings   71,471     37,058
    483,032     412,679

$ 825,816   $ 661,216
           

 
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
(Expressed in thousands of US dollars)
         
        2012     2011
Cash provided by (used in):              
Operating activities              
  Net income for the year     $ 34,413   $ 35,996
  Depletion and depreciation       65,937     40,367
  Amortization of deferred financing costs       -     734
  Accretion of long-term debt       4,791     2,555
  Accretion of decommissioning obligation       829     460
  Unrealized foreign exchange loss       636     1,122
  Deferred income tax expense       65,015     59,349
  Share-based payments       11,205     11,041
  Discount of long-term receivable       7,629     -
  Realized loss on financial commodity contracts       6,588     -
  Unrealized (gain) loss on financial commodity contracts       (556)     2,904
  Cash premiums paid for financial commodity contracts       (3,898)     (6,588)
        192,589     147,940
  Change in long-term receivable       (18,779)     -
  Change in non-cash working capital       (12,064)     (15,743)
        161,746     132,197
Investing activities              
  Additions to property, plant and equipment       (220,525)     (241,300)
  Additions to exploration and evaluation assets       (2,138)     (1,454)
  Restricted cash       -     (3,500)
  Change in non-cash working capital       (2,762)     6,786
        (225,425)     (239,468)
Financing activities              
  Issue of shares for cash       13,555     5,783
  Financing costs       (750)     (30)
  Increase in long-term debt       35,537     44,543
  Share issue costs       -     (167)
        48,342     50,129
Foreign exchange gain (loss) on cash and cash equivalents       64     (464)
Decrease in cash and cash equivalents       (15,273)     (57,606)
Cash and cash equivalents, beginning of year       49,013     106,619
Cash and cash equivalents, end of year     $ 33,740   $ 49,013
               
Interest paid     $ 4,788   $ 2,362
Interest received     $ 438   $ 574
               

 
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Expressed in thousands of US dollars, except number of common shares)
    Number of
common
shares
  Share
capital
  Warrants   Contributed
surplus
  Currency
translation
reserve
  Retained
earnings
  Total
Balance at December 31, 2010   244,794,990   $ 309,379   $ 1,597   $ 28,135   $ 6,094   $ 1,062   $ 346,267
                                         
Share-based payments   -     -     -     24,485     -     -     24,485
Options exercised   2,728,446     8,348     -     (2,969)     -     -     5,379
Warrants exercised   174,333     461     (57)     -     -     -     404
Share issue costs   -     (167)     -     -   -       -     (167)
Net income for the year   -     -     -     -   -       35,996     35,996
Currency translation adjustment   -     -     -     -     315     -     315
Balance at December 31, 2011   247,697,769   $ 318,021   $ 1,540   $ 49,651   $ 6,409   $ 37,058   $ 412,679
                                         
Share-based payments   -     -     -     21,432     -     -     21,432
Options exercised   1,457,890     4,147     -     (1,655)     -     -     2,492
Warrants exercised   4,672,991     12,596     (1,533)     -     -     -     11,063
Warrants expired   -     -     (7)     7     -     -     -
Net income for the year   -     -     -     -     -     34,413     34,413
Currency translation adjustment   -     -     -     -     953     -     953
Balance at December 31, 2012   253,828,650   $ 334,764   $ -   $ 69,435   $ 7,362   $ 71,471   $ 483,032
                                         

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 COO 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 APEGGA) 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 and 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.



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