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 /PRNewswire/ - 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.



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