Bankers Petroleum Announces 2013 Second Quarter Financial and Operational Results

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Aug 14, 2013, 08:00 ET

Free Cash Flow of $9 Million and Q3 Average Production to Date 18,300 bopd

CALGARY, Aug. 14, 2013 /PRNewswire/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2013 second quarter financial and operational results. During the quarter, Bankers achieved its second consecutive quarter of free cash flow and record production levels.

Results at a Glance			Three months ended June 30					Six months ended June 30
($000s, except as noted)			2013		2012	% change		2013	2012		% change
Financial
	Oil revenue		131,838		98,587	34%		264,400	201,255		31%
	Net operating income		69,142		47,252	46%		142,307	100,723		41%
	Net income		13,024		11,253	16%		27,201	19,018		43%
		Per share - basic ($)	0.05		0.04	16%		0.11	0.08		41%
		- diluted ($)	0.05		0.04	16%		0.11	0.08		43%
	Funds generated from operations		61,717		43,159	43%		127,136	91,231		39%
		Per share - basic ($)	0.24		0.17	41%		0.50	0.36		39%
	Capital expenditures		52,389		52,632	-		99,716	115,333		(14%)
Operating
	Average sales (bopd)		18,008		14,169	27%		17,310	13,724		26%
	Average price ($/barrel)		80.45		76.46	5%		84.39	80.57		5%
	Netback ($/barrel)		42.19		36.65	15%		45.42	40.33		13%
	Average Brent oil price ($/barrel)		102.43		108.29	(5%)		107.50	113.61		(5%)

				June 30, 2013			December 31, 2012			June 30, 2012
Cash and deposits				33,381			38,740			60,297
Working capital				116,656			88,799			112,022
Total assets				918,034			825,816			770,829
Long-term debt				97,864			97,158			95,793
Shareholders' equity				519,507			483,032			454,752

Highlights for the quarter and six months ended June 30, 2013 are:

Average oil production was 17,886 barrels of oil per day (bopd) for the three months ended June 30, 2013, 6% higher than 16,919 bopd in the first quarter of 2013 and 26% higher than 14,161 bopd in the second quarter of 2012. Average oil production for the third quarter to-date is approximately 18,300 bopd.
Oil sales averaged 18,008 bopd for the second quarter of 2013, an increase of 8% compared to 16,605 bopd for the previous quarter and an increase of 27% compared to 14,169 bopd for the second quarter of 2012. For the six months ended June 30, 2013, oil sales were 17,310 bopd, an increase of 26% compared to 13,724 bopd for the comparable 2012 period.
For the second quarter of 2013, revenue was $132 million ($80.45/bbl) compared to $133 million ($88.70/bbl) in the previous quarter and $99 million ($76.46/bbl) in the second quarter of 2012. Revenue for the second quarter of 2013 represented 79% of the Brent oil price of $102/bbl, compared to 79% of the Brent oil price of $113/bbl in the previous quarter and 71% of the Brent oil price of $108/bbl in the second quarter of 2012.
Royalties to the Albanian Government and related entities were $22 million (16% of revenue) for the second quarter of 2013 compared to $17 million (17% of revenue) for the same quarter of 2012. Total royalties were $45 million (17% of revenue) and $36 million (18% of revenue) for the six months ended June 30, 2013 and 2012, respectively.
For the three and six months periods ended June 30, 2013, operating, sales and transportation costs, originating from Albanian-based companies and their employees, were $41 million and $77 million, respectively, compared to $34 million and $64 million for the comparable periods of 2012.
The Company recorded net operating income (netback) of $69 million ($42.19/bbl) in the second quarter of 2013, compared to $73 million ($48.96/bbl) in the previous quarter and $47 million ($36.65/bbl) in the second quarter of 2012. Net operating income was $142 million ($45.42/bbl) for the six months ended June 30, 2013, a 41% increase compared to $101 million ($40.33/bbl) in the comparable 2012 period.
For the second quarter of 2013, funds generated from operations were $62 million, compared to $65 million for the previous quarter and $43 million for the same period of 2012.
Capital expenditures were $52 million in the second quarter of 2013. The Company drilled 39 wells during the quarter, comprised of 35 horizontal production wells and four horizontal lateral re-drill wells in the main area of the Patos-Marinza field. In the second quarter of 2012, capital expenditures were $53 million.
The Company continues to maintain a strong financial position at June 30, 2013 with cash of $33 million and working capital of $117 million. At June 30, 2013, the Company had drawn $115 million of its $230 million approved credit facilities. Working capital for December 31, 2012 and June 30, 2012 was $89 million and $112 million, respectively.
Both the International Finance Corporation (IFC) and European Bank for Reconstruction and Development (EBRD) have approved an extension of the Company's existing credit facility to September 2020. No repayments are required until September 2017, from which time the facility amount will decrease by 25% annually. Collectively, the revolving loan facilities will increase to $200 million from the existing $100 million. Currently, $120 million is available and the additional $80 million will be available as the Company continues to maintain its proved and probable reserves base and is conditional upon Brent oil prices remaining above $70/bbl.
The Company was successful in setting aside a separate assessment of excise tax on its importation and use of diluents. The Courts have also ruled in favor of the Company for other cases heard, including the carbon and circulation taxes on diluent imports, which resulted in assessments to the Company totalling approximately $25 million. The Company is now preparing to continue its defence at various levels of appeals.

Outlook

The average third quarter 2013 production to date from the Patos-Marinza oilfield in Albania is approximately 18,300 bopd, 2% higher than the second quarter average.

The Company is pleased with performance of the horizontal drilling program which continues to yield strong results. For the second half of 2013, the Company will continue to focus on development drilling in the North-Central areas of the Patos-Marinza field with an estimated 30 horizontal wells per quarter adding to production levels. Two water disposal wells are planned for late in the third quarter and into the fourth quarter to provide capacity expansion for growth. In addition, two (2) to four (4) wells are projected for delineation in the outlying areas of the field in the fourth quarter.

The expansion of water flood and polymer flood patterns continues with additional wells to be converted to injection in the second half of 2013. By year-end the Company will have three (3) water-flood patterns in the upper Marinza reservoir with up to seven (7) injectors and three (3) polymer-flood patterns in the lower Driza reservoir sands with up to six (6) injectors in place with response expected in 2014.

In the second half of 2013, the Company will ramp up spending on surface facilities including the addition of a satellite treatment facility and tank storage expansion to increase treatment capacity and construction of flow-lines to reduce trucking within the field where justified.

Drilling of two (2) wells in Kucova is projected in the fourth quarter of 2013 to test production and collect fluid and reservoir information. In addition, existing adjacent wells are scheduled for take-over from Albpetrol for further evaluation.

"I continue to be pleased with the operational success of the company and our ability to meet or exceed our production guidance for five consecutive quarters. The Board has now approved the potential acquisition of a sixth drilling rig which, pending availability, should enable Bankers to affirm the high-end of our annual guidance. We look forward to continued reliable, disciplined growth," said David French, President and CEO of Bankers Petroleum.

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
			2013		2012		2013		2012

Revenues		$	131,838	$	98,587	$	264,400	$	201,255
Royalties			(21,673)		(17,214)		(44,991)		(36,368)
			110,165		81,373		219,409		164,887

Unrealized gain (loss) on financial commodity contract			(6)		244		(1,380)		(2,965)
			110,159		81,617		218,029		161,922

Operating expenses			22,291		19,038		43,445		36,470
Sales and transportation expenses			18,732		15,083		33,657		27,694
General and administrative expenses			4,513		3,508		10,468		7,618
Depletion and depreciation			24,438		14,067		47,635		27,744
Share-based payments			3,103		1,447		6,361		5,683
			73,077		53,143		141,566		105,209
			37,082		28,474		76,463		56,713

Net finance expense			3,616		1,860		5,556		4,717

Income before income tax			33,466		26,614		70,907		51,996
Deferred income tax expense			(20,442)		(15,361)		(43,706)		(32,978)
Net income for the period			13,024		11,253		27,201		19,018

Other comprehensive income (loss)
	Currency translation adjustment		(510)		(505)		(862)		1
Comprehensive income for the period		$	12,514	$	10,748	$	26,339	$	19,019

Basic earnings per share		$	0.051	$	0.044	$	0.107	$	0.076

Diluted earnings per share		$	0.051	$	0.044	$	0.107	$	0.075

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, expressed in thousands of US dollars)

ASSETS
			June 30 2013			December 31 2012
Current assets
	Cash and cash equivalents	$		26,272	$		33,740
	Restricted cash			7,109			5,000
	Accounts receivable			59,399			35,603
	Inventory			34,423			23,517
	Deposits and prepaid expenses			40,215			30,265
	Financial commodity contract			170			1,550
				167,588			129,675
Non-current assets
	Long-term receivable			10,261			11,150
	Property, plant and equipment			735,912			681,399
	Exploration and evaluation assets			4,273			3,592
		$		918,034	$		825,816

LIABILITIES
Current liabilities
	Accounts payable and accrued liabilities	$		40,022	$		38,787
	Current portion of long-term debt			10,910			2,089
				50,932			40,876
Non-current liabilities
	Long-term debt			97,864			97,158
	Decommissioning obligation			18,022			16,747
	Deferred tax liabilities			231,709			188,003
				398,527			342,784

SHAREHOLDERS' EQUITY
Share capital				337,148			334,764
Contributed surplus				77,187			69,435
Currency translation reserve				6,500			7,362
Retained earnings				98,672			71,471
				519,507			483,032
		$		918,034	$		825,816

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
		2013		2012			2013		2012
Cash provided by (used in):
Operating activities
Net income for the period	$	13,024	$		11,253	$	27,201	$	19,018
Depletion and depreciation		24,438			14,067		47,635		27,744
Accretion of long-term debt		829			1,199		1,978		2,326
Accretion of decommissioning obligation		250			202		491		397
Unrealized foreign exchange (gain) loss		(268)			(126)		(448)		120
Deferred income tax expense		20,442			15,361		43,706		32,978
Share-based payments		3,103			1,447		6,361		5,683
Unwinding of discount of long-term receivable		(700)			-		(1,441)		-
Revaluation loss of long-term receivable		593			-		273		-
Unrealized (gain) loss on financial commodity contract		6			(244)		1,380		2,965
		61,717			43,159		127,136		91,231
Change in long-term receivable		202			-		2,057		-
Change in non-cash working capital		(7,137)			(6,775)		(44,949)		(12,614)
		54,782			36,384		84,244		78,617
Investing activities

Additions to property, plant and equipment		(51,842)			(51,306)		(99,035)		(113,451)
Additions to exploration and evaluation assets		(547)			(1,326)		(681)		(1,882)
Restricted cash		(2,109)			-		(2,109)		-
Change in non-cash working capital		968			(3,467)		1,532		(4,109)
		(53,530)			(56,099)		(100,293)		(119,442)
Financing activities
Issue of shares for cash		1,309			31		1,410		12,177
Financing costs		(1,994)			-		(1,994)		(750)
Change in long-term debt		(9,136)			2,993		9,201		35,817
		(9,821)			3,024		8,617		47,244

Foreign exchange loss on cash and cash
equivalents		(6)		(162)			(36)		(135)
Increase (decrease) in cash and cash equivalents		(8,575)			(16,853)		(7,468)		6,284
Cash and cash equivalents, beginning of period		34,847			72,150		33,740		49,013
Cash and cash equivalents, end of period	$	26,272	$		55,297	$	26,272	$	55,297


Interest paid	$	2,566	$		1,521	$	2,788	$	1,722
Interest received	$	73	$		218	$	118	$	278

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.

Updated Corporate Presentation

For additional information on this operational update, please see the August 2013 version of the Company's corporate presentation at www.bankerspetroleum.com.

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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 reactivations and well recompletions of the past will continue and success rates and production rates will be similar to those rates experienced for previous well recompletions and reactivations; 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 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.