Oct 07, 2010, 08:00 ET from Bankers Petroleum Ltd.

CALGARY, Oct. 7 /PRNewswire-FirstCall/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to announce the following operational and corporate updates.


Third quarter production averaged 9,826 bopd from the Patos-Marinza oilfield in Albania compared to second quarter production of 9,830 bopd. Current production is 10,500 bopd with 700 bopd shut-in awaiting maintenance and repairs. The average Patos-Marinza oil price was US$46.61 per barrel representing 61% of the Brent oil price compared to the second quarter's average oil price of US$47.12 per barrel(60% of the Brent oil price).

Three main factors affected lower than anticipated daily production volumes to this date:

    a)  Several new wells drilled in the second and third quarter were
        targeting reserves expansion, thermal assessments and one well was
        drilled for water disposal. This reduced the number of wells drilled
        for production growth.

    b)  The Company experienced delays in takeover of existing wells for
        re-activation from the national oil company, Albpetrol Sh.a. The
        Company was expecting to receive 100 well candidates from January
        through to the end of the third quarter, but unfortunately only
        10 suitable wells have been handed over for re-activation, resulting
        in lower production volumes. This situation has now been resolved
        with 55 re-activation candidates handed over to the company by
        Albpetrol on October 5th.

    c)  Several horizontal wells experienced drilling problems resulting in
        completing less than optimum short lateral sections. Other horizontal
        wells were challenged by previously explained fresh water intrusion
        and cross-flow from shallower zones due to corrosion in adjacent old
        vertical wells. Comprehensive review and remedial isolation of old
        well bores with corrosion issues has been progressing with positive
        results in increasing oil cut in affected horizontal and old vertical
        wells. The Company anticipates minimizing these concerns in future
        new drilling.

With these operational and mechanical issues, the Company is adjusting its exit production target to 12,000 bopd for 2010 and to 20,000 bopd for 2011.

Drilling Update

The Company continued execution of its horizontal drilling program targeting different productive zones and areas of the field to fully evaluate the reserves potential of the Patos-Marinza oilfield. Eleven horizontal wells drilled during the quarter resulted in four oil wells on production for over a month at an average rate of 165 bopd and seven wells recently placed on production and currently cleaning up and stabilizing with good initial productivity indication. The majority of the new producing wells are in the northern part of the field with one well drilled in the Driza 1 formation, which due to drilling mechanical issues has a short lateral of only 130 meters and with this limited inflow current production from the well is 30 bopd. The Driza 1 formation is present in large areas of the field and horizontal drilling development of this zone should contribute to new reserves additions.

At September 30, 2010, there were 43 horizontal wells drilled in the oilfield with 7 wells recently on production for under a month and stabilizing, 27 horizontal oil wells producing for longer than a month with an average production of 133 bopd, and 9 wells that have a lower production average of 20 bopd due to previously described mechanical issues, specifically short laterals within the producing section and water intrusion in others.

The Company is pleased with the overall success of the horizontal drilling program, specifically the potential for program expansion in 2011 beyond the 2009 proved + probable reserve case. The current reserve-based development program only incorporates horizontal drilling into 3 of the 17 discreet sands that exist in the field. Successful delineation of an additional 4 sands through the 2010 drilling program has lead to an expansion of the company's planned program in 2011 and beyond, and will likely result in incremental reserve additions at the end of the current year as new zones are targeted as recoverable oil-in-place.

Fourth Drilling Rig

Bankers horizontal drilling program will continue to expand in 2011 with the addition of a fourth drilling rig which has now been contracted and is scheduled to commence operations in April 2011.

Well Reactivations and Workovers

During the quarter, no wells were re-activated due to handover delays by Albpetrol. This situation has now been resolved and on October 5th, 55 existing wells have been handed over to the company by Albpetrol and several of these wells will be re-configured and placed on production before year-end. All of these wells are located in the northern part of the field north of the Seman River and in anticipation of receiving these wells the company had started construction of facilities and infrastructure to handle production from this sector.

10 existing shut-in wells were successfully brought on stream through recompletions in new producing formations to add 300 bopd of production.

Thermal Pilot and Western Extension Area

In addition to drilling of two vertical core recovery wells last quarter, two step-out vertical wells were drilled in the third quarter on the western flank of the field. Both wells indicated the presence of good porous oil saturated sandstones from the Lower Gorani through the Marinza formations. To date three separate formations have been tested for primary production with others to be evaluated in this quarter. Initial indication are that the oil is heavy and viscous (3.8 degree API) indicating that thermal recovery techniques will be necessary to produce this type of oil in this area. Two additional step-out wells will be drilled in the fourth quarter to further confirm the areal extent of these zones.

Planning and work for the first thermal pilot and initial cyclic steam injection into a horizontal well in the first quarter of 2011 is progressing on schedule. Surface facilities have been designed and various components have been procured. The 25,000 BTU steam generator will be ready in late October for start-up testing by the manufacturer in preparation for transport to Albania before year-end. Wellbore and production equipment design is nearing completion with major equipment orders placed with suppliers.

Infrastructure Development

Tank construction at the Vlore terminal is nearly complete and will enable storage of 160,000 barrels of oil once operational in the next few months. Planning for Phase 1 of the crude sales pipeline, from the Patos-Marinza oilfield to the rail tie-in at Fier, is progressing on schedule. Pipe has started to arrive in-country, drawings are currently being finalized for the hub facility at Fier and construction is expected to begin in the fourth quarter.


The Company has now received formal approval from Albpetrol and AKBN (the state regulatory agency) for amendments to the Kuçova Licence and Petroleum Agreements. Field work will commence this quarter and a formal plan of development will be submitted to the Albanian authorities in November.

Block F

The Company commenced re-processing existing seismic on the block. Initial evaluation of select lines illustrates considerable structural anomalies than was first contemplated. An expanded re-processing program is underway in order to select the best exploratory drilling location now scheduled for the first quarter of 2011.

Crude Marketing Initiatives/Working Capital

The company has received several new proposals to purchase Patos-Marinza crude at a price range between 66% and 68% of Brent Price. The company is currently finalizing new and current marketing agreements for 2011 volume deliveries and pricing.

At September 30, 2010, Bankers held $134 million of cash, and working capital was approximately $136 million. No funds were drawn on the $110 million credit facility from the European Bank for Reconstruction and Development and the International Finance Corporation. The Company has drawn $24 million of the $28 million Raiffeisen credit facility.

For additional information, please see an updated version of the Company's corporate presentation on

Conference Call

The Management of Bankers will host a conference call on October 7, 2010 at 7:00am MDT to discuss this operations 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 or by entering the following URL into your web browser

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 October 21, 2010 by dialing 1-800-642-1687 or 1-416-849-0833 and entering access code 16045644.

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

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 Abdel F. (Abby) Badwi, CEO 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 geologist (member of APEGGA) with over 40 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 both the Patos-Marinza and the Kuçova heavy oil fields. 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.