Bankers Petroleum Announces 2014 Year-End Reserves
203 Million Barrels of Proved plus Probable (2P) Reserves including 11.3
Million Barrels of EOR Reserves;
NPV of US$1.8 billion
CALGARY, March 2, 2015 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the
"Company") (TSX: BNK, AIM: BNK) announces the results of its December 31, 2014,
independent reserves evaluation. Evaluations were conducted by RPS Energy
Canada Ltd. (RPS) for the Patos-Marinza oilfield, Albania, and by DeGolyer and
McNaughton Canada Ltd. (D&M) for the Kuçova oilfield, Albania; and were
prepared in accordance with Canadian National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities.
David French, President and CEO commented "This 2014 Reserves update marks an
important strategic transition for Bankers. First, we are pleased with the
recognition of our Enhanced Oil Recovery (EOR) program with initial EOR Proved
Developed Producing (PDP) and Proved Undeveloped (PUD) reserve bookings. We see
EOR as an integral part of our future growth. The 76 patterns booked this year
represent less than one-fifth of our current opportunity set at the floodable
viscosity ranges in our field. Second, we have experienced modest
communication at 100 metre spacing in our core development area. While this
temporarily impacts our primary-only reserves per well, it will be the right
answer for commercial EOR development and subsequent bookings. Lastly, the
shallower depths and higher viscosities of our southern non-core area appear
commercially challenged at the current oil price. We will continue to solve for
the right technical solution to access these areas, such as the multilateral
test last year. On balance, our ongoing efforts to reduce operating expenses
and capital development, validate the potential for EOR, and solve the
challenges of our heaviest sands to set us up well for the future."
Overview
* First time booking of EOR reserve volumes in Patos-Marinza oilfield at 2.0,
8.6, 11.3 and 13.4 million barrels on a PDP, Proved (1P), Proved plus
Probable (2P), and Proved Probable plus Possible (3P) basis, respectively;
* 1P Reserves decreased 15% to 125.0 million barrels with after tax value
discounted at 10% down 40% to US$734 million (representing CAD$3.49 per
share);
* 2P Reserves decreased 12% to 203.3 million barrels with after tax value
discounted at 10% down 20% to US$1.8 billion (representing CAD$8.57 per
share);
* Reserve volume increases resulted from additional future development in the
core areas of the Patos-Marinza field following improved rate and recovery
performance from the polymer and water-flood EOR patterns implemented,
including horizontal drilling on reduced spacing (100 metre) and between 20
to 30 injector conversions per year over the next two years;
* Reserves volume decreases are largely attributed to deferred development in
extension areas of the oilfield where commercial viability is less at
current oil prices, secondary pressure support is not planned near term and
production techniques are being tested for improved recovery in higher
viscosity and lower temperature areas, including the Gorani and southern
Driza reservoirs;
* Main drivers for the decreased valuation are the lower price forecast,
revised development activity to focus on core areas of the oilfield and
technical revisions to reflect well performance in 200 metre and reduced
spacing development in core and extension areas;
* 2014 Company average production was 20,687 bopd for an annual total volume
of 7.6 million barrels (6% of total proved reserves);
* Reserves Life Index for 1P and 2P is 17 years and 27 years, respectively.
Total Company Reserves Summary
Gross Oil Reserves - Using Forecast Prices (Million barrels)
2014 2013
Patos- Kuçova Total Patos- Kuçova Total %
Marinza Albania Marinza Albania
Proved
Developed Producing 36.3 0.1 36.4 40.3 - 40.3 -10
Developed Non-Producing - 0.1 0.1 0.7 - 0.7 -83
Undeveloped 86.0 2.6 88.5 102.3 3.4 105.7 -16
Total Proved (1P) 122.3 2.8 125.0 143.3 3.4 146.7 -15
Probable 69.1 9.2 78.3 77.0 8.5 85.5 -8
Total Proved Plus Probable 191.4 12.0 203.3 220.3 11.9 232.2 -12
(2P)
Possible 81.0 15.5 96.9 104.0 21.4 125.4 -23
Total Proved, Probable & 272.8 27.5 300.3 324.3 33.3 357.6 -16
Possible (3P)
Patos-Marinza Contingent and Prospective Resources (Million barrels - P50
Probability Level)
2014 2013 %
Contingent Resource 512 505 1
Prospective Resource 315 259 22
Net Present Value at 10% - After Tax Using Forecast Prices (US$ millions)
2014 2013 %
Patos- Kuçova Total Patos- Kuçova Total
Marinza Albania Marinza Albania
Proved
Developed Producing 388 1 389 568 - 568 -32
Developed Non-Producing - 1 1 11 - 11 -89
Undeveloped 327 17 344 614 23 637 -46
Total Proved 715 19 734 1,193 23 1,216 -40
Probable 968 100 1,068 926 98 1,024 4
Total Proved Plus Probable 1,683 119 1,802 2,119 121 2,240 -20
Possible 846 197 1,043 1,003 296 1,299 -20
Total Proved, Probable & 2,529 316 2,845 3,122 417 3,539 -20
Possible
2014 2013
Reserves Value CAD$/Share US$/bbl CAD$/Share US$/bbl
10% Discounted, After Tax
1P reserves $3.49 $5.87 $5.27 $8.29
2P reserves $8.57 $8.86 $9.72 $9.65
3P reserves $13.54 $9.47 $15.36 $9.90
Basic shares outstanding as of December 31, 2014, were approximately 261
million (285 million diluted).
Values are based on RPS (Patos-Marinza) and D&M (Kuçova) January 1, 2015, price
forecast tables summarized below:
Reserves Evaluator Price Decks - Dated Brent
BRENT Oil Price Forecast US$/bbl
Year RPS D&M
2015 70.03 69.00
2016 74.64 75.40
2017 79.50 82.03
2018 84.50 88.90
2019 89.50 96.01
2020 93.85 97.85
2021 95.72 99.72
2022 97.64 101.64
2023 99.59 103.59
2024 101.58 105.58
2025 103.61 107.61
2026 +2.0% Thereafter +2.0% Thereafter
Finding and Development Costs (F&D)
The future development capital has decreased with deferral of activity in the
extension areas of the Patos-Marinza oilfield. The resulting future horizontal
well count has decreased from 995 to 882 in the 2P development case and from
984 to 870 in the 1P and 1,082 to 999 in the 3P cases. In 2014, Bankers
drilled 157 new horizontal production wells in Patos-Marinza.
Total future undiscounted capital costs for Patos-Marinza and Kuçova are
projected to be US$2.0 billion, US$2.1 billion and US$2.4 billion on a 1P, 2P
and 3P basis, respectively. This represents a 14%, 13% and 11% decrease in
future capital on a 1P, 2P, and 3P basis compared to the previous year. The F&
D costs, calculated as total future development capital divided by recoverable
reserves excluding currently developed PDP and Proved Developed Non-Producing
(PDNP) reserves, are summarized in the table below:
2014 2013
F&D Costs US$/bbl US$/bbl
1P reserves $22.57 $20.45
2P reserves $12.69 $12.08
3P reserves $8.95 $7.85
Oil Initially in Place
In Patos-Marinza, the Oil Initially in Place ("OIIP") volumes in the reserves
area remain essentially the same at 2.3 billion barrels and the OIIP outside
the reserves area at 2.8 billion barrels in 2014.
The Kuçova OIIP resource estimate remains at 297 million barrels.
Operational Update
The last ten day average production was 20,750 bopd, 2% higher than the fourth
quarter of 2014 average. All wells that had been temporarily shut-in due to
limited surface access during the flooding are now returned to production.
These wells continue to be optimized and as they clean-up, are expected to
resume previous rates throughout the remainder of the first quarter.
As previously announced, Bankers has now reduced its drilling activity to two
drilling rigs.
Further details, including the March 2015 Corporate Presentation, are available
on the Company's website www.bankerspetroleum.com.
Conference Call
Bankers' Management will host a conference call on March 2, 2015 at 6:30 am MST
(8:30 am EST, 1:30 pm GMT) to discuss this reserves report. 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 www.bankerspetroleum.com or by entering the following URL into your web
browser http://www.newswire.ca/en/webcast/detail/1488471/1657241.
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 March 16, 2015 by dialing 1-855-859-2056 or 1-416-849-0833 and entering
access code 89799223.
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 Chief
Operating Officer 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 APEGA) 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, 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.
David French, President and Chief Executive Officer, (403) 513-6930; Doug Urch,
Executive VP, Finance and Chief Financial Officer, (403) 513-2691; Laura
Bechtel, Investor Relations Analyst, (403) 513-3428; Email:
investorrelations@bankerspetroleum.com; Website: www.bankerspetroleum.com; AIM
NOMAD: Canaccord Genuity Limited, Henry Fitzgerald-O'Connor, +44 0 207 523
8000; AIM BROKER: FirstEnergy Capital LLP, Hugh Sanderson / David van Erp, +44
0 207 448 0200