Bankers Petroleum Announces 2014 Third Quarter Financial and Operational
Results
Netback of US$45.78/bbl and Q4 Average Production to Date 22,000 bopd
CALGARY, Nov. 7, 2014 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the
"Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2014 third quarter
financial and operational results.
During the quarter, Bankers achieved a netback of US$45.78 per barrel. All
amounts listed in this news release are in US dollars unless otherwise stated.
Results at a Glance Three months ended September 30 Nine months ended September 30
(US$000s, except as noted) 2014 2013 % change 2014 2013 % change
Financial
Oil revenue 158,932 146,665 8% 474,448 411,065 15%
Net operating income 92,624 82,725 12% 291,134 225,032 29%
Net income 25,592 19,507 31% 77,780 46,708 67%
Basic (US$/share) 0.10 0.08 27% 0.30 0.18 63%
Diluted (US$/share) 0.10 0.08 25% 0.29 0.18 60%
Funds generated from operations 84,617 71,074 19% 261,439 198,210 32%
Basic (US$/share) 0.32 0.28 14% 1.01 0.78 29%
Capital expenditures 87,605 66,199 32% 218,971 165,915 32%
Operating
Average production (bopd) 21,865 18,541 18% 20,809 17,787 17%
Average sales (bopd) 21,994 18,332 20% 20,696 17,655 17%
Average Brent oil price (US$/barrel) 101.93 110.29 (8%) 106.52 108.46 (2%)
Average realized price (US$/barrel) 78.55 86.96 (10%) 83.97 85.29 (2%)
Netback (US$/barrel) 45.78 49.05 (7%) 51.53 46.69 10%
September 30, 2014 December 31, 2013 September 30, 2013
Cash and restricted cash 87,976 31,706 40,659
Working capital 190,218 134,094 121,973
Total assets 1,230,406 1,007,148 971,587
Long-term debt 98,450 98,150 98,153
Shareholders' equity 661,775 564,675 542,655
Highlights for the quarter ended September 30, 2014 are summarized below:
Operational Highlights:
* Average oil production for the three months ended September 30, 2014 was
21,865 barrels of oil per day (bopd), 6% higher as compared to 20,630 bopd
in the previous quarter and 18% higher than 18,541 bopd in the third
quarter of 2013. For the nine months ended September 30, 2014, average oil
production was 20,809 bopd, 17% higher than 17,787 bopd for the same period
in 2013.
* Oil sales for the third quarter of 2014 averaged 21,994 bopd, a 2% increase
compared to 21,620 bopd for the previous quarter and 20% increase compared
to 18,332 bopd for the third quarter of 2013. Crude oil inventory at
September 30, 2014 decreased to 342,500 barrels, 11,500 barrels lower than
354,000 barrels at June 30, 2014. Oil sales for the nine months ended
September 30, 2014 were 20,696 bopd, an increase of 17% from 17,655 bopd
for the comparable 2013 period.
* Capital expenditures in the third quarter of 2014 were $88 million. The
Company drilled 45 wells during the quarter, comprised of 44 horizontal
production wells and the Company's first multi-lateral well in the main
area of the Patos-Marinza oilfield. Capital expenditures were $72 million
for the previous quarter and $66 million for the third quarter of 2013.
Product Margin Highlights:
* For the three and nine months ended September 30, 2014, operating costs and
sales and transportation costs, originating from Albanian-based companies
and their employees, were $43 million ($21.41/bbl) and $113 million ($20.03
/bbl), respectively, compared to $39 million ($23.29/bbl) and $116 million
($24.15/bbl) for the same periods in 2013.
* Net operating income (netback) in the third quarter of 2014 was $93 million
($45.78/bbl) compared to $106 million ($53.89/bbl) and $83 million ($49.05/
bbl) in the previous quarter and third quarter of 2013, respectively. Net
operating income for the nine months ended September 30, 2014 was $291
million ($51.53/bbl), a 29% increase compared to $225 million ($46.69/bbl)
in the comparable 2013 period.
Financial Highlights:
* Revenue for the third quarter of 2014 was $159 million ($78.55/bbl)
compared to $171 million ($86.68/bbl) in the previous quarter and $147
million ($86.96/bbl) in the third quarter of 2013. Field price realization
represented 77% of the Brent oil benchmark price ($101.93/bbl) for the
third quarter of 2014 compared to 79% of the Brent oil price ($109.67/bbl)
in the previous quarter and 79% of the Brent oil price ($110.29/bbl) in the
third quarter of 2013. The reduction as a percentage of Brent compared to
the previous quarter was mainly due to commencement of domestic sales
during the quarter.
* Royalties to the Albanian Government and related entities during the third
quarter of 2014 were $23 million (14% of revenue) compared to $25 million
(15% of revenue) in the previous quarter and $25 million (17% of revenue)
for the third quarter of 2013. For the nine months ended September 30,
2014, royalties were $70 million (15% of revenue) compared to $70 million
(17% of revenue) for the comparable period in 2013.
* Funds generated from operations for the third quarter of 2014 were $85
million ($0.32 per share) compared to $94 million ($0.36 per share) for the
previous quarter and $71 million ($0.28 per share) for the third quarter of
2013. Funds generated from operations for the nine months period ended
September 30, 2014 were $261 million, a 32% increase from $198 million for
the same period in 2013.
* The Company continues to maintain a strong financial position at September
30, 2014, with cash of $88 million and working capital of $190 million. At
September 30, 2014, the Company had drawn $104 million of its $224 million
approved credit facilities. Working capital for December 31, 2013 and
September 30, 2013 was $134 million and $122 million, respectively.
* In August 2014, Bankers commenced delivery of crude oil to the domestic
refinery, under new ownership and management. The temporary contract
enables the restart of the refinery to test the commercial viability of the
refinery system. Bankers agreed to sell oil to an affiliate of this
domestic refinery on a monthly basis until December 31, 2014 at 73% of
Dated Brent (FOB Vlore equivalent) plus $40/tonne or approximately $6/bbl
recovery against a delinquent accounts receivable balance. All sales are
fully secured by letters of credit. Bankers is in the process of reviewing
its sales contracts for the 2015 calendar year and volume commitments for
next year will be determined in the fourth quarter of 2014.
Fiscal Terms Mitigation:
* Bankers and the Government of Albania have worked together to reach an
agreement on mitigation of the 2014 fiscal changes. Terms of the agreement
have been approved by Albpetrol Sh.A, the Albanian National Agency for
Natural Resources (AKBN), and were ratified by the Council of Ministers on
November 2, 2014. The agreement is structured to allow excise and any
applicable carbon and circulation taxes to be deducted from revenue and
eligible for inclusion in the cost recovery pool for the Patos-Marinza
concession as Petroleum Costs to determine the Company's taxable position.
This mechanism enables the near term impact on cash flow to be fully offset
through deferred and reduced profit tax burden which keeps the net asset
value of the project whole and the economics of future investment
consistent with the pre-2013 fiscal regime.
Outlook
In the fourth quarter 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 fourth quarter average production to date is 22,000 bopd from the
Patos-Marinza oilfield, 1% higher than the third quarter average of 21,865
bopd. Nine (9) wells were converted to polymer injection late in the third
quarter completing the planned conversions for the year. The Company continues
to monitor the progress of the twenty-one (21) polymer and water-flood patterns
in the field. The results are meeting expectations and additional conversions
are being planned for the 2015 program.
Our infrastructure projects in the fourth quarter focus primarily on cost
reduction initiatives. The Company expects to electrify sixty (60) to
seventy-five (75) wells in the quarter, aimed at reducing energy costs.
Construction of a water disposal line will continue in the fourth quarter and
will be completed by early 2015 to reduce infield trucking volumes and costs.
The Company also commenced activity in Kuçova during the third quarter with
reactivation of three (3) wells and drilling of the first horizontal well in
the field. The well was cored and logged prior to drilling the horizontal
lateral for reservoir evaluation and production testing.
Bankers intends to announce its 2015 Capital Budget and Work Program on Friday,
December 12, 2014. The Company anticipates maintaining a similar activity level
in 2015 with a continued focus on production growth, polymer and water flood
pilot expansion and cost improvements. The 2015 program will be funded with
cash flow generated in 2015 supplemented with existing cash and credit
facilities.
Supporting Documents
The full Management Discussion and Analysis (MD&A), Financial Statements and
updated November 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 Nine months ended
September 30 September 30
2014 2013 2014 2013
Revenues $ 158,932 $ 146,665 $ 474,448 $ 411,065
Royalties (22,985) (24,664) (70,111) (69,655)
135,947 122,001 404,337 341,410
Unrealized gain (loss) on 1,556 (2,208) (1,216) (3,588)
financial commodity contracts
137,503 119,793 403,121 337,822
Operating expenses 25,639 22,000 70,617 65,445
Sales and transportation 17,684 17,276 42,586 50,933
expenses
General and administrative 6,601 4,434 19,089 14,902
expenses
Depletion and depreciation 29,921 25,583 84,597 73,218
Share-based compensation 1,062 1,692 3,529 8,053
80,907 70,985 220,418 212,551
56,596 48,808 182,703 125,271
Net finance expense (2,096) (3,311) (9,903) (8,867)
Income before income tax 54,500 45,497 172,800 116,404
Deferred income tax expense (28,908) (25,990) (95,020) (69,696)
Net income for the period 25,592 19,507 77,780 46,708
Other comprehensive income
(loss)
Currency translation adjustment (1,362) 263 (1,162) (599)
Comprehensive income for the $ 24,230 $ 19,770 $ 76,618 $ 46,109
period
Basic earnings per share $ 0.098 $ 0.077 $ 0.300 $ 0.184
Diluted earnings per share $ 0.095 $ 0.076 $ 0.292 $ 0.183
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, expressed in thousands of US dollars)
ASSETS
September 30 December 31
2014 2013
Current assets
Cash and cash equivalents $ 82,976 $ 24,597
Restricted cash 5,000 7,109
Accounts receivable 90,722 53,981
Inventory 11,309 38,025
Deposits and prepaid expenses 63,482 44,956
Financial commodity contracts 44 734
253,533 169,402
Non-current assets
Long-term receivable 4,368 7,019
Financial commodity contracts 2,321 -
Property, plant and equipment 961,712 823,908
Exploration and evaluation assets 8,472 6,819
$ 1,230,406 $ 1,007,148
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $ 62,115 $ 33,812
Current portion of long-term debt 1,200 1,496
63,315 35,308
Non-current liabilities
Long-term debt 98,450 98,150
Decommissioning obligation 25,637 22,806
Deferred tax liabilities 381,229 286,209
568,631 442,473
SHAREHOLDERS' EQUITY
Share capital 363,482 340,305
Contributed surplus 82,116 84,811
Currency translation reserve 5,183 6,345
Retained earnings 210,994 133,214
661,775 564,675
$ 1,230,406 $ 1,007,148
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, expressed in thousands of US dollars)
Three months ended Nine months ended
September 30 September 30
2014 2013 2014 2013
Cash provided by (used in):
Operating activities
Net income for the period $ 25,592 $ 19,507 $ 77,780 $ 46,708
Depletion and depreciation 29,921 25,583 84,597 73,218
Accretion of long-term debt 24 424 1,073 2,402
Accretion of decommissioning 284 259 830 750
obligation
Unrealized foreign exchange 382 48 446 (400)
(gain) loss
Deferred income tax expense 28,908 25,990 95,020 69,696
Share-based compensation 1,062 1,692 3,529 8,053
Discount and revaluation of - - (205) (1,168)
long-term receivable
Unrealized (gain) loss on
financial commodity (1,556) 2,208 1,216 3,588
contracts
Cash premiums paid for
financial commodity - (4,637) (2,847) (4,637)
contracts
84,617 71,074 261,439 198,210
Change in long-term 2,856 - 2,856 2,057
receivable
Change in non-cash working 18,139 5,722 (18,599) (39,227)
capital
105,612 76,796 245,696 161,040
Investing activities
Additions to property, plant (86,220) (63,879) (217,318) (162,914)
and equipment
Additions to exploration and (1,385) (2,320) (1,653) (3,001)
evaluation assets
Restricted cash 5,000 - 2,109 (2,109)
Change in non-cash working 15,853 5,260 18,351 6,792
capital
(66,752) (60,939) (198,511) (161,232)
Financing activities
Issue of shares for cash 758 545 13,818 1,955
Financing costs - - (435) (1,994)
Change in long-term debt - (9,191) (896) 10
758 (8,646) 12,487 (29)
Foreign exchange gain (loss) (1,469) 67 (1,293) 31
on cash and cash equivalents
Increase (decrease) in cash 38,149 7,278 58,379 (190)
and cash equivalents
Cash and cash equivalents, 44,827 26,272 24,597 33,740
beginning of period
Cash and cash equivalents, $ 82,976 $ 33,550 $ 82,976 $ 33,550
end of period
Interest paid $ 21 $ 44 $ 3,452 $ 2,832
Interest received $ 66 $ 26 $ 340 $ 145
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited, expressed in thousands of US dollars, except number of common
shares)
Number of Share Contributed Currency Retained
common capital surplus translation Total
shares reserve earnings
Balance at
December 31, 253,828,650 $ 334,764 $ 69,435 $ 7,362 $ 71,471 $ 483,032
2012
Share-based - - 11,558 - - 11,558
payments
Options 1,033,664 3,277 (1,321) - - 1,956
exercised
Net income for - - - - 46,708 46,708
the period
Currency
translation - - - (599) - (599)
adjustment
Balance at
September 30, 254,862,314 $ 338,041 $ 79,672 $ 6,763 $ 118,179 $ 542,655
2013
Share-based - - 6,027 - - 6,027
compensation
Options 819,597 2,264 (888) - - 1,376
exercised
Net income for - - - - 15,035 15,035
the period
Currency
translation - - - (418) - (418)
adjustment
Balance at
December 31, 255,681,911 $ 340,305 $ 84,811 $ 6,345 $ 133,214 $ 564,675
2013
Share-based - - 6,664 - - 6,664
compensation
Options 4,958,713 21,616 (8,921) - - 12,695
exercised
Warrants 400,000 1,561 (438) - - 1,123
exercised
Net income for - - - - 77,780 77,780
the period
Currency
translation - - - (1,162) - (1,162)
adjustment
Balance at
September 30, 261,040,624 $ 363,482 $ 82,116 $ 5,183 $ 210,994 $ 661,775
2014
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.
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