Bankers Petroleum Announces 2014 Financial Results
Cash Position of $73 Million and 14% Increase in Oil Sales
CALGARY, March 12, 2015 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the
"Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2014 financial
results. All amounts set out in this press release and listed in the tables
below are in US dollars unless otherwise stated.
In 2014, Bankers made several key accomplishments including record levels of
revenue of $583 million, adjusted funds generated from operations of $304
million, oil production of 20,690 barrels of oil per day (bopd) and capital
investment of $291 million.
Results at a Glance
($000s, except as noted) Year ended December 31
Results at a Glance 2014 2013 2012
Financial
Oil revenue 583,120 566,386 432,138
Net operating income 342,375 316,558 218,246
Net income 128,833 61,743 34,413
Basic (US$/share) 0.50 0.24 0.14
Diluted (US$/share) 0.49 0.24 0.14
Funds generated from operations 284,293 279,601 192,589
Adjusted funds generated from operations(1) 304,130 279,752 192,589
Basic (US$/share) 1.17 1.10 0.76
Capital expenditures 291,325 234,243 222,663
Operating
Average production (bopd) 20,690 18,169 15,020
Average sales (bopd) 20,679 18,173 14,808
Average Brent oil price (US$/barrel) 98.95 108.66 111.67
Average realized price (US$/barrel) 77.26 85.39 79.73
Netback (US$/barrel) 45.36 47.73 40.27
December 31
2014 2013 2012
Cash and restricted cash 73,036 31,706 38,740
Working capital 201,325 134,094 88,799
Total assets 1,284,846 1,007,148 825,816
Long-term debt 98,276 98,150 97,158
Shareholders' equity 716,536 564,675 483,032
1. Represents funds generated from operations before non-recurring contract
settlement expenses.
Highlights
Bankers reached several key financial and operational achievements during 2014
as described below:
Operational Highlights:
* Average oil production was 20,690 barrels of oil per day (bopd) in 2014,
14% higher than the 2013 average production of 18,169 bopd. Average oil
production for the 2015 year-to-date is approximately 19,500 bopd.
* Oil sales averaged 20,679 bopd in 2014, a 14% increase compared to 18,173
bopd in 2013. Crude oil inventory at December 31, 2014 increased to
315,500 barrels from 311,000 barrels at December 31, 2013.
* Capital expenditures in 2014 were $291 million, 24% higher compared to $234
million in 2013. A total of 160 wells were drilled including 149
horizontal production wells, seven lateral re-drills, two water disposal
wells and the Company's first multi-lateral well in the Patos-Marinza field
and its first horizontal well drilled in the Kuçova oilfield. A total of
146 wells were drilled in 2013.
* The Company continued the Enhanced Oil Recovery (EOR) program in 2014 with
monitoring and expansion of flood patterns. At the end of the year, 19
polymer flood and 4 water flood patterns were in place in the Patos-Marinza
oilfield and continue to perform to model expectations. Reservoir pressure
and production response are positive with good reservoir flood
conformance. The Company continues to be strongly encouraged by the
results to date and plans to move forward with 20 to 30 additional
conversions in 2015.
* Bankers commenced Kuçova oilfield development in the Arreza pool with the
takeover of 59 wells from Albpetrol in August 2014, reactivation of three
wells and drilling of the first horizontal well in 2014.
Product Margin Highlights:
* Operating and Sales and Transportation (S&T) costs, primarily originating
from Albanian-based companies and their employees, were $155 million
($20.51/bbl) for 2014 compared to $156 million for 2013 ($23.44/bbl), an
improvement of 13% on a per barrel basis. Overall, operating and S&T costs
improved by 21%, on a per barrel basis, from 2013 to 2014, taking into
account the $1.91/bbl impact of excise tax for 2014.
* Net operating income (netback) in 2014 was $342 million ($45.36/bbl)
compared to $317 million ($47.73/bbl) in 2013.
* The Company focused on key infrastructure projects aimed at reducing costs
and optimizing operations in the Patos-Marinza oilfield. The field
electrification project continued in the northern and central areas of the
Patos-Marinza oilfield with realized energy cost savings. Construction of
the west water disposal line and northern flow line system started in
2014. These projects target reductions in trucked volumes within the
field. Other infrastructure activities in 2014 include the commissioning
of the Satellite 3 treating facility, installation of several Gas Oil Ratio
(GOR) skids for gas capturing and measurement, as well as completed
maintenance turnarounds of the main treating facilities.
Financial Highlights:
* Revenue in 2014 was $583 million ($77.26/bbl) compared to $566 million
($85.39/bbl) in 2013. Field price realization represented 78% of the Brent
oil benchmark price ($98.95/bbl) as compared to 79% of the Brent price
($108.66/bbl) in 2013. The reduction as a percentage of Brent compared to
the previous year was mainly due to the commencement of domestic sales
during 2014.
* Royalties to the Albanian Government and related entities were $86 million
(15% of revenue) during 2014 compared to $94 million (17% of revenue) for
2013.
* During 2014, adjusted funds generated from operations were $304 million
($1.17 per share), a 9% increase compared to $280 million ($1.10 per share)
for 2013.
* The Company continues to maintain a strong financial position at December
31, 2014 with cash and restricted cash of $73 million and working capital
of $201 million. At December 31, 2014, the Company had drawn $104 million
of its $224 million approved credit facilities. At December 31, 2013, cash
and restricted cash was $32 million and working capital was $134 million.
* In August 2014, Bankers commenced delivery of crude oil to the domestic
refinery, which is now under new ownership and management. 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 an outstanding accounts
receivable balance.
* In April 2014, the Company paid a $3 million premium to enter into
financial commodity contracts representing 6,000 bopd at a floor price of
$80/bbl of Dated Brent for 2015. At December 31, 2014, the fair value of
these contracts was $44 million.
Other Highlights in 2014:
* The Oil Initially in Place (OIIP) resource assessment in Albania at
year-end was 5.4 billion barrels, consistent with the OIIP resource
assessment at the end of 2013. Reserves on a proved basis were 125 million
barrels compared to 147 million barrels at year-end 2013. On a proved plus
probable basis, reserves were 203 million barrels compared to 232 million
barrels at year-end 2013. The corresponding net present value (NPV) after
tax (discounted at 10%) of the proved plus probable reserves was $1.8
billion at year-end compared to $2.2 billion in 2013, representing CAD$8.57
/share and CAD$9.72/share, respectively.
Fiscal Terms Mitigation:
* Bankers and the Government of Albania worked together to reach an agreement
on mitigation of the 2014 fiscal changes. The terms of the agreement were
approved by Albpetrol and 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 to determine the Company's taxable position. This mechanism
enables the near term impact on cash flow to be fully offset through a
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
The Company's reduced capital program in 2015 will be $153 million, funded from
projected cash flow (based on an average $50/bbl Brent oil price) and existing
cash resources. Additionally, the Company's 2015 hedge program, representing
6,000 bopd at $80/bbl Brent, will ensure sufficient funding to maintain a
balanced program. The work program and budget include the following items:
* Drilling of 60 horizontal wells focused on continuing development in the
core area of the Patos-Marinza oilfield;
* Continuation of the EOR program with the addition of 20 to 30 polymer and
water injector conversions. The focus of the conversions planned is
expansion of existing patterns, with several conversions testing new areas
of the oilfield including higher viscosity fluids and thicker reservoir
sands;
* Continued focus on operational efficiencies in the field to expand product
margins including the construction of emulsion flow-lines to reduce
trucking costs, electrification and expansion of the gas gathering system
to reduce energy costs and emissions, and a review of well construction and
artificial lift design to improve well performance;
* Expansion of the water disposal system to accommodate increased fluid
handling requirements for the primary and EOR programs;
* Drilling of one well in Kuçova and implementation of a flood pattern to
commence EOR techniques in the oilfield;
* Continued investment on environmental remediation and social initiatives as
part of a sustained long-term effort to improve the physical
environment, and to provide training programs and other community
initiatives for the residents near the Company's operations.
First Quarter Operational Update
Bankers intends to announce its first quarter 2015 Operational update on
Tuesday, April 7, 2015.
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.
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31
(Expressed in thousands of US dollars, except per share amounts)
2014 2013
Revenues $ 583,120 $ 566,386
Royalties (85,966) (94,294)
497,154 472,092
Realized loss on financial commodity contracts (1,188) (3,898)
Unrealized gain (loss) on financial commodity 45,226 (1,555)
contracts
541,192 466,639
Operating expenses 95,317 88,510
Sales and transportation expenses 59,462 67,024
General and administrative expenses 22,189 21,212
Contract settlement expenses 19,837 151
Depletion and depreciation 116,458 99,554
Share-based compensation 5,721 11,527
318,984 287,978
222,208 178,661
Net finance expense (6,182) (18,712)
Income before income tax 216,026 159,949
Deferred income tax expense (87,193) (98,206)
Net income for the year 128,833 61,743
Other comprehensive loss
Currency translation adjustment (1,935) (1,017)
Comprehensive income for the year $ 126,898 $ 60,726
Basic earnings per share $ 0.497 $ 0.243
Diluted earnings per share $ 0.486 $ 0.241
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31
(Expressed in thousands of US dollars)
ASSETS
2014 2013
Current assets
Cash and cash equivalents $ 68,036 $ 24,597
Restricted cash 5,000 7,109
Accounts receivable 81,612 53,981
Inventory 10,008 38,025
Deposits and prepaid expenses 62,984 44,956
Financial commodity contracts 44,170 734
271,810 169,402
Non-current assets
Long-term receivable - 7,019
Property, plant and equipment 1,004,508 823,908
Exploration and evaluation assets 8,528 6,819
$ 1,284,846 $ 1,007,148
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $ 69,285 $ 33,812
Current portion of long-term debt 1,200 1,496
70,485 35,308
Non-current liabilities
Long-term debt 98,276 98,150
Decommissioning obligation 26,147 22,806
Deferred tax liabilities 373,402 286,209
568,310 442,473
SHAREHOLDERS' EQUITY
Share capital 363,670 340,305
Contributed surplus 86,409 84,811
Currency translation reserve 4,410 6,345
Retained earnings 262,047 133,214
716,536 564,675
$ 1,284,846 $ 1,007,148
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
(Expressed in thousands of US dollars)
2014 2013
Cash provided by (used in):
Operating activities
Net income for the year $ 128,833 $ 61,743
Depletion and depreciation 116,458 99,554
Accretion of long-term debt 1,350 2,805
Accretion of decommissioning obligation 1,139 1,019
Unrealized foreign exchange gain (649) (756)
Deferred income tax expense 87,193 98,206
Share-based compensation 5,721 11,527
Discount and revaluation (gain) loss of long-term (12,316) 4,687
receivable
Realized loss on financial commodity contracts 4,637 3,898
Unrealized (gain) loss on financial commodity (45,226) 1,555
contracts
Cash premiums paid for financial commodity contracts (2,847) (4,637)
284,293 279,601
Change in long-term receivable 19,335 (556)
Change in non-cash working capital 2,767 (54,403)
306,395 224,642
Investing activities
Additions to property, plant and equipment (289,616) (231,016)
Additions to exploration and evaluation assets (1,709) (3,227)
Restricted cash 2,109 (2,109)
Change in non-cash working capital 15,064 1,851
(274,152) (234,501)
Financing activities
Issue of shares for cash 13,923 3,332
Financing costs (435) (1,994)
Change in long-term debt (1,496) (813)
11,992 525
Foreign exchange gain (loss) on cash and cash (796) 191
equivalents
Increase (decrease) in cash and cash equivalents 43,439 (9,143)
Cash and cash equivalents, beginning of year 24,597 33,740
Cash and cash equivalents, end of year $ 68,036 $ 24,597
Interest paid $ 6,530 $ 5,811
Interest received $ 409 $ 159
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Expressed in thousands of US dollars, except number of common shares)
Number
Currency
of common Share Contributed Retained
translation Total
shares capital surplus earnings
reserve
Balance at December 31, 2012 253,828,650 $ 334,764 $ 69,435 $ 7,362 $ 71,471 $ 483,032
Share-based compensation - - 17,585 - - 17,585
Options exercised 1,853,261 5,541 (2,209) - - 3,332
Net income for the year - - - - 61,743 61,743
Currency translation adjustment - - - (1,017) - (1,017)
Balance at December 31, 2013 255,681,911 $ 340,305 $ 84,811 $ 6,345 $ 133,214 $ 564,675
Share-based compensation - - 11,040 - - 11,040
Options exercised 5,002,482 21,804 (9,004) - - 12,800
Warrants exercised 400,000 1,561 (438) - - 1,123
Net income for the year - - - - 128,833 128,833
Currency translation adjustment - - - (1,935) - (1,935)
Balance at December 31, 2014 261,084,393 $ 363,670 $ 86,409 $ 4,410 $ 262,047 $ 716,536
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