For Immediate Release
BANKERS PETROLEUM OPERATIONAL UPDATE
FOR THE FOURTH QUARTER 2014
Record Year with 2014 Average Production of 20,687 bopd
CALGARY, January 6, 2015- Bankers Petroleum Ltd. (Bankers or the Company) (TSX:
BNK, AIM: BNK) is pleased to announce the Company's fourth quarter operational
update.
Production
Bankers achieved 14% growth in 2014 with average production of 20,687 bopd
compared to 2013's average production of 18,169 bopd. For the fourth quarter
2014, average production from the Patos-Marinza oilfield in Albania was 20,324
bopd.
In November, the Company elected to shut-in production from several higher
water-cut wells due to reduced water handling capacity after a disposal pump
failure. The replacement parts needed for the pump are due to arrive in
country by mid-January and disposal rates will be resumed throughout the
balance of the first quarter. Two additional water disposal wells are planned
in later in 2015 to provide additional water handling capacity.
While a large amount of uncertainty around oil prices will have an impact on
the level of capital deployment, Bankers is carefully evaluating the economic
return of each well in the field on a regular basis. The Company will continue
to manage work-over activity and operational practices of marginal volumes in
accordance with the current economic environment.
Sales and Oil Prices
In 2014, oil sales averaged 20,678 bopd, 14% higher than the average sales in
2013. During the fourth quarter, oil sales averaged 20,619 bopd, 6% lower than
the previous quarter average of 21,992 bopd. Crude oil inventory at December
31, 2014 decreased to 315,500 barrels compared to 342,500 barrels at September
30, 2014.
The Patos-Marinza fourth quarter average oil price was approximately $57.31 per
barrel (representing 75% of Brent oil price of $76.27 per barrel), as compared
with the third quarter average oil price of $78.55 per barrel (representing 77%
of Brent oil price of $101.85 per barrel). Sales to the export market during
the fourth quarter represented 64% of total sales (net of in-kind royalties),
at an average export price of 77% of Brent oil price.
Bankers continues to maintain its 2015 hedge program covering 6,000
bopd whereby the difference between the monthly Brent price and $80/bbl
is received within the first week of the following month. For December 2014,
the cash settlement represented US$3.3 million. At December 31, 2014, the 2015
hedge represented a valuation of US$44 million.
Drilling Update
In 2014, Bankers drilled a record total of 160 horizontal wells. In the fourth
quarter, thirty-nine (39) wells were drilled and rig released: thirty-seven
(37) horizontal wells plus one (1) lateral re-drill were in the main area of
the Patos-Marinza oilfield and the Company's first horizontal well was drilled
in Kuçova. Thirty (30) of these wells including the Kuçova well were completed
and are on production with the remaining nine (9) to be placed on production in
January pending drilling rig move off the pad, well completions and facilities
tie-in.
As previously announced, Bankers has chosen to lay down two (2) of its drilling
rigs in December, with a third to follow in early January. The Company will
continue to drill utilizing a three (3) rig program and projects 85 - 90 new
horizontal wells in 2015 pending oil prices.
Secondary Recovery Program
The polymer flood and water flood patterns in the Patos-Marinza oilfield
continue to perform to model expectations from the nineteen (19) polymer and
four (4) water flood patterns installed at the end of the fourth quarter.
Reservoir pressure and production response are positive with good reservoir
flood conformance. Peak rates are being managed to control draw-down across
the laterals of the producers in all patterns to establish stable operating
conditions.
Two (2) additional wells were converted to injection in the fourth quarter
bringing the total number of implemented patterns to four (4) water flood
injectors in the Upper Marinza (M0 reservoir sand), thirteen (13) polymer flood
injectors in the Lower Driza spread evenly between the D5, D4, and D3 reservoir
sands with an additional injector in the D3 sand in the southern region, and
six (6) polymer injectors spread evenly in the three Lower Driza zones in the
central region of the field.
The Company continues to be strongly encouraged by the results to date and
plans to move forward with 25 - 30 additional conversions in 2015.
Infrastructure Development
The field electrification project continued in the northern and central areas
of the Patos-Marinza oilfield with the conversion of 68 wells in the fourth
quarter. With the good cost savings performance, the electrification program
will carry-on in 2015 with plans to electrify up to 250 wells throughout the
year.
Construction of the west water disposal line is over half completed, with
commissioning expected in the first quarter. Construction of the north
gathering oil line is scheduled to commence in the first quarter of 2015 with
completion mid-year. Both projects will target reductions in trucked volumes
within the field and reduce operating costs over the year. The third gathering
system, the west oil flow-line project, has been temporarily deferred under the
current oil price environment.
Other infrastructure activities include the commissioning of the Satellite 3
treating facility, installation of several GOR skids for gas capturing and
measurement as well as maintenance turnarounds of main treating facilities.
Updated Corporate Presentation
For additional information on this Operational Update please see the Company's
January 2015 corporate presentation at www.bankerspetroleum.com.
Conference Call
The Management of Bankers will host a conference call on January 6, 2015, at 6:
30 am MDT to discuss this Operational 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
www.bankerspetroleum.com or by entering the following URL into your web
browser, http://www.newswire.ca/en/webcast/detail/1467845/1633727.
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 January 20, 2015 by dialing 1-855-859-2056 or 1-416-849-0833 and entering
access code 60030326.
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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 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.
For further information, contact:
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