Average Quarterly Production 19,598
bopd and Improved Corporate Decline
CALGARY, Oct. 7, 2015 /PRNewswire/ - Bankers Petroleum
Ltd. (Bankers or the Company) (TSX: BNK, AIM: BNK) is pleased to
announce the Company's third quarter operational update.
Production
Average production from the Patos-Marinza and Kuçova oilfields
in Albania for the third quarter
of 2015 was 19,598 barrels of oil per day (bopd), a decrease of 2%
compared to the second quarter average of 20,045 bopd. Production
in the quarter stabilized with development drilling utilizing two
rigs, response from the enhanced oil recovery (EOR) patterns that
were implemented last year and continued focus on converting wells
to injectors as part of the 2015 EOR program.
The Bubullima reservoir continues to perform well, with four (4)
producing wells averaging close to 200 bopd per well, which
includes some downtime for workovers in the quarter. The
latest Bubullima well drilled in the third quarter was recently
tied-in and is being optimized. While the volumes are very
encouraging, the Bubullima production is both slightly sour and
high in watercut requiring the Company to manage the disposal
capacity and sour treatment facilities ahead of the Bubullima
development program. The Company has facilities in place to
support its plans to drill two (2) to three (3) additional
Bubullima wells in the fourth quarter and is planning the 2016
program accordingly.
Sales and Oil Prices
Oil sales during the third quarter averaged 19,730 bopd, 0.4%
higher than the previous quarter average of 19,599 bopd.
Crude oil inventory at September 30,
2015, was 297,000 barrels down from 307,000 barrels at
June 30, 2015.
The Patos-Marinza third quarter average oil price was
approximately $39.52 per barrel
(representing 79% of the Brent oil price of $50.26 per barrel), as compared with the second
quarter average oil price of $47.98
per barrel (representing 77% of the Brent oil price of $61.92 per barrel). Sales to the export market
during the third quarter 2015 represented 97% of total sales, at an
average export price of 79% of the Brent oil price. The majority of
the volumes were sold to the export market in the third quarter to
capitalize on the continued demand during the summer months.
In the fourth quarter, crude oil volumes have been largely
committed to the export market to capture higher realized prices
and consistent off-take during the winter months.
Bankers realized $16.4 million
(representing $9.05 per barrel)
during the third quarter in proceeds from corporate
hedges.
Hedging Strategy
Bankers has hedged 6,000 bopd at a Brent price of
$80 per barrel for the balance of
2015. The remaining 2015 hedge program at September 30, 2015, is valued at $23.4 million.
During the third quarter, Bankers initiated its 2016 hedging
strategy by placing two costless collar contracts with an average
floor of $54 and average ceiling of
$58 for a total of 2,500 bopd for the
full year. The Company will look to add to this hedging position as
the markets allow, for up to 6,000 bopd. These contracts are
designed to protect Bankers against further weakness in oil prices
in 2016, while still providing the Company and its shareholders the
opportunity to benefit from price improvement.
Enhanced Oil Recovery Program
The EOR program continues to demonstrate strong performance with
twenty-eight (28) polymer and six (6) water flood patterns
operating in the Patos-Marinza oilfield at the end of the third
quarter. During the third quarter, Bankers converted two (2)
producing wells to injector wells and plans to convert an
additional ten (10) to fifteen (15) wells before the end of
2015.
The polymer and water flood programs produced a total of
approximately 3,715 bopd in the month of September, representing
19% of Bankers total production or 12% incremental production above
what the estimated primary performance would have produced.
With a growing percentage of the field under pressure support from
the EOR program, the Company estimates that the base corporate
decline has begun to shallow from an estimated thirty (30) percent
in early 2015 to an estimated twenty (20) to twenty-five (25)
percent corporate decline in 2016.
"This is a significant milestone for the Company. The EOR
program is doing exactly what it was intended to do, provide an
incremental production wedge as well as reduce our corporate
decline, allowing the Company to achieve more with less activity,"
commented David French, President
and Chief Executive Officer of Bankers Petroleum.
Drilling Update
Bankers drilled a total of fourteen (14) wells in the third
quarter: thirteen (13) horizontal producers in Patos-Marinza and
one (1) horizontal producer in Kuçova. Twelve (12) of the producing
wells are on production, the remaining two (2) wells will be placed
on production early in the fourth quarter.
In the fourth quarter, Bankers plans to drill fourteen (14)
horizontal production wells and one (1) multi-lateral well.
This will be the second multi-lateral well in Patos-Marinza,
testing the Lower Driza performance from thinner stacked reservoir
sands. The multi-lateral concept reduces the capital cost of
each lateral leg compared to a single lateral well improving access
to the reservoir and allowing expansion of our development
plan.
Infrastructure Development
Infrastructure projects in the third quarter focused on emulsion
gathering systems to tie-in wells and improved inlet systems and
vapour recovery units at satellite facilities. The final
stages of the north gathering system are being completed with
partial commissioning underway and the remaining leases being
tied-in during the coming weeks. The inlet vessels at
Satellite 3 treating facility are currently being commissioned in
conjunction with the north gathering system. Construction on the
west gathering system has progressed as scheduled, with expected
completion in the first half of 2016.
Additional projects included the installation of vapor recovery
units at Pad H and Pad D treating facilities that commenced late in
the second quarter and are expected to be commissioned in the
latter half of the fourth quarter. As well, the second commercial
polymer skid was commissioned, completing the majority of the
necessary facilities associated with the remainder of the planned
EOR conversions in 2015.
Cost Recovery Audit Update
The Company is pleased to announce that it has signed a formal
Terms of Reference with the Albanian National Agency for Natural
Resources (AKBN) and the Minister of Energy and Industry to engage
a third-party international auditor to assist in resolving the
outstanding cost recovery audit. The audit firm will be
selected by mid-October and this process is expected to be
finalized by the end of the fourth quarter.
In parallel with this process, the Albanian Courts have formally
deferred (subject to appeal) the previously announced profits tax
assessment until resolution of the outstanding cost recovery
audit. It is expected that the findings of the third-party
audit will trigger a reduction of the previously announced tax
assessment.
Updated Corporate Presentation
For additional information on this Operational Update, please
see the Company's October 2015
corporate presentation at www.bankerspetroleum.com.
Conference Call
The Management of Bankers will host a conference call on
October 7, 2015 at 6:30 am MDT (8:30 am
EDT, 1:30 pm BST). 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,
https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=1061615&sessionid=1&key=69706B8BF384996018CDFB67BCE1568C&sourcepage=register.
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, 2015 by dialing 1-855-859-2056 or
1-416-849-0833 and entering access code 53385520.
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.
SOURCE Bankers Petroleum Ltd.