Bankers announces Q2 results

Bankers Petroleum Ltd. (“Bankers” or the “Company”) (TSX: BNK) (AIM: BNK) is pleased to provide its 2014 second quarter financial and operational results.

During the quarter, Bankers achieved a netback of $53.89 per barrel and free cash flow of $22 million. All amounts listed below are in US dollars unless otherwise stated.

Results at a Glance:

• Average oil production for the three months ended June 30, 2014 was 20,630 barrels of oil per day (bopd), 4% higher as compared to 19,911 bopd in the previous quarter and 15% higher than 17,886 bopd in the second quarter of 2013. For the six months ended June 30, 2014, average oil production was 20,272 bopd, 16% higher than 17,404 bopd for the same period in 2013.
• Oil sales for the second quarter of 2014 averaged 21,620 bopd, a 17% increase compared to 18,435 bopd for the previous quarter and 20% increase compared to 18,008 bopd for the second quarter of 2013. Crude oil inventory at June 30, 2014 decreased to 354,000 barrels, 90,000 barrels lower than 444,000 barrels at March 31, 2014, with inclusion of the export cargo that carried over from the first quarter into the first few days of the second quarter. Oil sales for the six months ended June 30, 2014 were 20,036 bopd, an increase of 16% from 17,310 bopd for the comparable 2013 period.
• Second quarter capital expenditures in 2014 were $72 million. The Company drilled 42 wells during the quarter, comprised of 39 horizontal production wells and three horizontal lateral re-drill wells in the main area of the Patos-Marinza oilfield. Capital expenditures were $60 million for the previous quarter and $52 million for the second quarter of 2013.

Expansion of Product Margin Highlights:

For the three and six months ended June 30, 2014, operating, sales and transportation costs, originating from Albanian-based companies and their employees, were $39 million ($19.99/bbl) and $70 million ($19.27/bbl), respectively, compared to $41 million ($25.03/bbl) and $77 million ($24.61/bbl) for the same periods in 2013.
In the second quarter of 2014, net operating income (netback) was $106 million ($53.89/bbl), a 15% increase compared to $92 million ($55.75/bbl) and a 53% increase compared to $69 million ($42.19/bbl) in the previous quarter and second quarter of 2013, respectively. Net operating income for the six months ended June 30, 2014 was $199 million ($54.74/bbl) compared to $142 million ($45.42/bbl) in the comparable 2013 period.

Financial Highlights:

• Revenue for the second quarter of 2014 was $171 million ($86.68/bbl), an increase of 18% from $145 million ($87.39/bbl) in the previous quarter and an increase of 29% from $132 million ($80.45/bbl) in the second quarter of 2013. Field price realization represented 79% of the Brent oil benchmark price ($109.67/bbl) for the second quarter of 2014 compared to 81% of the Brent oil price ($108.21/bbl) in the previous quarter and 79% of the Brent oil price ($102.43/bbl) in the second quarter of 2013. The reduction as a percentage of Brent compared to the previous quarter was due to spot market sales during the quarter.
• For the second quarter of 2014, royalties to the Albanian Government and related entities were $25 million (15% of revenue) as compared to $22 million (15% of revenue) in the previous quarter and $22 million (16% of revenue) for the second quarter of 2013. For the six months ended June 30, 2014, royalties were $47 million (15% of revenue) compared to $45 million (17% of revenue) for the comparable period in 2013.
• For the second quarter of 2014, funds generated from operations were $94 million, a 13% increase compared to $83 million for the previous quarter and a 52% increase compared to $62 million for the second quarter of 2013. Funds generated from operations for the six months period ended June 30, 2014 were $177 million, a 39% increase from $127 million for the same period in 2013.
• The Company continues to maintain a strong financial position at June 30, 2014, with cash of $55 million and working capital of $191 million. At June 30, 2014, the Company had drawn $104 million of its $224 million approved credit facilities. Working capital for December 31, 2013 and June 30, 2013 was $134 million and $117 million, respectively.
• Subsequent to June 30, 2014, the Company received approximately $31 million of Value Added Tax (VAT) reimbursement, of the $52 million owed to the Company at the end of the quarter. Bankers anticipates that the reimbursement mechanism will continue to run smoothly and to receive the remaining balance as well as ongoing VAT repayments in a timely manner.

Outlook

In the second half 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 third quarter 2014 average production to date is 21,500 bopd from the Patos-Marinza oilfield, 4.2% higher than the second quarter average of 20,630 bopd. Development drilling with six rigs continues in the main part of the field along with drilling and completion of Bankers’ first dual lateral well in the Gorani formation. Mechanical drilling operations went smoothly and the well will be brought on production shortly.

The Company plans to expand its polymer and water flood patterns further with conversion of up to an additional ten (10) wells in the second half of the year; three (3) polymer flood injector conversions in the third quarter and the remaining six (6) polymer flood conversions and one (1) water flood conversion in the fourth quarter.

Infrastructure projects continue with commissioning of the sludge treatment and sour cascade tank facilities. Other projects ongoing in the third quarter include additional flow lines to reduce infield trucking, electrification of well pads to reduce energy consumption, and installation of a new polymer mixing skid along with associated pipelines for the polymer and water flood programs.

The 3D seismic shoot over the central and northern areas of Patos-Marinza and eastern region of Block F is underway. Data acquisition is projected to be complete by the end of third quarter followed by processing in the fourth quarter.
Discussions between Bankers’ Management and the Government of Albania regarding the previously announced fiscal changes and tax law related amendments, continue to progress. The Company has now received written assurances from the Government that a financial offset will be offered to mitigate the impact of fiscal changes implemented in 2014. A formal agreement is expected to be finalized in the third quarter.

The Company intends to issue the third quarter 2014 operational update and host a conference call on Monday, October 6, 2014.

energjia.al 18.08.2014