Mr. Robert Cross reports
BANKERS PETROLEUM ANNOUNCES 2011 FINANCIAL RESULTS
Bankers Petroleum Ltd. has provided its 2011
financial results and outlook for 2012. All figures are shown in U.S. dollars, unless otherwise specified.
In 2011, Bankers accomplished several key achievements including record
production, reserves, net income and cash flow. The company also
invested $243-million, making it the largest annual capital expenditure
in Albania.
PRODUCTION RESULTS
2011 2010
Average production (bopd) 12,784 9,597
Average price ($/barrel) $72.84 $48.64
Netback ($/barrel) 36.36 23.15
Highlights of the key achievements in 2011
Oil sales averaged 12,784 barrels of oil per day, an increase of
33 per cent compared with 2010, as a result of the company's continuing horizontal
drilling program and continuation of well reactivations.
The original-oil-in-place (OOIP) resource assessment in Albania
increased by 3 per cent to 8.0 billion barrels from 7.8 billion barrels.
Reserves increased on a proved basis by 43 per cent from 120.2 million barrels
in 2010 to 172.4 million barrels in 2011 and by 12 per cent on a proved plus
probable basis from 237.6 million barrels in 2010 to 267.1 million
barrels in 2011. Additionally, the company's independent reserves
engineers assigned contingent and prospective resource oil estimates of
1.0 billion and 614 million barrels, respectively. The corresponding
net present value after tax (discounted at 10 per cent) of the proved
plus probable reserves remained consistent at $2.0-billion from 2010 to
2011.
Capital expenditures were $242.8-million, a 103-per-cent increase from 2010 of
$119.7-million. During the year, Bankers contracted a fourth and fifth
drilling rig. The company drilled 84 wells during 2011, including 76
horizontal production wells, two vertical delineation wells, two cyclic
steam horizontal wells and four water disposal wells. In 2010, a total
of 55 wells were drilled.
New export market agreements for 2012 have been completed representing
an overall export average price of 72 per cent of the Dated Brent oil
benchmark. ARMO, the Albanian refinery, also agreed to purchase
Patos-Marinza crude in 2012 for an average price of 66 per cent of Brent, which
approximates the same netback value as the export market due to lower
transport costs and having no port fees. The 2012 pricing agreements
represent an average 7-per-cent increase over the 2011 Patos-Marinza oil price.
Construction of phase one of the crude oil sales pipeline, which
connects the Patos-Marinza oil field to the Fier Hub facility was
completed. Operations commenced in the first quarter of 2012. Social
and environmental impact assessments for the second phase of the
pipeline, from the Fier Hub to the export terminal at Vlore, are
under way.
With the continuing reactivation and recompletion program expanding on the
north side of the river, as well as the expected expansion of the
drilling toward the north, the company has constructed and completed a
bridge crossing the Seman River to enable more efficient access for
drilling and servicing equipment as well as fluid transportation.
The company has completed expansions of the central treatment facility
(CTF) and increased the CTF capacity to 25,000 barrels of oil per day.
During 2011, Bankers continued with its environmental initiatives and
completed the pilot remediation project in Sector 3. The project
targeted the clean-up of old infrastructure and removal of legacy oil
spills testing mechanical waste separation, thermal desorption and
bio-remediation technologies. Larger scale clean-up processes are
scheduled for implementation in 2012.
Block F contains several seismically defined structural and
stratigraphic amplitude anomalies prospective for oil and natural gas.
The first exploration location has been selected and land access is
under way along with environmental permitting to commence surface lease
construction. The well is expected to be spudded in April, 2012.
Bankers proceeded with the thermal pilot program during 2011, drilling
two horizontal wells and a vertical well, along with installation of
the steam generator. Steam injection commenced in December, 2011.
The company continues to maintain a strong financial position at
Dec. 31, 2011, with cash of $54.0-million and working capital of
$80.3-million. Cash and working capital for Dec. 31, 2010, were $108.1-million and $130.9-million, respectively.
Operational update
First quarter 2012 year-to-date average production is 14,160 bopd. The
company has focused on expanding the water disposal capacity in the
Patos-Marinza oil field during the quarter with drilling of four water
disposal wells. Three of the four wells have finished drilling and
surface facilities installation, and are being brought on injection;
the fourth well will be brought on prior to the end of the quarter.
All four wells are expected to operate at full capacity in the second
quarter and will enable the company to gradually bring currently
shut-in wells related to water disposal capacity, on production over
the next few weeks. Bankers intends to issue the first quarter 2012
operational update on April 10, 2012.
Outlook
The company's capital program in 2012 will be $215-million, fully financed from projected cash flow based on an average $90 Brent oil price. The
work program and budget includes the following:
- Drilling of 100 horizontal and vertical wells and completion of 60 well
reactivations and workovers at the Patos-Marinza oil field;
- Continuing the water disposal capacity expansion with additional water
disposal drills and water control initiative with over 200 well
isolations;
- Continuing the thermal pilot operations and drilling additional core
wells for assessing future thermal development plans;
- Initiating social and environmental impact assessments, land permitting,
and material orders for the 35-kilometre second phase of the 70,000
bopd capacity pipeline from the Fier Hub to the Vlore export terminal
with construction beginning in 2013;
- Expanding waterflood activities at the Kueva oil field with five injector
conversions and 13 production reactivation wells;
- Drilling of two exploration wells on block F;
- Continuing with the environmental stewardship and social initiatives in
the company's area of operations.
Review by qualified person
This release was reviewed by Suneel Gupta, executive vice-president and
chief operating officer of Bankers Petroleum, 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 APEGGA) with
over 20 years experience in domestic and international oil and gas
operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Dec. 31
(in thousands of U.S. dollars, except per share amounts)
2011 2010
Revenues $339,918 $170,376
Royalties (63,941) (33,682)
275,977 136,694
Unrealized (loss) on financial commodity contracts (2,904) -
-------- --------
273,073 136,694
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Operating expenses 60,864 36,744
Sales and transportation expenses 45,460 18,847
General and administrative expenses 13,773 10,550
Depletion and depreciation 40,367 22,511
Share-based payments 11,041 7,900
171,505 96,552
-------- --------
101,568 40,142
Net finance expense 6,223 4,869
-------- --------
Income before income tax 95,345 35,273
Deferred income tax expense (59,349) (24,748)
-------- --------
Net income for the year 35,996 10,525
Other comprehensive income
Currency translation adjustment 315 6,094
-------- --------
Comprehensive income for the year $ 36,311 $ 16,619
======== ========
Basic earnings per share 0.146 0.044
Diluted earnings per share 0.141 0.043
We seek Safe Harbor.
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