Mr. Abby Badwi reports
BANKERS PETROLEUM ANNOUNCES 2012 THIRD QUARTER FINANCIAL AND OPERATIONAL RESULTS
Bankers Petroleum Ltd. has released its 2012 third
quarter financial and operational results. The complete reporting
package, consisting of management's discussion and analysis along with
the financial statements and notes, is posted on the company's website and on SEDAR. Amounts are in U.S. dollars unless stated otherwise.
RESULTS AT A GLANCE
(in thousands of U.S. dollars, except as noted)
Three months ended Sept. 30, Nine months ended Sept. 30
2012 2011 2012 2011
Oil revenue $ 115,054 $ 93,650 $ 316,309 $ 251,570
Net operating income 58,159 44,898 158,882 131,976
Net income 12,274 13,696 31,292 35,715
Per share
Basic ($) 0.049 0.055 0.124 0.145
Diluted ($) 0.048 0.054 0.123 0.140
Funds generated from operations(1) 48,308 42,099 139,539 115,267
Per share -- basic ($) 0.191 0.170 0.554 0.467
Capital expenditures 53,526 65,147 168,859 186,465
Average sales (bopd) 15,715 13,667 14,393 12,578
Average price ($/barrel) 79.58 74.48 80.21 73.26
Netback ($/barrel) 40.23 35.71 40.29 38.43
(1) Includes a $3.9-million payment for a financial commodity contract in August, 2012.
Highlights for the quarter and nine months ended Sept. 30, 2012, are:
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For the third quarter of 2012, oil sales averaged 15,715 barrels of oil per day, an
increase of 15 per cent compared with 13,667 barrels of oil per day for the same period in 2011, and
an increase of 11 per cent compared with 14,169 barrels of oil per day for the preceding quarter.
For the nine months ended Sept. 30, 2012, oil sales increased 14 per cent
to 14,393 barrels of oil per day from 12,578 barrels of oil per day for the comparable 2011 period.
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Revenue for the third quarter of 2012 increased by 23 per cent to $115.1-million
($79.58 per barrel) from $93.7-million ($74.48 per barrel) in the same period of
2011. Revenue for the third quarter of 2012 represented 73 per cent of the
Brent oil price of $110 per barrel. Revenue for the nine-month 2012 period
totalled $316.3-million ($80.21 per barrel), an increase of 26 per cent from $251.6-million ($73.26 per barrel) for the same period of 2011.
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Royalties to the Albanian government and related entities were $23.3-million and $18.5-million for the third quarter of 2012 and 2011,
respectively (both representing 20 per cent of total revenue). Total royalties
were $59.6-million and $45.3-million for the nine months ended
Sept. 30, 2012, and 2011, respectively.
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Operating, sales and transportation costs in the third quarter of 2012,
originating from Albanian-based companies and their employees, were
$33.6-million, compared with $30.3-million for the third quarter of
2011.
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The company recorded net operating income (netback) of $58.2-million
($40.23 per barrel) in the third quarter of 2012, an increase of 30 per cent compared
with $44.9-million ($35.71 per barrel) in the same period of 2011. For the nine
months ended Sept. 30, 2012, net operating income totalled $158.9-million ($40.29 per barrel), a 20-per-cent increase from $132-million ($38.43 per barrel)
for the same period in 2011.
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Funds generated from operations for the third quarter of 2012 were $48.3-million, a 15-per-cent increase compared with $42.1-million for the third quarter
of 2011. For the nine months ended Sept. 30, 2012, funds generated
from operations were $139.5-million, compared with $115.3-million for
the nine months ended Sept. 30, 2011. Included in funds generated
from operations is a payment of $3.9-million for a financial commodity
contract in August, 2012.
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Capital expenditures in the third quarter of 2012 were $53.5-million.
The company drilled 34 wells during the quarter, comprising 31
horizontal wells, one lateral redrill sidetrack well and two core
wells in the southern area of the field. Reactivation and
recompletion work continued during the quarter. During the same
period of 2011, capital expenditures were $65.1-million. For the nine
months ended Sept. 30, 2012, capital expenditures totalled $168.9-million, a reduction of 9 per cent from $186.5-million for the comparable 2011
period.
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During the third quarter of 2012, Bankers participated in the bid
evaluation process for the privatization of the Albanian national oil
company Albpetrol ShA. Although the company's participation was
unsuccessful, the winning bid value of 850 million euros attributed to
Albpetrol's assets enhances the company's oil fields' valuation and also
demonstrates its commitment to expand its business activities
in Albania.
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At Sept. 30, 2012, total deposits and prepaid expenses were $29.2-million, compared with $17.5-million at the end of December, 2011, of which
$16.6-million and $1.2-million, respectively, are paid to the Albanian
court as deposits for procedure purposes on several legal cases. The
recoverability of these amounts is dependent on the outcome of these
cases. As of Sept. 30, 2012, these amounts were considered
recoverable.
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The company is in the process of challenging assessments from the
Albanian government tax director negating the previous exemption relief
from carbon and circulation taxes on diluent imports. These
assessments represent a total of $15-million, covering the last five
years. The company was successful in setting aside a recently
introduced separate excise tax assessment amounting to $8-million on
the company's importation and use of diluent. Other audits have also
resulted in an additional assessment of previously exempted value-added
taxes for some of the company's subcontractors. Bankers has urged the
government of Albania to reconsider its position before proceeding
with implementation of this assessment, and is hopeful that these
contractual exemptions will continue to be applied.
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The company continues to maintain a strong financial position at
Sept. 30, 2012, with cash of $40.1-million and working capital of
$106.5-million. Working capital for Dec. 31, 2011, and Sept.
30, 2011, totalled $80.3-million and $73.5-million, respectively.
Financial update
Bankers has commenced discussions with EBRD and IFC, its reserve-based
lenders, for an increase to its $110-million credit facility and a term
extension that would extend existing repayments, currently scheduled to
commence in October, 2013. The existing 2009 facility was based on 2008
year-end reserves; subsequent reserve increases have significantly
expanded the company's borrowing base.
Operational update and outlook
The average fourth quarter 2012 production to date from the
Patos-Marinza oil field in Albania was 16,100 barrels of oil per day, 3 per cent higher than the third quarter average.
The company has made several improvements to address operational
challenges associated with mature heavy oil field development, including
interference from old wellbores, sand production and water disposal
capacity. Five previously drilled wells that were shut in due to
liner failure in late 2011 have been redrilled with a lateral
sidetrack through the cased section of the wellbore, and a new, higher-grade steel liner with redesigned slot configuration for additional
strength has been run in the new lateral legs. The wells were
successfully completed and are currently producing at a cumulative
production rate of 500 barrels of oil per day (average of 100 barrels of oil per day per well). Additional
candidate wells are being prepared for lateral redrilling and
installation of improved tubulars, with three redrill sidetracks
planned for the remainder of the fourth quarter and several more in the
first half of next year to restore shut-in production from similar
wells that have demonstrated good production capability but are
restricted due to liner failure concerns.
The company continues to be pleased with the results of the horizontal
drilling program along with the results of lateral section redrills
initiated in the third quarter and continuing into the fourth quarter
and first part of 2013.
For additional information, please see an updated version of the
company's November corporate presentation on the company's website.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands of U.S. dollars, except per share amounts)
Three months ended Sept. 30, Nine months ended Sept. 30,
2012 2011 2012 2011
Revenues $ 115,054 $ 93,650 $ 316,309 $ 251,570
Royalties (23,259) (18,457) (59,627) (45,274)
91,795 75,193 256,682 206,296
Unrealized gain (loss) on financial commodity contracts (1,085) 4,998 (4,050) 2,982
90,710 80,191 252,632 209,278
Operating expenses 20,229 17,328 56,699 43,562
Sales and transportation expenses 13,407 12,967 41,101 30,758
General and administrative expenses 3,999 3,536 11,617 9,974
Depletion and depreciation 15,644 9,591 43,388 26,983
Share-based payments 1,953 2,515 7,636 9,487
55,232 45,937 160,441 120,764
35,478 34,254 92,191 88,514
Net finance expense 3,732 146 8,449 4,050
Income before income tax 31,746 34,108 83,742 84,464
Deferred income tax expense (19,472) (20,412) (52,450) (48,749)
Net income for the period 12,274 13,696 31,292 35,715
Other comprehensive income (loss)
Currency translation adjustment 820 (2,626) 821 (373)
Comprehensive income for the period $ 13,094 $ 11,070$ 32,113 $ 35,342
Basic earnings per share $ 0.049 $ 0.055$ 0.124 $ 0.145
Diluted earnings per share $ 0.048 $ 0.054$ 0.123 $ 0.140
We seek Safe Harbor.
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