Bankers Petroleum Announces 2014 Financial Results

12.03.2015 | CNW

Cash Position of $73 Million and 14% Increase in Oil Sales

CALGARY, March 12, 2015 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2014 financial results. All amounts set out in this press release and listed in the tables below are in US dollars unless otherwise stated.

In 2014, Bankers made several key accomplishments including record levels of revenue of $583 million, adjusted funds generated from operations of $304 million, oil production of 20,690 barrels of oil per day (bopd) and capital investment of $291 million.

Results at a Glance

($000s, except as noted)			Year ended December 31
Results at a Glance				2014	2013	2012
Financial
	Oil revenue			583,120	566,386	432,138
	Net operating income			342,375	316,558	218,246
	Net income			128,833	61,743	34,413
		Basic (US$/share)		0.50	0.24	0.14
		Diluted (US$/share)		0.49	0.24	0.14
	Funds generated from operations			284,293	279,601	192,589
	Adjusted funds generated from operations⁽¹⁾			304,130	279,752	192,589
		Basic (US$/share)		1.17	1.10	0.76
	Capital expenditures			291,325	234,243	222,663
Operating
	Average production (bopd)			20,690	18,169	15,020
	Average sales (bopd)			20,679	18,173	14,808
	Average Brent oil price (US$/barrel)			98.95	108.66	111.67
	Average realized price (US$/barrel)			77.26	85.39	79.73
	Netback (US$/barrel)			45.36	47.73	40.27

			December 31
				2014	2013	2012
Cash and restricted cash				73,036	31,706	38,740
Working capital				201,325	134,094	88,799
Total assets				1,284,846	1,007,148	825,816
Long-term debt				98,276	98,150	97,158
Shareholders' equity				716,536	564,675	483,032

	1. Represents funds generated from operations before non-recurring contract settlement expenses.

Highlights

Bankers reached several key financial and operational achievements during 2014 as described below:

Operational Highlights:

Average oil production was 20,690 barrels of oil per day (bopd) in 2014, 14% higher than the 2013 average production of 18,169 bopd. Average oil production for the 2015 year-to-date is approximately 19,500 bopd.

Oil sales averaged 20,679 bopd in 2014, a 14% increase compared to 18,173 bopd in 2013. Crude oil inventory at December 31, 2014 increased to 315,500 barrels from 311,000 barrels at December 31, 2013.

Capital expenditures in 2014 were $291 million, 24% higher compared to $234 million in 2013. A total of 160 wells were drilled including 149 horizontal production wells, seven lateral re-drills, two water disposal wells and the Company's first multi-lateral well in the Patos-Marinza field and its first horizontal well drilled in the Kuçova oilfield. A total of 146 wells were drilled in 2013.

The Company continued the Enhanced Oil Recovery (EOR) program in 2014 with monitoring and expansion of flood patterns. At the end of the year, 19 polymer flood and 4 water flood patterns were in place in the Patos-Marinza oilfield and continue to perform to model expectations. Reservoir pressure and production response are positive with good reservoir flood conformance. The Company continues to be strongly encouraged by the results to date and plans to move forward with 20 to 30 additional conversions in 2015.

Bankers commenced Kuçova oilfield development in the Arreza pool with the takeover of 59 wells from Albpetrol in August 2014, reactivation of three wells and drilling of the first horizontal well in 2014.

Product Margin Highlights:

Operating and Sales and Transportation (S&T) costs, primarily originating from Albanian-based companies and their employees, were $155 million ($20.51/bbl) for 2014 compared to $156 million for 2013 ($23.44/bbl), an improvement of 13% on a per barrel basis. Overall, operating and S&T costs improved by 21%, on a per barrel basis, from 2013 to 2014, taking into account the $1.91/bbl impact of excise tax for 2014.

Net operating income (netback) in 2014 was $342 million ($45.36/bbl) compared to $317 million ($47.73/bbl) in 2013.

The Company focused on key infrastructure projects aimed at reducing costs and optimizing operations in the Patos-Marinza oilfield. The field electrification project continued in the northern and central areas of the Patos-Marinza oilfield with realized energy cost savings. Construction of the west water disposal line and northern flow line system started in 2014. These projects target reductions in trucked volumes within the field. Other infrastructure activities in 2014 include the commissioning of the Satellite 3 treating facility, installation of several Gas Oil Ratio (GOR) skids for gas capturing and measurement, as well as completed maintenance turnarounds of the main treating facilities.

Financial Highlights:

Revenue in 2014 was $583 million ($77.26/bbl) compared to $566 million ($85.39/bbl) in 2013. Field price realization represented 78% of the Brent oil benchmark price ($98.95/bbl) as compared to 79% of the Brent price ($108.66/bbl) in 2013. The reduction as a percentage of Brent compared to the previous year was mainly due to the commencement of domestic sales during 2014.

Royalties to the Albanian Government and related entities were $86 million (15% of revenue) during 2014 compared to $94 million (17% of revenue) for 2013.

During 2014, adjusted funds generated from operations were $304 million ($1.17 per share), a 9% increase compared to $280 million ($1.10 per share) for 2013.

The Company continues to maintain a strong financial position at December 31, 2014 with cash and restricted cash of $73 million and working capital of $201 million. At December 31, 2014, the Company had drawn $104 million of its $224 million approved credit facilities. At December 31, 2013, cash and restricted cash was $32 million and working capital was $134 million.

In August 2014, Bankers commenced delivery of crude oil to the domestic refinery, which is now under new ownership and management. Bankers agreed to sell oil to an affiliate of this domestic refinery on a monthly basis until December 31, 2014 at 73% of Dated Brent (FOB Vlore equivalent) plus $40/tonne or approximately $6/bbl recovery against an outstanding accounts receivable balance.

In April 2014, the Company paid a $3 million premium to enter into financial commodity contracts representing 6,000 bopd at a floor price of $80/bbl of Dated Brent for 2015. At December 31, 2014, the fair value of these contracts was $44 million.

Other Highlights in 2014:

The Oil Initially in Place (OIIP) resource assessment in Albania at year-end was 5.4 billion barrels, consistent with the OIIP resource assessment at the end of 2013. Reserves on a proved basis were 125 million barrels compared to 147 million barrels at year-end 2013. On a proved plus probable basis, reserves were 203 million barrels compared to 232 million barrels at year-end 2013. The corresponding net present value (NPV) after tax (discounted at 10%) of the proved plus probable reserves was $1.8 billion at year-end compared to $2.2 billion in 2013, representing CAD$8.57/share and CAD$9.72/share, respectively.

Fiscal Terms Mitigation:

Bankers and the Government of Albania worked together to reach an agreement on mitigation of the 2014 fiscal changes. The terms of the agreement were approved by Albpetrol and AKBN, and were ratified by the Council of Ministers on November 2, 2014. The agreement is structured to allow excise and any applicable carbon and circulation taxes to be deducted from revenue and eligible for inclusion in the cost recovery pool for the Patos-Marinza concession to determine the Company's taxable position. This mechanism enables the near term impact on cash flow to be fully offset through a deferred and reduced profit tax burden which keeps the net asset value of the project whole and the economics of future investment consistent with the pre-2013 fiscal regime.

OUTLOOK

The Company's reduced capital program in 2015 will be $153 million, funded from projected cash flow (based on an average $50/bbl Brent oil price) and existing cash resources. Additionally, the Company's 2015 hedge program, representing 6,000 bopd at $80/bbl Brent, will ensure sufficient funding to maintain a balanced program. The work program and budget include the following items:

Drilling of 60 horizontal wells focused on continuing development in the core area of the Patos-Marinza oilfield;

Continuation of the EOR program with the addition of 20 to 30 polymer and water injector conversions. The focus of the conversions planned is expansion of existing patterns, with several conversions testing new areas of the oilfield including higher viscosity fluids and thicker reservoir sands;

Continued focus on operational efficiencies in the field to expand product margins including the construction of emulsion flow-lines to reduce trucking costs, electrification and expansion of the gas gathering system to reduce energy costs and emissions, and a review of well construction and artificial lift design to improve well performance;

Expansion of the water disposal system to accommodate increased fluid handling requirements for the primary and EOR programs;

Drilling of one well in Kuçova and implementation of a flood pattern to commence EOR techniques in the oilfield;

Continued investment on environmental remediation and social initiatives as part of a sustained long-term effort to improve the physical environment, and to provide training programs and other community initiatives for the residents near the Company's operations.

First Quarter Operational Update

Bankers intends to announce its first quarter 2015 Operational update on Tuesday, April 7, 2015.

Supporting Documents

The full Management Discussion and Analysis (MD&A), Financial Statements and updated March corporate presentation are available on www.bankerspetroleum.com. The MD&A and Financial Statements will also be available on www.sedar.com.

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31
(Expressed in thousands of US dollars, except per share amounts)

	2014		2013

Revenues	$	583,120	$	566,386
Royalties		(85,966)		(94,294)
		497,154		472,092
Realized loss on financial commodity contracts		(1,188)		(3,898)
Unrealized gain (loss) on financial commodity contracts		45,226		(1,555)
		541,192		466,639

Operating expenses		95,317		88,510
Sales and transportation expenses		59,462		67,024
General and administrative expenses		22,189		21,212
Contract settlement expenses		19,837		151
Depletion and depreciation		116,458		99,554
Share-based compensation		5,721		11,527
		318,984		287,978
		222,208		178,661

Net finance expense		(6,182)		(18,712)

Income before income tax		216,026		159,949
Deferred income tax expense		(87,193)		(98,206)
Net income for the year		128,833		61,743

Other comprehensive loss
Currency translation adjustment		(1,935)		(1,017)
Comprehensive income for the year	$	126,898	$	60,726

Basic earnings per share	$	0.497	$	0.243

Diluted earnings per share	$	0.486	$	0.241

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31
(Expressed in thousands of US dollars)

ASSETS
		2014		2013
Current assets
	Cash and cash equivalents	$	68,036	$	24,597
	Restricted cash		5,000		7,109
	Accounts receivable		81,612		53,981
	Inventory		10,008		38,025
	Deposits and prepaid expenses		62,984		44,956
	Financial commodity contracts		44,170		734
			271,810		169,402
Non-current assets
	Long-term receivable		-		7,019
	Property, plant and equipment		1,004,508		823,908
	Exploration and evaluation assets		8,528		6,819
		$	1,284,846	$	1,007,148

LIABILITIES
Current liabilities
	Accounts payable and accrued liabilities	$	69,285	$	33,812
	Current portion of long-term debt		1,200		1,496
			70,485		35,308
Non-current liabilities
	Long-term debt		98,276		98,150
	Decommissioning obligation		26,147		22,806
	Deferred tax liabilities		373,402		286,209
			568,310		442,473

SHAREHOLDERS' EQUITY
Share capital			363,670		340,305
Contributed surplus			86,409		84,811
Currency translation reserve			4,410		6,345
Retained earnings			262,047		133,214
			716,536		564,675
		$	1,284,846	$	1,007,148

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
(Expressed in thousands of US dollars)

		2014		2013
Cash provided by (used in):
Operating activities
Net income for the year	$	128,833	$		61,743
Depletion and depreciation		116,458			99,554
Accretion of long-term debt		1,350			2,805
Accretion of decommissioning obligation		1,139			1,019
Unrealized foreign exchange gain		(649)			(756)
Deferred income tax expense		87,193			98,206
Share-based compensation		5,721			11,527
Discount and revaluation (gain) loss of long-term receivable		(12,316)			4,687
Realized loss on financial commodity contracts		4,637			3,898
Unrealized (gain) loss on financial commodity contracts		(45,226)			1,555
Cash premiums paid for financial commodity contracts		(2,847)			(4,637)
		284,293			279,601
Change in long-term receivable		19,335			(556)
Change in non-cash working capital		2,767			(54,403)
		306,395			224,642
Investing activities
Additions to property, plant and equipment		(289,616)			(231,016)
Additions to exploration and evaluation assets		(1,709)			(3,227)
Restricted cash		2,109			(2,109)
Change in non-cash working capital		15,064			1,851
		(274,152)			(234,501)
Financing activities
Issue of shares for cash		13,923			3,332
Financing costs		(435)			(1,994)
Change in long-term debt		(1,496)			(813)
		11,992			525
Foreign exchange gain (loss) on cash and cash equivalents		(796)			191
Increase (decrease) in cash and cash equivalents		43,439			(9,143)
Cash and cash equivalents, beginning of year		24,597			33,740
Cash and cash equivalents, end of year	$	68,036	$		24,597

Interest paid	$	6,530	$		5,811
Interest received	$	409	$		159

BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Expressed in thousands of US dollars, except number of common shares)
	Number of common shares	Share capital		Contributed surplus		Currency translation reserve		Retained earnings		Total

Balance at December 31, 2012	253,828,650	$	334,764	$	69,435	$	7,362	$	71,471	$	483,032

Share-based compensation	-		-		17,585		-		-		17,585
Options exercised	1,853,261		5,541		(2,209)		-		-		3,332
Net income for the year	-		-		-		-		61,743		61,743
Currency translation adjustment	-		-		-		(1,017)		-		(1,017)

Balance at December 31, 2013	255,681,911	$	340,305	$	84,811	$	6,345	$	133,214	$	564,675

Share-based compensation	-		-		11,040		-		-		11,040
Options exercised	5,002,482		21,804		(9,004)		-		-		12,800
Warrants exercised	400,000		1,561		(438)		-		-		1,123
Net income for the year	-		-		-		-		128,833		128,833
Currency translation adjustment	-		-		-		(1,935)		-		(1,935)

Balance at December 31, 2014	261,084,393	$	363,670	$	86,409	$	4,410	$	262,047	$	716,536

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.

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.

ContactDavid 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

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