Bankers Petroleum Announces 2013 Second Quarter Financial and Operational Results

Free Cash Flow of $9 Million and Q3 Average Production to Date 18,300 bopd

CALGARY, Aug. 14, 2013 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2013 second quarter financial and operational results. During the quarter, Bankers achieved its second consecutive quarter of free cash flow and record production levels.

Highlights for the quarter and six months ended June 30, 2013 are:

• Average oil production was 17,886 barrels of oil per day (bopd) for the three months ended June 30, 2013, 6% higher than 16,919 bopd in the first quarter of 2013 and 26% higher than 14,161 bopd in the second quarter of 2012. Average oil production for the third quarter to-date is approximately 18,300 bopd.
  
  
• Oil sales averaged 18,008 bopd for the second quarter of 2013, an increase of 8% compared to 16,605 bopd for the previous quarter and an increase of 27% compared to 14,169 bopd for the second quarter of 2012. For the six months ended June 30, 2013, oil sales were 17,310 bopd, an increase of 26% compared to 13,724 bopd for the comparable 2012 period.
  
  
• For the second quarter of 2013, revenue was $132 million ($80.45/bbl) compared to $133 million ($88.70/bbl) in the previous quarter and $99 million ($76.46/bbl) in the second quarter of 2012. Revenue for the second quarter of 2013 represented 79% of the Brent oil price of $102/bbl, compared to 79% of the Brent oil price of $113/bbl in the previous quarter and 71% of the Brent oil price of $108/bbl in the second quarter of 2012.
  
  
• Royalties to the Albanian Government and related entities were $22 million (16% of revenue) for the second quarter of 2013 compared to $17 million (17% of revenue) for the same quarter of 2012. Total royalties were $45 million (17% of revenue) and $36 million (18% of revenue) for the six months ended June 30, 2013 and 2012, respectively.
  
  
• For the three and six months periods ended June 30, 2013, operating, sales and transportation costs, originating from Albanian-based companies and their employees, were $41 million and $77 million, respectively, compared to $34 million and $64 million for the comparable periods of 2012.
  
  
• The Company recorded net operating income (netback) of $69 million ($42.19/bbl) in the second quarter of 2013, compared to $73 million ($48.96/bbl) in the previous quarter and $47 million ($36.65/bbl) in the second quarter of 2012. Net operating income was $142 million ($45.42/bbl) for the six months ended June 30, 2013, a 41% increase compared to $101 million ($40.33/bbl) in the comparable 2012 period.
  
  
• For the second quarter of 2013, funds generated from operations were $62 million, compared to $65 million for the previous quarter and $43 million for the same period of 2012.
  
  
• Capital expenditures were $52 million in the second quarter of 2013. The Company drilled 39 wells during the quarter, comprised of 35 horizontal production wells and four horizontal lateral re-drill wells in the main area of the Patos-Marinza field. In the second quarter of 2012, capital expenditures were $53 million.
  
  
• The Company continues to maintain a strong financial position at June 30, 2013 with cash of $33 million and working capital of $117 million. At June 30, 2013, the Company had drawn $115 million of its $230 million approved credit facilities. Working capital for December 31, 2012 and June 30, 2012 was $89 million and $112 million, respectively.
  
  
• Both the International Finance Corporation (IFC) and European Bank for Reconstruction and Development (EBRD) have approved an extension of the Company's existing credit facility to September 2020. No repayments are required until September 2017, from which time the facility amount will decrease by 25% annually. Collectively, the revolving loan facilities will increase to $200 million from the existing $100 million. Currently, $120 million is available and the additional $80 million will be available as the Company continues to maintain its proved and probable reserves base and is conditional upon Brent oil prices remaining above $70/bbl.
  
  
• The Company was successful in setting aside a separate assessment of excise tax on its importation and use of diluents. The Courts have also ruled in favor of the Company for other cases heard, including the carbon and circulation taxes on diluent imports, which resulted in assessments to the Company totalling approximately $25 million. The Company is now preparing to continue its defence at various levels of appeals.

Outlook

The average third quarter 2013 production to date from the Patos-Marinza oilfield in Albania is approximately 18,300 bopd, 2% higher than the second quarter average.

The Company is pleased with performance of the horizontal drilling program which continues to yield strong results. For the second half of 2013, the Company will continue to focus on development drilling in the North-Central areas of the Patos-Marinza field with an estimated 30 horizontal wells per quarter adding to production levels. Two water disposal wells are planned for late in the third quarter and into the fourth quarter to provide capacity expansion for growth. In addition, two (2) to four (4) wells are projected for delineation in the outlying areas of the field in the fourth quarter.

The expansion of water flood and polymer flood patterns continues with additional wells to be converted to injection in the second half of 2013. By year-end the Company will have three (3) water-flood patterns in the upper Marinza reservoir with up to seven (7) injectors and three (3) polymer-flood patterns in the lower Driza reservoir sands with up to six (6) injectors in place with response expected in 2014.

In the second half of 2013, the Company will ramp up spending on surface facilities including the addition of a satellite treatment facility and tank storage expansion to increase treatment capacity and construction of flow-lines to reduce trucking within the field where justified.

Drilling of two (2) wells in Kucova is projected in the fourth quarter of 2013 to test production and collect fluid and reservoir information. In addition, existing adjacent wells are scheduled for take-over from Albpetrol for further evaluation.

"I continue to be pleased with the operational success of the company and our ability to meet or exceed our production guidance for five consecutive quarters. The Board has now approved the potential acquisition of a sixth drilling rig which, pending availability, should enable Bankers to affirm the high-end of our annual guidance. We look forward to continued reliable, disciplined growth," said David French, President and CEO of Bankers Petroleum.

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.

Updated Corporate Presentation

For additional information on this operational update, please see the August 2013 version of the Company's corporate presentation at www.bankerspetroleum.com.

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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 reactivations and well recompletions of the past will continue and success rates and production rates will be similar to those rates experienced for previous well recompletions and reactivations; 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 and 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.