LON:BNK^J17 | Bankers Petroleum (BNK) - Oil Manufacturing

30th Sep '09 by djpreston

138 comments 42559 reads

Well, since Salty mentioned it on the M&A thread, I thought it about time someone wrote a thread on Bankers.

Forget GKP, if you want big OOIP, the Bankers is the company, 4-5bn bbls and possibly more!! (ramp over).

First things first, Company Website:

http://www.bankerspetroleum.com/s/Home.asp

The latest presentation is Sept 2009 (used at Oilbarrel):

http://www.bankerspetroleum.com/i/pdf/Presentation.pdf

Read the presentation and possibly listen to the webcast on the website covering Q2 results.

The presenation gives you all you really need to know regarding the Fiscal terms, forward programme and so forth.

What I like about Bankers is that it is basically very very simple. Big proven heavy oilfield with historically low production and recovery rates. Apply modern technology and techniques and increase recovery factors.

Bankers did have a bit of a rocky start but back in Jan 2008, the new management team came on board. These are established heavy hitters in the heavy oil plays, having proved themselves with Rallye Energy in Egypt, which was sold to Citadel Capital for C$900m in January 2007 (iirc). The attractions were obvious, as described above.

Bankers is traded both on AIM and also on the TSX - TSX has better liquidity for those interested (spread can be big in London. Due to the dual listing, it is eleigible for an ISA.

Currently the market cap is in the region of C$950m

The shares have been on a tear since the lows last year, this being heavy oil, it was very much hurt by the fall in POO and also the possibility that the IFC would not follow through with their finance facility, which was set at a POO of $55 IIRC (that is now complete and IFC is one of the big shareholders.)

The main Patos Marinza field that Bankers took ovr was previously operated by the state Albpetrol, this field has been producing for decades ina chaotic manner, several thousand wells, many of which no produce next to nothing (and I mean next to zero) and some a few bbls per day. These are being gradually taken on from Albpetrol and reworked in some cases.

The historic recovery factor has been somewhere near 6% but modern systems will increase that through better well placement, drainage models and so forth.

This year is when Bankers starts to get serious with production at 6500 bopd set to rise to…

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djpreston

13th May '11

First Quarter FInancial and Operational Results issued.

Highlights for the quarter ended March 31, 2011 are:

·         Bankers achieved record production during the three months ended
March 31, 2011. Production averaged 11,894 bopd, an increase of 44%, compared
to the same period in 2010. Production at the end of March 31, 2011 exceeded
13,500 bopd.

·         Revenue increased 107% to $72.7 million ($67.95/bbl) in the first
quarter of 2011 from $35.1 million ($47.16/bbl) during the first quarter of
2010.

·         Net operating income (netback) increased 155% to $39.8 million
($37.22/bbl) in the first quarter of 2011 from $15.6 million ($20.98/bbl)
during the first quarter of 2010.

·         Funds generated from operations increased 119% to $30.3 million in
the first quarter of 2011 from $13.8 million over the first quarter of 2010.
Included in funds generated from operations are cash premiums paid of $6.6
million for financial commodity contracts in February 2011.

·         Capital expenditures for the first quarter of 2011 were $51.9 million
and included drilling 16 wells, 29 reactivation and related infrastructure/
expansion projects. During the comparable 2010 quarter, capital expenditures
were $26.2 million.

·         The Company continues to maintain a strong balance sheet adjusted
working capital of $111.4 million (including cash and cash equivalents
totalling $82.9 million) and bank loans of $20.4 million. At December 31, 2010
the Company had adjusted working capital of $134.9 million and bank loans of
$25.8 million. Adjusted working capital at March 31, 2010 was $70.6 million.

ANNUAL GENERAL MEETING
The Company's Annual General Meeting (AGM) will take place on May 24, 2011 at
3:00pm MDT (5:00pm EDT) at the Petroleum Club in Calgary, AB, Canada.

For additional information, please see an updated version of the Company's
corporate presentation on http://www.bankerspetroleum.com/.

18th May '11

Bankers has been presenting at the latest First Energy Global Energy Conference.

http://www.firstenergy.com/conference_details.php?conf_id=90&webcast

There are links there for the webcast as well as a note from First Energy.

Id encourage people to have a glance at the list of companies presenting as there are a lot of names familiar to this site. Also some others that arent perhaps so well known but interesting nevertheless (IMO)

I should say that once again, First Energy have done a sterling job with the conference and the companies attending.

Bonus points for them for deciding that, in response to the Wildfires hitting Slave Lake in Alberta, they have decided to donate all commissions from today to the Canadian Red Cross as the agent for disaster relief in connection with the wildfire.

6th Jul '11

BNK issued the Operational Update for Q2.

As ever there will be a conference call, presentation and Q&A session:

Conference Call

The Management of Bankers will host a conference call on July 6, 2011 at 7:00am
MDT to discuss this Operations Update. Following Management's presentation,
there will be a question and answer session for analysts and investors.

To participate in the conference call, please contact the conference operator
ten minutes prior to the call at 1-888-231-8191 or 1-647-427-7450. A live audio
web cast of the conference call will also be available on Bankers website at
www.bankerspetroleum.com or by entering the following URL into your web browser
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3591060. The web cast
will be archived two hours after the presentation on the website, and posted on
the website for 90 days. A replay of the call will be available until July 20,
2011 by dialing 1-800-642-1687 or 1-416-849-0833 and entering access code
80070287.

My take:

Slightly disappointing in some respects with production coming in about 1200 bopd light due to shut ins. 12,152 bopd vs 11,894 in Q1. Currently doing 13,150 bopd. Not that one cargo of 54,000 bopd was delayed by 3 days so will fall into the next Q. That is equiv to c 600 bopd for the Q. Basically the ship was late.

Now guiding for a 2011 exit production rate of 16,000 to 20,000 bopd with 18,000 seen as the most likely.

On the positive side, realised price was $77 per bbl. 13% up on Q1 realisations.

Fourth rig is in country and operating (first well spud early June) with a fifth due to begin ops in October.

The company is estimating 79 horizontals and 82 well reactivations in 2011.

One problem has been a lack of service rigs - more service rigs are being sourced and more water disposal wells will be drilled as well.

Good news on the Northern Gorani area where two wells were drilled and produced at 175 bopd average. With the completion of the Serman bridge expected in December, activity here can then be stepped up in this higher productivity area.

Infrastructure developments are all proceeding well.

The Thermal program is progressing - first delineation well is due to be drilled this month followed by two horizontals with the first 60 day steam cycle scheduled for September.

Summary

As ever with BNK a mix of good news and progress with a small hiccup but then again, that is understable given the scale of the operations there (no of wells etc). Everythign still moving nicely ahead with good production and the thermal project looming ever closer. Still maintain that, when (if) the thermal project is competed ssuccessfully, proving up much more recoverables, the management team will look to exit selling to a NOC in all likelihood. Okay, its not the most dynamic of companies and it isnt going to multibag but theres still very good upside for the patient IMO.

StrollingMolby

Ouch - and there's the fall, in relation to the downwardly-revised 2011 exit production rates. Despite the considerable progress with infrastructure and new wells/reactivations, etc... made over the last 18 months I'm back to where I started...

Fangorn

24th Aug '11

I've been taking another look at this as have just noticed it is well off its highs for the year, and considerably lower than it was around May/June (circa 450p mark). They do seem to have been hit quite badly by the market panic that started 13 days ago. culminating in 4 days off large sell offs.

August 2nd quarter results looked fairly good to my untrained oil eye...

http://moneyam.uk-wire.com/cgi-bin/articles/20110812070000P1512.html?epic=BNK

Average production

(bopd) 12,1529830+24%12,0249060+33%

Its financial position remained strong with $81m in cash and minimal long-term debt of $31m.

@ 275p/sh currently, after today's nice rise, this still seems very cheap.

Any "oily experts" with a more in depth opinion as I'm very tempted. Blvn @ 120p/sh is also looking attractive as a bottom fishing play....

p.s Apologies if I've missed disucssion elsewhere on this one but I've been otherwise engaged the last two months or so enjoying the delights of Kenya, Canada and Scotland..and have spent little time following the markets to the extent I normally do.

p.p.s Tried formatting the financials four times,reinputing from scratch but seem to be unable to get a decent layout. (:

JPGH

Fangorn
I have a few of these bought in 209 & 2010 with a couple of top ups in 2011.

The SP is in the doldrums a bit mainly due to the continuous failure to meet targets (when I say failure I mean failure by a small amount) and lack of development on the SAGD front where trails were promised in 2010 that stil in 2011 have not happened. Also teh share is traded in Canada with a paltry 3000 to 6000 or so shares traded in London hence the share is at the mercy of the TSX herd mentaility. So thats 3 ticks against!!

On the plus side BNK just keep on producing the heavy oil, export via their own pipeline to their own terminal and have long term contracts with BP (?) to take the heavy crude. It's sold at a large discount to Brent but the netback is good and development costs are low. The reserves are enormous and its only a matter of time before BNK get taken out probably by one of the semi-NOCs. In the meantime the balance sheet will get more and more impressive.

Buy in Toronto though as London spread is awful

JPGH

Leekgo

I quite like Bankers but is it really that cheap? Soco is only 47% more expensive but a lot more than 47% better....

I would suspect until it can show it can meet its production forecasts it will lag behind. 12000bopd isnt much better than what Antrim predict they will have on production within a year or 2 and Antrim is only worth 100milGBP or so.... (the reserves are, um, rather different though)

I want Bankers to do well - my father has a position in it. ;) I would be grateful if anyone could convince me of its hidden merits....

Leek

Hiya JPGH,

It's been one I've followed but was never willing to pay a four handle on, let alone 500 to 600p/sh. I saw that DJP commented back in July, slightly lower production rates than he expected.(That is the small failure I take it?). A continuous failure to hit targets(as long as they are only small undershoots) seem to be heavily punished in current markets - but provide the perfect time for some value fishing.

Ah I didn't realise they were exposed to TSX illiquidity - remember reading something in one of those Canadian financial mags over July when i was in Ottawa(Sell Rec I recall)

Thanks for your comments, appreciated. Will look to Toronto as, despite the three ticks against you mention, I feel that they have fallen way too far(the possibility of a takeover by a semi NOC would be the icing on the cake)

4th Oct '11

Q3 operational update from Bankers.

http://www.investegate.co.uk/article.aspx?id=20111004070000P7FDE&fe=1

Still not taken the plunge here myself,am hoping for significantly lower entry than current (which looks more likely given the panic that seems to be around in the market these days)

Thanks for posting the link Fangorn.

Like, oh, I dont know, 10, 20, 50? companies out there they look daftly priced.

Solid progress operationally, production up to 14,250 bopd, Sales agreements for next year done at 72.5% of Brent (up from $ 66 IIRC).

Conference call later.

sander4709

I'm turning the sofa upside down and putting a kidney on EBay - I have to do a top-up!

Yep, spoiled for choice on the daftly priced front. Problem is I expect them to become even more daftly priced as sentiment deteriorates further.No more top ups from me for the time being. Plenty of companies on the watchlist :)

rgf100

24th Oct '11

Due to report earnings tomorrow, and has been on quite a streak the last while - it's outstripped my other oil shares lately, despite not having had any news I've noticed.

12th Nov '11

Q3'11 results released on website

http://www.bankerspetroleum.com/en/components/investor/pr_2011_third_quarter_november_11_final.pdf

Highlights for the quarter ended September 30, 2011 are:

Production averaged 13,667 bopd, an increase of 39% compared to the same period in 2010. Current production is 14,750 bopd.
In the third quarter of 2011, revenue increased by 10% to $93.7 million ($74.48/bbl) from $85.2 million ($77.03/bbl) in the previous quarter and by 122% from $42.1 million ($46.61/bbl) in the third quarter of 2010.
Net operating income (netback) was $44.9 million ($35.71/bbl) in the third quarter of 2011, compared to $47.2 million ($42.72/bbl) during the second quarter of 2011 and $19.6 million ($21.74/bbl) in the third quarter of 2010.
Funds generated from operations were $42.6 million in the third quarter of 2011 compared to $42.9 million in the second quarter of 2011 and $16.3 million in the third quarter of 2010.
During the third quarter of 2011, capital expenditures were $65.1 million. The Company drilled sixteen (16) horizontal wells, a vertical cored delineation well, two (2) thermal horizontal wells, and two (2) water disposal wells, as well as reactivated 19 wells in addition to other related infrastructure/expansion projects. During the same period of 2010, capital expenditures were $27.5 million.
New export market agreements for 2012 have been agreed at higher average price levels than the current year crude oil contracts. ARMO, the Albanian refinery, also agreed to purchase Patos-Marinza crude in 2012 for a significant realized average price increase from the current year contract. The 2012 pricing agreements represent an average 7% increase over the 2011 Patos-Marinza oil price.
The Company continues to maintain a strong financial position with cash of $53.2 million and working capital of $73.5 million at September 30, 2011. Working capital for December 31, 2010 and September 30, 2010 was $130.9 million and $138.8 million, respectively.

9th Jan '12

Q4 2011 Operating update.

http://www.investegate.co.uk/article.aspx?id=20120109130000P3DF4&fe=1

Not even come close to having a chance to read it today (:

salty64

Now listening to the podcast. Not at present invested but feel I should be. I will have to listen and read tomorrow.

http://www.newswire.ca/en/webcast/detail/902171/962215

tiswas

21st Jun '12

Anyone still holding these?

http://www.bankerspetroleum.com/en/components/investor/bnk-presentation-2012-june_final1.pdf

2012 Average Production to date 14,000 bopd, sp trashed, reckon they now have market cap circa £270m.

Interested in people's thoughts, seems to me that more than most their capex is going to be particularly badly hit by fall in POO.

ohisay

Hi Tiswas - I think you've hit the nail on the head with the POO effect on BNK.

And serial disappointer of course pre 2012 on guidance as the stockchase page demonstrates- wunderkind Nuttall seems to be particularly hacked off.

http://www.stockchase.com/Company-sl--slq-ID-slv-Bankers--Petroleum.php

They're certainly getting to be cheap - I've seen recent NAVs of 2.90$/share just for P1 reserves.

Was thinking about buying a few this week until I saw they've apparently hacked off the locals.

http://in.reuters.com/article/2012/06/18/albania-bankers-attack-idINL5E8HIHN720120618

I'd be in at 1.50$/1.60$ as a value punt if they can sort out that particular kerfuffle.

25th Jun '12

Down another 20%, presumably on a delayed reaction to upsetting the locals!

Do you have a link for the $2.90 NAV valuation, is that US or Canadian $?

Tiswas ...

http://business.financialpost.com/2012/05/28/pan-orient-deal-highlights-value-in-bankers-petroleum/

Doesn't mention the oil price he's based his valuation on of course .

I think the market's stopped believing in the reserve numbers and /or recoverability for the time being .

Bankers Petroleum (BNK) - Oil Manufacturing

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Djpreston

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