REG-Bankers Petroleum Limited: 2015 Third Quarter Financial and Operational Results <Origin Href="QuoteRef">BNK.TO</Origin>
06/11/2015 12:00
Bankers Petroleum Announces 2015 Third Quarter Financial and Operational
Results
Third Quarter Operating, Sales and Transportation Costs Decrease 14%
CALGARY, Nov. 6, 2015 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the
"Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2015 third quarter
financial and operational results.
During the quarter, Bankers achieved a cash margin of US$27.50 per barrel and
netback of US$18.46 per barrel. All amounts listed in this news release are in
US dollars unless otherwise stated.
"By any measure, the third quarter is a testament to our strategy of margin
expansion over the past several years and reinforces our ability to perform in
a challenging oil environment" said David French, Chief Executive Officer of
Bankers Petroleum. "We have reduced our costs by $8 per barrel since 2013 and
reached combined levels of operating costs and sales and transportation costs
not rivaled since 2009. Our improved cost structure, along with the success of
our enhanced oil recovery program gives Bankers the ability to achieve more
with less capital headed into 2016."
Results at a Glance Three months ended September 30 Nine months ended September 30
(US$000s, except as noted) 2015 2014 % change 2015 2014 % change
Financial
Oil revenue 71,643 158,932 (55%) 229,754 474,448 (52%)
Net operating income 33,508 92,624 (64%) 99,879 291,134 (66%)
Net income 14,360 25,592 (44%) 4,777 77,780 (94%)
Basic (US$/share) 0.06 0.10 (40%) 0.02 0.30 (93%)
Diluted (US$/share) 0.06 0.10 (40%) 0.02 0.29 (93%)
Funds generated from operations 42,083 84,617 (50%) 117,203 261,439 (55%)
Basic (US$/share) 0.16 0.32 (50%) 0.45 1.01 (55%)
Basic (CAD$/share) 0.21 0.35 (40%) 0.57 1.11 (49%)
Capital expenditures 31,850 87,605 (64%) 119,362 218,971 (45%)
Operating
Average production (bopd) 19,600 21,865 (10%) 19,805 20,809 (5%)
Average sales (bopd) 19,730 21,994 (10%) 19,878 20,696 (4%)
Average Brent oil price (US$/ 50.47 101.93 (50%) 55.31 106.52 (48%)
barrel)
Average realized price (US$/ 39.47 78.55 (50%) 42.34 83.97 (50%)
barrel)
Netback (US$/barrel) 18.46 45.78 (60%) 18.41 51.53 (64%)
Cash margin (US$/barrel) 27.50 46.67 (41%) 26.75 51.85 (48%)
September 30, 2015 December 31, 2014 September 30, 2014
Cash and restricted cash 63,877 73,036 87,976
Working capital 173,708 201,325 190,218
Total assets 1,280,167 1,284,846 1,230,406
Long-term debt 98,916 98,276 98,450
Shareholders' equity 727,203 716,536 661,775
Highlights for the period ended September 30, 2015 are:
Operational Highlights:
* Average oil production for the three months ended September 30, 2015 was
19,600 barrels of oil per day (bopd) compared to 20,050 bopd in the
previous quarter and 21,865 bopd in the third quarter of 2014. For the nine
months ended September 30, 2015, average oil production was 19,805 bopd
compared to 20,809 bopd for the same period in 2014.
* Oil sales for the third quarter of 2015 averaged 19,730 bopd compared to
19,626 bopd for the previous quarter and 21,994 bopd for the third quarter
of 2014. Crude oil inventory at September 30, 2015 decreased to 297,000
barrels compared to 307,000 barrels at June 30, 2015. For the nine months
ended September 30, 2015, oil sales were 19,878 bopd compared to 20,696
bopd for the same period in 2014.
* During the third quarter of 2015, capital expenditures were $32 million.
The Company drilled 13 horizontal production wells during the quarter at
the Patos-Marinza oilfield and one horizontal production well in the Kuçova
oilfield. Capital expenditures were $38 million for the previous quarter
and $88 million for the third quarter of 2014. For the nine months ended
September 30, 2015, capital expenditures totalled $119 million compared to
$219 million for the same period in 2014.
Product Margin Highlights:
* For the three months and nine months ended September 30, 2015, operating
costs and sales and transportation (S&T) costs, originating from
Albanian-based companies and their employees, were $28 million ($15.35/bbl)
and $97 million ($17.90/bbl), respectively, reduced from $43 million
($21.41/bbl) and $113 million ($20.03/bbl) for the same periods in 2014.
Operating and S&T costs improved by 14% on a per barrel basis from the
second quarter of 2015 to the third quarter of 2015.
* Net operating income (netback) in the third quarter of 2015 was $34 million
($18.46/bbl) compared to $42 million ($23.24/bbl) for the previous quarter
and $93 million ($45.78/bbl) for the third quarter of 2014. Net operating
income for the nine months ended September 30, 2015 was $100 million
($18.41/bbl) compared to $291 million ($51.53/bbl) for the same period in
2014.
* Cash margin for the third quarter of 2015 was $27.50/bbl compared to $29.52
/bbl in the previous quarter and $46.67/bbl in the third quarter of 2014.
Cash margin represents netback inclusive of the realized gain on commodity
contracts and recovery against an outstanding accounts receivable balance.
Cash margin for the nine months ended September 30, 2015 was $26.75/bbl
compared to $51.85/bbl for the same period in 2014.
Financial Highlights:
* For the third quarter of 2015, revenue was $72 million ($39.47/bbl)
compared to $86 million ($47.99/bbl) in the previous quarter and $159
million ($78.55/bbl) in the third quarter of 2014. Field price realization
represented 78% of the Brent oil benchmark price ($50.47/bbl) for the third
quarter of 2015 compared to 78% of the Brent oil benchmark price ($61.88/
bbl) in the previous quarter and 77% of the Brent oil benchmark price
($101.93/bbl) in the third quarter of 2014. The increase, as a percentage
of Brent compared to the third quarter of 2014 was mainly due to higher
export sales during the third quarter of 2015. For the nine months ended
September 30, 2015, revenue was $230 million ($42.34/bbl) compared to $474
million ($83.97/bbl) for the same period in 2014.
* Royalties to the Albanian Government and related entities during the third
quarter of 2015 were $10 million (14% of revenue) compared to $12 million
(14% of revenue) for the previous quarter and $23 million (14% of revenue)
for the third quarter of 2014. For the nine months ended September 30,
2015, royalties were $33 million (14% of revenue) compared to $70 million
(15% of revenue) for the same period in 2014.
* For the third quarter of 2015, funds generated from operations were $42
million (US$0.16 per share, CAD$0.21 per share) compared to $50 million
(US$0.19 per share, CAD$0.24 per share) for the previous quarter and $85
million (US$0.32 per share, CAD$0.35 per share) for the third quarter of
2014. Funds generated from operations for the nine months ended September
30, 2015 were $117 million (US$0.45 per share, CAD$0.57 per share) compared
to $261 million (US$1.01 per share, CAD$1.11 per share) for the same period
in 2014.
* The Company continues to maintain a strong financial position at September
30, 2015, with cash and restricted cash of $64 million and working capital
of $174 million. At September 30, 2015, the Company had drawn $123 million
of its $223 million approved credit facilities. Working capital for
December 31, 2014 and September 30, 2014 was $201 million and $190 million,
respectively.
* Bankers recognized realized gains of $16 million ($9.04/bbl) and $40
million ($7.44/bbl) on financial commodity contracts during the three and
nine months periods ended September 30, 2015, respectively. The financial
commodity contracts represent 6,000 bopd at a floor price of $80/bbl of
Dated Brent for 2015. At September 30, 2015, the fair value of these
contracts was $23 million.
* During the third quarter of 2015, Bankers initiated its 2016 hedging
strategy by placing two costless collar contracts with an average floor of
$53.90/bbl and an average ceiling of $58.19/bbl for a total of 2,500 bopd
for the full year (all prices are referenced to Dated Brent). Subsequent to
September 30, 2015, Bankers entered into an additional costless collar
contract with a floor of $55.00/bbl and a ceiling of $55.80/bbl for 2016.
Collectively, these contracts represent a hedging plan with an average
floor of $54.31/bbl and an average ceiling of $57.29/bbl for a total of
4,000 bopd for 2016.
* The Company has signed a formal agreement with the Albanian National Agency
for Natural Resources (AKBN) and the Minister of Energy and Industry to
engage a third-party international auditor to assist in resolving the
outstanding cost recovery audit. Subsequent to September 30, 2015, the
contract was finalized with a third-party international auditor. In
addition, the Albanian Courts have formally deferred (subject to appeal)
the previously announced $57 million profits tax assessment until
resolution of the outstanding cost recovery audit.
Outlook
Production in the fourth quarter to date is 18,300 bopd, down from the third
quarter average of 19,600 bopd due to temporary interruptions. Bankers
anticipates exiting the year with an 18,500 to 19,000 bopd production rate.
In early October, southern Albania received significant rainfall resulting in
flash flooding and power outages in the Patos Marinza field. The Company
temporarily reduced production levels by an average of 1,000 bopd over an
approximate two week period to manage high water levels and restricted access
to well sites and facilities. The affected wells have been brought back on
production and are in the process of approaching pre-flood production levels.
As previously announced, Bankers started up the flowline and inlet system of
Satellite 3 in mid-October. Commissioning and stabilization of production will
take approximately four (4) to six (6) weeks as twenty-three (23) pads are
integrated into the system. Production has been impacted by approximately 500
bopd. The newly installed inlet separator allows Bankers to capture 1.5 to two
(2) million cubic feet of gas, which can be utilized in operations.
In the third quarter, Bankers saw evidence of corrosion of the lateral liner in
three polymer producer wells, limiting production from these wells by
approximately 450 bopd. The corrosive environment is confined to a small aerial
extent in the southern part of the field. The Company has repaired the first
well with a lateral re-drill and installation of a chrome liner to mitigate the
corrosive reservoir conditions. The other wells will be repaired by the end of
the year. As a precaution, all new wells drilled in this area will follow this
design.
The producing polymer patterns continue to perform well and Bankers expects to
complete the planned twenty-five (25) to thirty (30) conversions in 2015.Eight
(8) wells have been converted to injection to date in the fourth quarter and an
additional two (2) to seven (7) conversions planned in the remainder of 2015.
Additional infrastructure and facilities projects in the fourth quarter include
construction of the western gathering system, which is on schedule and expected
to be completed in the first quarter of 2016. The vapor recovery units at Pad H
and Pad D satellite facilities are expected to be fully commissioned in the
fourth quarter of 2015. These two projects will capture additional gas to be
used to offset diesel, propane and electricity costs.
Bankers continues to carry out a balanced capital program in the remainder of
2015, focused on maximizing the exit production rate. The Company intends to
issue its 2016 Capital Program and host a conference call on Tuesday, December
15.
Supporting Documents
The full Management Discussion and Analysis (MD&A), Financial Statements and
updated corporate presentation are available on http://www.bankerspetroleum.com
/. The MD&A and Financial Statements will also be available on http://
www.sedar.com/.
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, expressed in thousands of US dollars, except per share amounts)
Three months ended Nine months ended
September 30 September 30
2015 2014 2015 2014
Revenues $ 71,643 $ 158,932 $ 229,754 $ 474,448
Royalties (10,269) (22,985) (32,719) (70,111)
Revenue, net of royalties 61,374 135,947 197,035 404,337
Realized gain on financial 16,400 - 40,386 -
commodity contracts
Unrealized gain (loss) on 4,291 1,556 (18,546) (1,216)
financial commodity contracts
82,065 137,503 218,875 403,121
Operating expenses 19,854 25,639 65,481 70,617
Sales and transportation expenses 8,012 17,684 31,675 42,586
General and administrative 4,943 5,440 14,783 17,409
expenses
Contract settlement (recovery) (10) 1,161 385 1,680
expenses
Depletion and depreciation 30,547 29,921 91,496 84,597
Share-based compensation 1,865 1,062 3,768 3,529
65,211 80,907 207,588 220,418
Operating income 16,854 56,596 11,287 182,703
Net finance expense (2,022) (2,096) (12,500) (9,903)
Income (loss) before income tax 14,832 54,500 (1,213) 172,800
Deferred income tax recovery (472) (28,908) 5,990 (95,020)
(expense)
Net income for the period 14,360 25,592 4,777 77,780
Other comprehensive loss
Currency translation adjustment (1,168) (1,362) (2,473) (1,162)
Comprehensive income for the $ 13,192 $ 24,230 $ 2,304 $ 76,618
period
Basic earnings per share $ 0.055 $ 0.098 $ 0.018 $ 0.300
Diluted earnings per share $ 0.055 $ 0.095 $ 0.018 $ 0.292
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, expressed in thousands of US dollars)
ASSETS
September 30 December 31
2015 2014
Current assets
Cash and cash equivalents $ 46,388 $ 68,036
Restricted cash 17,489 5,000
Accounts receivable 86,064 81,612
Inventory 4,822 10,008
Deposits and prepaid expenses 54,058 62,984
Financial commodity contracts 23,368 44,170
232,189 271,810
Non-current assets
Financial commodity contracts 2,256 -
Property, plant and equipment 1,037,067 1,004,508
Exploration and evaluation assets 8,655 8,528
$ 1,280,167 $ 1,284,846
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $ 37,336 $ 69,285
Current portion of long-term debt 21,145 1,200
58,481 70,485
Non-current liabilities
Long-term debt 98,916 98,276
Decommissioning obligation 28,155 26,147
Deferred tax liabilities 367,412 373,402
552,964 568,310
SHAREHOLDERS' EQUITY
Share capital 365,045 363,670
Contributed surplus 93,397 86,409
Currency translation reserve 1,937 4,410
Retained earnings 266,824 262,047
727,203 716,536
$ 1,280,167 $ 1,284,846
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, expressed in thousands of US dollars)
Three months ended Nine months ended
September 30 September 30
2015 2014 2015 2014
Cash provided by (used in):
Operating activities
Net income for the period $ 14,360 $ 25,592 $ 4,777 $ 77,780
Depletion and depreciation 30,547 29,921 91,496 84,597
Accretion of long-term debt 233 24 733 1,073
Accretion of decommissioning 333 284 969 830
obligation
Unrealized foreign exchange (1,436) 382 2,904 446
(gain) loss
Deferred income tax (recovery) 472 28,908 (5,990) 95,020
expense
Share-based compensation 1,865 1,062 3,768 3,529
Discount and revaluation of - - - (205)
long-term receivable
Unrealized (gain) loss on (4,291) (1,556) 18,546 1,216
financial commodity contracts
Cash premiums paid for - - - (2,847)
financial commodity contracts
Funds generated from operations 42,083 84,617 117,203 261,439
Change in long-term receivable - 2,856 - 2,856
Change in non-cash working 10,166 18,139 (8,851) (18,599)
capital
52,249 105,612 108,352 245,696
Investing activities
Additions to property, plant (31,850) (86,220) (119,235) (217,318)
and equipment
Additions to exploration and - (1,385) (127) (1,653)
evaluation assets
Restricted cash (11,717) 5,000 (12,489) 2,109
Change in non-cash working (4,616) 15,853 (17,550) 18,351
capital
(48,183) (66,752) (149,401) (198,511)
Financing activities
Issue of shares for cash - 758 722 13,818
Financing costs - - - (435)
Change in long-term debt 9,078 - 19,345 (896)
9,078 758 20,067 12,487
Foreign exchange loss on cash (573) (1,469) (666) (1,293)
and cash equivalents
Increase (decrease) in cash and 12,571 38,149 (21,648) 58,379
cash equivalents
Cash and cash equivalents, 33,817 44,827 68,036 24,597
beginning of period
Cash and cash equivalents, end $ 46,388 $ 82,976 $ 46,388 $ 82,976
of period
Interest paid $ 299 $ 21 $ 3,439 $ 3,452
Interest received $ 69 $ 66 $ 220 $ 340
BANKERS PETROLEUM LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited, expressed in thousands of US dollars, except number of common
shares)
Number of Share Contributed Currency Retained Total
common capital surplus translation earnings
shares reserve
Balance at December 31, 255,681,911 $ 340,305 $ 84,811 $ 6,345 $ 133,214 $ 564,675
2013
Share-based compensation - - 6,664 - - 6,664
Options exercised 4,958,713 21,616 (8,921) - - 12,695
Warrants exercised 400,000 1,561 (438) - - 1,123
Net income for the - - - - 77,780 77,780
period
Currency translation - - - (1,162) - (1,162)
adjustment
Balance at September 30, 261,040,624 $ 363,482 $ 82,116 $ 5,183 $ 210,994 $ 661,775
2014
Share-based compensation - - 4,376 - - 4,376
Options exercised 43,769 188 (83) - - 105
Net income for the - - - - 51,053 51,053
period
Currency translation - - - (773) - (773)
adjustment
Balance at December 31, 261,084,393 $ 363,670 $ 86,409 $ 4,410 $ 262,047 $ 716,536
2014
Share-based compensation - - 7,641 - - 7,641
Options exercised 339,935 1,375 (653) - - 722
Net income for the - - - - 4,777 4,777
period
Currency translation - - - (2,473) - (2,473)
adjustment
Balance at September 30, 261,424,328 $ 365,045 $ 93,397 $ 1,937 $ 266,824 $ 727,203
2015
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 http://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.
David 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/Wei Loon Yap, +44 0
207 523 8000; AIM BROKER: FirstEnergy Capital LLP, Hugh Sanderson / David van
Erp, +44 0 207 448 0200
END
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