REG-Bankers Petroleum Limited: Bankers Petroleum Announces 2015 Year-End Reserves <Origin Href="QuoteRef">BNK.TO</Origin>
02/03/2016 12:10
Bankers Petroleum Announces 2015 Year-End Reserves
202 Million Barrels of Proved plus Probable (2P) Reserves including 21 Million
Barrels of EOR Reserves;
NPV of US$1.4 Billion
CALGARY, March 2, 2016 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the
"Company") (TSX: BNK, AIM: BNK) announces the results of its December 31, 2015,
independent reserves evaluation. Evaluations were conducted by RPS Energy
Canada Ltd. (RPS) for the Patos-Marinza oilfield, Albania, and by DeGolyer and
McNaughton Canada Ltd. (D&M) for the Kuçova oilfield, Albania; and were
prepared in accordance with Canadian National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities.
David French, President and CEO commented "The 2015 Reserves update represents
a continuation of our successful development plan over the past several years.
The doubling of our booked Enhanced Oil Recovery (EOR) barrels demonstrates the
success of the EOR program, and our dedication to prioritize EOR as the most
efficient dollars we can spend in this pricing environment. It also marks an
inflection point in our Finding and Development Costs, as the transition to EOR
development will reduce our forward capital requirements to sustain and grow
the business. We have a deep inventory of future drilling locations and
injector conversions, and even modest changes in oil price put us in a very
enviable position of low cost operations and development."
Overview
* EOR reserve volumes doubled in the Patos-Marinza oilfield increasing to
4.6, 14.7, 21.1 and 27.3 million barrels on a Proved Developed Producing
(PDP), Proved (1P), Proved plus Probable (2P), and Proved Probable plus
Possible (3P) basis, respectively;
* 1P Reserves remained constant at 125 million barrels with after tax value
(discounted at 10%) down 12% to US$648 million (representing CAD$3.42 per
share);
* 2P Reserves remained constant at 202 million barrels with after tax value
(discounted at 10%) down 21% to US$1.4 billion (representing CAD$7.49 per
share);
* Reserves volume increases in the core area of the oilfield resulted from
additional future development in the Marinza formation due to horizontal
drilling on reduced spacing (100 metres) and the addition of future EOR
patterns.
* Reserves volume decreases and overall valuation decreases are attributable
to the lower price forecast and resulting reduced development plan in
non-core areas, specifically in the Driza Formation in the southern region
of the Patos-Marinza oilfield.
* 2015 Company average production was 19,384 bopd for an annual total volume
of 7.1 million barrels (6% of total proved reserves);
* Reserves Life Index for 1P and 2P is 18 years and 29 years, respectively.
Total Company Reserves Summary
Gross Oil Reserves - Using Forecast Prices (Million barrels)
2015 2014
Patos- Kuçova Total Patos- Kuçova Total %
Marinza Albania Marinza Albania
Proved
Developed Producing 32.3 0.1 32.4 36.3 0.1 36.4 -11
Developed Non-Producing 4.7 - 4.7 - 0.1 0.1 -
Undeveloped 85.8 2.7 88.5 86.0 2.6 88.5 0
Total Proved (1P) 122.9 2.8 125.6 122.3 2.8 125.0 0
Probable 67.5 9.2 76.7 69.1 9.2 78.3 -2
Total Proved Plus Probable 190.3 12.0 202.3 191.4 12.0 203.3 -1
(2P)
Possible 73.6 15.6 89.3 81.4 15.5 96.9 -8
Total Proved, Probable & 263.9 27.6 291.6 272.8 27.5 300.3 -3
Possible (3P)
Net Present Value at 10% - After Tax Using Forecast Prices (US$ millions)
2015 2014 %
Patos- Kuçova Total Patos- Kuçova Total
Marinza Albania Marinza Albania
Proved
Developed Producing 297 0 297 388 1 389 -23
Developed Non-Producing 48 - 48 - 1 1 -
Undeveloped 288 15 303 327 17 344 -12
Total Proved 633 15 648 715 19 734 -12
Probable 702 70 772 968 100 1,068 -28
Total Proved Plus Probable 1,335 85 1,420 1,683 119 1,802 -21
Possible 526 166 692 846 197 1,043 -34
Total Proved, Probable & 1,861 251 2,112 2,529 316 2,845 -26
Possible
Bankers Calculated Share Value from 2015 Year End Reserves Evaluation
2015
Reserves Value CAD$/Share US$/Share
10% Discounted, After Tax
1P reserves $3.42 $2.48
2P reserves $7.49 $5.43
3P reserves $11.14 $8.07
Basic shares outstanding as of December 31, 2015, were approximately 261
million (285 million diluted).
Values are based on RPS (Patos-Marinza) and D&M (Kuçova) January 1, 2016, price
forecast tables summarized below:
Reserves Evaluator Price Decks - Dated Brent
BRENT Oil Price Forecast US$/bbl
Year RPS D&M
2016 44.00 52.00
2017 50.00 60.10
2018 58.00 63.34
2019 65.00 69.85
2020 73.00 75.59
2021 78.00 75.59
2022 83.00 80.41
2023 88.00 87.64
2024 93.00 89.40
2025 95.61 91.19
2026 97.52 93.01
2027 +2.0% Thereafter +2.0% Thereafter
Finding and Development Costs (F&D)
The future development capital has improved with the addition of the enhanced
oil recovery program as well as continued cost savings per well. The resulting
future horizontal well count in Patos-Marinza has decreased from 882 to 817 in
the 2P development case and from 870 to 803 in the 1P and 999 to 928 in the 3P
cases. In 2015, Bankers drilled 57 new horizontal production wells (including
1 Kucova well).
Total future undiscounted capital costs for Patos-Marinza and Kuçova are
projected to be US$1.9 billion, US$2.0 billion and US$2.2 billion on a 1P, 2P
and 3P basis, respectively. This represents a decrease of 5% on a 1P and 2P
basis and an 8% decrease in future capital on a 3P basis, compared to the
previous year. The Finding and Development (F&D) costs, calculated as total
future development capital divided by recoverable reserves excluding currently
developed PDP and Proved Developed Non-Producing (PDNP) reserves, are
summarized in the table below:
Finding and Development Costs (F&D) Annual Summary
2015 2014
F&D Costs US$/bbl US$/bbl
1P reserves $21.39 $22.57
2P reserves $12.22 $12.69
3P reserves $8.82 $8.95
Contingent Resources and Prospective Resources
Patos-Marinza Contingent Resources (Million barrels - P50 Probability Level)
2015 2014 Change
(%)
Development Development Total Total
Pending Unclarified or
On Hold
Contingent Resource - 2C 29.3 533.5 562.8 512 10
Patos-Marinza Prospective Resources (Million barrels - P50 Probability Level)
2015 2014 Change
(%)
Prospective Resource - Best Estimate 290 315 -8
The Company retained RPS to conduct an independent evaluation of the Contingent
and Prospective Resources in the Patos-Marinza oilfield in accordance with
Canadian Oil and Gas Evaluation Handbook (COGEH) and the standards established
by NI 51-101, with an effective date of December 31, 2015. All Contingent
Resources evaluated in the "Development Pending" project maturity sub-class
were deemed economic as of the effective date. The Contingent Resources in
this category will require further resolution of technical uncertainties
related to enhanced recovery processes in expanded areas of the field in order
to be re-classified as Reserves.
RPS risked the Contingent Resources "Development Pending" by applying a chance
of development of 75% to the volumes and NPV values. This chance of
development is RPS' estimate of the probability that the Contingent Resources
will ultimately be developed, given the technical uncertainties associated with
the projects.
Summary of Oil and Gas 2C Contingent Resources (P50 Probability Level)
Gross 2C Volumes Chance of Risked Gross 2C Volume
(MMstb) Development (MMstb)
29.3 75% 21.9
Summary of Net Present Value of Future Revenues for 2C Contingent Resources
(P50 Probability Level)
NPV Chance of Risked NPV
(Million US$) Development (Million US$)
Before Tax 531 75% 398
After Tax 325 75% 244
Chance of Development is the estimated probability that once discovered a known
accumulation will be commercially developed. For the Contingent Resources
"Development Pending" provided within, RPS has evaluated several Chance of
Development factors, including, but not limited to:
* Technical Factors: including reservoir presence and quality and presence of
hydrocarbons
* Economic Factors: including factors beyond the scope of commodity price
forecasts including the additional capital costs associated with EOR
projects, including but not limited to polymer chemical, electricity, and
facility costs.
* Technology Factors: primarily the likelihood of a commercially viable
incremental EOR response from a reservoir whose characteristics differ from
that of current analogous EOR projects. The principal risk as it pertains
to Patos-Marinza is oil viscosity, though other reservoir characteristics
such as thickness and permeability also merit consideration.
* Development Plan Factors: including production facilities, market
availability, and transportation.
* Development Timeframe Factors: primarily the likelihood that major capital
spending will begin within 5 years.
* Other Contingency Factors: major factors beyond the control of the
operators and outside the scope of the aforementioned factors.
The Contingent Resources "Development Pending" in Patos-Marinza will be
developed from an established commercially productive oilfield with available
infrastructure, market accessibility, and crude oil export transportation
infrastructure. The estimates for Contingent Resources foresee the technology
factors associated with implementing an EOR development outside the range of
current analogous production as the primary risk to commercial development.
Efforts to resolve these conditions for development are being actively pursued
through pilot testing in the field and further engineering studies. The
estimated capital cost to bring these Contingent Resources to production is
$247 million.
The Contingent Resource assessments were prepared by RPS in accordance with the
definitions, standards, and procedures contained in the COGEH and NI 51-101.
Contingent Resource is defined as quantities of petroleum potentially
recoverable from known accumulations using established technology or technology
under development, but which are not currently considered to be commercially
recoverable due to one or more contingencies. Production from Contingent
Resources may be greater or less than the estimates provide herein.
Oil Initially in Place
In Patos-Marinza, the Oil Initially in Place ("OIIP") volumes in the reserves
area increased slightly to 2.4 billion barrels and the OIIP outside the
reserves area at 3.1 billion barrels in 2015.
As part of Bankers continuous efforts to evaluate the Patos-Marinza oilfield,
typically after three years a geological review is undertaken to incorporate
additional drilling and log data into the geological mapping and corresponding
OIIP estimates used by RPS. This review was undertaken as part of the year end
2015 reserves process and resulted in a slight increase in net pay values in
regions and productive reservoirs of the field, resulting in a marginal
increase in the overall OIIP.
The Kuçova OIIP resource estimate remains at 297 million barrels.
Further details, including the March 2016 Corporate Presentation, are available
on the Company's website http://www.bankerspetroleum.com/.
Conference Call
Bankers' Management will host a conference call on March 2, 2016 at 6:30 am MST
(8:30 am EST, 1:30 pm GMT) to discuss this reserves report. 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 http://www.bankerspetroleum.com./ or by entering the following URL into your
web browser http://event.on24.com/r.htm?e=1142214&s=1&k=
E18C8B993C48260FDA6BEAA00C689FCE.
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 March 15, 2016 by dialing 1-855-859-2056 or 1-416-849-0833 and entering
access code 58198062.
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.
Review by Qualified Person
This release was reviewed by Suneel Gupta, Executive Vice President and Chief
Operating Officer of Bankers Petroleum Ltd., who is a "qualified person" under
the rules and policies of AIM in his role with the Company and due to his
training as a professional petroleum engineer (member of APEGA) with over 20
years' experience in domestic and international oil and gas operations.
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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