REG-Bankers Petroleum Limited: Operational Update for the Second Quarter 2016 <Origin Href="QuoteRef">BNK.TO</Origin>

Big Banc SplitAnnouncement

06/07/2016 12:05

Bankers Petroleum Operational Update for the Second Quarter 2016 
 
 CALGARY, July 6, 2016 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the
"Company") (TSX: BNK, AIM: BNK) is pleased to announce the Company's second
quarter operational update. 
 
 Production 
 
 Bankers achieved a second quarter 2016 production average of 15,934 barrels
of oil per day (bopd), 8.2% below the first quarter 2016 average of 17,363
bopd. Following a previously announced business interruption at the
Petrolifera Italo Albanese ("PIA") Terminal port facility in late May, the
Company curtailed production by approximately 4,000 bopd for 5 days due to
lack of storage capacity. Production was brought back on-line beginning June 8
and resumed production levels within a week. In addition, maintenance and
optimization of the water disposal system during the quarter further
restricted production (approximately 300 bopd over the quarter). The Company
continued to optimize production levels and monitor the economic return of all
wells in accordance with the current oil price environment. 
 
 Sales and Oil Prices 
 
 In the second quarter 2016, oil sales averaged 15,023 bopd, compared to the
first quarter sales in 2016 of 17,280 bopd. Crude oil inventory at June 30,
2016 increased to 348,700 barrels compared to 266,000 barrels at March 31,
2016, with the last scheduled cargo of the quarter deferred to the first few
days of July. 
 
 Bankers' second quarter average oil price was approximately $29.99 per barrel
(representing 66% of the Brent oil price of $45.57 per barrel), as compared
with the first quarter 2016 average oil price of $21.07 per barrel
(representing 62% of the Brent oil price of $33.89 per barrel). Sales to the
export market during the second quarter 2016 represented 94% of total sales,
at an average export price of 66% of the Brent oil price. Sales prices in the
second quarter improved compared to the first quarter of 2016 as the Brent
benchmark price climbed back over $40 per barrel and demand increased
seasonally for heavy crude oil on both the export and domestic markets. 
 
 For the six months ended June 30, 2016, average oil sales were 16,152 bopd
(representing 63% of the Brent oil price of $25.22 per barrel) compared 19,899
bopd (representing 75% of the Brent oil price of $57.95 per barrel) for the
first six months of 2015. 
 
 On April 29, 2016, Bankers added another 1,000 bopd to its existing hedge
position for 2016. The Company now has a total of 6,000 bopd under costless
collar contracts with an average floor of $51.52 per barrel and an average
ceiling of $53.78 per barrel (all prices are referenced to Dated Brent) for
the balance of 2016. In the second quarter of 2016, the hedge program
generated proceeds of $2.7 million. The remaining 2016 hedge program at June
30, 2016, is valued at $2.2 million. These contracts are designed to protect
Bankers against further volatility in oil prices in 2016. 
 
 Drilling Update 
 
 Due to the low oil price environment, Bankers elected to defer drilling
activity at the start of the year in order to protect the strength of the
Company's balance sheet. Drilling activity will resume as pricing improves and
is being reviewed for resumption in the second half of 2016. 
 
 Enhanced Oil Recovery (EOR) Program 
 
 The existing polymer flood and water flood patterns continue to perform well
and in several cases above reservoir model expectations. The average
incremental production over primary decline in the month of June coming from
EOR patterns is approximately 3,665 bopd (representing about 24% of total
production). The total production coming from these EOR patterns is close to
5,285 bopd (or 35% of total production). The Company converted four (4)
producing wells to injection in the second quarter and has fifty-three (53)
polymer and five (5) water flood patterns implemented at the end of the second
quarter 2016. 
 
 Infrastructure Development 
 
 In the second quarter of 2016, Bankers implemented plans to expand the reach
of natural gas generated power through the installation of stock gas
generators synchronized with overhead powerlines and continued expansion on
the polymer distribution system. The Company also focused on the optimization
of its water disposal system with the purchase of high pressure pumps to be
installed in the third quarter to increase the injection capacity at existing
disposal wells. The planned commissioning of the new inlet system at Pad D was
delayed due to late arrival of equipment and is now expected early in the
third quarter. 
 
 Corporate Transaction Update 
 
 Completion of the proposed plan of arrangement (the "Arrangement") with
affiliates of Geo-Jade Petroleum Corporation ("Geo-Jade") is subject to the
outstanding regulatory approval of the Chinese State Administration of Foreign
Exchange (SAFE). Bankers anticipates receipt of this approval in the coming
weeks and closing of the Arrangement to occur shortly thereafter in July.
Following a successful completion of the Arrangement, the common shares of
Bankers (the "Bankers Shares") will be delisted from the Toronto Stock
Exchange ("TSX") and the AIM market of the London Stock Exchange. 
 
 Updated Corporate Presentation 
 
 For additional information on this Operational Update please see the
Company's July 2016 corporate presentation on the Company's website,
http://www.bankerspetroleum.com/ . 
 
 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, the
regulatory approvals required to complete the Arrangement and the anticipated
delisting of the Bankers Shares following completion of the Arrangement
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. Forward-looking
statements in this new release are made as of the date hereof, and the Company
undertakes no obligation to update or revise any forward looking statements,
whether as a result of new information, future events or otherwise, unless
required by applicable securities laws. 
 
 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
and Eastern Europe. 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". In 2015 Bankers
acquired an 85% interest in the rights to explore the Püspökladány Block
concession within the Pannonian Basin located in north eastern Hungary.
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 & Corporate Communications Specialist, (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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