Bankers Petroleum Announces 2014 First Quarter Financial and Operational Results

Record High Netback of $55.75/bbl and Q2 Average Production to Date 20,150 bopd

CALGARY, May 8, 2014 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2014 first quarter financial and operational results.

During the quarter Bankers achieved record high netbacks of $55.75 per barrel, and free cash flow of $23 million. All amounts listed below are in US dollars unless otherwise stated.

Highlights for the quarter ended March 31, 2014 are:

Primary Drilling Program Highlights:

• Average oil production for the three months ended March 31, 2014 was 19,911 barrels of oil per day (bopd), 3% higher as compared to 19,303 bopd in the previous quarter and 18% higher than 16,919 bopd in the first quarter of 2013.
  
  
• For the first quarter of 2014, oil sales averaged 18,435 bopd compared to 19,710 bopd for the previous quarter and 16,605 bopd for the first quarter of 2013.  Due to marine weather conditions, an export scheduled at the end of March was delayed until early April resulting in crude oil inventory increasing by 43% to 444,000 barrels at March 31, 2014.
  
  
• Capital expenditures were $60 million in the first quarter of 2014.  The Company drilled 34 wells during the quarter, comprised of 29 horizontal production wells, three horizontal lateral re-drill wells and two water disposal wells in the main area of the Patos-Marinza oilfield.  Capital expenditures were $68 million and $47 million for the previous quarter and the first quarter of 2013, respectively.

Expansion of Product Margin Highlights:

• For the three months ended March 31, 2014, operating, sales and transportation costs, originating from Albanian-based companies and their employees, were $31 million ($18.41/bbl) as compared to $39 million ($21.59/bbl) for the preceding quarter and $36 million ($24.14/bbl) for the first quarter of 2013.
  
  
• Net operating income (netback) in the first quarter of 2014 and the fourth quarter of 2013 remained consistent at $92 million, however, on a per barrel basis, increased 10% to $55.75/bbl from $50.48/bbl.  Compared to the first quarter of 2013, net operating income for the first quarter of 2014 increased 26% from $73 million ($48.96/bbl).

Financial Highlights:

• Revenue for the first quarter of 2014 was $145 million ($87.39/bbl) compared to $155 million ($85.66/bbl) in the previous quarter and $133 million ($88.70/bbl) in the first quarter of 2013.  Field price realization represented 81% of the Brent oil benchmark price ($108.21/bbl) for the first quarter of 2014 compared to 78% of the Brent oil price ($109.24/bbl) in the previous quarter and 79% of the Brent oil price ($112.57/bbl) in the first quarter of 2013.
  
  
• For the first quarter of 2014, royalties to the Albanian Government and related entities were $22 million (15% of revenue) as compared to $25 million (16% of revenue) in the previous quarter and $23 million (18% of revenue) for the first quarter of 2013.
  
  
• Funds generated from operations for the first quarter of 2014 were $83 million, a 2% increase compared to $81 million for the previous quarter and a 27% increase compared to $65 million for the first quarter of 2013.
  
  
• The Company continues to maintain a strong financial position at March 31, 2014, with cash of $56 million and working capital of $160 million.  At March 31, 2014, the Company had drawn $105 million of its $225 million approved credit facilities.  Working capital for December 31, 2013 and March 31, 2013 was $134 million and $108 million, respectively.

Outlook

The Company continues to execute on its three part strategy to deliver steady and reliable growth through the primary drilling program, expanding its product margin through surface-level improvements and validating the potential of polymer and water flood in the field.

The second quarter 2014 quarter-to-date average production is 20,150 bopd from the Patos-Marinza oilfield in Albania, 1.2% higher than the first quarter average of 19,911 bopd.  Focus in April has been development drilling in the centre of the field with more wells per pad, leading to a deferral of some production to the latter half of the quarter. The Company expects overall production growth for the second quarter to be consistent with guidance.

All six drilling rigs are active in the main area of the oilfield.  In the second quarter, the Company will drill an estimated thirty-nine (39) horizontal production wells and commence operation of both the third satellite facility and the sludge treatment facility. Other infrastructure projects include additional flow lines to reduce infield trucking, new well-pad cascade treating facilities and construction of the new equipment warehouse.

Bankers will continue to expand on the polymer and water flood program as planned with up to five (5) additional well conversions to injection in the second quarter.  Early-stage results of the first few patterns will be shared with the investment community in June.

Effective April 1, 2014, excise tax becomes effective pursuant to the fiscal changes proposed by the Government of Albania at the end of 2013.  Based on the current diluent blend rate and diesel usage, the expected financial impact will add approximately $5.00/bbl to the operating and sales and transportation costs.  Mitigation discussions are ongoing with the Government as to how such current costs will be reflected in cost recovery and offset within the profit tax framework.

The Company intends to issue the second quarter 2014 operational update and host a conference call on Tuesday, July 8, 2014.

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.

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.

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.

SOURCE Bankers Petroleum Ltd.

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
+44 0 207 523 8000

AIM BROKER:
FirstEnergy Capital LLP
Hugh Sanderson / David van Erp
+44 0 207 448 0200