Bankers Petroleum Limited Operational Update for the Third Quarter 2015

 
TIDMBNK 
 
Bankers Petroleum Operational Update for the Third Quarter 2015 
 
    Average Quarterly Production 19,598 bopd and Improved Corporate Decline 
 
CALGARY, Oct. 7, 2015 /CNW/ - Bankers Petroleum Ltd. (Bankers or the Company) 
(TSX: BNK, AIM: BNK) is pleased to announce the Company's third quarter 
operational update. 
 
Production 
 
Average production from the Patos-Marinza and Kuçova oilfields in Albania for 
the third quarter of 2015 was 19,598 barrels of oil per day (bopd), a decrease 
of 2% compared to the second quarter average of 20,045 bopd. Production in the 
quarter stabilized with development drilling utilizing two rigs, response from 
the enhanced oil recovery (EOR) patterns that were implemented last year and 
continued focus on converting wells to injectors as part of the 2015 EOR 
program. 
 
The Bubullima reservoir continues to perform well, with four (4) producing 
wells averaging close to 200 bopd per well, which includes some downtime for 
workovers in the quarter. The latest Bubullima well drilled in the third 
quarter was recently tied-in and is being optimized. While the volumes are very 
encouraging, the Bubullima production is both slightly sour and high in 
watercut requiring the Company to manage the disposal capacity and sour 
treatment facilities ahead of the Bubullima development program. The Company 
has facilities in place to support its plans to drill two (2) to three (3) 
additional Bubullima wells in the fourth quarter and is planning the 2016 
program accordingly. 
 
Sales and Oil Prices 
 
Oil sales during the third quarter averaged 19,730 bopd, 0.4% higher than the 
previous quarter average of 19,599 bopd. Crude oil inventory at September 30, 
2015, was 297,000 barrels down from 307,000 barrels at June 30, 2015. 
 
The Patos-Marinza third quarter average oil price was approximately $39.52 per 
barrel (representing 79% of the Brent oil price of $50.26 per barrel), as 
compared with the second quarter average oil price of $47.98 per barrel 
(representing 77% of the Brent oil price of $61.92 per barrel). Sales to the 
export market during the third quarter 2015 represented 97% of total sales, at 
an average export price of 79% of the Brent oil price. The majority of the 
volumes were sold to the export market in the third quarter to capitalize on 
the continued demand during the summer months. In the fourth quarter, crude oil 
volumes have been largely committed to the export market to capture higher 
realized prices and consistent off-take during the winter months. 
 
Bankers realized $16.4 million (representing $9.05 per barrel) during the third 
quarter in proceeds from corporate hedges. 
 
Hedging Strategy 
 
Bankers has hedged 6,000 bopd at a Brent price of $80 per barrel for the 
balance of 2015. The remaining 2015 hedge program at September 30, 2015, is 
valued at $23.4 million. 
 
During the third quarter, Bankers initiated its 2016 hedging strategy by 
placing two costless collar contracts with an average floor of $54 and average 
ceiling of $58 for a total of 2,500 bopd for the full year. The Company will 
look to add to this hedging position as the markets allow, for up to 6,000 
bopd. These contracts are designed to protect Bankers against further weakness 
in oil prices in 2016, while still providing the Company and its shareholders 
the opportunity to benefit from price improvement. 
 
Enhanced Oil Recovery Program 
 
The EOR program continues to demonstrate strong performance with twenty-eight 
(28) polymer and six (6) water flood patterns operating in the Patos-Marinza 
oilfield at the end of the third quarter. During the third quarter, Bankers 
converted two (2) producing wells to injector wells and plans to convert an 
additional ten (10) to fifteen (15) wells before the end of 2015. 
 
The polymer and water flood programs produced a total of approximately 3,715 
bopd in the month of September, representing 19% of Bankers total production or 
12% incremental production above what the estimated primary performance would 
have produced. With a growing percentage of the field under pressure support 
from the EOR program, the Company estimates that the base corporate decline has 
begun to shallow from an estimated thirty (30) percent in early 2015 to an 
estimated twenty (20) to twenty-five (25) percent corporate decline in 2016. 
 
"This is a significant milestone for the Company. The EOR program is doing 
exactly what it was intended to do, provide an incremental production wedge as 
well as reduce our corporate decline, allowing the Company to achieve more with 
less activity," commented David French, President and Chief Executive Officer 
of Bankers Petroleum. 
 
Drilling Update 
 
Bankers drilled a total of fourteen (14) wells in the third quarter: thirteen 
(13) horizontal producers in Patos-Marinza and one (1) horizontal producer in 
Kuçova. Twelve (12) of the producing wells are on production, the remaining two 
(2) wells will be placed on production early in the fourth quarter. 
 
In the fourth quarter, Bankers plans to drill fourteen (14) horizontal 
production wells and one (1) multi-lateral well. This will be the second 
multi-lateral well in Patos-Marinza, testing the Lower Driza performance from 
thinner stacked reservoir sands. The multi-lateral concept reduces the capital 
cost of each lateral leg compared to a single lateral well improving access to 
the reservoir and allowing expansion of our development plan. 
 
Infrastructure Development 
 
Infrastructure projects in the third quarter focused on emulsion gathering 
systems to tie-in wells and improved inlet systems and vapour recovery units at 
satellite facilities. The final stages of the north gathering system are being 
completed with partial commissioning underway and the remaining leases being 
tied-in during the coming weeks. The inlet vessels at Satellite 3 treating 
facility are currently being commissioned in conjunction with the north 
gathering system. Construction on the west gathering system has progressed as 
scheduled, with expected completion in the first half of 2016. 
 
Additional projects included the installation of vapor recovery units at Pad H 
and Pad D treating facilities that commenced late in the second quarter and are 
expected to be commissioned in the latter half of the fourth quarter. As well, 
the second commercial polymer skid was commissioned, completing the majority of 
the necessary facilities associated with the remainder of the planned EOR 
conversions in 2015. 
 
Cost Recovery Audit Update 
 
The Company is pleased to announce that it has signed a formal Terms of 
Reference 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. The audit 
firm will be selected by mid-October and this process is expected to be 
finalized by the end of the fourth quarter. 
 
In parallel with this process, the Albanian Courts have formally deferred 
(subject to appeal) the previously announced profits tax assessment until 
resolution of the outstanding cost recovery audit. It is expected that the 
findings of the third-party audit will trigger a reduction of the previously 
announced tax assessment. 
 
Updated Corporate Presentation 
 
For additional information on this Operational Update, please see the Company's 
October 2015 corporate presentation at http://www.bankerspetroleum.com/. 
 
Conference Call 
 
The Management of Bankers will host a conference call on October 7, 2015 at 6: 
30 am MDT (8:30 am EDT, 1:30 pm BST). 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, https://event.on24.com/eventRegistration/EventLobbyServlet?target= 
registration.jsp&eventid=1061615&sessionid=1&key= 
69706B8BF384996018CDFB67BCE1568C&sourcepage=register. 
 
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 October 21, 2015 by dialing 1-855-859-2056 or 1-416-849-0833 and entering 
access code 53385520. 
 
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/ 

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October 07, 2015 07:11 ET (11:11 GMT)