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Bankers Petroleum announces 2013 year-end reserves

232 Million Barrels of Proved plus Probable (2P) Reserves; NPV of US$2.24 billion
Average Production First Quarter to Date 19,700 bopd

CALGARY, Feb. 21, 2014 /PRNewswire/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide the results of its December 31, 2013, 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.

Total Company Reserves Summary

Gross Oil Reserves - Using Forecast Prices (Million barrels)

                 
  2013   2012    
  Patos-
Marinza
Kuçova Total
Albania
  Patos-
Marinza
Kuçova Total
Albania
  %
Proved                  
  Developed Producing 40.3 - 40.3   25.4 - 25.4   59
  Developed Non-Producing 0.7 - 0.7   3.0 - 3.0   -
  Undeveloped 102.3 3.4 105.7   107.6 3.4 111.0   -5
Total Proved (1P) 143.3 3.4 146.7   136.0 3.4 139.4   5
Probable 77.0 8.5 85.5   77.8 8.5 86.3   -1
Total Proved Plus Probable (2P) 220.3 11.9 232.2   213.8 11.9 225.7   3
Possible 104.0 21.4 125.4   110.8 21.5 132.3   -5
Total Proved, Probable &
Possible (3P)
324.3 33.3 357.6   324.6 33.4 358.0   0

Patos-Marinza Contingent and Prospective Resources (MMbbls - P50)

       
  2013 2012 %
Contingent Resource 505 534 -5
Prospective Resource 259 254 2
Total Resources 764 788 -3

Highlights

  • 1P Reserves after tax value discounted at 10% increased 27% to US$1.2 billion (representing CAD$5.27 per share);
  • 2P Reserves after tax value discounted at 10% increased 20% to US$2.2 billion (representing CAD$9.72 per share);
  • Main drivers for the increased valuation are operational improvements, an accelerated drilling program and lower future development costs. Operating costs per unit have decreased with reduction in diluent usage, treating system improvements, reduced energy consumption, and improved pump performance;
  • 2013 Company average production was 18,169 bopd for an annual total volume of 6.6 million barrels (4.5% of total proved reserves);
  • Reserves Life Index for 1P and 2P is 22 years and 35 years respectively;

Net Present Value at 10% - After Tax Using Forecast Prices (US$ millions)

                 
  2013   2012   %
  Patos-
Marinza
Kuçova Total
Albania
  Patos-
Marinza
Kuçova Total
Albania
   
Proved                  
  Developed Producing 568 - 568   372 - 372   55
  Developed Non-Producing 11 - 11   44 - 44   -
  Undeveloped 614 23 637   517 26 543   22
Total Proved 1,193 23 1,216   932 26 958   27
Probable 926 98 1,024   793 115 908   13
Total Proved Plus Probable 2,119 121 2,240   1,724 141 1,865   20
Possible 1,003 296 1,299   860 354 1,214   7
Total Proved, Probable &
Possible
3,122 417 3,539   2,584 495 3,079   15

       
Reserves Value
10% Discounted, After Tax
CAD$/Share   US$/bbl
1P reserves $5.27   $8.49
2P reserves $9.72   $9.77
3P reserves $15.36   $9.98

Basic shares outstanding of as of December 31, 2013, were approximately 256 million (281 million diluted).

Values are based on RPS (Patos-Marinza) and D&M (Kuçova) January 1, 2014, price forecast tables summarized below:

Reserve Auditor Price Decks - Dated Brent

   
BRENT Oil Price Forecast US$/bbl  
Year RPS D&M
2014 $105.20 $106.00
2015 $100.60 $101.80
2016 $95.80 $101.64
2017 $95.50 $101.51
2018 $97.40 $101.42
2019 $99.40 $101.58
2020 $101.40 $103.61
2021 $103.40 $105.68
2022 $105.40 $107.79
2023 $107.60 $109.95
2024 $109.70 $112.15
2025 +2.0% Thereafter +2.0% Thereafter

Patos-Marinza Crude Pricing

The average sales price for export sales is approximately 81% of Brent (an increase of 2% over the 2013 average realized pricing of 79% of Brent). The average realized sales price the Company is receiving for crude oil from the Patos-Marinza and Kuçova oilfields is at a discount to Brent oil.

Albanian Fiscal Changes

Pursuant to the 2014 Albanian fiscal changes, these reserve reports are based on the assumption that the Company and Government of Albania will reach agreement on adequate offsets in recognition of the economic stabilization provisions of the hydrocarbon agreements and that the previously exempted value added tax will be fully reimbursed in a timely manner.  Precedent for such an offset arrangement was established during the 2008 Royalty Tax implementation.

Finding and Development Costs (F&D)

In the Patos-Marinza 2P development case, the future horizontal well count has decreased from 1,085 to 995. The average cost per well is $1.2 million.

Total future undiscounted capital costs for Patos-Marinza and Kuçova are projected to be US$2.2 billion, US$2.3 billion and US$2.5 billion on a 1P, 2P and 3P basis, respectively. This represents the following F&D costs, calculated as total future development capital divided by recoverable reserves excluding currently developed PDP and PDNP reserves:

     
  2013 2012
F&D Costs US$/bbl US$/bbl
1P reserves $20.45 $20.90
2P reserves $12.08 $12.27
3P reserves $7.85 $8.08

Oil Initially in Place

In Patos-Marinza, the Oil Initially in Place ("OIIP") volumes in the reserves area remain at 2.4 billion barrels and the OIIP outside the reserves area remains at 2.7 billion barrels in 2013.

The Kuçova OIIP resource estimate remains at 297 million barrels.

David French, President and CEO commented "The Company is very pleased to announce an increase in our reserves on the back of a year of record production in the field. The 2013 reserve report reflects our strategy of engineering momentum through drilling efficient, predictable horizontal wells and enhancing the operating margin of every barrel we produce.  These new reserves reflect a 20% increase in the net present value of our 2P reserve base and reinforce the strength of our base business - optimizing the performance of this world class heavy-oil asset."

Operational Update

Average production for the first quarter to date was 19,700 bopd; this rate is 2% higher than the fourth quarter average production of 19,303 bopd.

The sixth drilling rig is now in country undergoing final inspection. It will commence drilling in the first quarter of 2014.

Further details, including the February 2014 Corporate Presentation, are available on the Company's website www.bankerspetroleum.com.

Conference Call

Bankers' Management will host a conference call on February 21, 2014 at 6:30 am MST 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 www.bankerspetroleum.com or by entering the following URL into your web browser http://www.newswire.ca/en/webcast/detail/1301697/1436315.

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 07, 2014 by dialing 1-855-859-2056 or 1-416-849-0833 and entering access code 89045312.

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.

 

 

SOURCE Bankers Petroleum Ltd.

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