30th Jan 2015 12:29
LONDON (Alliance News) - Bankers Petroleum Ltd Friday said it has slashed its capital expenditure budget for 2015 by USD65 million in light of the low oil price environment, which will lead to production falling by around 5% next year due to lower levels of drilling activity.
"These adjustments have been made to ensure 2015 spending fits within funds generated from operations and cash resources in the latest oil price environment," said the company.
Bankers, whose operations are in Albania, revised down its 2015 capital programme to USD153 million from its previously announced budget of USD218 million. Bankers said all of the budget will be funded from existing resources and reported a cash balance of USD73 million at the end of December 2014.
As a result, the company has predicted production in 2015 to be 5% lower than in 2014 due to reduced drilling activity and shut-in volumes due to marginal economics, said Bankers.
Bankers said the revised budget is based on a USD50 per barrel average Brent oil price, whereas the previous budget had been based on an oil price lingering around USD70 per barrel.
"We believe it is prudent with today's commodity outlook to show capital discipline and preserve our strong balance sheet. Our project portfolio is flexible enough to allow us to choose our pace and scale of development as appropriate," said David French, president and chief executive.
Around USD80 million of the revised budget will be spent on the company's primary development, the Patos-Marinza field, where Bankers will drill 60 new horizontal wells. However, the company will reduce the amount of rigs on site to two rigs, from three.
Up to 20 existing production wells will undergo polymer injection in order to enhance oil recovery at a cost of around USD28 million. This section of the budget took a 25% to 30% reduction when it was revised.
Bankers will spend USD45 million on infrastructure and facilities, such as well servicing and work-overs, electrification of the well pads and expanding its water disposal capabilities, it said.
In addition, the company has hedged 6,000 barrels of oil per day at USD80 per barrel for 2015, which results in a hedge valuation in excess of USD60 million, said the company.
At the end of 2014, Bankers had drawn down USD104 million from its USD224 million credit facility, but said it has no intention of making any further draw downs during 2015.
Bankers shares were down 0.7% to 140.00 pence per share on Friday afternoon.
By Joshua Warner; [email protected]; @JoshAlliance
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