7th Oct 2015 11:43
LONDON (Alliance News) - Bankers Petroleum PLC Wednesday said production fell in the third quarter of 2015 whilst a tiny rise in sales was offset by a fall in oil prices, but the company said it has hedged a considerable amount of production for the remainder of the year and in 2016 to mitigate lower oil prices.
The Albania-focused oil producer said production in the third quarter of 2015 averaged 19,598 barrels of oil per day, down 2% quarter-on-quarter from 20,045 barrels of oil per day. Production comes from the Patos-Marinza and Kuçova oilfields. Oil sales averaged 19,730 barrels of oil per day, a smidgen up from the previous quarter whilst its inventory fell to 297,000 barrels at the end of September from 307,000 barrels held at the end of June.
However, oil prices suffered as expected. Bankers achieved an average price of USD39.52 per barrel from the Patos-Marinza field, which is down from an average of USD47.98 per barrel in the second quarter of 2015. Bankers said it achieved an average of 79% of the Brent oil price in the third quarter, up from 77% in the second quarter.
Brent was trading at just under USD59 per barrel on Wednesday.
"The majority of the volumes were sold to the export market in the third quarter to capitalise 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 realised prices and consistent off-take during the winter months," it said.
In an attempt to mitigate the risk of low oil prices, Bankers has hedged 6,000 barrels of oil per day at a price of USD80 per barrel for the remainder of 2015. At the end of September, the 2015 hedging programme had a value of around USD23.4 million.
It has also began planning its hedging strategy for 2016, hedging around 2,500 barrels of oil per day at a price between USD54 and USD58 per barrel. It aims to increase this up to 6,000 barrels of oil per day if the markets allow, it said.
"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," it said.
The Bubullima reservoir in Albania "continues to perform well", with four producing wells averaging "close to" 200 barrels of oil per day. Bankers plans to drill two to three wells on the Bubullima reservoir starting in the fourth quarter of 2015 and stretching into 2016.
Bankers drilled a total of 14 wells in the third quarter, all of which were drilled on the Patos-Marinza field except for one that was drilled on Kucova. Of those wells, 12 are now producing with the remaining two being optimised. In the fourth quarter, Bankers plans to drill another 14 wells.
Bankers shares were down 6.5% to 94.0 pence per share on Wednesday.
By Joshua Warner; [email protected]; @JoshAlliance
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