13th Feb 2012 12:30
Bankers Petroleum Announces 2011 Reserves Report
Proved Reserves (1P) Increase by 43% and Proved plus Probable (2P) by 12%
CALGARY, Feb. 13, 2012 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") is pleased to provide the results of its December 31, 2011 independent reserves evaluation and reports another consecutive year of reserves additions since Company inception in 2004.
Evaluations were conducted by RPS Energy Canada Ltd. (RPS) for thePatos-Marinza oilfield, Albania and by DeGolyer and McNaughton Canada Ltd. (D&M) for the Ku§ova oilfield, Albania and were prepared in accordance withCanadian National Instrument 51-101 - Standards of Disclosure for Oil and GasActivities.
Total Company Reserves Summary
· Proved reserves (1P) of 172 million barrels (43% increase from December 31, 2010) representing over twelve times production replacement.
· Proved plus probable reserves (2P) of 267 million barrels (12% increase from December 31, 2010).
· Proved, probable and possible reserves (3P) of 426 million barrels (unchanged from December 31, 2010).
· Original oil in place (OOIP) resource estimate (P50) of 8.0 billion barrels (3% increase from December 31, 2010).
· 2011 average production was 13,051 bopd for an annual total of 4.8 million barrels (3% of proved reserves).
· Reserves Life Index is 30+ years.
Patos-Marinza Field
· 1P reserves increased 45% to 169 million barrels of oil from 117 million barrels at December 31, 2010.
· 2P reserves increased 13% to 256 million barrels (December 31, 2010 - 226 million barrels).
· 3P reserves remain unchanged at 395 million barrels (December 31, 2010 - 395 million barrels).
· OOIP estimate (P50) increased 3% to 7.7 billion barrels (December 31, 2010 - 7.5 billion barrels).
· All of Patos-Marinza's 2011 recoverable reserves estimates are from primary recovery methods only.
The 2011 reserves growth is primarily attributable to continued implementationof horizontal drilling, expansion of field development to enhance recovery andthe upgrade of 3P into 2P reserves and 2P into 1P reserves, based on extendedperiods of actual well and reservoir performance. The 49% and 43% respectiveincreases in Proved developed producing reserves (PDP) and total Provedreserves in 2011, plus the reduction of probable and also possible reservescompared to 2010, validates the reservoir performance and improvement inreserves classification achieved over the year. Significant additional reservesresulted from appraisal drilling of the Gorani and Driza formations throughhorizontal drilling in new areas of the field where no reserves had been bookedin previous years, which resulted in a direct migration of contingent resourceinto probable and possible reserves, resulting in the growth of 2P andreplenishment of the 3P category totals.
Patos-Marinza Contingent and Prospective Resources
RPS has also updated the Contingent and Prospective oil resource estimates forthe Patos-Marinza oilfield as at December 31, 2011. Contingent and prospectiveresources are based on similar recovery estimates as the main part of the fieldand analogous fields under primary horizontal and secondary water-flooddevelopment applied to the Driza and Marinza formations and thermal developmenttechnologies applied to the Gorani and Driza formations to optimize recovery inthe extension areas of the field.
The thermal pilot first steam injection commenced in the fourth quarter of 2011. A water flood pilot will be implemented in 2012.
Contingent resources for 2011 are 1.0 billion barrels, compared to 1.2 billion barrels in 2010.
Prospective resources for 2011 are currently being updated and will be reported later on this month. Prospective resources in 2010 were 540 million barrels.
Ku§ova Field
The water flood pilot started in 2011 with one injector and two producers withplans to expand the program in 2012. Field reserves remain relatively unchangedat:· 1P reserves 3.2 million barrels.· 2P reserves 10.8 million barrels.· 3P reserves 31.1 million barrels.· OOIP resource estimate remains unchanged at 297 million barrels.
Gross Oil Reserves - Using Forecast Prices (MMbbls)
2011 2010 Patos- Total Total Marinza Ku§ova Albania Albania % Proved Developed Producing 25.8 - 25.8 17.3 49 Developed Non-Producing - - - - - Undeveloped 143.4 3.2 146.6 102.9 42 Total Proved 169.2 3.2 172.4 120.2 43 Probable 87.1 7.6 94.7 117.4 -19 Total Proved Plus Probable 256.3 10.8 267.1 237.6 12 Possible 138.9 20.3 159.2 189.0 -16 Total Proved, Probable & 395.2 31.1 426.3 426.6 0 Possible
Patos-Marinza Contingent and Prospective Resources
The Contingent resources (C2) on a P50 basis are 1.0 billion barrels. The contingencies are (a) confirmation by field testing of the well performance demonstrating commercial productivity of the zones, and (b) further definition of development plans using viable recovery processes to commercialize the resources. There is no certainty of commercial viability to produce any portion of the resources.
Prospective resource figures are still under determination.
Total Net Present Value (NAV) of Total Company Reserves (after Tax, discountedat 10%)· 1P reserves US$1.0 billion ($4.10/share)· 2P reserves US$2.0 billion ($7.97/share)· 3P reserves US$3.7 billion ($14.91/share)
Basic shares outstanding of as of December 31, 2011 were approximately 248 million (273 million diluted).
Net Present Value at 10% - After Tax Using Forecast Prices (US$ millions)
2011 2010 Patos- Total Total Marinza Ku§ova Albania Albania % Proved Developed Producing 347 - 347 220 58 Developed Non-Producing - - - - - Undeveloped 647 22 669 729 -8 Total Proved 994 22 1,016 949 7 Probable 854 103 957 1,019 -6 Total Proved Plus Probable 1,848 125 1,973 1,968 0 Possible 1,377 344 1,721 1,584 9 Total Proved, Probable & 3,225 469 3,694 3,552 4 Possible
The slight reduction in Proved undeveloped reserves (PUD) and Probable reserves discounted value is primarily due to increased capital in these two categories.
Values are based on RPS (Patos-Marinza) and D&M (Ku§ova) January 1, 2012 price forecast tables summarized below:
Reserve Auditor Price Decks - Dated Brent
BRENT Oil Price Forecast US$/bbl
Year RPS D&M 2012 $110.00 $106.00 2013 $105.50 $104.67 2014 $101.00 $105.42 2015 $100.80 $106.25 2016 $102.80 $106.08 2017 $104.90 $108.20 2018 $107.00 $110.36 2019 $109.10 $112.57 2020 $111.30 $114.82 2021 $113.50 $117.12 2022 $115.80 $119.42 2023 $118.10 $121.85 2024 $120.50 +2.0% Thereafter The average realised sales price the Company is receiving for crude oil fromthe Patos-Marinza and Ku§ova oilfields are at a discount to Brent. Currently,the average sales price for domestic and export sales is approximately 70% ofBrent (an increase of 8% over 2011 average realised pricing of 65%), but mayincrease throughout 2012 on confirmation from spot contracts that have beenindicated at 75 to 76% of Brent.
Finding and Development Costs (F&D)
In the 2P development case, the horizontal well count has increased from 624wells in the previous year's projected full case development program of US$1.2billion to 910 wells in 2012 and beyond, representing total future capital ofUS$1.9 billion. With a weighted average horizontal well recovery of 220,000barrels in the 2P category (10% lower than the previous year's projectedaverage recovery) 74 new horizontal wells have been added to the existing Drizadevelopment plan. Additionally, the expansion of the drilling program into newareas and zones of the Patos-Marinza oilfield, notably in the Gorani formationand step-out areas in the Driza formation, has added 212 additional newhorizontal wells to the capital program representing new reserve additions.Total future undiscounted capital costs for Patos-Marinza and Ku§ova are nowprojected to be US$1.7 billion, US$2.0 billion and US$2.5 billion on a 1P, 2Pand 3P basis, respectively. This represents the following F&D costs, calculatedas total future development capital divided by barrels of recoverable reservesafter currently developed PDP reserves in each category:· 1P reserves US$11.50 per barrel.· 2P reserves US$8.48 per barrel.· 3P reserves US$6.18 per barrel."We are very pleased to report that for the last seven years, the Company hascontinued to grow reserves and production year over year and demonstrate itsability to upgrade the total reserves volumes into proved and probablecategories (63% in 2011 and 56% in 2010, of total reserves). Our objectiveremains focused on converting most of the remaining 3P reserves into 2P and 1Preserves over the next few years. While F&D costs have increased from 2010, theindividual well and project economic metrics remain strong. We anticipateadding significant primary reserves in future years by expanding developmentbeyond the current field boundaries. With successful thermal and waterfloodpilots and an economic source of natural gas, the Company can start to validatesignificant portions of the Contingent and Prospective resources intorecoverable reserves." said Abby Badwi, President and CEO of Bankers.
Operational Update
Due to active drilling activities at the rate of 10 wells per month withvarious objectives (reserves, production, and water disposal), variableproductivities and well declines, combined with having up to 10% of existingwells down on any given day for servicing, water space and other restrictiveactivities, the Company will commence reporting average production numbers overa specific period rather than current production on a certain day.Average production for January 2012 was 14,220 bopd, this rate is on target toachieve 5% to 7% production growth for the quarter over Q4-2011 production of13,833 bopd. Along with production additions, drilling in Q1 is focused onexpanding water disposal capacity and field delineation in the extension areas.Thermal well 5201 has been put on its first production cycle following a 3,000m3 water equivalent injection cycle at good injection rates over a 2 weekperiod and a subsequent soak period. This early first cycle injection andproduction data is required to develop the thermal model for the pilot area, inconjunction with recently completed core analysis data from the observationwell 5200. First cycle production and initial thermal model data will beavailable in the next operational update scheduled for April 2012.
The Block "F" survey for the "Ardenica" exploration well location is now completed with road and lease construction to commence shortly. The estimated spud date is late March.
Further details, including the February 2012 Corporate Presentation, are available on the Company's website www.bankerspetroleum.com.
Conference Call
The Management of Bankers will host a conference call on February 13, 2012 at 6:30am 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 operatorten minutes prior to the call at1-888-231-8191begin_of_the_skype_highlighting 1-888-231-8191
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or 1-647-427-7450begin_of_the_skype_highlighting 1-647-427-7450
end_of_the_skype_highlighting.
A live audio web cast of the conference call will also be available on Bankerswebsite at www.bankerspetroleum.com or by entering the following URL into yourweb browser http://www.newswire.ca/en/webcast/detail/918421/980617The 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 availableuntil February 27, 2012 by dialing1-855-859-2056begin_of_the_skype_highlighting 1-855-859-2056
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or 1-416-849-0833begin_of_the_skype_highlighting 1-416-849-0833
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and entering access code 21749043.
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Caution Regarding Forward-looking Information
Information in this news release respecting matters such as the expected futureproduction levels from wells, future prices and netback, work plans,anticipated total oil recovery of the Patos-Marinza and Ku§ova oilfieldsconstitute forward-looking information. Statements containing forward-lookinginformation express, as at the date of this news release, the Company's plans,estimates, forecasts, projections, expectations, or beliefs as to future eventsor results and are believed to be reasonable based on information currentlyavailable to the Company. Exploration for oil is a speculative business that involves a high degree ofrisk. The Company's expectations for its Albanian operations and plans aresubject to a number of risks in addition to those inherent in oil productionoperations, including: that Brent oil prices could fall resulting in reducedreturns and a change in the economics of the project; availability offinancing; delays associated with equipment procurement, equipment failure andthe lack of suitably qualified personnel; the inherent uncertainty in theestimation of reserves; exports from Albania being disrupted due to unplanneddisruptions; and changes in the political or economic environment.Production and netback forecasts are based on a number of assumptions includingthat the rate and cost of well takeovers, well reactivations and wellrecompletions of the past will continue and success rates will be similar tothose rates experienced for previous well recompletions/reactivations/development; that further wells taken over and recompleted will produce atrates similar to the average rate of production achieved from wellsrecompletions/reactivations/development in the past; continued availability ofthe necessary equipment, personnel and financial resources to sustain theCompany's planned work program; continued political and economic stability inAlbania; the existence of reserves as expected; the continued release byAlbpetrol of areas and wells pursuant to the Plan of Development and Addendum;the absence of unplanned disruptions; the ability of the Company tosuccessfully drill new wells and bring production to market; and general risksinherent 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 COO 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 APEGGA) 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 and has a 100% interest in the Ku§ova 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.
For further information:Abby BadwiPresident and Chief Executive Officer(403) 513-2694 begin_of_the_skype_highlighting (403)
513-2694 end_of_the_skype_highlighting
Doug UrchExecutive VP, Finance and Chief Financial Officer(403) 513-2691 begin_of_the_skype_highlighting (403)
513-2691 end_of_the_skype_highlighting
Mark HodgsonVP, Business Development(403) 513-2695 begin_of_the_skype_highlighting (403)
513-2695 end_of_the_skype_highlighting
Email: [email protected]: www.bankerspetroleum.comAIM NOMAD: Canaccord Genuity LimitedRyan Gaffney/ Henry Fitzgerald-O'Connor+44 20 7050 6500 begin_of_the_skype_highlighting +44 20 7050
6500 end_of_the_skype_highlighting
AIM JOINT BROKERS:Canaccord Genuity LimitedRyan Gaffney/ Henry Fitzgerald-O'Connor+44 20 7050 6500 begin_of_the_skype_highlighting +44 20 7050
6500 end_of_the_skype_highlighting
Macquarie Capital AdvisorsBen Colegrave/Paul Connolly+44 20 3037 5639 begin_of_the_skype_highlighting +44 20 3037
5639
(BNK) end_of_the_skype_highlighting
XLONRelated Shares:
BNK.L