Half-yearly Report

Bankers Petroleum Announces 2013 Second Quarter Financial and OperationalResults Free Cash Flow of $9 Million and Q3 Average Production to Date 18,300 bopd CALGARY, Aug. 14, 2013 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the"Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2013 second quarterfinancial and operational results. During the quarter, Bankers achieved itssecond consecutive quarter of free cash flow and record production levels. Results at a Glance Three months ended June 30 Six months ended June 30 ($000s, except as noted) 2013 2012 % 2013 2012 % change change Financial Oil revenue 131,838 98,587 34% 264,400 201,255 31% Net operating income 69,142 47,252 46% 142,307 100,723 41% Net income 13,024 11,253 16% 27,201 19,018 43% Per share - basic ($) 0.05 0.04 16% 0.11 0.08 41% - diluted ($) 0.05 0.04 16% 0.11 0.08 43% Funds generated from operations 61,717 43,159 43% 127,136 91,231 39% Per share - basic ($) 0.24 0.17 41% 0.50 0.36 39% Capital expenditures 52,389 52,632 - 99,716 115,333 (14%) Operating Average sales (bopd) 18,008 14,169 27% 17,310 13,724 26% Average price ($/barrel) 80.45 76.46 5% 84.39 80.57 5% Netback ($/barrel) 42.19 36.65 15% 45.42 40.33 13% Average Brent oil price ($/ 102.43 108.29 (5%) 107.50 113.61 (5%) barrel) June 30, 2013 December 31, June 30, 2012 2012 Cash and deposits 33,381 38,740 60,297 Working capital 116,656 88,799 112,022 Total assets 918,034 825,816 770,829 Long-term debt 97,864 97,158 95,793 Shareholders' equity 519,507 483,032 454,752 Highlights for the quarter and six months ended June 30, 2013 are: · Average oil production was 17,886 barrels of oil per day (bopd) forthe three months ended June 30, 2013, 6% higher than 16,919 bopd in the firstquarter of 2013 and 26% higher than 14,161 bopd in the second quarter of 2012.Average oil production for the third quarter to-date is approximately 18,300bopd. · Oil sales averaged 18,008 bopd for the second quarter of 2013, anincrease of 8% compared to 16,605 bopd for the previous quarter and an increaseof 27% compared to 14,169 bopd for the second quarter of 2012. For the sixmonths ended June 30, 2013, oil sales were 17,310 bopd, an increase of 26%compared to 13,724 bopd for the comparable 2012 period. · For the second quarter of 2013, revenue was $132 million ($80.45/bbl)compared to $133 million ($88.70/bbl) in the previous quarter and $99 million($76.46/bbl) in the second quarter of 2012. Revenue for the second quarter of2013 represented 79% of the Brent oil price of $102/bbl, compared to 79% of theBrent oil price of $113/bbl in the previous quarter and 71% of the Brent oilprice of $108/bbl in the second quarter of 2012. · Royalties to the Albanian Government and related entities were $22million (16% of revenue) for the second quarter of 2013 compared to $17 million(17% of revenue) for the same quarter of 2012. Total royalties were $45million (17% of revenue) and $36 million (18% of revenue) for the six monthsended June 30, 2013 and 2012, respectively. · For the three and six months periods ended June 30, 2013, operating,sales and transportation costs, originating from Albanian-based companies andtheir employees, were $41 million and $77 million, respectively, compared to$34 million and $64 million for the comparable periods of 2012. · The Company recorded net operating income (netback) of $69 million($42.19/bbl) in the second quarter of 2013, compared to $73 million ($48.96/bbl) in the previous quarter and $47 million ($36.65/bbl) in the second quarterof 2012. Net operating income was $142 million ($45.42/bbl) for the six monthsended June 30, 2013, a 41% increase compared to $101 million ($40.33/bbl) inthe comparable 2012 period. · For the second quarter of 2013, funds generated from operations were$62 million, compared to $65 million for the previous quarter and $43 millionfor the same period of 2012. · Capital expenditures were $52 million in the second quarter of 2013.The Company drilled 39 wells during the quarter, comprised of 35 horizontalproduction wells and four horizontal lateral re-drill wells in the main area ofthe Patos-Marinza field. In the second quarter of 2012, capital expenditureswere $53 million. · The Company continues to maintain a strong financial position at June30, 2013 with cash of $33 million and working capital of $117 million. At June30, 2013, the Company had drawn $115 million of its $230 million approvedcredit facilities. Working capital for December 31, 2012 and June 30, 2012 was$89 million and $112 million, respectively. · Both the International Finance Corporation (IFC) and European Bankfor Reconstruction and Development (EBRD) have approved an extension of theCompany's existing credit facility to September 2020. No repayments arerequired until September 2017, from which time the facility amount willdecrease by 25% annually. Collectively, the revolving loan facilities willincrease to $200 million from the existing $100 million. Currently, $120million is available and the additional $80 million will be available as theCompany continues to maintain its proved and probable reserves base and isconditional upon Brent oil prices remaining above $70/bbl. · The Company was successful in setting aside a separate assessment ofexcise tax on its importation and use of diluents. The Courts have also ruledin favor of the Company for other cases heard, including the carbon andcirculation taxes on diluent imports, which resulted in assessments to theCompany totalling approximately $25 million. The Company is now preparing tocontinue its defence at various levels of appeals. Outlook The average third quarter 2013 production to date from the Patos-Marinzaoilfield in Albania is approximately 18,300 bopd, 2% higher than the secondquarter average. The Company is pleased with performance of the horizontal drilling programwhich continues to yield strong results. For the second half of 2013, theCompany will continue to focus on development drilling in the North-Centralareas of the Patos-Marinza field with an estimated 30 horizontal wells perquarter adding to production levels. Two water disposal wells are planned forlate in the third quarter and into the fourth quarter to provide capacityexpansion for growth. In addition, two (2) to four (4) wells are projected fordelineation in the outlying areas of the field in the fourth quarter. The expansion of water flood and polymer flood patterns continues withadditional wells to be converted to injection in the second half of 2013. Byyear-end the Company will have three (3) water-flood patterns in the upperMarinza reservoir with up to seven (7) injectors and three (3) polymer-floodpatterns in the lower Driza reservoir sands with up to six (6) injectors inplace with response expected in 2014. In the second half of 2013, the Company will ramp up spending on surfacefacilities including the addition of a satellite treatment facility and tankstorage expansion to increase treatment capacity and construction of flow-linesto reduce trucking within the field where justified. Drilling of two (2) wells in Kucova is projected in the fourth quarter of 2013to test production and collect fluid and reservoir information. In addition,existing adjacent wells are scheduled for take-over from Albpetrol for furtherevaluation. "I continue to be pleased with the operational success of the company and ourability to meet or exceed our production guidance for five consecutivequarters. The Board has now approved the potential acquisition of a sixthdrilling rig which, pending availability, should enable Bankers to affirm thehigh-end of our annual guidance. We look forward to continued reliable,disciplined growth," said David French, President and CEO of Bankers Petroleum. BANKERS PETROLEUM LTD. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited, expressed in thousands of US dollars, except per share amounts) Three months ended Six months ended June 30 June 30 2013 2012 2013 2012 Revenues $ 131,838 $ 98,587 $ 264,400 $ 201,255 Royalties (21,673) (17,214) (44,991) (36,368) 110,165 81,373 219,409 164,887 Unrealized gain (loss) on financial commodity contract (6) 244 (1,380) (2,965) 110,159 81,617 218,029 161,922 Operating expenses 22,291 19,038 43,445 36,470 Sales and transportation expenses 18,732 15,083 33,657 27,694 General and administrative expenses 4,513 3,508 10,468 7,618 Depletion and depreciation 24,438 14,067 47,635 27,744 Share-based payments 3,103 1,447 6,361 5,683 73,077 53,143 141,566 105,209 37,082 28,474 76,463 56,713 Net finance expense 3,616 1,860 5,556 4,717 Income before income tax 33,466 26,614 70,907 51,996 Deferred income tax expense (20,442) (15,361) (43,706) (32,978) Net income for the period 13,024 11,253 27,201 19,018 Other comprehensive income (loss) Currency translation adjustment (510) (505) (862) 1 Comprehensive income for the period $ 12,514 $ 10,748 $ 26,339 $ 19,019 Basic earnings per share $ 0.051 $ 0.044 $ 0.107 $ 0.076 Diluted earnings per share $ 0.051 $ 0.044 $ 0.107 $ 0.075 BANKERS PETROLEUM LTD. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited, expressed in thousands of US dollars) ASSETS June 30 December 31 2013 2012 Current assets Cash and cash equivalents $ 26,272 $ 33,740 Restricted cash 7,109 5,000 Accounts receivable 59,399 35,603 Inventory 34,423 23,517 Deposits and prepaid expenses 40,215 30,265 Financial commodity contract 170 1,550 167,588 129,675 Non-current assets Long-term receivable 10,261 11,150 Property, plant and equipment 735,912 681,399 Exploration and evaluation assets 4,273 3,592 $ 918,034 $ 825,816 LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 40,022 $ 38,787 Current portion of long-term debt 10,910 2,089 50,932 40,876 Non-current liabilities Long-term debt 97,864 97,158 Decommissioning obligation 18,022 16,747 Deferred tax liabilities 231,709 188,003 398,527 342,784 SHAREHOLDERS' EQUITY Share capital 337,148 334,764 Contributed surplus 77,187 69,435 Currency translation reserve 6,500 7,362 Retained earnings 98,672 71,471 519,507 483,032 $ 918,034 $ 825,816 BANKERS PETROLEUM LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, expressed in thousands of US dollars) Three months ended Six months ended June 30 June 30 2013 2012 2013 2012 Cash provided by (used in): Operating activities Net income for the period $ 13,024 $ 11,253 $ 27,201 $ 19,018 Depletion and depreciation 24,438 14,067 47,635 27,744 Accretion of long-term debt 829 1,199 1,978 2,326 Accretion of decommissioning 250 202 491 397obligation Unrealized foreign exchange (268) (126) (448) 120(gain) loss Deferred income tax expense 20,442 15,361 43,706 32,978 Share-based payments 3,103 1,447 6,361 5,683 Unwinding of discount of (700) - (1,441) -long-term receivable Revaluation loss of long-term 593 - 273 -receivable Unrealized (gain) loss on 6 (244) 1,380 2,965financial commodity contract 61,717 43,159 127,136 91,231 Change in long-term 202 - 2,057 -receivable Change in non-cash working (7,137) (6,775) (44,949) (12,614)capital 54,782 36,384 84,244 78,617 Investing activities Additions to property, plant (51,842) (51,306) (99,035) (113,451)and equipment Additions to exploration and (547) (1,326) (681) (1,882)evaluation assets Restricted cash (2,109) - (2,109) - Change in non-cash working 968 (3,467) 1,532 (4,109)capital (53,530) (56,099) (100,293) (119,442) Financing activities Issue of shares for cash 1,309 31 1,410 12,177 Financing costs (1,994) - (1,994) (750) Change in long-term debt (9,136) 2,993 9,201 35,817 (9,821) 3,024 8,617 47,244 Foreign exchange loss on cashand cash equivalents (6) (162) (36) (135) Increase (decrease) in cash (8,575) (16,853) (7,468) 6,284and cash equivalents Cash and cash equivalents, 34,847 72,150 33,740 49,013beginning of period Cash and cash equivalents, $ 26,272 $ 55,297 $ 26,272 $ 55,297end of period Interest paid $ 2,566 $ 1,521 $ 2,788 $ 1,722 Interest received $ 73 $ 218 $ 118 $ 278 Supporting Documents The full Management Discussion and Analysis (MD&A), Financial Statements andupdated March corporate presentation are available on www.bankerspetroleum.com.The MD&A and Financial Statements will also be available on www.sedar.com. Updated Corporate Presentation For additional information on this operational update, please see the August2013 version of the Company's corporate presentation atwww.bankerspetroleum.com. --------- 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 Kuçova 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 reactivations and well recompletions of the pastwill continue and success rates and production rates will be similar to thoserates experienced for previous well recompletions and reactivations; continuedavailability of the necessary equipment, personnel and financial resources tosustain the Company's planned work program; continued political and economicstability in Albania; the existence of reserves as expected; the continuedrelease by Albpetrol of areas and wells pursuant to the Plan of Development andAddendum; 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 thatfinancing, equipment and personnel will be available when required and onreasonable terms, none of which are assured and are subject to a number ofother risks and uncertainties described under "Risk Factors" in the Company'sAnnual Information Form and Management's Discussion and Analysis, which areavailable on SEDAR under the Company's profile at www.sedar.com. There can be no assurance that forward-looking statements will prove to beaccurate. Actual results and future events could differ materially from thoseanticipated in such statements. Readers should not place undue reliance onforward-looking information and forward looking statements. About Bankers Petroleum Ltd. Bankers Petroleum Ltd. is a Canadian-based oil and gas exploration andproduction company focused on developing large oil and gas reserves. InAlbania, Bankers operates and has the full rights to develop the Patos-Marinzaheavy oilfield and has a 100% interest in the Kuçova oilfield, and a 100%interest in Exploration Block F. Bankers' shares are traded on the TorontoStock Exchange and the AIM Market in London, England under the stock symbolBNK. SOURCE: Bankers Petroleum Ltd. For further information: David FrenchPresident and Chief Executive Officer(403) 513-6930 Doug UrchExecutive VP, Finance and Chief Financial Officer(403) 513-2691 Mark HodgsonVP, Business Development(403) 513-2695 Email: [email protected]: www.bankerspetroleum.com AIM NOMAD:Canaccord Genuity LimitedHenry Fitzgerald-O'Connor+44 0 207 523 8000 AIM BROKER:FirstEnergy Capital LLPHugh Sanderson / David van Erp+44 0 207 448 0200

(BNK.)