Bankers Petroleum announces 2016 second quarter financial and operational results

CALGARY, Aug. 11, 2016 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to provide its 2016 second quarter financial and operational results. 

During the second quarter, Bankers achieved a cash margin of US$11.03 per barrel. All amounts listed in this news release are in US dollars unless otherwise stated.

Results at a Glance			Three months ended June 30				Six months ended June 30
(US$000s, except as noted)			2016		2015		2016		2015
Financial
	Oil revenue		40,989		85,707		74,080		158,111
	Net operating income		12,383		41,503		15,831		66,371
	Net loss		(21,827)		(10,462)		(33,798)		(9,583)
		Basic (US$/share)	(0.08)		(0.04)		(0.13)		(0.04)
		Diluted (US$/share)	(0.08)		(0.04)		(0.13)		(0.04)
	Funds generated from operations		5,387		50,230		6,834		75,120
		Basic (US$/share)	0.02		0.19		0.03		0.29
	Capital expenditures		7,371		37,567		20,047		87,512
Operating
	Average production (bopd)		15,934		20,050		16,649		19,909
	Average sales (bopd)		15,023		19,626		16,152		19,953
	Average Brent oil price (US$/barrel)		45.59		61.88		39.81		57.84
	Average realized price (US$/barrel)		29.98		47.99		25.20		43.78
	Netback (US$/barrel)		9.05		23.24		5.39		18.38
	Cash margin (US$/barrel)		11.03		29.52		8.84		26.39
				June 30, 2016		December 31, 2015		June 30, 2015
Cash and restricted cash				26,080		69,141		39,589
Working capital				83,885		159,868		160,909
Total assets				1,192,977		1,261,390		1,257,837
Long-term debt				94,826		98,628		98,459
Shareholders' equity				686,064		719,294		710,245

Highlights for the period ended June 30, 2016 are:

Arrangement Agreement:

On March 19, 2016, Bankers Petroleum Ltd. entered into a definitive agreement (the "Arrangement Agreement") with an affiliate of Geo-Jade Petroleum Corporation ("Geo-Jade"), for the purchase of all the issued and outstanding common shares of the Company ("Bankers Shares") at a cash price of C$2.20 per Bankers Share.  The transaction will be effected by the way of a plan arrangement under the Business Corporations Act (Alberta).  All Directors and Officers of Bankers are committed to this transaction and have executed support agreements. At a May 31, 2016 Special Meeting, Bankers shareholders overwhelmingly approved the transaction, and subsequently, the Alberta Court of Queen's Bench provided its authorization. Additional regulatory approvals have been received pursuant to the Investment Canada Act, the People's Republic of China and the Republic of Albania.  The transaction is expected to close before September 30, 2016 and remains subject to the regulatory approval of the Chinese State Administration of Foreign Exchange ("SAFE").  Failure to receive the SAFE approval by September 30, 2016 would entitle Bankers to the US$20 million reverse termination fee should Bankers terminate the Arrangement Agreement due to such failure.  Following successful completion of the transaction, Bankers Shares will be delisted from the Toronto Stock Exchange ("TSX") and the AIM market of the London Stock Exchange.

Operational Highlights:

• Average oil production for the three months ended June 30, 2016 was 15,934 barrels of oil per day ("bopd") compared to 17,363 bopd in the previous quarter and 20,050 bopd in the second quarter of 2015. For the six months ended June 30, 2016, average oil production was 16,649 bopd compared to 19,909 bopd for the same period in 2015.
• Oil sales for the second quarter of 2016 averaged 15,023 bopd compared to 17,280 bopd for the previous quarter and 19,626 bopd for the second quarter of 2015. Crude oil inventory at June 30, 2016 increased to 350,000 barrels compared to 260,000 barrels at March 31, 2016. For the six months ended June 30, 2016, oil sales were 16,152 bopd compared to 19,953 bopd for the same period in 2015.
• Capital expenditures during the second quarter of 2016 were $7 million. The Company did not drill any wells during the quarter. Capital expenditures were $13 million for the previous quarter and $38 million for the second quarter of 2015.

Product Margin Highlights:

• For the three months and six months ended June 30, 2016, operating costs and sales and transportation ("S&T") costs, originating from Albanian-based companies and their employees, were $23 million ($16.58/bbl) and $48 million ($16.35/bbl), respectively, reduced from $32 million ($17.86/bbl) and $69 million ($19.18/bbl) for the same periods in 2015.
• In the second quarter of 2016, net operating income (netback) was $12 million ($9.05/bbl) compared to $3 million ($2.19/bbl) for the previous quarter and $42 million ($23.24/bbl) for the second quarter of 2015. Net operating income for the six months ended June 30, 2016 was $16 million ($5.39/bbl) compared to $66 million ($18.38/bbl) for the same period in 2015.
• Cash margin for the second quarter of 2016 was $11.03/bbl compared to $6.91/bbl in the previous quarter and $29.52/bbl in the second quarter of 2015. Cash margin represents netback inclusive of the realized gain on commodity contracts. Cash margin for the six months ended June 30, 2016 was $8.84/bbl compared to $26.39/bbl for the same period in 2015.

Financial Highlights:

• Revenue was $41 million ($29.98/bbl) for the second quarter of 2016, compared to $33 million ($21.04/bbl) in the previous quarter and $86 million ($47.99/bbl) in the second quarter of 2015. Field price realization represented 66% of the Brent oil benchmark price ($45.59/bbl) for the second quarter of 2016 compared to 62% of the Brent oil benchmark price ($33.94/bbl) in the previous quarter and 78% of the Brent oil benchmark price ($61.88/bbl) in the second quarter of 2015. The increase, as a percentage of Brent, compared to the previous quarter was mainly due to improvements in world commodity prices, therefore reducing the pressure of competitive pricing differential during the second quarter of 2016. For the six months ended June 30, 2016, revenue was $74 million ($25.20/bbl) compared to $158 million ($43.78/bbl) for the same period in 2015.
• Royalties to the Albanian Government and related entities during the second quarter of 2016 were $6 million (14% of revenue) compared to $4 million (13% of revenue) for the previous quarter and $12 million (14% of revenue) for the second quarter of 2015. For the six months ended June 30, 2016, royalties were $10 million (14% of revenue) compared to $22 million (14% of revenue) for the same period in 2015.
• Funds generated from operations for the second quarter of 2015 were $5 million ($0.02 per share) compared to $1 million ($0.01 per share) for the previous quarter and $50 million ($0.19 per share) for the second quarter of 2015. Funds generated from operations for the six months ended June 30, 2016 were $7 million ($0.03 per share) compared to $75 million ($0.29 per share) for the same period in 2015.
• The Company continues to maintain a stable financial position at June 30, 2016, with cash and restricted cash of $26 million and working capital of $84 million. At June 30, 2016, the Company had drawn $109 million of its approved credit facilities. Working capital for December 31, 2015 and June 30, 2015 was $160 million and $161 million, respectively.
• At June 30, 2016, Bankers hedged 6,000 bopd under costless collar contracts with an average floor of $50.84/bbl (all prices are referenced to Dated Brent) and an average ceiling of $52.90/bbl for the balance of 2016. In the second quarter of 2016, the hedge program generated proceeds of $2 million compared to $7 million in the first quarter of 2016. The 2016 hedge program at June 30, 2016, is valued at $2 million. These contracts are designed to protect Bankers against further volatility in the oil prices in 2016.

Outlook:

Production in the third quarter of 2016 to date is 15,358 bopd, 3% lower than the second quarter average of 15,934 bopd.  The Company is focused on optimization of current production levels and is monitoring the economic return of all wells in accordance with the current oil price environment.

In the third quarter, Bankers' infrastructure and facilities projects include commissioning the inlet system and vapor recovery unit at satellite facility Pad D, vapor recovery unit at Pad H and the west emulsion gathering system.  In addition, the Company is focusing on design and implementation of a sour oil treating project aimed at sweetening sour production from various reservoir zones throughout the field.

Bankers continues to prioritize its polymer and water flood development, with an additional seven (7) well conversions planned throughout the remainder of 2016 to bring the total for the year to sixteen (16) conversions.  The producing water and polymer patterns are performing well and Bankers is continuing to monitor production from the fifty-eight (58) polymer and four (4) water flood patterns implemented to date.

Due to continued pressure on oil prices, Bankers anticipates receiving average cash realizations equivalent to 67 to 68% of Dated Brent for the export market for the remainder of 2016. Additionally, Bankers is in discussion for potential domestic crude oil sales contracts for a portion of its volumes and expects to receive equivalent pricing to the export market after accounting for reduced transportation and export related fees.

Supporting Documents:

The full Management Discussion and Analysis ("MD&A"), Financial Statements and updated corporate presentation are available on our website, www.bankerspetroleum.com. The MD&A and Financial Statements will also be available on www.sedar.com.

BANKERS PETROLEUM LTD.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited, expressed in thousands of US dollars, except per share amounts)
			Three months ended June 30				Six months ended June 30
			2016		2015		2016		2015
Revenues		$	40,989	$	85,707	$	74,080	$	158,111
Royalties			(5,943)		(12,306)		(10,174)		(22,450)
Revenue, net of royalties			35,046		73,401		63,906		135,661
Realized gain on financial commodity contracts			2,713		9,856		10,136		23,986
Unrealized loss on financial commodity contracts			(14,031)		(20,798)		(17,831)		(22,837)
Total operating revenues			23,728		62,459		56,211		136,810
Operating expenses			16,748		22,132		34,465		45,627
Sales and transportation expenses			5,915		9,766		13,610		23,663
General and administrative expenses			7,514		5,188		14,655		9,840
Contract settlement expenses			-		40		-		395
Depletion and depreciation			24,640		30,830		51,298		60,949
Share-based compensation			169		721		421		1,903
Total expenses			54,986		68,677		114,449		142,377
Operating loss			(31,258)		(6,218)		(58,238)		(5,567)
Net finance expense			(4,174)		(1,590)		(4,338)		(10,478)
Loss before income tax			(35,432)		(7,808)		(62,576)		(16,045)
Income tax recovery (expense)
Current			1,032		-		765		-
Deferred			12,573		(2,654)		28,013		6,462
			13,605		(2,654)		28,778		6,462
Net loss for the period			(21,827)		(10,462)		(33,798)		(9,583)
Other comprehensive income (loss)
Currency translation adjustment			(787)		115		(311)		(1,305)
Comprehensive loss for the period		$	(22,614)	$	(10,347)	$	(34,109)	$	(10,888)
Basic loss per share		$	(0.083)	$	(0.040)	$	(0.129)	$	(0.037)
Diluted loss per share		$	(0.083)	$	(0.040)	$	(0.129)	$	(0.037)

 

BANKERS PETROLEUM LTD.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited, expressed in thousands of US dollars)
ASSETS
			June 30 2016		December 31 2015
Current assets
	Cash and cash equivalents		$	20,018	$	51,963
	Restricted cash			6,062		17,178
	Accounts receivable			45,578		56,592
	Income tax receivable			580		-
	Inventory			6,082		4,597
	Deposits and prepaid expenses			57,063		67,514
	Financial commodity contracts			2,169		20,000
				137,552		217,844
Non-current assets
	Long-term deposits			42,593		-
	Property, plant and equipment			1,001,731		1,034,791
	Exploration and evaluation assets			11,101		8,755
			$	1,192,977	$	1,261,390
LIABILITIES
Current liabilities
	Accounts payable and accrued liabilities		$	42,134	$	39,156
	Income tax liability			-		765
	Current portion of long-term debt			11,533		18,055
				53,667		57,976
Non-current liabilities
	Long-term debt			94,826		98,628
	Decommissioning obligation			30,025		29,264
	Deferred tax liabilities			328,395		356,228
				506,913		542,096
SHAREHOLDERS' EQUITY
Share capital				365,045		365,045
Contributed surplus				95,178		94,299
Currency translation reserve				1,206		1,517
Retained earnings				224,635		258,433
				686,064		719,294
			$	1,192,977	$	1,261,390

BANKERS PETROLEUM LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, expressed in thousands of US dollars)
			Three months ended June 30					Six months ended June 30
				2016		2015		2016		2015
Cash provided by (used in):
Operating activities
	Net loss for the period		$	(21,827)	$	(10,462)	$	(33,798)	$	(9,583)
	Depletion and depreciation			24,640		30,830		51,298		60,949
	Accretion of long-term debt			233		250		453		500
	Accretion of decommissioning obligation			357		321		709		636
	Unrealized foreign exchange (gain) loss			1,389		5,118		(1,302)		4,340
	Current income tax recovery			(1,032)		-		(765)		-
	Deferred income tax (recovery) expense			(12,573)		2,654		(28,013)		(6,462)
	Share-based compensation			169		721		421		1,903
	Unrealized loss on financial commodity contracts			14,031		20,798		17,831		22,837
				5,387		50,230		6,834		75,120
	Change in long-term deposits			(42,593)		-		(42,593)		-
	Change in non-cash working capital			27,892		(26,856)		30,810		(19,017)
				(9,314)		23,374		(4,949)		56,103
Investing activities
	Additions to property, plant and equipment			(7,037)		(37,567)		(17,701)		(87,385)
	Additions to exploration and evaluation assets			(334)		-		(2,346)		(127)
	Restricted cash			8,976		(181)		11,116		(772)
	Change in non-cash working capital			1,735		(7,216)		(7,502)		(12,934)
				3,340		(44,964)		(16,433)		(101,218)
Financing activities
	Issue of shares for cash			-		511		-		722
	Change in long-term debt			(11,703)		2,505		(10,622)		10,267
				(11,703)		3,016		(10,622)		10,989
Foreign exchange gain (loss) on cash and cash equivalents				(263)		140		59		(93)
Decrease in cash and cash equivalents				(17,940)		(18,434)		(31,945)		(34,219)
Cash and cash equivalents, beginning of period				37,958		52,251		51,963		68,036
Cash and cash equivalents, end of period			$	20,018	$	33,817	$	20,018	$	33,817
Interest paid			$	3,495	$	3,095	$	3,717	$	3,140
Interest received			$	158	$	55	$	244	$	151

BANKERS PETROLEUM LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited, expressed in thousands of US dollars, except number of common shares)
		Number of common shares	Share capital		Contributed surplus		Currency translation reserve		Retained earnings		Total
Balance at December 31, 2014		261,084,393	$	363,670	$	86,409	$	4,410	$	262,047	$	716,536
Share-based compensation		-		-		3,875		-		-		3,875
Options exercised		339,935		1,375		(653)		-		-		722
Net loss for the period		-		-		-		-		(9,583)		(9,583)
Currency translation adjustment		-		-		-		(1,305)		-		(1,305)
Balance at June 30, 2015		261,424,328	$	365,045	$	89,631	$	3,105	$	252,464	$	710,245
Share-based compensation		-		-		4,668		-		-		4,668
RSUs exercised		133,056		-		-		-		-		-
Net income for the period		-		-		-		-		5,969		5,969
Currency translation adjustment		-		-		-		(1,588)		-		(1,588)
Balance at December 31, 2015		261,557,384	$	365,045	$	94,299	$	1,517	$	258,433	$	719,294
Share-based compensation		-		-		879		-		-		879
Net loss for the period		-		-		-		-		(33,798)		(33,798)
Currency translation adjustment		-		-		-		(311)		-		(311)
Balance at June 30, 2016		261,557,384	$	365,045	$	95,178	$	1,206	$	224,635	$	686,064

The information communicated in this announcement is inside information for the purposes of Article 7 of Market Abuse Regulation 596/2014 ("MAR").

Caution Regarding Forward-looking Information

Certain information set forth in this press release, including information and statements which may contain words such as "could", "plans", "intends" "should", "anticipate", "expects", "will", "propose", "opportunity", "future", "continue", and similar expressions and statements relating to matters that are not historical facts, contain forward-looking statements, including but not limited to statements regarding:  the proposed transaction and the anticipated timing of closing, the timing of receipt of required regulatory approvals and the delisting of the Bankers Shares following completion of the transaction. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Bankers' control. Completion of the Arrangement is subject to a number of conditions, including receipt of the approvals required by the People's Republic of China, and other conditions which are typical for transactions of this nature. Failure to satisfy any of these conditions or the emergence of a superior proposal may result in the termination of the Arrangement Agreement. The foregoing list is not exhaustive. Additional information on these and other risks that could affect completion of the Arrangement is set forth in the Management Information Circular of the Company dated April 19, 2016, which is available on SEDAR at www.sedar.com. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The actual results, performance or achievement of Bankers could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Bankers will derive therefrom. Bankers disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

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 and Eastern Europe.  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".  In 2015 Bankers acquired an 85% interest in the rights to explore the Püspökladány Block concession within the Pannonian Basin located in north eastern Hungary.  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.

David French, President and Chief Executive Officer, [phone]; Doug Urch, Executive VP, Finance and Chief Financial Officer, [phone]; Laura Bechtel, Investor Relations & Corporate Communications Specialist, [phone]; Email: [email protected]; Website: www.bankerspetroleum.com; AIM NOMAD: Canaccord Genuity Limited, Henry Fitzgerald-O'Connor, [phone]; AIM BROKER: FirstEnergy Capital LLP, Hugh Sanderson / David van Erp, [phone]