LONDON (Alliance News) - Bankers Petroleum Ltd shares dropped on Friday after it said its net income in the first nine months of 2015 was down 94% from a year ago whilst revenue halved due to lower oil prices and production.
Bankers shares were untraded at 110.50 pence per share on Friday.
The oil producer operating in Albania said revenue in the first nine months of 2015 fell by more than half to USD229.8 million from USD474.5 million a year earlier, leading its net operating income to fall by two-thirds to USD99.9 million from USD291.1 million.
That in turn caused net income to plummet to only GBP4.8 million from the USD77.8 million reported a year earlier.
Production in the first nine months declined 4.3% to 19,905 barrels of oil per day from the 20,809 barrels being produced daily a year ago, whilst sales shrunk 3.9% to 19,878 barrels per day from 20,696 barrels.
However, the major cause of Bankers Petroleum's vanishing net income was the fall in oil prices, with the company only achieving an average of USD42.34 a barrel in the period compared to USD83.97 per barrel a year ago.
To put that into perspective, the average Brent price over the first nine months of 2015 was USD55.31 a barrel. The average Brent price dropped 48% from a year earlier, whilst Bankers' average price was down 50%.
The company could have suffered more from the fall in prices if it did not have hedges in place. Bankers said it made USD40.0 million more in the period using its hedges than it would have made without them. That equates to the company making around USD7.44 more per barrel than it would have got under spot prices.
However, the overall result saw margins squeezed, with Bankers making a netback of USD18.41 per barrel in the period, which is down 64% from USD53.51 a year ago. Its cash margin fell 48% year-on-year to USD26.75 a barrel from USD51.85.
Operating, sales and transportation costs totalled USD97.0 million, equating to USD17.90 a barrel, which is down from the USD113.0 million, or USD20.03 a barrel, reported a year ago, partially offsetting the lower netback and cash margin.
In the first three quarters, Bankers generated USD117.2 million in funds from its operations, which is down 55% from USD261.4 million a year ago.
In response to the prevailing market conditions, Bankers, like many of its peers, has focused on reducing costs and expenditure. Capital expenditure in the first nine months of 2015 totalled USD119.4 million, almost half the USD219.0 million spent a year earlier.
Bankers said it has reduced its costs by USD8.00 a barrel since 2013, not nearly enough to offset the dramatic fall in oil prices since the middle of 2014.
"We have reduced our costs by USD8 per barrel since 2013 and reached combined levels of operating costs and sales and transportation costs not rivalled since 2009. Our improved cost structure, along with the success of our enhanced oil recovery program gives Bankers the ability to achieve more with less capital headed into 2016," said Chief Executive David French.
Looking specifically at the third quarter of 2015, revenue was down 55% year-on-year to USD71.6 million from USD158.9 million, leading net income to fall 44% to USD14.4 million from USD25.6 million.
Production and sales in the third quarter of 2015 were both down 10% from a year earlier at 19,600 barrels and 19,730 barrels per day respectively. In line with the first nine months of the year, oil prices in the third quarter were half of what they were a year ago.
Looking forward, the company said production has fallen even further in the fourth quarter, averaging around 18,300 barrels of oil per day due to temporary interruptions caused by heavy rainfall.
By the end of the year, Bankers is expecting to achieve an exit rate of 18,500 to 19,000 barrels of oil a day.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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