BNK.L Regulatory News (BNK)

Bankers Petroleum Announces 2015 Capital Budget and Work Program Fully Funded US$218 Million Capital Programand Accelerated Enhanced Oil Recovery Program CALGARY, Dec. 12, 2014 /CNW/ - Bankers Petroleum Ltd. ("Bankers" or the"Company") (TSX: BNK, AIM: BNK) is pleased to announce its 2015 capital programof US$218 million (all amounts referenced below are in US dollars). The capitalprogram will be fully supported by funds generated from operations and cashresources. The budget has been approved by the Company's Board of Directorsand submitted to the Albanian authorities for their approval. The 2015 capital program will continue to focus on three main strategic goals:execution of the primary horizontal drilling program, acceleration of thesecondary recovery program, and targeted capital for operational improvementsto reduce costs and provide infrastructure and facilities necessary to supportthe future growth of the Company. David French, President and CEO, commented, "We have put together a strategicfully funded capital program that maintains a solid level of drilling activitywhile investing in the future growth of Bankers through enhanced oil recovery(EOR). "Over the past several years Bankers has built a business with a clean balancesheet and operational flexibility to withstand softer commodity prices. Whencombining our 2015 sales program and hedge position, the Company anticipates acash margin of around $30/bbl at $70 Brent with capability to deliver over $25/bbl stress tested at $60/bbl Dated Brent. This budget builds upon our low-costdevelopment of horizontal wells, and continues our commitment to reservesgrowth and future volumes through expansion of polymer flooding. We believe ourfinancial discipline, reservoir management, and operational capability willserve us well in this volatile market." CAPITAL PROGRAM FUNDING The 2015 capital program utilizes a $70 per barrel average annual Brent oilprice forecast. The Company expects to fully fund the 2015 capital program withfunds generated from operations and cash resources. 2015 Sales Contracts Bankers is pleased to announce that it expects to receive average cashrealization equivalent of 82% of Dated Brent price realization; inclusive ofboth the export and domestic agreements as well as the existing hedge atcurrent average Brent forecast of $70/bbl. The Company has committed 55% of next year's crude oil volumes to exportcounterparties in the Mediterranean and the United States. An average realizedprice of 79 - 80% of Dated Brent is projected for all export volumes on termcontracts. Bankers has also reached an agreement to sell 45% of its 2015 volumes to thedomestic market at 74% of Dated Brent (FOB Vlora equivalent), plus a fixed $28/metric-ton or approximately $4.45/bbl recovery against the overdue accountsreceivable balance from prior years. Over the course of the year, the Companywill receive full payment of the remaining $15.4 million accounts receivable inaddition to sales and transportation savings of approximately $2.90/bbl. Thefixed $4.45/bbl payment has the advantage of providing structural protectionagainst further softening in Brent pricing. PATOS-MARINZA FIELD Primary Development The majority of the 2015 capital program at $118 million is for primarydrilling with three rigs and between 85 - 90 new horizontal wells. These wellsare a continuation of development in the Patos-Marinza oilfield. Enhanced Oil Recovery: Polymer Flood Expansion Next year will mark a shift from an early-stage pilot project to commercialdevelopment of our EOR program. We are encouraged by the strong performance todate and will be allocating $36 million to EOR expansion in 2015, with plans toconvert 25 - 30 existing production wells to polymer injection throughout theyear. Approximately 70% of EOR capital will be spent on associatedinfrastructure and facilities, and the remaining 30% on well conversions andinjection. This program represents an increase of 41% compared to the 2014 EOR budget of$22 million and more than double the number of wells converted to injection. Facilities, Infrastructure, and Associated Capital A total of $64 million of the 2015 capital program will be allocated tofacilities and infrastructure activities which include improvements aimed atlowering operating costs. Projects include: * well servicing and work overs; * flow lining within the field; * electrification of well pads; * expansion of water disposal capabilities with two (2) water disposal wells; and * continuation of environmental remediation and social initiatives. OPERATIONAL FLEXIBILITY Over the past several years, Bankers has constructed its capital program toallow for flexibility in changing market conditions. In this lower commodityprice environment, Bankers has initiated a drilling rig phase-down from six tothree rigs to conserve cash-flow and balance capital spending. By the end ofthe fourth quarter 2014, two rigs will be suspended with the third rigfollowing in January 2015. In addition, the Company has been in conversationwith all material service providers to source near term price reductions. Our efforts will continue on expanding margins through further operationalefficiencies in the field including the installation of flow lines to reducetrucking costs, electrification of well pads, well servicing improvements anddiluent reduction. Over the past two years that margin expansion has been astrategic focus of the Company, we have reduced our cost structure by over $6/bbl excluding excise and carbon and circulation tax changes introduced in 2014.Bankers projects an additional costs savings of $2 - 3/bbl over the next twoyears. Bankers is positioned to respond quickly when oil prices show signs of recoveryand will prioritize its primary drilling program by reinstating drilling rigs,infrastructure and facilities spending. FINANCIAL RESILIENCE Bankers maintains a strong balance sheet with a cash position of $88 million atSeptember 30, 2014. Management will continue to protect the financial positionof the Company with the strategic view to maintain capital expenditures within2015 cash flow, supplemented with cash resources. At September 30, 2014,Bankers had drawn $104 million from its $224 million credit facilities; noadditional draws are anticipated in 2015. Financial Hedge To protect against the downside of oil prices, in Q2 2014, Bankers purchasedtwo Puts, which combined represent 6,000 bopd at $80/bbl Brent for 2015. Cashproceeds from the Puts are received monthly, based on the difference betweenthe average monthly Brent price and $80/bbl. The financial stability providedby this hedge supports the operation of three drilling rigs in 2015. PRODUCTION GUIDANCE In recognition of recent pullback in Brent oil price, reduced 2015 capitalexpenditure and the acceleration of the polymer flood program, Bankersanticipates 2015 average production levels will be in line with the 2014average production level. UPDATED CORPORATE PRESENTATION For additional information on this operational update, please see the December2014 version of the Company's corporate presentation at http://www.bankerspetroleum.com/. CONFERENCE CALL Management of Bankers will host a conference call on December 12, 2014 at 6:30am MST to discuss the 2015 Capital Budget. 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 at 1-888-231-8191 or 1-647-427-7450. A live audioweb cast of the conference call will also be available on Bankers website athttp://www.bankerspetroleum.com/ or by entering the following URL into your webbrowser, http://www.newswire.ca/en/webcast/detail/1457825/1621957. The 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 December 25, 2014 by dialing 1-855-859-2056 or 1-416-849-0833 andentering access code 47056493. Q4 2014 OPERATIONAL UPDATE Bankers intends to announce its Operational Update for the Fourth Quarter 2014and host a conference call on Tuesday, January 6, 2015. 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, has a 100% interest in the Kuçova oilfield, and a 100% interestin Exploration Block "F". Bankers' shares are traded on the Toronto StockExchange and the AIM Market in London, England under the stock symbol BNK. David French, President and Chief Executive Officer, (403) 513-6930; Doug Urch,Executive VP, Finance and Chief Financial Officer, (403) 513-2691; LauraBechtel, Investor Relations Analyst, (403) 513-3428; Email:investorrelations@bankerspetroleum.com; Website: www.bankerspetroleum.com; AIMNOMAD: Canaccord Genuity Limited, Henry Fitzgerald-O'Connor, +44 0 207 5238000; AIM BROKER: FirstEnergy Capital LLP, Hugh Sanderson / David van Erp, +440 207 448 0200