25 Mar 2008 12:00
Bankers Petroleum Announces Three-Year Plan
Albanian Production to Increase to Approximately 20,000 boed by Year-End
2010; Restructuring for U.S. Subsidiary in 2008
CALGARY, March 25 /CNW/ - Bankers Petroleum Ltd. is pleased to introduce its three-year plan of development (the Plan) for its Albanian assets as well as a proposed restructuring for its U.S. subsidiary Bankers Petroleum (US) Inc.
Albania Three-Year Strategic Plan
In March 2008, the Company completed an Addendum to the Plan of Development that outlined the technical, capital and production profiles for the Patos Marinza field. Under this Addendum, Bankers plans to access additional reserves through the application of infill vertical and horizontal drilling, and waterflood and thermal recovery techniques. The Addendum was submitted to Albpetrol Sh. A. and the Albanian Government and is currently awaiting final approval.
Regarding the recently acquired Kucova oilfield in Albania, the Company will be completing its evaluation and will disclose details of its capital program and reserves assessment by the end of the second quarter.
The Plan's total capital investment is estimated to be $370.0 million and will be primarily funded from existing working capital and future cash flow. The Plan's objective is to achieve production target of 20,000 bopd by December 2010.
The Company's strategic objective is to remain focused on exploration and production activities in Albania.
Maximizing Patos Marinza's Potential
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The original plan of development was mainly comprised of recompleting active wells and re-activation of suspended wells through primary cold heavy oil production (CHOP) of previously operated wells by the state oil company, Albpetrol Sh. A. The new Addendum to the plan of development moves beyond primary recovery techniques, identifying methods to further access the substantial oil reserves of the field by applying the appropriate extraction method to each individual formation. The various technologies will be focused to maximize the recoveries from each formation through disciplined and staged exposure of capital and an overall 'field to formation' development plan. While the Plan includes approximately $90.0 million for waterflood and thermal work programs, there are no reserves recognition for these activities in the recently announced 2007 year-end reserves report. Positive results from these programs are expected to contribute to additional reserves recognition in 2008 and beyond.
The Plan contemplates the following activities for the Patos Marinza field over the next three years(1):
------------------------------------------------------------------------- Reactivations 250 existing wells ------------------------------------------------------------------------- Vertical & horizontal infill 60 wells wells ------------------------------------------------------------------------- Waterflood program 50 wells - reactivation and new wells ------------------------------------------------------------------------- Cyclic Steam Stimulation Initial eight well pilot phase in 2008 Evaluation period in 2009 30 well commercial expansion in 2010 ------------------------------------------------------------------------- Capital Expenditure Total: $370.0 million - 2008 - $80.0 million - 2009 - $120.0 million - 2010 - $170.0 million ------------------------------------------------------------------------- Production Target Exit Rate - 2008 - 7,000 bopd - 2009 - 14,000 bopd - 2010 - 20,000 bopd ------------------------------------------------------------------------- (1) During this period, Bankers will continue to review additional requirements for investment and growth and will provide new or revised plans in annual work programs and budgets. Note that these are estimates and may change based on changing circumstances, knowledge and results. Restructuring of Bankers Petroleum (US) Inc.
Recognizing the size of Patos Marinza and Kucova heavy oilfields in Albania, Bankers' Board of Directors decided in its three-year plan to focus its resources on maximizing the potential of these very important assets. With recent success in Oklahoma, the Company determined that the timing is right for Bankers U.S. to be restructured into a separate entity to proceed with its own growth plans in a manner that will maximize value and preserve future upside to all Bankers' existing shareholders. As such, the Company will consider structuring alternatives in respect of Bankers U.S. over the next few weeks to determine the most optimal arrangement for this restructuring and will announce further details as soon as possible.
A 2008 capital program of $45.0 million has been established to drill, complete and tie-in 30 wells in the Tishomingo gasfield. This is expected to be funded from working capital and debt secured by the US assets; Bankers is currently evaluating several debt financing proposals.
Caution Regarding Forward-looking Information
Information in this news release respecting the expected future production levels, future prices and netback, work plans, anticipated total oil recovery of the Patos Marinza oilfield and the Tishomingo gasfield in Oklahoma, U.S., the proposed plan of arrangement for the U.S. assets, and potential opportunities constitutes forward-looking information. Statements containing forward-looking information express, as at the date of this news release, the Company's plans, estimates, forecasts, projections, expectations, or beliefs as to future events or results and are believed to be reasonable based on information currently available to the Company.
Exploration for oil and natural gas is a speculative business that involves a high degree of risk. Few shale natural gas wells that are drilled are ultimately developed commercially. There is no assurance that expenditures made by the Company on its US properties will result in discovery of commercial qualities of natural gas. The Company's expectations for its Albanian operations and plans are subject to a number of risks in addition to those inherent in oil production operations, including: that Brent oil prices could fall resulting in reduced returns and a change in the economics of the project; delays associated with equipment procurement, equipment failure and the lack of suitably qualified personnel; the inherent uncertainty in estimation of reserves; exports from Albania being disrupted due to unplanned disruptions; and changes in the political or economic environment.
Production and netback forecasts are based on a number of assumptions including that the rate and cost of well takeovers and well recompletions of the past will continue and success rates will be similar to those rates experienced for previous well recompletions/development; that further wells taken over and recompleted will produce at rates similar to the average rate of production achieved from wells recompleted/redeveloped in the past; continued availability of the necessary equipment, personnel and financial resources to sustain the Company's planned work program; continued political and economic stability in Albania; approval of the Addendum to the Plan of Development; the existence of reserves as expected; the continued release by Albpetrol of areas and wells pursuant to the Plan of Development and Addendum; the absence of unplanned disruptions; the ability of the Company to successfully drill new wells and bring production to market; and general risks inherent 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.
Review by Qualified Person
This operations update was reviewed by Richard Wadsworth, President 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 with over 16 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 50% interest in the Kucova oil field. It also holds an average 50% interest in the Tishomingo gas field in Oklahoma and varied interests in three other areas in the Northern and Central regions of the United States, where it is currently pursuing the exploration, development and production of shale and tight sand gas plays. Bankers shares are traded on the Toronto Stock Exchange and the AIM Market in London, England under the ticker symbol BNK.
For further information: Abby Badwi, Chief Executive Officer, (403) 513-2694; Doug Urch, VP, Finance and Chief Financial Officer, (403) 513-2691; Susan J. Soprovich, VP, Investor Relations and Corporate Governance, (403) 513-2681, Email: investorrelations(at)bankerspetroleum.com; Website: www.bankerspetroleum.com; AIM NOMAD: Canaccord Adams Limited, Ryan Gaffney/Adam Janikowski, +44 20 7050 6500 (BNK)
BANKERS PETROLEUM LIMITED