31 Jan 2007 07:00
Bankers Petroleum Partners with Peninsula for Palo Duro Basin Exploration Program
Deal to Provide Funds for Exploration and Development in Texas and
Oklahoma
CALGARY, Jan. 30 /CNW/ - Bankers Petroleum Ltd. is pleased to announce that it has entered into a letter of understanding with Peninsula Merchant Syndications Corp. (Peninsula) to sell 27% of its working interest in its approximate 375,000 net acres in the Palo Duro basin, Texas. Peninsula is a private merchant bank controlled by Sam Magid, a former founding partner of Salman Partners. The total consideration to be paid for the acreage is US$19.5 million, of which a minimum of US$15.0 million will be in cash. Bankers will continue as operator for its exploration activities in the Palo Duro basin.
The cash received from the sale will be utilized to fund Bankers' 2007 U.S. exploration budget in the Palo Duro basin as well as the development program in Oklahoma, where the Company anticipates it will have its first natural gas production tied-in by summer. The transaction is expected to close prior to March 31, 2007, subject to satisfaction of certain conditions including completion of formal documentation.
"We're pleased to have made this partnership with Peninsula, which underlines the potential of the Palo Duro basin," said Richard Wadsworth, President. "Both management teams have a similar view about the prospective value of the Palo Duro basin and philosophies towards the methodology to develop this asset. We look forward to a successful business relationship as we continue our work in determining the best way to economically develop the hydrocarbons in this basin."
Palo Duro Basin Activity Update
Bankers is expecting to commence drilling its Cogdell No.1-64 well in the next week. This well offsets the legacy Cogdell No.1-1 well that had produced at a reported 2.8 million cubic feet of natural gas per day over a three day test before being shut-in and experiencing mechanical problems. Bankers is focusing on the Bend Group interval, utilizing underbalanced air drilling techniques in order to minimize reservoir damage. This follows the apparent success of another operator in the basin that had encouraging early results using the same technique.
Two additional wells are planned to be drilled in the basin over the next four months. Bankers is also in the planning and permitting stage for a 3D seismic program over a portion of its ground.
Caution Regarding Forward-looking Information
Information in this news release respecting the proposed transaction with Peninsula Merchant Syndications Corp. and planned work programs on the Company's US properties and anticipated results of such programs 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.
The transaction with Peninsula is subject to certain conditions that may or may not be satisfied within the time frame anticipated or at all. If Peninsula does not complete the acquisition for any reason, the Company's work programs for which the proceeds are intended to be used may have to be curtailed and funding sought from other sources. There is no assurance that such funding will be available to the Company on reasonable terms or at all and any financing could dilute the Company's interest in its properties or be dilutive to existing shareholders. Exploration for natural gas is a speculative business that involves a high degree of risk. Few wells that are drilled are ultimately developed commercially. Attainment of commercial production is dependent upon a number of factors and subject to risks including, but not limited to the ability to establish economic flow rates, ultimate hydrocarbon recoveries, future pipeline capacity, and availability of the necessary equipment, personnel and financial resources. There is no assurance that expenditures made by the Company on its US properties will result in discovery of commercial qualities of natural gas. 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 14 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 opportunities in unconventional petroleum assets. Bankers holds interests in four prospects in the Northern and Central regions of the United States, where it is currently pursuing the exploration of shale gas plays. It also operates in the Patos-Marinza oilfield in Albania pursuant to a license agreement, producing heavy oil. Bankers' shares are traded on the Toronto Stock Exchange and the AIM Market in London, England under the ticker symbol BNK.
For further information: Susan J. Soprovich, VP, Investor Relations and Corporate Governance, (403) 541-5313, Email: investorrelations(at)bankerspetroleum.com, Website: www.bankerspetroleum.com (BNK.)
BANKERS PETROLEUM LIMITED