13 Feb 2008 13:00
Bankers Petroleum Provides Operational Update
Higher Oil Prices and Initial Steam Results in Albania
CALGARY, Feb. 13 /CNW/ - Bankers Petroleum Ltd. is pleased to provide an operational update for its Albanian heavy oil operations and its United States exploration program.
Albania
Bankers' Patos Marinza operations increased its 2007 exit production by 12% to 5,337 bopd from 4,406 bopd at the end of 2006. During the fourth quarter, average daily production was 5,169 bopd, which represents a 24% increase compared to the same period in 2006.
Effective January 1, 2008, the Company renegotiated its domestic crude oil sales agreement with ARMO Sh.A, the state-owned Albanian refining and marketing organization, and completed an export agreement with a second refinery in Italy. The higher domestic sales price compares favourably to the previous contract, becoming competitive with export pricing. The domestic sales contract with ARMO Sh.A. includes volume commitments of between 50% to 55% of Bankers production in Albania.
Bankers expects that its overall average sales price will approximate 56% of the Brent oil price for 2008, dependant upon total domestic versus export volumes. Based on a current Brent price of US$93.00 per barrel, this translates into an average sales price of US$52.00 per barrel as compared to US$35.54 per barrel in 2007. For January 2008, average blended sales price was US$49.51 as compared to US$39.56 for December 2007, a 25% improvement.
Steam injection operations commenced on an existing well into the Driza formation sands during the fourth quarter of 2007. In early December, approximately 17,000 barrels of cold water equivalent steam was successfully injected into the well. Initial flowback and production of condensed water and oil was encouraging with estimated oil production reaching over 150 bopd during the first few days of production. The well subsequently experienced casing collapse at the perforations. Since that time, the Company made adjustments to place the well back on production in a non-optimized configuration. Current production rates are approximately 25 to 30 bopd with a strong fluid level as optimization continues, compared to prior production of seven bopd.
Taking these results into account, Bankers believes that newly planned thermal wells will be designed to overcome the casing integrity issues experienced with existing wells. The Company expects to drill eight new wells for the thermal steam project in the fourth quarter of 2008.
Further details of the Company's three-year plan will be released in March 2008. In preparation for implementation, Bankers has contracted a drilling rig to begin in the second quarter of 2008, and is seeking a second drilling rig for the third quarter of the year.
United States Oklahoma, Ardmore Basin -----------------------
In Bankers' Woodford shale project, the "Tishomingo field", the Company finished drilling and fracture stimulating its third and fourth horizontal shale wells, the Brock 4-1H and Brock 9-1H. The wells have currently recovered about 43% of the injected fracture fluid and are producing using a gas lift. Initial production rates were approximately 2.1 mmcfe/d and 1.8 mmcfe/d respectively. This compares favourably to Bankers first two horizontal wells, one of which is on production and the other, the WLC 17-1H (initial production rate: 2.1 mmcfe/d), is currently shut-in awaiting pipeline hook-up. Total behind pipe volume is 6.0 mmcfe/d. A gathering system is currently being installed to connect the Brock wells to the processing facility, which the Company expects to have completed by the end of February 2008. Bankers US production averaged 1.0 mmcfe/d in the fourth quarter of 2007 and had an exit production rate of 0.7 mmcfe/d.
Bankers has received a preliminary brute stack for the entire 115 square mile 3D seismic survey that was acquired last year, and is using this data to select its drill sites for 2008. The first five locations have been chosen and three new locations are currently being built. The first of these wells is expected to spud in the next two weeks. Two additional rigs are scheduled to begin drilling the other two locations in the first week of March.
Texas, Palo Duro Basin
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In the Palo Duro Basin, results have not been as anticipated. Two of the three horizontal stages were fracture stimulated in the Atoka A zone of the horizontal Cogdell No.64-1H well. Testing resulted in virtually no hydrocarbon recovery, likely due to the fracture having connected into a water interval. This well was redrilled horizontally out of the same wellbore that originally produced 325 mcf/d from the Atoka A zone in an attempt to increase the production rate. The well recovered all of the injected water and was still producing significant water rates at the time it was shut-in. Bankers is currently evaluating its options for the remaining part of the wellbore.
Bankers Black 4-1 well has not yet been fracture stimulated in the Bend shale. Core Laboratories has recently completed additional tests on core material from Bankers' Burleson Ranch well to test some theories for a different fracture stimulation method. Bankers anticipates that it will have the fracture stimulation recommendation for the Black 4-1 well in the next two weeks.
--------- Caution Regarding Forward-looking Information
Information in this news release respecting expected future production levels, future sales prices and netback, work plans 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; the existence of reserves as expected; the continued release by Albpetrol of areas and wells pursuant to the Plan of Development; the absence of unplanned disruptions; the ability of the Company to 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 opportunities in unconventional petroleum assets. Bankers operates and has the full rights to develop the Patos-Marinza heavy oilfield in Albania, which is a 2.0 billion barrel resource. It also holds interests in four 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