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Bankers produces 9,826 bopd from Patos-Marinza in Q3
2010-10-07 08:13 ET - News Release
Mr. Abby Badwi reports
BANKERS PETROLEUM PROVIDES OPERATIONAL AND CORPORATE UPDATE
Bankers Petroleum Ltd. has provided the following operational and corporate updates.
Production
Third quarter production averaged 9,826 barrels of oil per day (bopd) from the Patos-Marinza oil field in Albania compared with second quarter production of 9,830 bopd. Current production is 10,500 bopd with 700 bopd shut in awaiting maintenance and repairs. The average Patos-Marinza oil price was $46.61 (U.S.) per barrel representing 61 per cent of the Brent oil price compared with the second quarter's average oil price of $47.12 (U.S.) per barrel (60 per cent of the Brent oil price).
Three main factors affected lower than anticipated daily production volumes to this date:
- Several new wells drilled in the second and third quarter were targeting reserves expansion, thermal assessments and one well was drilled for water disposal. This reduced the number of wells drilled for production growth.
- The company experienced delays in takeover of existing wells for reactivation from the national oil company, Albpetrol Sh.a. The company was expecting to receive 100 well candidates from January through to the end of the third quarter, but unfortunately only 10 suitable wells have been handed over for reactivation, resulting in lower production volumes. This situation has now been resolved with 55 reactivation candidates handed over to the company by Albpetrol on Oct. 5.
- Several horizontal wells experienced drilling problems resulting in completing less than optimum short lateral sections. Other horizontal wells were challenged by previously explained fresh water intrusion and cross-flow from shallower zones due to corrosion in adjacent old vertical wells. Comprehensive review and remedial isolation of old wellbores with corrosion issues has been progressing with positive results in increasing oil cut in affected horizontal and old vertical wells. The company anticipates minimizing these concerns in future new drilling.
With these operational and mechanical issues, the company is adjusting its exit production target to 12,000 bopd for 2010 and to 20,000 bopd for 2011.
Drilling update
The company continued execution of its horizontal drilling program targeting different productive zones and areas of the field to fully evaluate the reserves potential of the Patos-Marinza oil field. Eleven horizontal wells drilled during the quarter resulted in four oil wells on production for over a month at an average rate of 165 bopd and seven wells recently placed on production and currently cleaning up and stabilizing with good initial productivity indication. The majority of the new producing wells are in the northern part of the field with one well drilled in the Driza 1 formation, which due to drilling mechanical issues has a short lateral of only 130 metres and with this limited inflow current production from the well is 30 bopd. The Driza 1 formation is present in large areas of the field and horizontal drilling development of this zone should contribute to new reserves additions.
At Sept. 30, 2010, there were 43 horizontal wells drilled in the oil field with seven wells recently on production for under a month and stabilizing, 27 horizontal oil wells producing for longer than a month with an average production of 133 bopd, and nine wells that have a lower production average of 20 bopd due to previously described mechanical issues, specifically short laterals within the producing section and water intrusion in others.
The company is pleased with the overall success of the horizontal drilling program, specifically the potential for program expansion in 2011 beyond the 2009 proved plus probable reserve case. The current reserve-based development program only incorporates horizontal drilling into three of the 17 discreet sands that exist in the field. Successful delineation of an additional four sands through the 2010 drilling program has led to an expansion of the company's planned program in 2011 and beyond, and will likely result in incremental reserve additions at the end of the current year as new zones are targeted as recoverable oil in place.
Fourth drilling rig
Bankers horizontal drilling program will continue to expand in 2011 with the addition of a fourth drilling rig which has now been contracted and is scheduled to commence operations in April, 2011.
Well reactivations and workovers
During the quarter, no wells were reactivated due to handover delays by Albpetrol. This situation has now been resolved and on Oct. 5, 55 existing wells have been handed over to the company by Albpetrol and several of these wells will be reconfigured and placed on production before year-end. All of these wells are located in the northern part of the field north of the Seman River and in anticipation of receiving these wells the company had started construction of facilities and infrastructure to handle production from this sector.
Ten existing shut-in wells were successfully brought on stream through recompletions in new producing formations to add 300 bopd of production.
Thermal pilot and western extension area
In addition to drilling of two vertical core recovery wells last quarter, two step-out vertical wells were drilled in the third quarter on the western flank of the field. Both wells indicated the presence of good porous oil saturated sandstones from the Lower Gorani through the Marinza formations. To date three separate formations have been tested for primary production with others to be evaluated in this quarter. Initial indication are that the oil is heavy and viscous (3.8-degree American Petroleum Institute (API)) indicating that thermal recovery techniques will be necessary to produce this type of oil in this area. Two additional step-out wells will be drilled in the fourth quarter to further confirm the areal extent of these zones.
Planning and work for the first thermal pilot and initial cyclic steam injection into a horizontal well in the first quarter of 2011 are progressing on schedule. Surface facilities have been designed and various components have been procured. The 25,000-British-thermal-unit (BTU) steam generator will be ready in late October for start-up testing by the manufacturer in preparation for transport to Albania before year-end. Wellbore and production equipment design is nearing completion with major equipment orders placed with suppliers.
Infrastructure development
Tank construction at the Vlore terminal is nearly complete and will enable storage of 160,000 barrels of oil once operational in the next few months. Planning for phase 1 of the crude sales pipeline, from the Patos-Marinza oil field to the rail tie-in at Fier, is progressing on schedule. Pipe has started to arrive in country, drawings are currently being finalized for the hub facility at Fier and construction is expected to begin in the fourth quarter.
Kucova
The company has now received formal approval from Albpetrol and AKBN (the state regulatory agency) for amendments to the Kucova licence and petroleum agreements. Fieldwork will commence this quarter and a formal plan of development will be submitted to the Albanian authorities in November.
Block F
The company commenced reprocessing existing seismic on the block. Initial evaluation of select lines illustrates considerable structural anomalies than was first contemplated. An expanded reprocessing program is under way in order to select the best exploratory drilling location now scheduled for the first quarter of 2011.
Crude marketing initiatives/working capital
The company has received several new proposals to purchase Patos-Marinza crude at a price range between 66 per cent and 68 per cent of Brent price. The company is currently finalizing new and current marketing agreements for 2011 volume deliveries and pricing.
At Sept. 30, 2010, Bankers held $134-million of cash, and working capital was approximately $136-million. No funds were drawn on the $110-million credit facility from the European Bank for Reconstruction and Development and the International Finance Corp. The company has drawn $24-million of the $28-million Raiffeisen credit facility.
For additional information, please see an updated version of the company's corporate presentation on its website.
Conference call
The management of Bankers will host a conference call on Oct. 7, 2010, at 7 a.m. MDT to discuss this operations update. 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 operator 10 minutes prior to the call at 1-888-231-8191 or 1-647-427-7450. A live audio webcast of the conference call will also be available on Bankers' website.
The webcast 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 available until Oct. 21, 2010, by dialling 1-800-642-1687 or 1-416-849-0833 and entering access code 16045644.
We seek Safe Harbor.