AN INTERVIEW WITH ABBY BADWI
PRESDIENT OF BANKERS PETROLEUM
(As of July 25, 2011)
From David Pescod's - Canaccord Interview:
We’re here with Abby Badwi who has been on quite an adventure
in Albania over the last couple of years and Abby we have
noticed on our recent trip to Albania how incredible it has
been, the recovery in the country. Becoming part of Europe
over the last few years, roads built, airports built, you name it.
It’s nice to see and it looks like Bankers Petroleum is playing a
role there?
AB: The country is definitely making a lot of progress over the
last four years that I have been in Albania. We have seen the
changes you talk about. The current Democratic party and
Prime Minister Sali Berrisha have focused on road building
and he has built a lot of first class roads tying the country together
from north to south and east to west. These changes
have been very important for us because now it facilitates our
operation considering that we do a lot of trucking of our oil at
this stage of development by moving our oil from Fier to the
port of Vlore. And of course to the two local refineries.
DP: There have recently been some elections in Albania, any
thoughts on that?
AB: You refer to the mayoral elections to determine mayors of
the major cities in Albania, they went very peacefully and they
were monitored by international observers and the EU and
declared to be fair elections. They had issues in one jurisdiction
in Tirane, the capital, where the leader of the socialist
party is Mayor of Tirane and the person who ran against him,
Luizim Basha, from the Democratic party and it was a very
close race with the winner declared by only 80 votes. It took a
long time counting and re-counting those votes and it swung
one time from Democratic candidate then back to the Socialist
but at the final count Luizim Basha from the Democratic party
won, and that is where we are sitting right now.
DP: The market spanked you a bit because you missed production
expectations, comments?
AB: This was the second time we had to change our production
forecast. Basically when we prepared those forecasts
back in late 2009 early 2010, we only had ten horizontal wells
on which to base our production forecast and declines.
Being early in the wells lives, it did not indicate very much
decline and they had very good productivity, so we used
those numbers to make our assessments of future production
based on the number of wells we were going to drill in
2010 and 2011. With 70/80 wells drilled by September 2010,
we realized that not all of the wells were successful due to
mechanical issues being drilled in an oil field and adjusted
our success rate to 85% which was not included in the early
estimates.
Secondly we are starting to see different declines from different
wells in different zones. Incorporating all these facts
back in September and then again last month we had to revisit
those calculations to reflect the actual declines from
the wells and unfortunately we just had to do it. Basically we
erred on the early forecast because of lack of data at the
time we made those estimates.
DP: What kind of numbers are you using for expectations
down the road now for year-end and 18 months from now?
AB: We chose to go with a range because this is an evolving
field, we are drilling new wells in new zones and in different
parts of the field, so we ran a high estimate of 20,000
barrels per day exit this year and a low case of 16,000 with a
likely case of 18,000 barrels per day.
DP: That is a fairly big increase…
AB: Regardless of how you look at it, this company has
been consistently growing reserves and production over the
year. The wrong estimates have affected all of the good that
we’ve been doing for the last few years.
Having said that, I can understand some of the shareholders
not being happy with it, but as they say, bears will leave and
bulls will come.
We have a lot of trading in our stock and we still have a very
strong shareholder base and this has been a buying opportunity
for people that still like the story and believe in it as a
reserve growth story rather than a production growth story,
which is what we’ve always said. Our first dollar and our
first effort is always going to wards converting a lot of the oil
in place, 7.5 billion barrels to recoverable reserves, and we
have proven that year over year.
DP: Working in Albania is there any shortage of equipment?
AB: It’s not shortage of equipment but rather planning of
getting the equipment into the country. There is no modern
equipment that you can source right in Albania so we have
been getting our drilling rigs from Canada and Croatia as
well as our service rigs.
That was the reason we had so much shut in production at the end of the second quarter. We were short of service rigs and
we’re now getting one more rig at the end of the month, another one coming in October, and we are also looking at two
more rigs to build a fleet of 14 service rigs working for us, which would need to service more than 300 wells that we have on
production.
DP: There have been rumors for a long time that the exit strategy for Bankers would be to sell it to someone really big
who might be able to ramp it up quicker, anything you’d be able to say on that?
AB: That is still part of our strategy. What’s the line, “Build it and they will come”? We’re in the process of building and
we will continue to do so. We are running this company and operating it as if we are going to be there for the next 25
years, and if along the way we get an attractive offer that is in the best interest of our shareholders then we will definitely
look at it. Meanwhile, we are very active We have four drilling rigs and a fifth coming this fall. We’re starting the thermal
program, building production facilities, building a pipeline, so we are proceeding to build our company.
DP: When one sees the huge assets Bankers has in Albania firsthand, you notice thousands of old rusting derricks and
in between the modern equipment you have. Unfortunately there is also a lot of heavy oil in those ditches that go into
creeks that go into the Adriatic. That is being cleaned up as well as the site, one hopes, correct?
AB: With our recent acquisition of Albpetrol’s remaining producing wells at Patos Marinza, Albpetrol will cease to utilize
their production facility in the area which is causing contaminated water to be discharged in canals. Bankers is very active
with its remediation and environmental initiatives in Albania.
DP: We have to end this with our favorite questions. If you could name your favorite beach in Albania, which one is it?
Where do you think oil will close at the end of the year and an oil and gas pick other than one of your own?
AB: On prices it is really interesting to see how those $100 + oil prices have lasted for so long. We don’t see any indication
right now to suggest we are going to see any decline in prices. I believe a number higher than $100 is still going to
be there until the end of the year with uncertainty and political issues in the Middle East, where over 25% of the world oil
is coming out of. Other environmental issues with offshore drilling and oil sands, all of this has put a lot of pressure on
oil prices and I don’t see it coming down below $100 in the short term or by the end of this year.
International operators, in my opinion are undervalued. Any one of them that has good production, cash flow and reserves
is a very good stock to buy. To make some really good money I still focus on internationals and not any one in
particular but I think a lot of them have been hurt quite a bit, between 25%-30% from highs of several months ago and I
think we should be able to recover from those numbers over the next few months. Paradise beach which is a little bit
south, of Vlora is a very nice spot, and while I don’t go to the beach, this one a beautiful beach a few minutes south of
Vlore!
DP: Thank you Abby!
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