BNK-T, BNK-L Mark Hodgson VP Talks To Canaccord's Pescod

AN INTERVIEW WITH MARK HODGSONVP BUSINESS DEVELOPMENTWITH BANKERS PETROLEUM(As of February 15, 2012It was a while ago that we were offto Albania and saw first-hand thesize of Bankers Petroleum’s heavy oilproject there. The first sight isawe-inspiring as oil is everywhere(on the roads, the ditches) andthere are hundreds upon hundredsof old Chinese and Russian der-ricks as far as the eye can see.

Inbetween the antique Russian andChinese technology is new equip-ment helping to clean up a bit ofthe mess and hopefully more effi-ciently extract the oil.Time to get caught up as a new resource and production re-port was just released and it brings up a few questions…Wego to VP Business Development Mark Hodgson for an update:

David Pescod: Mark, this production number for the pastquarter of just over 14,000 barrels a day is a bit of a disap-pointment to followers of the company. We’ve heard rumorsof problems getting people with the right skills and equip-ment over there. What should we know about that and howsoon do you expect to see 20,000 barrels a day?Mark

Hodgson: With 5 drilling rigs operating full time we arenow able to drill 10 horizontal wells per month which meansproduction is certainly on its way. In 2010 and 2011 we grewproduction by 50% and 30% respectively, and we are target-ing similar growth in 2012 and over the next several years.Skilled industry professionals are in fact difficult to findwithin the country so we recruit heavily from Alberta for bothour technical and operations teams.

Competition, as you know, is fierce for skilled heavy oil workers within the prov-ince, but we do feel that the combination of the opportunity towork on rotation in Southern Europe, the excitement of work-ing with such a work class asset, and also the options, allmake for an attractive employment package, and that is re-flected in the growth we have seen in quality staff over thepast few years. Equipment challenges relate mostly to leadtime as most of our supplies are based in other countries.That said, the proximity to the coast makes it quite easy tobring equipment in and out of the country.

DP: The reserve/resource report bounces out numberslike 200 million and 400 million barrels - numbers that mostjunior or intermediate oil companies would only dream of.But for the followers of Bankers, we dream of billions.What should we know about the numbers and how much ispotentially recoverable?

MH: That is the great thing about this field David, not onlydo we keep finding new applications of existing westerntechnology that enhance the recovery, but we also keepfinding more oil! As of this year we see an incremental 1billion barrels of contingent resource that we can begin toconvert into reserves, and the best part is, it is all extract-able using off the shelf technology from heavy operationshere in Canada.

DP: Abby Badwi and members of the senior mgmt teambrought Rally Petroleum in Egypt to a certain point andthen sold it. The suggestion by many is that a big com-pany, sooner or later, will take over Bankers and with big-ger resources, will be able to increase production quicker.Where does that thought sit currently?

MH: I think Abby puts it best when he refers to this field asthe field of dreams. “Build it and they will come” he says,and he is right. Patos-Marinza is the biggest onshore oilfield in Europe, and when developed to peak production itwill be one of the largest suppliers of heavy oil to the re-gion for years to come. We are certainly making amazingstrides in terms of delineating the prize, but we still see somuch potential. The big players will come eventually, andwhen they do, we will be looking out for the best interest ofour shareholders, be it a corporate sale, a joint venture, ortaking more time to see the proper value recognition re-flected in the transaction. In the meantime we are buildingthis company like we will be there for the next 25 years.

DP: Albania being in Europe may have issues these days.Any concerns being in Europe that we should be aware of?

MH: Albania is a member of NATO and has applied to theEU, however it has a very isolated economy with the pri-mary industry being farming. It has very little sovereigndebt and as such has stayed out of the kind of troubles wesee elsewhere in the region. Investment in the country isexpanding at a rapid rate as are government tax revenuesthrough the reemergence of industries like the oil sector.

We feel lucky to be in such a stable region, and are pleased with the forward thinking of the Albanian govern-ment with their open policy towards foreign investment.

DP: Shell have just farmed into some of the exploration blocks of your neighbor in Albania, PetroManas. What doesthis mean for Albania and for Bankers?

MH: It is obvious great news to see Shell back in the country. Shell was the first company to license our Block F ex-ploration concession. We wish the new partnership every success in their high impact exploration campaign just tothe east of Patos-Marinza. For Albania, this is a significant event because it really paves the way for more interestfrom other large players. For Bankers this will definitely be a relationship we look to build on, be it through partner-ship on gas usage, or potentially larger infrastructure projects.

DP: What are your thoughts on what next for oil prices and a stock pick that wouldn’t be a conflict of interest?

MH: Most people are aware of the key factors effecting oil prices in general over the past few months. First is tighten-ing supply from OPEC (by that I mean that Saudi and Libyan production increases seem to have been absorbed by themarketplace), you can add to that the risk of a supply shock around some sort of escalation of conflict in Iran.

Second is the effect of the Euro zone crisis on global growth and subsequent demand. Third is the how a US election year andresults will effect foreign policy and impact points 1 and 2!From where we sit, we also keep a close eye on the WTI-Brent differential because all of our sales are priced off Brent.

All indications from new production coming on near Cushing seems to point toward that differential staying strong inthe months to come. It makes what we are doing in Europe all the more attractive.As for a stock pick, I’d have to say Porto Energy.

Joe Ash and the team have got some great exciting wells coming up,and with the shares down to $0.15 from their $1.00 IPO, the risk/reward is more compelling than ever.

DP: Thank you very much Mark!

Takeovers the Path to Golden Returns: Sascha Opel

Sascha Opel, publisher of one of Germany's most popular commodity newsletters, looks at the economy with rose-colored glasses. He sees the end of the Euro crisis and sees Asian growth as the engine pulling the world out of its economic malaise. He finds the path to golden returns in gold and silver companies likely to be taken over and in this exclusive interview with The Gold Report, he's not afraid to name likely targets.

The Gold Report: It's been four years since you told The Gold Report that gold was beginning the process of re-establishing itself as money.
Sascha Opel: We are in the middle of this process. Many people and even central banks have added gold to their portfolios or balance sheets as they realized that no paper currency is 100% safe anymore. The Greek haircut has made it clear to investors that even European government bonds are not safe havens. The money went into German and U.S. bonds. But what happens in the next few years with growing debt in these countries?

For me, what is still most important is unlike bank, corporate or government bonds, gold has no risk of failure. Bonds have to pay interest to the investors who take the risk to lend the money. If you own gold you are completely independent from any government or any other institution in the world. You are out of the modern financial system. You don't owe anyone anything. Since 2008 it as been clear: gold is the only safe haven.

You can find many, many potential takeover targets, such as
exploration or development companies. Alacer Gold Corp. (ASR:TSX)

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