Bankers Petroleum provides technical and operational progress update
prnews
CALGARY, June 4, 2012 /PRNewswire/ - Bankers Petroleum Ltd. ("Bankers" or the
"Company") (TSX: BNK, AIM:BNK) is pleased to provide the following
update.
Production
Average production for April and May 2012 was 13,800 barrels of oil per
day ("bopd"), and average production for May 2012 was 14,150 bopd.
First five months 2012 production average of 14,000 bopd represents a
7% growth over 2011 production.
Horizontal Drilling Performance
New horizontal drilling in the central and northern areas of the field
in 2012 has encountered good results with flow rates north of the river
averaging 170 bopd and wells in the North Central region averaging 90
bopd. To follow up on this positive performance, the remainder of the
2012 drilling program will utilize 4 rigs to drill high impact Driza
and Gorani wells focused on steady production additions in these areas
of the field. The 5th rig will be used for core and delineation wells in other part of the
fields, and to drill water disposal wells and an exploration well into
Block F.
Three (3) type curves for horizontal wells in the Patos-Marinza oilfield
have been added to the Corporate Presentation representing the majority
of the wells drilled to date and additional production performance.
Results are consistent with previously forecasted 40-50% declines in
production during the transient phase, followed by a shallower 15-30%
decline as well performance transitions into a steady state phase.
While results across the field and in different zones vary, the future
development program will continue to focus on those areas of the field
which can yield the best results.
Secondary recovery methods are being reviewed to enhance both the
ultimate recovery and also the pace of recovery through stemming the
above stated natural reservoir declines. Indications are present in the
field that secondary flooding will be effective. The Company is
planning to gather core data for special core analysis and establishing
water-flood and polymer-flood pilots over the next several months to
validate the potential for secondary recovery processes.
Wellbore Construction Improvements
Drilling procedures, sand production, and localized tectonics within the
field area are believed to be the main causes of recent liner
mechanical integrity concerns in some of the horizontal wells. Wellbore
construction has been an ongoing focus of the technical team and
several improvements are being implemented, including liner and
slotting design for additional strength and adjusted drilling
techniques for better down-hole conditions. As these improvements are
implemented by the fourth quarter, they are expected to largely
mitigate concerns in the go-forward program.
While the impact of
wellbore construction has contributed to lower production results in
the first part of the year, liner and slotting configuration adjustment
for optimum performance is not uncommon in heavy oil developments and
the Company believes the solutions discussed will aid in rectifying the
situation within the next few quarters.
Water Control
Water control initiatives in the field continue with over 200 old
vertical wells now plugged to prevent water cross-flow, which impacted
existing and new production in both re-activated vertical wells and
several new horizontal wells. The expansion of the Company's water
disposal capacity in the first quarter has enabled many of the shut-in
high water cut wells to be brought back on line. The Company expects to
see a gradual increase of oil production from these wells as the water
cut decreases over time.
Included in the Company's plans is the utilization of third party
consultants and oilfield service providers with global experience in
similar old oilfield developments, to help provide the needed solutions
on a collaborative basis with Bankers' technical and operational teams
towards production and reserves enhancements.
Thermal Program
Laboratory results from the oil sample recovered from the first cycle of
the thermal pilot have shown viscosity measurements of over 100,000
centipoise at reservoir temperature and demonstrated oil mobility can
occur at temperatures over 90 degrees Celsius. To achieve optimum
results in the second phase of the pilot, steam will be injected for a
shorter 30 day cycle at over 250 degrees Celsius and the well will be
put on production after a few days soak period to enable higher
temperatures during flow-back and production. The second steam
injection cycle is expected to commence this month.
Exploration Block "F"
The Company intends to drill the second Block "F" exploration well in
the fourth quarter. Seismic modeling and detailed interpretation of a
large turbidite prospect is underway. Work has also commenced to gain
lease access and the approvals to construct the road necessary for the
well location.
2012 Budget and Liquidity
The Company will continue to maintain a strong balance sheet, especially
considering this global economic uncertainty.
As a development company
with significant production, Bankers can rely on a relatively
consistent cash flow to fund its project growth. The work program
maintains sufficient flexibility to be modified, if needed, to fit
within expected cash resources, thereby focusing capital program
spending during lower oil prices towards maintaining and supporting
production levels. The Company has stress-tested its liquidity at
various Brent oil price levels and additionally, by way of a hedge
executed in 2011, has secured a floor price of US$80 Brent oil price
for 25% of its production in 2012.
On the basis of Bankers independent reserve valuation at December 2011,
the existing borrowing base covenants show that nearly $300 million of
debt capacity is supported by proved reserves. The existing $110
million credit facilities, held jointly with the European Bank for
Reconstruction and Development ("EBRD") and the International Finance
Corporation ("IFC"), are mid-way through their initial six year term.
Under the terms of these facilities, and with the expectation that cash
flow will be in excess of capital program requirements, principal
repayments will commence in October 2013 and over the remaining two
years.
The Company expects to open discussions with its lenders early
next year to extend the facility, thereby deferring the repayment
requirements. At the end of March, 2012, the Company renewed its US$20
million revolving loan with Raiffeisen bank for another two years.
With its $215 million capital program, Bankers anticipates delivering
growth in production for 2012, however, until the Company completes a
full assessment and determines the time needed to implement and see
positive results from the wellbore construction and water control
initiatives, the Company will not be providing production guidance for
this year.
Updated Corporate Presentation
For additional information on this update, please see the June 2012
version of the Company's corporate presentation and also a new presentation titled Technical and Operational Progress Update
Dated June 4, 2012 at www.bankerspetroleum.com.
Conference Call
The Management of Bankers will host a conference call on June 4, 2012 at
2:30PM MDT to discuss this Technical and Operational Update. Following
Management's presentation, there will be a question and answer session
for analysts and investors. \
As questions will not be able to be asked
from the dial in live, please forward any questions to mhodgson@bankerspetroleum.com during the webcast and we will attempt to incorporate them into the
Q&A.
ial, sans-serif; font-size: 13px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-align: -webkit-auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px;">prnews
CALGARY, June 4, 2012 /PRNewswire/ - Bankers Petroleum Ltd. ("Bankers" or the
"Company") (TSX: BNK, AIM:BNK) is pleased to provide the following
update.
Production
Average production for April and May 2012 was 13,800 barrels of oil per
day ("bopd"), and average production for May 2012 was 14,150 bopd.
First five months 2012 production average of 14,000 bopd represents a
7% growth over 2011 production.
Horizontal Drilling Performance
New horizontal drilling in the central and northern areas of the field
in 2012 has encountered good results with flow rates north of the river
averaging 170 bopd and wells in the North Central region averaging 90
bopd. To follow up on this positive performance, the remainder of the
2012 drilling program will utilize 4 rigs to drill high impact Driza
and Gorani wells focused on steady production additions in these areas
of the field. The 5th rig will be used for core and delineation wells in other part of the
fields, and to drill water disposal wells and an exploration well into
Block F.
Three (3) type curves for horizontal wells in the Patos-Marinza oilfield
have been added to the Corporate Presentation representing the majority
of the wells drilled to date and additional production performance.
Results are consistent with previously forecasted 40-50% declines in
production during the transient phase, followed by a shallower 15-30%
decline as well performance transitions into a steady state phase.
While results across the field and in different zones vary, the future
development program will continue to focus on those areas of the field
which can yield the best results.
Secondary recovery methods are being reviewed to enhance both the
ultimate recovery and also the pace of recovery through stemming the
above stated natural reservoir declines. Indications are present in the
field that secondary flooding will be effective. The Company is
planning to gather core data for special core analysis and establishing
water-flood and polymer-flood pilots over the next several months to
validate the potential for secondary recovery processes.
Wellbore Construction Improvements
Drilling procedures, sand production, and localized tectonics within the
field area are believed to be the main causes of recent liner
mechanical integrity concerns in some of the horizontal wells. Wellbore
construction has been an ongoing focus of the technical team and
several improvements are being implemented, including liner and
slotting design for additional strength and adjusted drilling
techniques for better down-hole conditions. As these improvements are
implemented by the fourth quarter, they are expected to largely
mitigate concerns in the go-forward program. While the impact of
wellbore construction has contributed to lower production results in
the first part of the year, liner and slotting configuration adjustment
for optimum performance is not uncommon in heavy oil developments and
the Company believes the solutions discussed will aid in rectifying the
situation within the next few quarters.
Water Control
Water control initiatives in the field continue with over 200 old
vertical wells now plugged to prevent water cross-flow, which impacted
existing and new production in both re-activated vertical wells and
several new horizontal wells. The expansion of the Company's water
disposal capacity in the first quarter has enabled many of the shut-in
high water cut wells to be brought back on line. The Company expects to
see a gradual increase of oil production from these wells as the water
cut decreases over time.
Included in the Company's plans is the utilization of third party
consultants and oilfield service providers with global experience in
similar old oilfield developments, to help provide the needed solutions
on a collaborative basis with Bankers' technical and operational teams
towards production and reserves enhancements.
Thermal Program
Laboratory results from the oil sample recovered from the first cycle of
the thermal pilot have shown viscosity measurements of over 100,000
centipoise at reservoir temperature and demonstrated oil mobility can
occur at temperatures over 90 degrees Celsius. To achieve optimum
results in the second phase of the pilot, steam will be injected for a
shorter 30 day cycle at over 250 degrees Celsius and the well will be
put on production after a few days soak period to enable higher
temperatures during flow-back and production. The second steam
injection cycle is expected to commence this month.
Exploration Block "F"
The Company intends to drill the second Block "F" exploration well in
the fourth quarter. Seismic modeling and detailed interpretation of a
large turbidite prospect is underway. Work has also commenced to gain
lease access and the approvals to construct the road necessary for the
well location.
2012 Budget and Liquidity
The Company will continue to maintain a strong balance sheet, especially
considering this global economic uncertainty. As a development company
with significant production, Bankers can rely on a relatively
consistent cash flow to fund its project growth. The work program
maintains sufficient flexibility to be modified, if needed, to fit
within expected cash resources, thereby focusing capital program
spending during lower oil prices towards maintaining and supporting
production levels. The Company has stress-tested its liquidity at
various Brent oil price levels and additionally, by way of a hedge
executed in 2011, has secured a floor price of US$80 Brent oil price
for 25% of its production in 2012.
On the basis of Bankers independent reserve valuation at December 2011,
the existing borrowing base covenants show that nearly $300 million of
debt capacity is supported by proved reserves. The existing $110
million credit facilities, held jointly with the European Bank for
Reconstruction and Development ("EBRD") and the International Finance
Corporation ("IFC"), are mid-way through their initial six year term.
Under the terms of these facilities, and with the expectation that cash
flow will be in excess of capital program requirements, principal
repayments will commence in October 2013 and over the remaining two
years. The Company expects to open discussions with its lenders early
next year to extend the facility, thereby deferring the repayment
requirements. At the end of March, 2012, the Company renewed its US$20
million revolving loan with Raiffeisen bank for another two years.
With its $215 million capital program, Bankers anticipates delivering
growth in production for 2012, however, until the Company completes a
full assessment and determines the time needed to implement and see
positive results from the wellbore construction and water control
initiatives, the Company will not be providing production guidance for
this year.
Updated Corporate Presentation
For additional information on this update, please see the June 2012
version of the Company's corporate presentation and also a new presentation titled Technical and Operational Progress Update
Dated June 4, 2012 at www.bankerspetroleum.com.
Conference Call
The Management of Bankers will host a conference call on June 4, 2012 at
2:30PM MDT to discuss this Technical and Operational Update. Following
Management's presentation, there will be a question and answer session
for analysts and investors. As questions will not be able to be asked
from the dial in live, please forward any questions to mhodgson@bankerspetroleum.com during the webcast and we will attempt to incorporate them into the
Q&A.
Canada Is World’s Biggest Oil Loser With Price Spread
By - May 8, 2012
Canada buys high and sells low when it comes to crude oil, costing the world’s 10th largest economy billions in lost revenue as it expands production from one of the world’s largest energy deposits.
The gap between Alberta’s exported Western Canada Select and Brent oil imported into Ontario and Quebec was about $30.50 a barrel yesterday, and that difference is creating a drag on growth according to Bank of Canada Governor Mark Carney.
Annual losses of about C$19 billion ($19 billion) may persist for a couple of years amid a lack of ready alternatives for oil sands bitumen.TransCanada Corp.’s (TRP) Keystone XL pipeline to U.S. Gulf coast refineries was delayed by President Barack Obama while Enbridge Inc.’s (ENB) proposed Northern Gateway project to the west coast faces environmental hearings and growing opposition in British Columbia. There are no advanced proposals to ship oil from Alberta east to the rest of Canada.
The price difference “highlights the importance and potentially the value of pipelines in Canada that move our oil on an east-west axis,” saidJim Prentice, vice chairman of Canadian Imperial Bank of Commerce and a former minister for the environment and industry. “That’s lost corporate revenue, government income tax, government royalties.”
CIBC estimates losses to the economy of at least C$18 billion a year, while Bank of Montreal economists say the oil- price gap costs about C$19 billion.
Bloomberg Summit
The economy and energy are topics that will be discussed today at a Bloomberg Summit in Toronto that includes speakers such as Ontario Premier Dalton McGuinty, former Prime Minister Paul Martin and Devon Canada Corp. President Christopher Seasons.
Canadian oil and gas stocks have lost 6.4 percent this year, the ninth out of 10 sub-groups and lagging the 2.5 percent drop for the country’s main stock index.
Companies such as Bankers Petroleum Ltd. (BNK), which earn money from oil produced outside Canada, may outperform domestic drillers such as Imperial Oil Ltd. (IMO), Crescent Point Energy Corp. and Suncor Energy Inc., said Paul Taylor, Chief Investment Officer at BMO Harris Private Banking in Toronto. Bankers Petroleum has production in Albania that sells at Brent prices.
“That differential is probably going to stick for some time,” Taylor said, citing Middle East tensions that may keep Brent prices elevated and dim prospects for a quick end to the glut of Canadian exported oil at Cushing, Oklahoma.
Economic Impact
In a 2005 report, the Bank of Canada said higher oil prices benefited the economy, as the boost from increased investment outweighed the drag on energy consumers such as factories. The bank updated that view last month, saying that oil market developments this year have hurt Canada because “not all oil prices have risen equally,” with the price gap reducing Canada’s real domestic income.
Canadian oil-sands producers are ramping up investment that will more than double output from Northern Alberta’s bitumen fields to 3.5 million barrels a day by 2025, according to the Canadian Association of Petroleum Producers. Production has already risen from just over 1 million barrels a day in 2005, according to provincial government figures.
Still, higher output hasn’t been enough for Canada to escape a deficit in its broadest measure of trade, the current account. Being a net oil exporter with a current-account gap makes Canada the biggest member of a club that includes Mexico and Sudan. The International Monetary Fund projects Canada will remain in a current-account deficit through 2017.
Energy Superpower
The drag from energy may blunt Prime Minister Stephen Harper’s efforts to brand Canada as an energy superpower. Finance Minister Jim Flaherty’s March 29 fiscal plan included steps to accelerate environmental reviews of major energy projects.
The opposition New Democratic Party objects to fast- tracking new pipelines, arguing better environmental controls are needed and that Canada should consider refining bitumen at home instead of exporting it to Texas.
“This is the Wild West all over again, breaking down the basic fundamentals and saying that all decisions with regards to oil and pipelines will be political decisions,” Nathan Cullen, an NDP lawmaker from British Columbia, told reporters May 4.
Some 52 percent of British Columbia residents oppose the Northern Gateway proposal according to a Forum Research Inc. telephone poll taken April 11, up from 46 percent in January. The pipeline, which would carry crude from Alberta to the Pacific Ocean at Kitimat, British Columbia, has been opposed by environmental and aboriginal groups, who say a spill along the coast would be catastrophic.
Better Prices
There are efforts to rework existing pipelines to fetch better prices for Canadian oil, including Kinder Morgan Inc.’s proposed expansion of the Trans Mountain line to Vancouver and the reversal of the Seaway line owned by Enterprise Products Partners LP and Enbridge between Cushing and Houston. As well, TransCanada re-applied for a U.S. permit for Keystone XL on May 4, seeking permission to build a $5.3 billion portion of the original project from the Canadian border to Steele City, Nebraska.
Still, “Canada still exports primarily to the U.S.,” said Mazen Issa, Canada macro strategist at TD Securities Inc. in Toronto. “If you diversify it may be the case where you don’t end up on the short end of the stick,” he said.
High prices for oil and other exported commodities have helped keep the Canadian dollar at about parity with the U.S. dollar, adding to pressure on manufacturers, based primarily in Ontario and Quebec, who have fired 13 percent of their workforce in the last five years.
“If I had my preferences as to whether we have a rapidly growing oil and gas sector in the west or a lower dollar benefiting Ontario, I’d tell you where I stand - with a lower dollar,” Ontario Premier McGuinty said in February.
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