"We are heading into another exciting year as 2014 marks the Company's 10th year operating in Albania." - David French
President, CEO and Director
In 2013, Bankers Petroleum achieved a number of significant milestones through our strategy of delivering reliable, disciplined growth. Throughout the year, the Company invested a total of $234 million into our Albanian assets, achieved record revenue of $566 million, an average netback of $47.73/bbl, and realised our first year of free cash flow of $45 million. The Company drilled a record 145 horizontal wells and grew production by 21% bringing the average production to 18,169 bopd, a record for the Company and the 85-year history of the Patos-Marinza oilfield.
Through focus on both drilling efficiency and operating cost management, we grew the volume of our 2P reserves to 232 million barrels, and more significantly, the Net Present Value (after tax discounted at 10%) of those reserves grew by 20% to $2.2 billion on a 2P recovery basis.
10–15% Annual Production Growth
We are heading into another exciting year as 2014 marks the Company’s 10th year operating in Albania. With a record capital program of $313 million, fully funded from cash flow and existing cash, the Company will continue on the momentum we have built through a strategy of delivering reliable annual production growth of 10 – 15%, expanding our product margins though surface-level improvements in the field, and the validation of enhanced oil recovery – engineering our growth for many years to come.
$1.4 billion cumulative investment in Albania
Over the past ten years, Bankers has invested over $1.4 billion into the brownfield development of Patos-Marinza, the largest onshore oilfield in Europe – a world class heavy-oil field which Albania has offered us the privilege to operate. We have built a track record of “firsts” for Albania. We drilled the first horizontal well, conducted the first coil tubing operation, implemented continuous rod technology and initiated the first polymer flood. This year we will apply the latest technology to imaging our reservoirs by acquiring the first 3-D seismic in the history of the country. All the while, we have dedicated ourselves to bringing international standards for environmental management, safety performance, and stakeholder engagement to our operations, and will invest over $7 million in 2014 in these efforts. We intend to always be the partner of choice for the country of Albania.
2013 Free Cash Flow of $45 million
I’d like to take this opportunity to thank the Management, Board of Directors and employees of Bankers for their dedication and hard work. And I’d also like to extend thanks to our suppliers and customers for their contribution to our success, and to Bankers shareholders for their continued support. We are proud of our past, and we are engineering our momentum for a bright future.
On Behalf of the Board of Directors,
Director, President and Chief Executive Office
* all dollar amounts in US$ unless otherwise noted
Strategic operational focus in Albania. 20% increase in NPV based on the 2P recovery case.
At Bankers, we are engineering momentum for future growth through a three-part strategy: executing our primary drilling program, expanding our product margin and validating our polymer and water flood patterns.
The cornerstone of our 2014 capital plan and the driver behind our 10 – 15% annual production growth is our primary drilling program. With the addition of the sixth drilling rig, which spud its first well in March 2014, the Company will drill between 150 – 170 horizontal wells this year at a cost of about $1.2 million per well.
The majority of these wells will be drilled in the main area of the Patos-Marinza oilfield where most of our development drilling has taken place to date. Additionally, the Company plans to drill a small number of exploration and delineation wells for data gathering in the southern area of Patos-Marinza and in Kuçova.
The second focus of the Company is to make each barrel of oil worth more by lowering operating costs. The Company is continuously working to improve surface-level facilities such as building a network of flow-lines to limit in-field trucking, optimizing our treating process to reduce our use of diluent, and developing a more efficient power generation and phased electrification of the field to decrease our reliance on imported diesel for energy. While these projects, along with many others, may not seem overly exciting, we know that focusing on the details will improve our netbacks and set Bankers apart as an investment opportunity.
In addition to our optimizations within the field, Bankers will begin the process of expanding our contracted export terminal to allow for larger vessels. This could push the realized price for our oil beyond the 81% of Brent that we currently receive.
We know that focusing on the details will improve our netbacks.
The third focus of the Company is validating the water and polymer flood programs which began in 2013. Through the injection of water and polymer into the reservoir, the Company aims to increase reservoir pressure to mitigate production declines and increase oil recovery. In 2013, Bankers initiated 3 water flood and 5 polymer flood patterns in the main area of the Patos-Marinza oilfield. This year we plan to expand this program by converting an additional 14 wells to injection.
Each pattern should take 9 – 12 months to show a response in the nearby producing wells. We have been pleased with the performance of the injection to date, which is tracking our model expectations, and look forward to sharing production response with the investment community in the middle of 2014.
*all amounts in US$ unless otherwise noted
Identified in 2P Reserves case
Every 3 Days
Bankers Petroleum reported proved reserves (1P) of 147 million barrels of oil, and proved plus probable (2P) reserves of 232 million barrels of oil, an increase of 5% and 3% respectively, in 2013.
At December 31, 2013, Bankers Petroleum reported proved reserves (1P) of 147 million barrels of oil, and proved plus probable (2P) reserves of 232 million barrels of oil, an increase of 5% and 3% respectively, in 2013.
While we saw a slight increase in our volumes in 2013, the value of the Company grew by 20% on a Net Present Value basis, which can primarily be attributed to operational efficiencies in the field. The 10% discounted independent Net Present Value was $1.2 billion and $2.2 billion on a 1P and 2P basis, respectively.
The Oil Initially in Place (“OIIP”) volumes in the reserves area of the field have been reported as 2.4 billion barrels and 5.1 billion barrels across the entire Patos-Marinza field. The OIIP resource estimate in the Kuçova oilfield is 297 million barrels.
The 2013 reserves are based solely on the primary development program. As we validate the water and polymer flood program, we will be evaluating potential reserve implications for the pilot areas.
Bankers obtains annual independent reservoir evaluations of its Albanian properties by RPS Energy Canada Ltd. for the Patos-Marinza oilfield and by DeGolyer and MacNaughton Canada Ltd. for the Kuçova oilfield.
In 2013, revenue increased by 31% to $566 million, and funds generated from operations exceeded annual capital expenditures by $45 million.
* all dollar amounts in US$ unless otherwise noted
Over the past 10 years that Bankers has operated in Albania, the Company has paid approximately $304 million in Royalty Tax payments to the Government of Albania, $94 million in 2013 alone.
Over the past 10 years that Bankers has operated in Albania, the Company has paid approximately $304 million in Royalty Tax payments to the Government of Albania, $94 million in 2013 alone. In addition to Royalty Tax contributions, Bankers will invest an additional $7 million in community relations, health, safety and environmental initiatives in 2014.
$7 million to be invested in community relations, health, safety and environmental initiatives in 2014
Bankers has designed and implemented a series of programs as part of a sustained long-term effort to increase incomes, provide employment opportunities, develop skills and improve the quality of life for the residents of the Patos-Marinza area. The programs include vocational training for skills that are in demand in their specific region, English language classes, agriculture support programs to help residents transition from subsistence to commercial farming, and investment in local infrastructure and recreation facilities.
Bankers' Community Relations team engages with stakeholders through regular meetings with local authorities, residents, companies and institutions through outreach initiatives and the Community Information Centre, which has seen more than 600 people since opening in May 2012.
Largest contributor of taxes in Albania, $94 million paid in Royalty Tax payments in 2013
Before Bankers came to Albania, 85 years of oilfield operations in Patos-Marinza left the field in poor condition with oil contamination surrounding many of the wells and old Albpetrol facilities. Although Bankers' License Agreement excludes responsibility for pollution and contamination caused by historical development, Bankers has invested over $20 million to clean-up historical contamination in the field area and to eliminate pollution discharges from pre-existing operations. Bankers promotes a continuous environmental clean-up philosophy to reduce current risks to people and the environment, while also helping reduce the overall environmental liability frequently associated with brownfield petroleum operations.
Patos-Marinza - Before 2005
Patos-Marinza - After 2012
Agricultural Mentoringin Sheqishta - 2013
Irrigation Project Jagodina - July 2013
Health and Safety Awareness Campainin Mbyet - 2013
Zhupan School - Sept 2013
Kuman Roskovec Road Works
Parks recreation Patos Stadium - Sept 2013