Albania’s largest foreign direct investor, Bankers Petroleum (BNK:TSX) has released its fourth quarter production numbers for 2013, with average daily oil output growing by 4.1% quarter-over-quarter (q-o-q) to 19,303bopd. The company produced an average of 18,169bopd over 2013 which represented 21% growth over 2012 average daily production of 15,020bopd. Oil sales grew year-over-year as well with 2013 oil sales increasing 23% with an average price per barrel of $85.71.
To achieve this fourth quarter production, the company drilled 40 horizontal wells of which 37 were production wells and three were lateral re-drills. 33 of the production wells were completed in the fourth quarter and are on production currently. The remaining 7 are scheduled to be put on production in January once the facilities are built. The total wells drilled in the company’s massive Patos-Marinza oilfield in 2013 was 146 which the company plans to grow to over 175 in 2014. Five rigs are currently drilling with a sixth rig expected to start drilling within the first quarter of 2014.
Secondary and tertiary recovery programs are well underway and will be a driver for production growth in 2014 and beyond. Bankers’ water flood and polymer flood patterns continue to be monitored and expanded and the company expects an initial production response from the Lower Driza in the first half of 2014. Two polymer injectors commenced early in 2013 in this zone. Reservoir pressure is rising and is following current projections.
The company plans to convert up to 8 wells for polymer and water injection in the first half of 2014, adding to the 11 completed in 2013. In their recent capital budget plan for 2014, the company sited plans for a total of 14 secondary and tertiary injectors to be used in 2014.
The company has continued to have success within their treating process and were able to reduce diluent blend to 8.5% of gross sales volume in the fourth quarter of 2013, down significantly from the 13% in the fourth quarter of 2012. This will continue to expand margins as it improves the sales specification of the crude oil and should help bolster bottom line cash flows.
In order to reduce costs, the company expects to focus on key infrastructure in 2014, including: field electrification, flow-lines, sour treatment facilities, tank construction and additional cascade systems. All of this is part of their above estimated 2014 capital budget of $313 million which should lay the foundation for value late into 2014 and beyond. The increased budget has over $76 million in it for infrastructure developments which should last past 2014 and should continue to expand profitability a its production facilities.
The company also updated investors on ongoing fiscal changes within the Albanian government which will mildly effect Bankers. The Parliament of Albania approved the State Budget in late December which included tax law related amendments that pertain to hydrocarbon operations.
Effective January 1, 2014, the government has removed exemptions of VAT of 20% on goods and services related to the extraction of hydrocarbons. A potential Excise Tax on imported petroleum products effective April 1, 2014 is also on the table, although the government is taking the next three months to consult with key industry members including Bankers.
“We anticipate these changes will have minimal impact on our ongoing business and plan to move forward with our 2014 capital plan as previously reported. We look forward to another successful year and continued robust investment in Albania” commented David French, President and Chief Executive Officer of Bankers Petroleum.