Bankers Petroleum Ltd. provided an operational update for its Albanian heavy oil operations and its United States exploration program.
In Albania, Bankers' Patos Marinza operations increased its 2007 exit production by 12% to 5,337 bopd from 4,406 bopd at the end of 2006. During the fourth quarter, average daily production was 5,169 bopd, which represents a 24% increase compared to the same period in 2006.
Effective January 1, 2008, the company renegotiated its domestic crude oil sales agreement with ARMO Sh.A, the state-owned Albanian refining and marketing organization, and completed an export agreement with a second refinery in Italy. The higher domestic sales price compares favorably to the previous contract, becoming competitive with export pricing. The domestic sales contract with ARMO Sh.A. includes volume commitments of between 50% to 55% of Bankers production in Albania.
Bankers expects that its overall average sales price will approximate 56% of the Brent oil price for 2008, dependant upon total domestic versus export volumes. Based on a current Brent price of US$93.00 per barrel, this translates into an average sales price of $52.00 per barrel as compared to $35.54 per barrel in 2007. For January 2008, average blended sales price was $49.51 as compared to $39.56 for December 2007, a 25% improvement.
Steam injection operations commenced on an existing well into the Driza formation sands during the fourth quarter of 2007. In early December, approximately 17,000 barrels of cold water equivalent steam was successfully injected into the well. Initial flow-back and production of condensed water and oil was encouraging with estimated oil production reaching over 150 bopd during the first few days of production. The well subsequently experienced casing collapse at the perforations. Since that time, the company made adjustments to place the well back on production in a non-optimized configuration. Current production rates are approximately 25 to 30 bopd with a strong fluid level as optimization continues, compared to prior production of seven bopd.
Taking these results into account, Bankers believes that newly planned thermal wells will be designed to overcome the casing integrity issues experienced with existing wells. The company expects to drill eight new wells for the thermal steam project in the fourth quarter of 2008.
Further details of the company's three-year plan will be released in March 2008. In preparation for implementation, Bankers has contracted a drilling rig to begin in the second quarter of 2008, and is seeking a second drilling rig for the third quarter of the year.
In Bankersí Oklahoma Woodford shale project, the "Tishomingo field", the company finished drilling and fracture stimulating its third and fourth horizontal shale wells, the Brock 4-1H and Brock 9-1H. The wells have currently recovered about 43% of the injected fracture fluid and are producing using a gas lift. Initial production rates were approximately 2.1 mmcfe/d and 1.8 mmcfe/d respectively. This compares favorably to Bankersí first two horizontal wells, one of which is on production and the other, the WLC 17-1H (initial production rate: 2.1 mmcfe/d), is currently shut-in awaiting pipeline hook-up. Total behind pipe volume is 6.0 mmcfe/d. A gathering system is currently being installed to connect the Brock wells to the processing facility, which the company expects to have completed by the end of February 2008. Bankersí U.S. production averaged 1.0 mmcfe/d in the fourth quarter of 2007 and had an exit production rate of 0.7 mmcfe/d.
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