Banker's Petroleum starts to bottom out
On August 13,2015 Banker's Petroleum reported it's second quarter results.Most of Banker's assets are in Albania but it is listed on the TSX. It's revenues are determined by the Brent price of oil instead of the West Texas (WTI) price.This should make it move differently than Canadian based oil producers.But it is not much different than most Canadian small producers.One big difference is that Banker's Petroleum's(BNK) operational netback has increased over the last quarter.It was $13.62 per barrel in Q1 and now it is $23.24 per barrel - or more than a 2/3 increase.
Operational Statistics
BNK gets paid at a rate of 78% of the Brent oil price which is usually $7.00 to $10.00 per barrel more expensive than the WTI price.BNK also hedged 6000 barrels per day at $80 per barrel for another $21 million.However revenues fell 50% to $86 million for 3 months and fell 50% to $158 million for 6 months.While net income fell 138% to negative $10 million for 3 months and fell 118% to negative $9.5 million for 6 months.Funds from operations (FFO) for the second quarter were $50 million compared to $93 million for the same quarter in 2014. And FFO was $75 million for 6 months compared to $176 million for 2014.In addition, capital expenditures fell 47% to $37 million for 3 months and fell 33% to $87 million for 6 months.
Some improvements
BNK has had some asset purchases and dispositions recently but it's total assets have increased by 2% since the same quarter in 2014.Working capital is down only 15% and long term debt is down by 1% but importantly shareholder's equity is up 12%.Production is down slightly from the second quarter in 2014 but up 1% from the first quarter.It appears as if production may have bottomed out in the first quarter.Also Banker's has scheduled 12 new horizontal wells to be drilled in the next quarter.
Summary
Banker's Petroleum was trading at $4.00 per share in January and as high as $6.00 in September 2014.Now it is in the $2.10 to $2.15 range as it has been caught in the sell off of oil stocks. A few months ago it was trading at the $2.25 to $2.40 range.This is seen as a more appropriate level but the highest that it will hit could be $2.50. It appears that their netback has hit the bottom (in the first quarter) and may stay at the present level until yearend.It is also possible that their netback may rise another 25%.This will mean that (like all the small producers) it must be able to cut costs and be more efficient.In addition, it's production has hit bottom in the first quarter.This blog does not expect significant increases in production but maybe up to a 5% increase. This blog believes that BNK will likely stay in a range from $2.20 to $2.50 per share until yearend.Hopefuly soon the Brent price will move back towards $68 to $70 a barrel;then Banker's will start to edge towards $3.00.
Operational Statistics
BNK gets paid at a rate of 78% of the Brent oil price which is usually $7.00 to $10.00 per barrel more expensive than the WTI price.BNK also hedged 6000 barrels per day at $80 per barrel for another $21 million.However revenues fell 50% to $86 million for 3 months and fell 50% to $158 million for 6 months.While net income fell 138% to negative $10 million for 3 months and fell 118% to negative $9.5 million for 6 months.Funds from operations (FFO) for the second quarter were $50 million compared to $93 million for the same quarter in 2014. And FFO was $75 million for 6 months compared to $176 million for 2014.In addition, capital expenditures fell 47% to $37 million for 3 months and fell 33% to $87 million for 6 months.
Some improvements
BNK has had some asset purchases and dispositions recently but it's total assets have increased by 2% since the same quarter in 2014.Working capital is down only 15% and long term debt is down by 1% but importantly shareholder's equity is up 12%.Production is down slightly from the second quarter in 2014 but up 1% from the first quarter.It appears as if production may have bottomed out in the first quarter.Also Banker's has scheduled 12 new horizontal wells to be drilled in the next quarter.
Summary
Banker's Petroleum was trading at $4.00 per share in January and as high as $6.00 in September 2014.Now it is in the $2.10 to $2.15 range as it has been caught in the sell off of oil stocks. A few months ago it was trading at the $2.25 to $2.40 range.This is seen as a more appropriate level but the highest that it will hit could be $2.50. It appears that their netback has hit the bottom (in the first quarter) and may stay at the present level until yearend.It is also possible that their netback may rise another 25%.This will mean that (like all the small producers) it must be able to cut costs and be more efficient.In addition, it's production has hit bottom in the first quarter.This blog does not expect significant increases in production but maybe up to a 5% increase. This blog believes that BNK will likely stay in a range from $2.20 to $2.50 per share until yearend.Hopefuly soon the Brent price will move back towards $68 to $70 a barrel;then Banker's will start to edge towards $3.00.
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