TIRANA, March 22 – Last week, the Canadian oil and gas company, Bankers Petroleum, which was awarded the tender when Albania privatized its oilfields, announced it has found more oil within Albania than it had anticipated, according to a statement.
Bankers Petroleum said its 2007 proven reserves jumped 19 percent, to 54 million barrels of oil, while proven and probable reserves soared 54 percent to 156.6 million barrels.
The company said the majority of the increase in reserves is attributable to oil pumped from the Patos Marinza oilfield in Albania.
Why would a Canadian company have a special interest in oil in Albania? Albania’s oil is heavy, and similar to that found in Canada. One problem, though, is that the heavy oil does not command the same pricing as light, crude oil, which is a much higher quality product.
The Albanian government allows Bankers to sell a certain amount of its oil in Albania at a capped price. The rest can be exported, but to do that Bankers also has to build relationships with local refineries, and deal with the logistical difficulties at Albania’s shallow ports.
In the third quarter, Bankers was able to export 55 percent of its crude production, and the fourth quarter is expected to be higher because the company has negotiated additional sales. Some 45 percent of the oil Bankers sold in Albania brought $28.31 per barrel in the third quarter, while the export price in the same quarter was $44 per barrel.
Bankers shares fell on Thursday by 6.5 percent, or 9 cents, to $1.29 Canadian in afternoon trading on the Toronto Stock Exchange. That could reflect some profit taking, since Bankers shares have skyrocketed 49.4 percent since the beginning of the year.
On March 12, Albania’s Economy Minister, Genc Ruli, said 15 foreign companies had shown interest in buying 85 percent of Albania’s oil refiner, ARMO. Bids are due to open May 21, with a contract signed by June. ARMO has one refinery at the Albanian city of Ballsh, a smaller one at Fier and a small network of fuel stations selling motor oil and products.
Albania invited bidding to begin the sale of ARMO last month. The sale is part of the privatization program that includes the sell-off of state-owned insurer INSIG, the state-held stakes of Albanian Mobile Communications and the cash-strapped KESH power monopoly.
On March 11, Canaccord Adams analyst Rafi Khouri raised his target price on Bankers Petroleum to $1.65 Canadian, from $1.35 Canadian, and maintained his “buy” rating. Khouri said the company was focusing its efforts on maximizing the value of its heavy oil assets.
Last month, Bankers announced it had increased its 2007 production at Patos Marinza by 12 percent, or 5,337 barrels of oil per day, up from 4,406 barrels of oil per day in 2006. During the fourth quarter, average daily production was 5,169 barrels, a 24 percent increase from the prior year.
As of January 1, Bankers said it renegotiated its domestic crude oil sales agreement with ARMO. Bankers now expects an average sale price of $52.00 per barrel, compared with $35.54 per barrel in 2007. For January 2008, the average blended sales price was $49.51, up from $39.56 for December 2007 by 25 percent.
