Bankers Petroleum achieved a first quarter 2016 production average of 17,363 barrels of oil per day (bopd), 4% below the fourth quarter 2015 average of 18,137 bopd.
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During the first quarter of 2016,Bankers Petroleum continued to optimize current production levels and monitor the economic return of all wells in accordance with the current oil price environment.
In the first quarter of 2016, oil sales averaged 17,280 bopd, compared to the fourth quarter sales in 2015 of 18,558 bopd. Crude oil inventory at March 31, 2016 increased to 266,000 barrels compared to 258,000 barrels at December 31, 2015.
Bankers' first quarter average oil price was approximately $21.07 per barrel (representing 62% of the Brent oil price of $33.89 per barrel), as compared with the fourth quarter 2015 average oil price of $33.62 per barrel (representing 77% of the Brent oil price of $43.69 per barrel).
Sales to the export market during the first quarter 2016 represented 96% of total sales. Sales prices were lower than expected in the first quarter due to temporarily reduced pricing in February at the request of our export crude buyer as Brent prices reached levels of $30 per barrel.
March crude sales recovered towards better pricing as the Brent oil price improved and we are expecting continued improvement as we enter into the second quarter and seasonally higher demand for heavy crude oil on both the export and domestic markets.
Bankers has hedged 5,000 bopd under costless collar contracts with an average floor of $52.09 per barrel and an average ceiling of $54.64 per barrel (all prices are referenced to Dated Brent) for the balance of 2016.
In the first quarter of 2016, the hedge program generated proceeds of $7.4 million.
The remaining 2016 hedge program at March 31, 2016, is valued at $16.2 million. These contracts are designed to protect Bankers against further volatility in oil prices in 2016.
Due to the low oil price environment, Bankers elected to defer drilling activity at the start of the year in order to protect the strength ofBankers Petroleum's balance sheet. Drilling activity will resume as pricing improves. ■