Bankers Petroleum Is Cheap And Growing Quickly

Mar.11.14 | About: Bankers Petroleum (BNKJF)

Summary

Growing production.

Capital outlays within cash flows.

Recycle ratio 3.5 times.

Bankers should reward patient money.

Bankers Petroleum (OTCPK:BNKJF) continues to increase production and cash flows while living within its means by keeping capital expenditures within its internally generated cash flows. Bankers released reserves and production figures recently showing a $2.2 billion net present value of reserves and production now approaching 20,000 barrels of oil a day from its Albanian oil fields.

With a recycle ratio of 3.5 times at $100 per barrel Brent crude price, Bankers has the ability to grow organically without material use of third party debt.

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Source: Bankers Petroleum February 2014 corporate presentation

With 257 million shares outstanding and a recent price of around $5.00 a shares, the market value of the company is just over half its reserve valuation. That makes it a steal in my opinion.

Bankers' production growth since 2008 can only be described as spectacular with horizontal wells the major contributor to recent increases.

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Source: Bankers 2014 corporate presentation

At September 30, 2013 the company had debt net of cash of less than $70 million, had generated almost $200 million of cash flow for the nine month period and spent $160 million on capital outlays to develop its properties. At today's prices for oil, Bankers should be able to continue to keep its capital spending well within its cash flows and show sustained production growth.

Bankers will release 2013 year-end financial results March 13, 2014. Investors wanting a pure play on oil exploration and development with prices tied to Brent crude would find Bankers worth following.

I am long the stock.

Disclosure: I am long BNKJF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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