With three new wells drilled in December 2011 and placed on production in the first week of January, current production is 16,048 bopd.

Average production for the fourth quarter was 13,833 bopd, representing a 5% increase from 13,232 bopd in the third quarter.

Average oil production for 2011 was 13,051 bopd, 33% higher than 2010 production of 9,806 bopd.

Oil sales from the Patos-Marinza oilfield in Albania during the fourth quarter averaged 13,399 bopd. Average oil sales for 2011 were 12,784 bopd, 33% higher than 2010 sales of 9,597 bopd. Crude oil inventory on December 31st was 241,000 barrels, an increase of 40,000 barrels from September 30th.

The Patos-Marinza fourth quarter average oil price was approximately US$71.67 per barrel (representing 66 per cent of the Brent oil price of US$109.31 per barrel, as compared with the third quarter average oil price of US$74.46 per barrel (66% of Brent oil). The average oil price for 2011 was US$72.84 per barrel (66% of Brent oil), a 50% increase from US$48.64 per barrel (61% of Brent oil) for 2010.

Drilling update and well reactivations

Twenty-six (26) wells have been drilled during the fourth quarter: twenty-five (25) horizontal production wells and one (1) water disposal well. All of the horizontal production wells have been completed and are on production. Eighty-four (84) wells were drilled in 2011: seventy-six (76) horizontal production wells, two (2) vertical delineation wells, two (2) cyclic steam horizontal wells, and four (4) water disposal wells.

Several step-out wells in the western extension of the field (Area 3) were drilled in the fourth quarter. Six (6) of these wells are in the Driza 1 formation with encouraging production rates ranging from 70 to 270 bopd. In addition, several step-out wells in the southern area of the field (Area 2) were drilled with three (3) wells in the Upper and Middle Gorani having good production rates in the range of 90 to 150 bopd. The new production using horizontal well completions in these formations will contribute to additional development of recoverable reserves in these areas of the field.

The fifth drilling rig is currently operating at Patos-Marinza and drilling its third well in the field.

Reactivation and recompletion work continued in the fourth quarter with five (5) new reactivations and five (5) recompletions, including expansion into the northern part of the contract area targeting the deeper Bubullima sandstone formation. The first well in this area (K-8) was reactivated in December and initial production monitoring is underway with good fluid recovery and early traces of oil. An additional well will be reactivated in the Bubullima zone during the first quarter with new drilling activity later in the year as part of the Company's development plans for this formation and area of the field.

Thermal program

Thermal operations commenced at the southern Patos Cyclic Steam Pilot in December 2011 with steam test injection into thermal horizontal well 5201. The steam generator was calibrated and tested at full capacity with injection rates of 230 m3/d of cold water equivalent steam. The steam generator, well operating and injection conditions are within forecasted parameters.

Currently, two offset wells have been taken over from the State oil company ("Albpetrol") for remedial work and are being equipped to monitor the adjacent temperature and pressure conditions during full cycle operation of the Steam Pilot.

Full steam injection will resume in January and the first production cycle on the well (5201) is projected to commence later in the first quarter, with stabilized production results available in the second quarter. The second thermal horizontal well (5202) will be steamed subsequent to the injection cycle on the first well, followed by a production cycle later in the year.

Exploration Block "F"

The first Block "F" exploration location has been selected and land access is underway along with environmental permitting to commence surface lease construction. This first well is expected to spud in the first quarter of 2012.

Infrastructure development

The first phase of the crude oil sales pipeline, which connects the Patos-Marinza oilfield to Bankers' storage and loading hub facility at Fier is built and scheduled to commence operations in January. Construction of the expanded central treatment facility is finished and will also be operational in January, expanding Bankers' treating capacity to handle 25,000 bopd.

The Seman River Bridge, in the northern area of the Patos-Marinza oilfield, is complete and was open for traffic in December.

Kuçova

Water injection into well F-38 commenced in May and two offset wells F34 and F41 were placed on production in December. The Company intends to expand the waterflood pilot project with an additional injector and producers in the Ferme pool and expansion into the Ciflik and Arreza pools later this year.

Environmental initiatives

Environmental cleanup of former Albpetrol leases continued throughout the fourth quarter. Results of the remediation trials have been tabulated and Bankers completed the environmental remediation and reclamation of 62 leases and 5 former pump stations as part of the Sector III project.

Plans have been developed and budget funds allocated for 2012 to continue with the cleanup of additional leases and remnant hydrocarbon spill material from historic operations. The plans include expansion of the sludge treatment facility and the introduction of a commercial high temperature thermal desorption unit to treat hydrocarbon materials.

Tags: Bankers Petroleum Ltd.