Bankers’ year-end reserves update was roughly in line with our expectations. Increasing our realized price
assumptions slightly higher due to indications of further improvement in differentials has increased our
NAVPS estimates slightly, but not enough to warrant adjusting our C$6.00 target price.
Bankers is trading at a discount to other International E&Ps under coverage on all key metrics, and at 0.43x
Base NAVPS. We believe that a valuation of up to 0.65x Base NAVPS will leave room for a potential acquirer
to offer a premium to market valuation and get a small portion of 2P reserves (and all of the company’s longerterm
upside potential) for free. Although operational execution in heavy oil redevelopment in Albania offers
challenges, we nonetheless believe that the over 5 billion barrels of original oil in place (combined with
growing production) offers long-term growth potential that will be attractive to larger companies. In the
absence of a take-out, Bankers appears to be taking the necessary steps to ensure the resource can be developed
in a reasonably timely and cost-efficient manner.
Near-term catalysts include year-end financials (expected in mid-March), a new resource report (March), a
credit facility review (late March or April), and regular operations updates (next update likely in early April).
We continue to believe that Bankers is likely to meet or beat the upper end of its production guidance for 2013
to average 10-15% growth (implying production of 16.4 mbbl/d to 17.1 mbbl/d).