Canada-based Bankers Petroleum said on August 29 it has finally resolved a tax dispute with the Albanian government and it will be reimbursed for "excessive payments" made to the Albanian tax authorities. The binding third-party audit report on the 2011 tax dispute said that Bankers “correctly stated its 2011 expenses as cost recoverable”, Bankers said in a statement.
In February Bankers, which is mainly active in Albania, suspended its arbitration procedure against Tirana after reaching an agreement with the country’s energy ministry on the appointment of an international expert audit team to resolve the $75mn tax dispute. China's Geo-Jade Petroleum Corporation is in the process of acquiring Bankers in a deal due to close at the end of September.
The third-party audit was conducted by a joint panel of individuals from PricewaterhouseCoopers and Navigant Consulting Company. Its decision is a final resolution, as previously agreed to by the Albanian National Agency for Natural Resources (AKBN), the ministry of energy and industry and Bankers.
The audit obliges the Albanian tax authority to recalculate Bankers' tax obligations for 2011 and determine the appropriate mechanism to settle or reimburse Bankers for the payments made to date, said the statement.
Bankers said it had paid a total of $37mn to the Albania tax authorities as deposits for the 2011 profit tax assessment as of June 30.
Bankers operates the Patos-Marinza oilfield and has a 100% interest in both the Kucova oilfield and in Exploration Block F in Albania.
In November 2015, the tax dispute forced Bankers to consider a phasedown of its operations in Albania, after its account was frozen, but the next month the company regained access to its account, which enabled it to operate the Patos-Marinza oilfield under normal conditions.
In January, the ministry of energy said that Albania plans to renegotiate its contracts with Bankers and other oil companies to limit the expenditures they use to cover their tax liabilities.
Following these developments, Bankers decided in March 2016 to sell its shares to affiliates of Chinese oil and gas exploration company Geo-Jade Petroleum Corporation in a transaction which is expected to close before September 30.
According to the agreement with the Chinese company, Geo-Jade will acquire all the issued and outstanding common shares of Bankers through its affiliates at a cash price of CAD2.20 (€1.53) per Bankers’ share. The sale was announced as companies operating in the offshore Adriatic, along with other regions, have also been hit by low oil prices.
For H1 2016, Bankers Petroleum reported lower revenues and oil production. Oil production declined to 16,649 barrels per day (b/d) in H1 2016 from 19,909 b/d in the same period a year earlier, while oil sales were 16,152 b/d compared to 19,953 b/d a year earlier.
Bankers Petroleum’s net operating income plunged to $16mn ($5.39/bbl) in H1 2016 from $66mn ($18.38/bbl) in the same period in 2015.