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To: ms.smartest.person who wrote (2910)	12/3/2007 8:24:18 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 3198

&#8362 David Pescod's Late Edition November 29, 2007 AN INTERVIEW WITH ABBY BADWI, DIRECTOR OF BANKERS PETROLEUM (As of November 28, 2007) We are with Abby Badwi and as if he needs to work again in his lifetime after his huge success at Rally Energy, but here he is, off to places like Albania and Oklahoma. David Pescod: You have just signed on recently with Bankers Petroleum and you are just back from a trip to Albania. What stood out to you? Abby Badwi: The size of the field is fascinating. You come over the horizon and you see all of these old derricks that have been used to service the old wells and there are thousands of them out there, extending over several miles. That was impressive. In the midst of all of these derricks of course was Bankers operations intermingled with AlbPetrol operations which is the National Oil Company. Bankers’ equipment and leases are in fantastic shape compared to the old field. This stood out – we are doing some good within the field. D.P: Now 2 billion barrels – that’s an enormous number. How confident should one feel with that? A.B: There are no doubts about the oil in place. The oil in place has been derived by independent engineers. Production has come from three different zones the Marinza, Driza and the third formation is the Gorani. Reserves from the three formations add up the oil in place to be the 2 billion barrels. The recoverable reserves are another story. Again, to date the field produced in excess of 90 million barrels over a period of 40 or 50 years with the remaining reserves from primary recovery at another 90 million barrels. That’s 180 million barrels of recoverable reserves over the 2 billion barrels in place a 9% recovery. This is a good number for primary recovery. What’s left to do is infill drilling to access additional reserves with vertical and horizontal drilling to enhance recovery to 13% or 14%, but more importantly of course, is to look at enhanced recovery and in particular cyclic steam. With a successful cyclic steam operation, you can get recoveries up into the 25%-30% range. That would be a very significant number in terms of recoverable reserves. D.P: Some of the equipment there from some of the last few decades is old and it’s Russian… A.B: The wells have been previously drilled and completed in a different manner. What Bankers had problems with is some of the workovers being conducted on the existing wells had failed wellbores, bad casings, bad cement jobs, etc. The work that had been successful is when they had good integrity in the old well bores, Bankers realized some good productivity out of these wells. The current production of 5000 barrels per day is coming from these wells. When you speak of equipment, of course it’s specifically pumps. Bankers has been changing all of the equipment in the old wells and replaced it with modern equipment. What we are doing next is drill new wells and get better productivity and apply enhanced recovery methods. We have to work on all of these ideas Dave to make sure that what I’m saying is going to be realized. This is the idea the vision, that as a new management team with participation from the existing management and technical teams, we can develop a business plan that will incorporate this thinking. D.P: When you took Rally over to Egypt in a big way, some people said or thought that there was country risk there. How do you feel about Albania? A.B: I don’t see the country risk at all. I have been doing some reading on the political and economic situation in the country. It has been a democracy for the last 15 years since the fall of communism back in the early 1990’s. It has changed elected government several times. The main purpose of government is to encourage foreign investment and improve the quality of life. This country has had significant economic growth. It has a small population (less than 4 million people) with the main objective is to provide better standard of living for its people. They are trying to get into the EU, so they are doing the right things with cooperation from the World Bank to build a country that can be accepted and will have the standards to join the European Union. These are all positive things that we are noticing. There has been some foreign investment coming from Canada in the mining sector and the oil and gas sector. There have been industrial investments from Italy and of course over the next three years, tourism is going to improve immensely because of a wonderful coastline that the country has extending across the Adriatic. D.P: It’s not just Albania that you have an extensive interest in, but in the States (Oklahoma) as well. That’s turning out to be a very significant gas play, isn’t it? A.B: Bankers has several shale gas wells to date in Oklahoma. They had very positive results from the wells that are producing 2 million and 3 million cubic feet per day. It is shale gas and we are working on trying to find the best way to fund our development activity for this prospect. We are looking at several options and we will come up with a plan in the next few months to be able to enjoy the benefits of maximizing value from these assets. It is early for us to say what we are going to do, but we are examining options to have the US subsidiary being able to fund its own activities. We are looking at selling or assigning a portion of our interests in the assets to be able to focus our efforts on something that we understand. D.P: With roughly half a billion shares outstanding, this is a big question. You are going to need money. Both these projects are huge and there is still a lot of stock outstanding. A.B: One, the stock side first—sometime in the next six to eight months, we are probably going to be looking at a consolidation of shares. But on the funding side, we have to look at cash flow as you know we are generating cash flow from our 5000 barrels a day of production. So that continues to fund our operation with growing production numbers in 2008 and beyond. Two, we have debt facilities available to us. We are banking with an Austrian Bank with a big operation in Albania. They understand the country, they understand its risk and we currently have a $30 million facility that we are looking at expanding it to $50 million. With an increased reserve value over this year and next year, we should be able to access additional debt to develop our assets in Albania. We don’t want to put anymore capital in the U.S. as I explained earlier – we would like to be able to see that this project is selffunding on its own either through its own debt facilities or equity dilution within the U.S. subsidiary to fund its own capital program. If we do sell that asset or a portion of it, of course it would provide us with additional capital to deploy in Albania. We hope not to do any equity financings soon so we can continue to have a much stronger share price. D.P: With these markets that we are in right now, it feels as if we are into a recession when you look at some oil and gas and mining stocks these days. What are your thoughts on commodity prices and oil prices down the road and are we going to be seeing arecession, or not? A.B: These questions are not for a geologist, but on the oil price, I said before that I think we will see high oil prices due to a weak U.S. dollar and deteriorating geopolitical situation that is not very stable around the world. Oil prices I believe will retract over the next year or two to levels that would make a lot more sense. That number might be $70 or $75. If I knew exactly when that would be, we would make a lot of money! On the recession side, it is evident that things are moving in that direction because we start to see big cap companies also retracting in value. The IBM’s, the Microsoft’s, The GE’s and so on. It is an election year in the U.S. and we will see some changes. If a recession happens, it will be short-lived and we should be out of it by the end of 2008, or early 2009. That’s a geologist’s comment on the global economy! D.P: Any stock picks for us? A.B: With all that we are seeing in the markets right now, you can have a very long list. I still like Canadian Natural; it’s been a great company to play. The fact that they decided to slow down their investments in the oil sands we saw the impact of that. I think that with any changes in the royalty plans and or in government, we should see the stock coming back strong, so that would be my pick of the day. I’m still a believer in a company and I will not change my mind on it anytime soon and that’s Connacher Oil and Gas. D.P: Thank you very much Abby! To receive the Late Edition and be on our daily circulation simply e-mail Debbie at Debbie_lewis@canaccord.com and give your address, phone number and e-mail and we’ll have you on the list tonight.