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Bankers Petroleum Ltd Oil and Gas, Exploration and Production | Flash Update Albanian Government has not complied with ICC order; Bankers operations will be phased down. BNK- TSX; BNK-AIM | Price (27-Nov) C$1.67 | Market Cap C$436.6M BUY PRICE TARGET C$4.00 This morning Bankers Petroleum released a press release which will likely see continued negative press on Bankers share price this morning. We expect that many investors who have been following the story will "throw in the towel" on a combination of unpredictable government regime combined with retail tax-loss selling as Bankers's larger tax issue will likely not be resolved by year-end. Who can you trust? As there probably are more predictable energy stories, uncertainty doesn't benefit BNK. Bankers believed the government would abide by the order issued by the Tribunal constituted by the International Court of Arbitration of the International Chamber of Commerce (ICC). Investors trusted Bankers's statements about the situation's resolution. Neither situation occurred, and now there is the threat of Bankers winding down their operations in Albania due to lack of access to bank accounts. With a general statement that Bankers will monitor the situation and will remain "hopeful" that a solution can be reached before further disruptions to operations occur, this does cause some concern. Impact on operations As of the release of this report, we are still waiting to hear from management on exactly what level of production disruption is currently occurring and to what degree it is "phased-down" by year-end. If Bankers isn't able to export crude, essentially the worst case scenario is that the company will have to shut-in all operations in the coming weeks until the matter is resolved. With the independent audit not due to be completed for a while, this could potentially result in Bankers not being on production coming into year-end. Independent audit We still believe that the independent audit will decide in Bankers's favour for long as the agreement is truly a cost recovery agreement. As we have not seen the details of the agreement (because Bankers will not provide the details), we are only going by management's comments that this agreement is in fact a standard cost recovery type of contract. For as long as the contract is truly a proper international cost recovery agreement, Bankers will be exonerated. Currently the Albanian government is treating the company as if it is already guilty of violating its tax laws. We suspect the press release serves another purpose as well, since it will likely be published in local papers in Albania. The last paragraph is essentially propaganda on how important the company is to the local economy. Unusual statements the company made in today's press release highlight that it is a significant employer in the country, with over 1,500 employees (both directly and indirectly) as well as a major contributor to bringing Western technology to the country. The overall message to Albania is that this action not only threatens a Western-based company but also threatens the livelihood of many Albanians. Valuation We use a DCF model to value Bankers. We estimate a 2015E risked NAV of C$4.70/share, which we discount slightly in establishing our C$4.00/share target price. Christopher Brown, PEng Canaccord Genuity Corp. (Canada) | [e-mail] | 1.403.508.3858 Kimberly Hedlin Canaccord Genuity Corp. (Canada) | [e-mail] | 1.403.508.3854 Click on title or here for full note To us there are no foreign markets. For more research and our coverage universe online, visit Canaccord Genuity's Research Portal. 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