London (Platts)--25Feb2011/1006 am EST/1506 GMT

Canada's Bankers Petroleum said Friday it has bought put options representing 4,000 b/d of oil at a price of $80/barrel for 2012 as protection against a future slide in the oil price.

The volumes represent some 20% of the company's forecast 2012 average production from the Patos Marinza oil field in Albania.

"With the recent spike in oil prices due to the current geopolitical situation in the Middle East and North Africa, and with our Patos-Marinza oil marketing agreements priced relative to the Brent oil price, the company elected to implement this relatively inexpensive strategy to start in 2012 as a form of insurance," Bankers said in a statement.

Bankers wants to have downside protection below $80/b on a percentage of its production "while continuing full upside participation above the strike price on all 2012 production."

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It said the hedge is strictly financial and does not take into account the Patos-Marinza crude price differential to Dated Brent.

"If oil prices drop below $80/b, these hedge contracts and the resulting production cash flow would generate sufficient revenue to fund a significant portion of our capital program in 2012 and service any outstanding debt during that period," it said.

Bankers said additional oil hedging contracts might be considered in the future as part of its overall risk management strategy.

Bankers has operated Patos Marinza since July 2004, when it took it over from a consortium of three international companies. Crude production at the time was 700 b/d.

Current output is around 12,000 b/d and by the end of 2014 the company hopes to increase it to 40,000 b/d.

--Stuart Elliott, stuart_elliott@platts.com