Petroamerica Announces the Financial Results for Three and Six Months Ended June 30, 2012 with Highlights on the Las Maracas Production Start Up
CALGARY, Aug. 20, 2012 /CNW/ - Petroamerica Oil Corp. (TSXV: PTA) ("Petroamerica" or the "Company"), a junior oil and gas company operating in Colombia, is pleased to announce the financial and operating results for the three and six months ended June 30, 2012. Copies of the Company's Management Discussion and Analysis ("MD&A") and Financial Statements have been filed with the Canadian Securities Regulatory Authorities and can be viewed or downloaded at the Company's website at www.petroamericaoilcorp.com or at www.sedar.com.
Quarterly highlights include:
(all balances in Canadian dollars, unless otherwise noted)
- Closing of the $35M debt financing on April 19, 2012, allowing the Company, through a combination of cash on hand and projected production revenues, to move forward with its exploration and field development plans;
- Acquisition of additional 25% working interest on Los Ocarros Block from the former operator on the block, bringing working interest position on the entire block to 50% and allowing for the aggressive development of the Las Maracas Field;
- Commencement of production and oil sales from the Las Maracas-2 side track discovery well. To date, this well has produced over 124,000 barrels of oil;
- Spudding of the Las Maracas-3 well on June 28, 2012, resulting in the successful appraisal of the existing discovery as well as the discovery of a new deeper oil pool;
- Net production and sales volumes for the three months ended June 30, 2012 were 55,772 barrels and 46,774 barrels respectively, with an average sales price of US$107.02 per barrel and a net back of US$65.57 per barrel.
The following table presents the highlights of Petroamerica's financial and operating results for the three and six months ended June 30, 2012 and 2011.
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||
(in $000 except share and per share and per barrel amounts) | 2012 | 2011 | 2012 | 2011 | |||||||
Oil revenue - net of royalties | $ | 4,696 | $ | 2,532 | $ | 6,262 | $ | 2,532 | |||
Loss for period | $ | (418) | $ | (8,695) | $ | (4,079) | $ | (19,112) | |||
Total comprehensive income (loss) | $ | 722 | $ | (10,225) | $ | (3,776) | $ | (17,245) | |||
Loss per share - Basic and Diluted | $ | (0.00) | $ | (0.02) | $ | (0.01) | $ | (0.04) | |||
Total assets | $ | 125,012 | $ | 109,525 | $ | 125,012 | $ | 109,525 | |||
Total cash | $ | 32,911 | $ | 2,556 | $ | 32,911 | $ | 2,556 | |||
Notes payable | $ | 32,204 | $ | - | $ | 32,204 | $ | - | |||
Shareholders' equity | $ | 84,169 | $ | 75,230 | $ | 84,169 | $ | 75,230 | |||
Exploration costs / (recovery) | $ | (58) | $ | 6,901 | $ | 2,148 | $ | 13,407 | |||
Capital expenditures | $ | 3,902 | $ | 5,432 | $ | 9,446 | $ | 5,432 | |||
Common shares outstanding | 578,331,594 | 578,331,594 | 578,331,594 | 578,331,594 | |||||||
Weighted average shares outstanding | |||||||||||
Basic and Diluted | 578,331,594 | 509,726,422 | 578,331,594 | 464,791,036 | |||||||
Average daily production - bbls | 613 | 304 | 389 | 304 | |||||||
Total sales volumes -bbls | 514 | 291 | 334 | 291 | |||||||
Average daily production - bbls | 541 | 304 | 389 | 304 | |||||||
Average selling price US$/bbl | $ | 107.02 | $ | 107.83 | $ | 110.00 | $ | 107.83 | |||
Average royalty US$/bbl | $ | 8.56 | $ | 8.63 | $ | 8.80 | $ | 8.63 | |||
Average transportation costs US$/bbl | $ | 17.49 | $ | 8.13 | $ | 15.33 | $ | 8.13 | |||
Average production cost US$/bbl | $ | 15.41 | $ | 26.53 | $ | 16.09 | $ | 26.53 | |||
Average netback US$/bbl | $ | 65.57 | $ | 64.54 | $ | 69.79 | $ | 64.54 | |||
Share trading | |||||||||||
High | $ | 0.17 | $ | 0.28 | $ | 0.20 | $ | 0.74 | |||
Low | $ | 0.12 | $ | 0.12 | $ | 0.10 | $ | 0.12 | |||
Close | $ | 0.13 | $ | 0.16 | $ | 0.13 | $ | 0.16 | |||
Trading volume | 36,075,300 | 121,027,100 | 139,586,200 | 305,271,600 |
Second Quarter Financial Summary
For the three months ended June 30, 2012, the Company reported $4,695,861 in oil revenue, net of royalties, from the sale of 46,774 barrels of oil. The realized sales price was US $107.02 per barrel generating an operating netback of approximately US $66 per barrel.
For the second quarter of 2012, the Company's net loss was $418,000 ($0.00 per share diluted). The Company's capital expenditures for the second quarter were $3.9 million, all invested in Colombia. These capital expenditures were funded from available cash on hand.
Operations Update
Production from the Mirador formation on the Las Maracas-2 sidetrack discovery well began on April 23, and the well has remained on production since then. To date the well has produced over 124,000 barrels of oil. The well is currently producing over 1,100 barrels of oil per day ("bopd") with a 1.6% watercut. On July 30, 2012 the Company announced that the Las Maracas-3 well, which began drilling on June 28, 2012, had successfully appraised the Mirador formation discovery made by the Las Maracas-2 sidetrack well, and discovered a new deeper oil pool in the Gacheta formation. The Las Maracas-3 well encountered 30 feet of net oil pay in the Mirador formation and 29 feet of net oil pay in the Gacheta formation, and produced 30o API oil under natural flow, from a 14 foot perforated section in the Gacheta reservoir at a stabilized rate of 1,491 bopd with a 1% water cut The Las Maracas-3 well is now producing from the Gacheta formation through the long-term test facility under electro-submersible pump at rates of approximately 2,000 bopd with a 2.7% watercut. Since production on the Las Maracas-3 well began, the well has produced over 31,000 barrels of oil. The Las Maracas-4 well began drilling on July 30, 2012, and on August 16, 2012 the Company announced that the well had reached total depth of 12,522 feet measured depth with electrical logs indicating more than 65 feet of prospective oil play in the Mirador and Gacheta formations. The Las Maracas-4 well has now been logged and cased and a work over rig is expected to be brought in to complete Las Maracas-4 as a Gacheta formation producer. The final development plan and total number of development wells to be drilled to develop this accumulation will be determined by the results of the long-term tests on the three Maracas wells. However, it is anticipated that up to two additional producing wells and one water disposal well could be drilled in the fourth quarter of 2012.
For the six month period ended June 30, 2012, the Balay-1 and Balay-2 wells, which have been on long-term production test since July 14, 2010 and June 24, 2011 respectively, have produced at an average combined gross rate of 1,574 bopd under electro-submersible pump. From the inception of the long-term production test these wells have produced a combined total of over 1.2 million barrels of oil. The Balay-3 well, which was completed early in January 2012, is expected to be converted to a water disposal well as part of the field development plan. The Balay-4 well is scheduled to begin drilling in September and the results of this well will determine the extent of field development drilling activity and facilities construction for 2013. For the six months ended June 30, 2012, the Company sold 60,774 barrels of oil and recognised over $6.2 million in revenue, net of royalties, from these sales.
Financial Update
On April 19, 2012 the Company closed $35 million in debt financing by issuing 3,500 units at a price of $10,000 per unit. Each unit consists of $10,000 in principal amount of senior secured notes bearing interest at 11.5% per annum, payable quarterly, with a maturity date of April 19, 2015 (the "Notes"), and one warrant entitling the holder to purchase 10,000 common shares of the Company at $0.20 per share until April 19, 2015. The Notes have been secured by the Company's property and are senior to all other indebtedness and liabilities of the Company. The Company expects to use the proceeds raised to support the appraisal and development programs for the Las Maracas and Balay discoveries as well as to support additional development, appraisal and other costs that are expected to arise from the 2012 exploration program and for general corporate purposes.
Outlook
With the successful completion of the debt financing the Company now has the financial resources from a combination of cash on-hand and projected production revenues, to execute its exploration and development plans for the current year and beyond.
Following the encouraging results at Las Maracas-3 and Las Maracas-4 on the Los Ocarros Block, including the successful appraisal of the existing discovery and the discovery of a new deeper oil pool, the Company, together with its partner, plans to aggressively exploit the Las Maracas accumulations with the objective of accelerating the Company's production and cash flows. Given the positive indications from the Las Maracas-4 well it is possible that an additional two producers and one water disposal well will be added before year-end, subject to partner and ANH approvals.
The Balay Field development plan is now sanctioned and the Company and its partners expect to develop the Balay Field, starting with the drilling of Balay-4 in the third quarter of this year. As part of this plan, Balay-3 is expected to be converted to a water disposal well, and the construction of the permanent production facility is envisaged to take place in 2013.
On the exploration front, a successful start to the 2012 drilling campaign was observed with the new deeper oil pool discovery at Las Maracas-3. For the remainder of the year, the Company plans to participate in the drilling of four more exploration wells, one of which could occur in the first quarter of 2013.
The first exploration well, La Casona-1 on the El Eden Block, is planned to spud in September using the same rig that is currently drilling Las Maracas-4. The start of the Altillo Este-1 well on the CPO-1 Block has been delayed due to landowner issues and therefore a September spud date is now anticipated. A high impact well, Curiara-1 on the El Porton Block, is expected to spud late in the fourth quarter of 2012. The drilling of the Malavar-1 well on the LLA-10 Block is expected to occur in the first quarter of 2013 due to environmental permitting delays. The exploration well on the SSJN-5 Block previously included in the 2012 program will no longer occur due to the Company's withdrawal from this block. All of the prospects to be drilled are situated in the Llanos Basin and have been de-risked with 3D seismic.
PETROAMERICA OIL CORP.
Condensed Consolidated Statements of Financial Position
(Unaudited - Expressed in Canadian dollars)
As at | As at | ||||||
June 30 | December 31 | ||||||
2012 | 2011 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 32,911,399 | $ | 19,294,554 | |||
Trade and other receivables | 13,830,595 | 7,242,516 | |||||
Prepayments and deposits | 377,918 | 417,837 | |||||
Crude oil inventory | 1,720,206 | 563,530 | |||||
48,840,118 | 27,518,437 | ||||||
Non-current assets | |||||||
Restricted cash | $ | 7,808,846 | $ | 7,926,079 | |||
Property, plant and equipment | 28,656,190 | 14,881,718 | |||||
Exploration and evaluation assets | 39,706,582 | 44,560,366 | |||||
76,171,618 | 67,368,163 | ||||||
Total assets | $ | 125,011,736 | $ | 94,886,600 | |||
Liabilities | |||||||
Current liabilities | |||||||
Current equity tax | $ | 440,162 | $ | 404,703 | |||
Accounts payable and accrued liabilities | 4,358,246 | 5,016,607 | |||||
4,798,408 | 5,421,310 | ||||||
Non-Current liabilities | |||||||
Deferred tax liabilities | $ | 2,601,828 | $ | 2,601,828 | |||
Decommissioning liabilities | 684,555 | 176,000 | |||||
Notes payable | 32,203,697 | - | |||||
Equity tax | 554,040 | 668,231 | |||||
Total liabilities | 40,842,528 | 8,867,369 | |||||
Shareholders' equity | |||||||
Share capital | $ | 140,483,641 | $ | 140,483,641 | |||
Contributed surplus | 23,094,850 | 21,168,550 | |||||
Reserves | 795,315 | 492,924 | |||||
Deficit | (80,204,598) | (76,125,884) | |||||
84,169,208 | 86,019,231 | ||||||
Total liabilities and shareholders' equity | $ | 125,011,736 | $ | 94,886,600 |
PETROAMERICA OIL CORP.
Condensed Consolidated Statements of Loss and Comprehensive Loss
(Unaudited - Expressed in Canadian dollars)
Three months ended June 30 | Six months ended June 30 | ||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||
Revenue | |||||||||||||
Oil revenue - net of royalties | $ | 4,695,861 | $ | 2,532,009 | $ | 6,261,696 | $ | 2,532,009 | |||||
4,695,861 | 2,532,009 | 6,261,696 | 2,532,009 | ||||||||||
Expenses | |||||||||||||
Production | (1,566,516) | (894,851) | (1,943,801) | (894,851) | |||||||||
Exploration and evaluation | 58,090 | (6,901,143) | (2,147,740) | (13,407,181) | |||||||||
Depreciation, depletion and amortization | (412,507) | (449,171) | (1,139,564) | (450,606) | |||||||||
General and administration | (1,986,994) | (1,441,321) | (4,126,796) | (3,541,377) | |||||||||
Share-based payments | (319,534) | (921,117) | (704,133) | (2,512,221) | |||||||||
Equity tax and other | - | - | - | (1,422,650) | |||||||||
(4,227,461) | (10,607,603) | (10,062,034) | (22,228,886) | ||||||||||
Interest income | 323,343 | 197,028 | 579,320 | 377,169 | |||||||||
Interest and financing fees | (964,819) | 82,804 | (1,078,511) | (143,240) | |||||||||
Foreign exchange (loss) gain | (45,882) | 548,301 | 437,046 | 427,113 | |||||||||
Loss on disposal of investments | - | - | - | (1,674,352) | |||||||||
Accretion | (199,520) | - | (216,231) | - | |||||||||
(886,878) | 828,133 | (278,376) | (1,013,310) | ||||||||||
Loss before income taxes | (418,478) | (7,247,461) | (4,078,714) | (20,710,187) | |||||||||
Current income tax | - | 114 | - | - | |||||||||
Deferred tax (expense) recovery | - | (1,447,718) | - | 1,597,854 | |||||||||
Net loss for the period | (418,478) | (8,695,065) | (4,078,714) | (19,112,333) | |||||||||
Other comprehensive (loss) income | |||||||||||||
Reserve on translation of foreign operations | |||||||||||||
and net investments in foreign operations | 1,140,278 | (1,530,109) | 302,391 | 583,377 | |||||||||
Net change in fair value of available-for-sale investments | - | - | - | 1,284,150 | |||||||||
Other comprehensive income (loss) | 1,140,278 | (1,530,109) | 302,391 | 1,867,527 | |||||||||
Total comprehensive income (loss) | $ | 721,800 | $ | (10,225,174) | $ | (3,776,323) | $ | (17,244,806) | |||||
Basic and diluted loss per share | $ | (0.00) | $ | (0.02) | $ | (0.01) | $ | (0.04) | |||||
Weighted average number of basic and diluted | |||||||||||||
common shares outstanding | 578,331,594 | 509,726,422 | 578,331,594 | 464,791,036 |
PETROAMERICA OIL CORP.
Condensed Consolidated Statements of Changes in Equity
(Unaudited - Expressed in Canadian dollars)
Share Capital | Contributed surplus |
Fair value reserve |
Translation reserve |
Deficit | Total equity | |||||||||||||
Balance at January 1, 2012 | $ | 140,483,641 | $ | 21,168,550 | $ | - | $ | 492,924 | $ | (76,125,884) | $ | 86,019,231 | ||||||
Net loss for the period | - | - | - | - | (4,078,714) | (4,078,714) | ||||||||||||
Other comprehensive loss | - | - | - | 302,391 | - | 302,391 | ||||||||||||
Total comprehensive income (loss) | - | - | - | 302,391 | (4,078,714) | (3,776,323) | ||||||||||||
Warrants | - | 1,289,571 | - | - | - | 1,289,571 | ||||||||||||
Warrant issue costs | - | (67,404) | - | - | - | (67,404) | ||||||||||||
Share-based payments | - | 704,133 | - | - | - | 704,133 | ||||||||||||
Balance at June 30, 2012 | $ | 140,483,641 | $ | 23,094,850 | $ | - | $ | 795,315 | $ | (80,204,598) | $ | 84,169,208 | ||||||
Share Capital | Contributed surplus |
Fair value reserve |
Translation reserve |
Deficit | Total equity | |||||||||||||
Balance at January 1, 2011 | $ | 114,438,212 | $ | 13,141,128 | $ | (1,284,150) | $ | (1,922,966) | $ | (44,206,637) | $ | 80,165,587 | ||||||
Net loss for the period | - | - | - | - | (19,112,333) | (19,112,333) | ||||||||||||
Other comprehensive income | - | - | 1,284,150 | 583,377 | - | 1,867,527 | ||||||||||||
Total comprehensive income (loss) | - | - | 1,284,150 | 583,377 | (19,112,333) | (17,244,806) | ||||||||||||
Issue of share capital | 26,846,161 | 4,753,739 | - | - | - | 31,599,900 | ||||||||||||
Transaction costs | (1,499,349) | (284,390) | - | - | - | (1,783,739) | ||||||||||||
Share-based payments | 698,617 | 2,306,103 | - | - | - | 3,004,720 | ||||||||||||
Balance at June 30, 2011 | $ | 140,483,641 | $ | 19,916,580 | $ | - | $ | (1,339,589) | $ | (63,318,970) | $ | 95,741,662 |
PETROAMERICA OIL CORP.
Condensed Consolidated Statements of Cash Flows
(Unaudited - Expressed in Canadian dollars)
Three months ended June 30 | Six months ended June 30 | |||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||
Operating activities | ||||||||||||
Net loss for the period | $ | (418,478) | $ | (8,695,065) | $ | (4,078,714) | $ | (19,112,333) | ||||
Items not involving cash: | ||||||||||||
Share-based payments | 319,534 | 921,117 | 704,133 | 2,512,221 | ||||||||
Depreciation, depletion and amortization | 412,507 | 449,171 | 1,139,564 | 450,606 | ||||||||
Loss on disposal of investments | - | - | - | 1,674,352 | ||||||||
Deferred tax expense (recovery) | - | 1,447,718 | - | (1,597,854) | ||||||||
Unrealized foreign exchange (gain) loss | (1,587,668) | 732,726 | (841,446) | 954,565 | ||||||||
Accretion | 199,520 | - | 216,231 | - | ||||||||
Impairment of exploration & evaluation assets | - | - | - | 2,650,720 | ||||||||
Net changes in non-cash working capital: | ||||||||||||
Changes in trade and other receivables | (4,743,399) | (7,287,183) | (7,079,624) | (8,765,157) | ||||||||
Changes in prepayments and deposits | 154,111 | 3,700 | 40,322 | 31,250 | ||||||||
Changes in crude oil inventory | (1,446,722) | (112,114) | (1,156,726) | (98,747) | ||||||||
Changes in accounts payable, accrued liabilities and equity tax | 1,294,918 | (7,560,010) | 13,213 | (1,893,757) | ||||||||
Cash used in operating activities | (5,815,677) | (20,099,940) | (11,043,047) | (23,194,134) | ||||||||
Investing activities | ||||||||||||
Exploration and evaluation expenditures | (2,944,427) | 6,173,587 | (5,208,078) | (5,181,176) | ||||||||
Property, plant and equipment expenditures | (2,711,612) | - | (3,831,727) | - | ||||||||
Interest received | 390,276 | 243,159 | 454,151 | 268,859 | ||||||||
Payment for assets relinquished | - | - | - | (6,800,000) | ||||||||
Restricted cash investments | - | - | - | 2,300,000 | ||||||||
Short-term investments | - | (22,000,000) | - | (22,000,000) | ||||||||
Proceeds from marketable securities | - | - | - | 2,441,347 | ||||||||
Cash used in provided by investing activities | (5,265,763) | (15,583,254) | (8,585,654) | (28,970,970) | ||||||||
Financing activities | ||||||||||||
Issuance of equity, net of costs | - | 29,816,161 | - | 29,816,161 | ||||||||
Issuance of debt, net of costs | 33,243,580 | - | 33,243,580 | - | ||||||||
Proceeds on exercise of stock options | - | - | - | 492,500 | ||||||||
Cash provided by financing activities | 33,243,580 | 29,816,161 | 33,243,580 | 30,308,661 | ||||||||
Effect of foreign currency exchange rate changes on cash | 140,274 | (3,462) | 1,966 | 278 | ||||||||
Increase (decrease) in cash and cash equivalents during the period |
22,302,414 | (5,870,495) | 13,616,845 | (21,856,165) | ||||||||
Cash and cash equivalents, beginning of period | 10,608,985 | 8,126,053 | 19,294,554 | 24,111,723 | ||||||||
Cash and cash equivalents, end of period | $ | 32,911,399 | $ | 2,255,558 | $ | 32,911,399 | $ | 2,255,558 | ||||
Interest paid | 793,800 | - | 793,800 | - | ||||||||
Income tax paid | - | - | - | - |
Forward Looking Statements:
This news release includes information that constitutes "forward-looking information" or "forward-looking statements". More particularly, this news release contains statements concerning expectations regarding the conversion of the Balay-3 well to a water disposal well, regulatory and partner approvals on the Company's development plan, drilling and operational opportunities and the timing thereof, expected spud dates for the Company's wells, the use of proceeds of the recently completed Note financing in addition to the potential exploration and development opportunities and expectations regarding regulatory approval and the strategic direction of the Company. The forward-looking statements contained in this document, including expectations and assumptions concerning the obtaining of the necessary regulatory approvals, including ANH approval, and the assumptions, opinions and views of the Company or cited from third party sources, are solely opinions and forecasts which are uncertain and subject to risks. A multitude of factors can cause actual events to differ significantly from any anticipated developments and although the Company believes that the expectations represented by such forward-looking statements are reasonable, undue reliance should not be placed on the forward-looking statements because there can be no assurance that such expectations will be realized. Material risk factors include, but are not limited to: the inability to obtain regulatory approval, including ANH approval, for the transfer of participating interests and/or operatorship for the Company's properties, the risks of the oil and gas industry in general, such as operational risks in exploring for, developing and producing crude oil and natural gas, market demand and unpredictable shortages of equipment and/or labour; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; fluctuations in oil and gas prices, foreign currency exchange rates and interest rates, inclement weather conditions and reliance on industry partners.
Neither the Company nor any of its subsidiaries nor any of its officers, directors or employees guarantees that the assumptions underlying such forward-looking statements are free from errors nor does any of the foregoing accept any responsibility for the future accuracy of the opinions expressed in this document or the actual occurrence of the forecasted developments.
The forward-looking statements contained in this document are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: Petroamerica Oil Corp.
Nelson Navarrete
President and CEO
Colin Wagner
CFO
Ralph Gillcrist
Executive Vice President Exploration & Business Development
Tel Bogota, Colombia: +57-1-629-3534
Tel Calgary, Canada: +1-403-237-8300
Email: [email protected]
Web Page: www.PetroamericaOilCorp.com
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