Petroamerica Provides 2015 First Half Guidance Focusing on Capital Preservation and a 2014 Production Update

CALGARY, Jan. 12, 2015 /CNW/ - Petroamerica Oil Corp. (TSX-V:PTA) ("Petroamerica" or the "Company") is pleased to present its expected production and capital expenditure guidance for the first half of 2015 and provide a 2014 production update (note: all financial amounts shown are in United States Dollars unless otherwise stated).

In response to the current volatility in world commodity prices Petroamerica is limiting its production, capital and work program guidance to the first six months of 2015.  The Company will periodically update its guidance in response to changes in oil prices and the results from the scheduled exploration and appraisal activities that will take place in the first two quarters of the year.

Capital Program for the First Six Months of 2015: Brent Oil Price Assumption $55 per Barrel

Petroamerica's capital expenditure program for the first six months of 2015 is expected to be $20 million, of which $6 million will be allocated towards exploration activities, $7 million for appraisal activities and $7 million for facilities upgrades and workovers. The six month 2015 capital program is expected to be fully funded from net working capital, including current cash on hand of approximately $60 million, and operating cash flows assuming an average $55 per barrel Brent oil price for the first six months of the year. If current oil prices prevail throughout 2015, it is envisaged that the full year 2015 capital expenditure program could range between $25 and $30 million.

2015 First Half Drilling Program

The Company's exploration and appraisal drilling program for the first six months of 2015 includes two exploration wells, both of which are substantially carried; at the Garza-Roja-1 well the Company will pay 5.5% of the well costs to maintain a 50% working interest and at the Calatea-2 well, the Company will pay 20% of the well costs to retain a 50% working interest. The drilling program also includes one appraisal well, which is considered a low risk follow-up to the Langur-1X discovery well where Petroamerica holds a 50% working interest. Given the current oil price environment, development drilling activities on the Company's Putumayo properties have been deferred.

A summary of planned drilling activities for the first half of 2015 is outlined in the following table:

Block	Working Interest	Prospect/Well	Activity Type	Timing/Status
LLA-19	50%	Langur-2	Appraisal	Q1 2015
LLA-10	50%	Garza Roja-1	Exploration	Q1/Q2 2015
El Porton	50%	Calatea-2	Exploration	Q1/Q2 2015

2015 First Half Production Guidance

With this reduced capital program Petroamerica expects its working interest production (before royalties) to average 5,400 barrels of oil equivalent per day ("boepd") for the first six months of 2015. The Company has placed all development drilling plans on hold for the first six months of the year.  The guidance is based solely on production from its Putumayo and Llanos basin fields, including the recently announced Langur discovery. This projection does not include any production from the two exploration wells that are expected to be drilled in the first two quarters of 2015.

2014 Production Update and Estimated Capital Spending

Total Company working interest production (before royalties) for the fourth quarter of 2014 averaged 5,988 boepd (97% liquids). Production for the month of December 2014 averaged 5,379 boepd (98% liquids). Production for the entire year averaged 6,246 boepd (98% liquids). These production volumes include December field estimates, which may be subject to minor reconciliation adjustments.

2014 December production was below expectations due to a number of temporary operational events including:

• Delayed completion of the Quinde-3 well pending reperforation and potential stimulation now anticipated in January of 2015;
• Sand production in existing Quinde wells that resulted in the rig initially assigned to development drilling activities being diverted to carry out workover operations on these producing wells; 
• Water disposal restrictions at the Las Maracas field that have since been improved with the tie-in of an additional injection well and chemical stimulation of existing injection wells.

Total capital expenditure for the 2014 fiscal year is currently estimated at approximately $44 million, down from the previous projection of $53 million from September 2014. 

About Petroamerica:

Petroamerica Oil Corp. is a Canadian oil and gas exploration and production company with interests in twelve blocks, located in Colombia's Llanos and Putumayo Basins Petroamerica's shares are listed on the TSX Venture Exchange under the symbol "PTA".

Forward-Looking Statement

This news release includes forward-looking statements related to the expected occurrences in relation to the properties and drilling activities identified, the anticipated timing of well results, the capital budget, the expected use of funds in the current fiscal year and possible new exploratory drilling in the current year. A multitude of factors can cause actual events to differ significantly from any anticipated development and although Petroamerica believes that the expectations represented by such forward-looking statements are reasonable; there can be no assurance that such expectations will be realized.  These forward looking statements are based upon assumptions that Petroamerica has made concerning the oil and gas industry in Colombia, the reliability of available data regarding the properties, and the continuing market for oil and gas.  Risk factors may include the uncertainty of conducting operations under a foreign regime, the availability of labour and equipment, the fluctuating price of oil and gas, and Petroamerica's dependence upon other participants in the property areas.  Neither Petroamerica nor any of its subsidiaries nor any of its officers or employees guarantees that the assumptions underlying such forward-looking statements are free from errors, nor do 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.

Although the Company believes that the expectations represented by the forward-looking statements contained herein 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. 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.

Use of 'boe'

Throughout this press release, the calculation of barrels of oil equivalent ("boe") is at a conversion rate of 6,000 cubic feet ("cf") of natural gas for one barrel of oil and is based on an energy equivalence conversion method. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6,000 cf: 1 barrel is based on an energy equivalence conversion method primarily applicable at the burner tip and does not represent a value equivalence at the wellhead

SOURCE Petroamerica Oil Corp.

Colin Wagner, CFO, Tel Calgary, Canada: [phone], Email: [email protected], Web Page: www.PetroamericaOilCorp.com