Americas Petrogas Announces First Quarter 2014 Results
30 May 2014 - 11:10PM
Marketwired
Americas Petrogas Announces First Quarter 2014 Results
CALGARY, ALBERTA--(Marketwired - May 30, 2014) - Americas
Petrogas Inc. ("Americas Petrogas" or the "Company")
(TSX-VENTURE:BOE) announces its first quarter 2014 results.
Summary Financial and
Operational Highlights
Selected financial and operational information is outlined below
and should be read in conjunction with the Company's interim
consolidated financial statements and the related Management's
Discussion and Analysis ("MD&A") for the quarter, which have
been filed on SEDAR under the Company's profile at www.sedar.com
and are also available on the Company's website at
www.americaspetrogas.com. All amounts are in Canadian dollars
unless otherwise stated.
($ in thousands, except share, per share,
and per barrel amounts) |
Three months ended March 31 |
|
2014 |
|
|
2013 |
Gross oil sales revenue |
$ |
9,108 |
|
$ |
16,450 |
|
|
|
|
|
|
Net revenue(1) |
$ |
7,763 |
|
$ |
14,347 |
|
|
|
|
|
|
Operating netback (including Oil Plus benefits)(2) |
$ |
4,094 |
|
$ |
13,167 |
|
|
|
|
|
|
Operating netback (including Oil Plus benefits) per
barrel(2) |
$ |
36.73 |
|
$ |
60.88 |
|
|
|
|
|
|
Operating netback (excluding Oil Plus benefits) per
barrel(2) |
$ |
36.73 |
|
$ |
47.70 |
|
|
|
|
|
|
Net income (loss) attributable to owners of the
Company(3) |
$ |
(24,557 |
) |
$ |
4,338 |
|
|
|
|
|
|
Earnings (loss) per share- basic and diluted |
$ |
(0.12 |
) |
$ |
0.02 |
|
|
|
|
|
|
Funds flow from operations(4) |
$ |
2,047 |
|
$ |
9,874 |
|
Per share - basic |
$ |
0.01 |
|
$ |
0.05 |
|
Per share - diluted |
$ |
0.01 |
|
$ |
0.05 |
|
|
|
|
|
|
Weighted average number of common shares
outstanding(5) |
|
|
|
|
|
|
Basic |
|
212,572,440 |
|
|
212,760,484 |
|
Diluted |
|
214,139,198 |
|
|
216,952,633 |
|
|
|
|
|
|
Cash flow from operating activities |
$ |
8,860 |
|
$ |
5,465 |
|
|
|
|
|
|
Capital expenditures |
$ |
10,948 |
|
$ |
27,296 |
|
|
|
|
|
|
Average barrels sold per day |
|
1,238 |
|
|
2,403 |
|
|
|
|
|
|
Average selling price per barrel |
$ |
81.72 |
|
$ |
76.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands) |
|
March 31, 2014 |
|
December 31, 2013 |
|
|
|
|
|
Cash and cash equivalents |
$ |
15,217 |
$ |
18,334 |
Working capital(6) |
$ |
14,746 |
$ |
21,687 |
|
|
|
|
|
Equity outstanding |
|
|
|
|
|
Common shares |
|
212,572,440 |
|
212,572,440 |
|
Stock options |
|
17,946,093 |
|
17,946,093 |
Notes:
- "Net revenue" is an additional GAAP measure because it is
presented in the consolidated statement of income (loss). Net
revenue is gross revenue less royalties. The Company uses "net
revenue" as an indicator of operating performance.
- "Operating netback" is a non-GAAP measure and is calculated as
revenues from oil sales less royalties and production costs.
Operating netback is used as an indicator of operating performance,
profitability and liquidity. "Operating netback (excluding Oil Plus
benefits)" excludes any Oil Plus benefits credited to production
costs. "Operating netback (including Oil Plus benefits)" is net of
any Oil Plus benefits credited to production costs. Operating
netback does not have a standardized meaning prescribed by IFRS. It
is unlikely for non-GAAP measures to be comparable to similar
measures presented by other companies. For the three months ended
March 31, 2014, operating netback was $4.1 million (calculated as
gross oil sales revenue of $9.1 million less royalties of $1.3
million and production costs of $3.7 million). For the three months
ended March 31, 2013, operating netback was $13.2 million
(calculated as gross oil sales revenue of $16.5 million less
royalties of $2.1 million and production costs of $1.2
million).
- The net loss in 2014 includes a non-cash foreign exchange loss
of $17.97 million associated with the Company's USD intercompany
loans. See note 16(c) of the Company's condensed interim
consolidated financial statements for the three months ended March
31, 2014 and section "1.4 Results of Operations -- Foreign Exchange
Gain/Loss and Other Comprehensive Income/Loss" of the Company's
MD&A for the quarter.
- "Funds flow from operations" is an additional GAAP measure
because it is presented in the consolidated statement of cash
flows. Funds flow from operations and funds flow from operations
per share are used to analyze operating performance and liquidity.
Funds flow from operations is calculated as net cash generated from
(used by) operating activities (as determined in accordance with
IFRS) before changes in non-cash balance sheet operating items.
Funds flow from operations per share is calculated by dividing
funds flow from operations by the weighted average number of shares
outstanding. Funds flow from operations should not be considered an
alternative to, or more meaningful than net cash generated from
(used by) operating activities as determined in accordance with
IFRS. Funds flow from operations per share should not be considered
an alternative to, or more meaningful than earnings (loss) per
share as determined in accordance with IFRS.
- Diluted weighted average number of common shares outstanding is
computed by adjusting basic weighted average number of common
shares outstanding for dilutive instruments. The number of shares
included with respect to options, warrants and similar instruments
is computed using the treasury stock method, which assumes any
proceeds received by the Company upon exercise of the in-the-money
instruments would be used to repurchase common shares at the
average market price for the period. For the three months ended
March 31, 2014, 1,566,758 (three months ended March 31, 2013 -
4,192,149) common shares were deemed to be issued for no
consideration in respect of options.
- Working capital is a non-GAAP measure and is calculated as
current assets less current liabilities. Working capital is used to
assess liquidity and general financial strength. Working capital
does not have a standardized meaning prescribed by IFRS. It is
unlikely for non-GAAP measures to be comparable to similar measures
presented by other companies. Working capital should not be
considered an alternative to, or more meaningful than current
assets or current liabilities as determined in accordance with
IFRS.
- Net loss: The loss for 2014 of $24.6 million is primarily
attributable to a non-cash, foreign exchange loss of $17.97 million
on intercompany loans between the Canadian parent company and its
Argentina subsidiary, which arose primarily due to an approximate
20% decline in the Argentina Peso against the US dollar in January
2014. For the three months ended March 31, 2013, net income was
$4.3 million.
- Cash position: $15.2 million of consolidated cash and cash
equivalents as of March 31, 2014. In May 2014, the Company
announced that it had executed an underwriting agreement to raise
gross proceeds of $15 million. For additional information, see
"Highlights and Recent Activities" below.
- Oil Plus benefits: during the first quarter of 2014, the
Company did not recognize any Oil Plus benefits, though $7.3
million of Oil Plus benefits (recognized in 2013) were collected in
January 2014. During the year ended December 31, 2013, the Company
recognized $25.5 million of Oil Plus benefits (related to
production and reserve increases). As of the current date, a total
of $26.8 million of Oil Plus benefits have already been collected.
An additional $16.2 million has been applied for and remains to be
collected.
Highlights and Recent
Activities
- In May 2014, the Company entered into an underwriting agreement
with a syndicate of underwriters to raise $15 million in gross
proceeds (the "Offering"). The Company has filed a preliminary
short form prospectus in connection with the Offering, which is
being conducted in all provinces in Canada (except Quebec) and
outside of Canada where permitted under applicable securities laws.
The Offering consists of 16,666,666 units (the "Units") of the
Company at an offering price of $0.90 per Unit, with each Unit
consisting of one Common Share and one-half of one Common Share
purchase warrant (each whole Common Share purchase warrant, a
"Warrant"). Each Warrant is exercisable for a period of 36 months
following closing at an exercise price of $1.125 per Common Share.
The Company has granted to the underwriters an over-allotment
option which entitles the underwriters to acquire up to an
additional 15% of the Units distributed in the Offering at the
Offering price at any time up to 30 days following the closing of
the Offering. The Company expects to close the Offering on or about
June 6, 2014, subject to satisfaction of customary closing
conditions. In connection with the Offering, the underwriters will
receive a cash commission equal to 6% of the gross proceeds raised
under the Offering and non-transferable compensation options
entitling the Underwriters to acquire up to 500,000 Units (575,000
Units if the over-allotment option is exercised in full) for a
period of 12 months from the closing date of the Offering at $0.90
per Unit having the same terms as the Units comprising the
Offering.
- On September 19, 2013, Americas Petrogas announced a strategic
review, which commenced a process to review strategic alternatives
for maximizing shareholder value. The Company engaged Jefferies LLC
as its sole financial advisor to assist management in evaluating a
range of strategic alternatives. The strategic review is ongoing
and the Company continues to evaluate a range of alternatives.
- So far in 2014, as the Company reduces its capital expenditures
in an effort to preserve its cash position while the strategic
review with Jefferies is ongoing, oil sales volumes in 2014 have
been lower in comparison to 2013. Sales volumes during the first
quarter of 2014, including oil sales from testing unconventional
wells, averaged 1,238 bopd (net), a decrease over the average daily
production during the same period in 2013, which was 2,403 bopd
(net).
- As of January 2014, the Company successfully completed and
brought on-stream its own power generation facility at Medanito Sur
using associated gas from oil production. This now allows
substantially all of the operations at Medanito Sur to be powered
via the produced gas. This, in turn, has reduced the need for
rental generators and associated diesel and labour costs.
Management estimates that it will be able to power approximately
400 pump jacks and associated surface process facilities using this
system.
- In April 2014, the Company began a gas reinjection program,
injecting approximately 1 million cubic feet per day (mmcfd) of
produced gas into the top of the El Tordillo formation at the
easternmost updip area of the El Jabali Field. The total gas
treatment and injection capacity is 7 mmcfd.
- In May 2014, the Peruvian state-owned company Activos Mineros
S.A.C. and the Executive Director of ProInversion executed the
transfer agreement formally granting the Bayovar Property to APPSA,
Americas Petrogas' Peruvian subsidiary.
- The Company obtained an extension until September 2015 of its
exploration contract terms for the Totoral, Yerba Buena and Bajada
Colorada Blocks while returning to the government a total of
approximately 1,510 square kilometers in the three blocks, leaving
the Company with 3,048 square kilometres or 753,200 acres gross
(2,743 square kilometres or 677,880 acres net). Ryder Scott Company
estimated (updated as of March 31, 2014) that the Company has 7.56
billion BOE P50 Best Case Unrisked Prospective (Recoverable)
Resources (27% oil/condensate and 73% gas) in the Company's nine
unconventional shale oil and shale gas properties. The original
estimates (8.3 billion BOE P50 Best Case Unrisked Prospective
(Recoverable) Resources) were included in a report prepared as of
June 30, 2013 but, subsequently, the estimates were amended to
account for the aforementioned return of lands to the government on
the Totoral, Yerba Buena and Bajada Colorada Blocks. The Ryder
Scott estimates only considered the Vaca Muerta, Agrio and Los
Molles shales. The report did not consider additional zones of
interest such as the Mulichinco, Quintuco, Tordillo, and other
prospective formations.
For further information regarding the Company's financial
results, financial position and related changes, please see the
interim consolidated financial statements and the related
MD&A.
About Americas Petrogas
Inc.
Americas Petrogas Inc. is a Canadian company whose shares trade
on the TSX Venture Exchange under the symbol "BOE". Americas
Petrogas has conventional and unconventional shale oil and gas and
tight sands oil and gas interests in numerous blocks in the Neuquén
Basin of Argentina. Americas Petrogas has joint venture partners,
including ExxonMobil and YPF, on various blocks in the shale oil
and gas corridor in the Neuquén Basin, Argentina. Americas Petrogas
also owns an 80% interest in GrowMax Agri Corp., a private company
involved in the exploration for near-surface potash, phosphates and
other minerals, and potential development of a fertilizer project
in Peru. Indian Farmers Fertiliser Co-operative Limited (IFFCO)
owns a 20% interest in GrowMax Agri Corp. For more information
about Americas Petrogas Inc., please visit
www.americaspetrogas.com.
Forward Looking Information
This Press Release contains forward-looking information
including, but not limited to, the Company's goals and growth,
estimates of reserves and resources, production and cash flows,
reviewing various strategic alternatives, exploration, appraisal
and development activities related to conventional and
unconventional oil and gas, other exploration, development and
production activities in respect of the projects in Argentina and
Peru, and closing of the Offering. The recovery and resources
estimates for the Company's properties described in this Press
Release are estimates only and there is no guarantee that the
estimated resources will be recovered. The actual resources for the
Company's properties may be greater or less than those calculated.
Additional forward-looking information is contained in the
Company's Annual MD&A and Annual Information Form for the year
ended December 31, 2013, and reference should be made to the
additional disclosures of the assumptions, risks and uncertainties
relating to such forward-looking information in those
documents.
Forward‐looking information is based on management's
expectations regarding the Company's future growth, results of
operations, production, future capital and other expenditures
(including the amount, nature and sources of funding thereof),
competitive advantages, plans for and results of drilling activity
(including the timing, location, depth and the number of wells),
environmental matters, business prospects and opportunities and
expectations with respect to general economic conditions. Such
forward‐looking information reflects management's current beliefs
and assumptions and is based on information, including reserves and
resources information, currently available to management.
Forward‐looking information involves significant known and unknown
risks and uncertainties. A number of factors could cause actual
results, performance or achievements to differ materially from any
future results, performance or achievements expressed or implied by
the forward‐looking information, including but not limited to,
risks associated with the oil and gas industry (e.g. operational
risks in development, exploration and production, delays or changes
to plans with respect to exploration or development projects or
capital expenditures; the uncertainty of reserve estimates; the
uncertainty of geological interpretations; the uncertainty of
estimates and projections in relation to production, costs and
expenses and health, safety and environment risks, extensions of
concessions and commitments), the risk of commodity price and
foreign exchange rate fluctuations, the uncertainty associated with
negotiating with foreign governments and third parties located in
foreign jurisdictions and the risk associated with international
activity and the risk of being unable to raise significant funds on
terms acceptable to the Company to meet its capital and operating
expenditure requirements in respect of its properties.
Although the forward-looking information contained herein is
based upon assumptions which management believes to be reasonable,
the Company cannot assure investors that actual results will be
consistent with this forward-looking information. This
forward-looking information is made as of the date hereof and the
Company assumes no obligation to update or revise this information
to reflect new events or circumstances, except as required by law.
Because of the risks, uncertainties and assumptions inherent in
forward-looking information, prospective investors in the Company's
securities should not place undue reliance on this forward-looking
information.
The term BOE (barrels of oil equivalent) is used in this press
release. All calculations converting natural gas to BOE have been
made using a conversion ratio of six thousand cubic feet (six
"Mcf") of natural gas to one barrel of oil, unless otherwise
stated. The use of BOE may be misleading, particularly if used in
isolation, as the conversion ratio of six Mcf of natural gas to one
barrel of oil is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a
value equivalency at the wellhead. Given that the value ratio based
on the current price of crude oil as compared to natural gas is
significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
Prospective Resources are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
undiscovered accumulations by application of future development
projects. Prospective resources have both an associated chance of
discovery and a chance of development. Uncertainty Ranges are
described by the COGEH as low, best, and high estimates for
reserves and resources. The Best Estimate is considered to be the
best estimate of the quantity that will actually be recovered. It
is equally likely that the actual remaining quantities recovered
will be greater or less than the best estimate. If probabilistic
methods are used, there should be at least a 50 percent probability
(P50) that the quantities actually recovered will equal or exceed
the best estimate.
In the case of undiscovered resources or a subcategory of
undiscovered resources, there is no certainty that any portion of
the resources will be discovered. If discovered, there is no
certainty that it will be commercially viable to produce any
portion of the resources. For undiscovered hydrocarbons, the term
'unrisked' means that no geologic or chance of discovery ("play
risk") has been incorporated into the hydrocarbon volume
estimates.
The estimates of resources for individual properties may not
reflect the same confidence level as estimates of resources for all
properties, due to the effects of aggregation.
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 THE RELEASE.
Americas Petrogas Inc.Barclay Hambrook, P. Eng., MBAPresident
and CEO(403)
685-1888inquiries@americaspetrogas.comwww.americaspetrogas.com
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