TORONTO,
April 10, 2012 /PRNewswire/ -
PetroMagdalena Energy Corp. (TSXV: PMD) has filed today its audited
consolidated financial statements for the year ended December 31, 2011, together with its Management's
Discussion and Analysis ("MD&A"), Forms 51-101 F1, F2, F3 and
F4, and its Annual Information Form, for the corresponding period.
These documents will be posted on the Company's website at
www.petromagdalena.com and at www.sedar.com under the Company's
SEDAR profile.
Luciano Biondi,
the Company's Chief Executive Officer, stated: "We are pleased to
see strong financials results for the 2011 financial year,
reflecting our focus on managing our core portfolio of oil assets
in the Llanos Basin. We have increased the prospectivity of the
portfolio with our most recent NI 51-101 reserves report and we are
optimistic about our exploration portfolio which includes
significant activity in 2012 and additional upside production
potential not yet reflected in the 2011 year-end reserves. In
particular, Azor-1X and Cernicalo-1ST are now on production and we
are currently testing Tijereto Sur. In addition, later in 2012, we
plan to drill two high potential exploration wells at Copa A Norte
and Copa C in the Cubiro block."
We met our production guidance for 2011 and
increased our 2011 daily production exit rate by 76% over the 2010
rate. Production increases combined with stronger realized oil and
gas prices contributed to significant revenue growth for
PetroMagdalena in 2011 as demonstrated by the 174% year-over-year
increase in our fourth quarter revenues to $27.7 million. Together with our focus on
improving operating efficiencies, we reported our fourth
consecutive quarter of improved operating netback, which averaged
$61.33 per boe in the fourth quarter
of 2011.
With the increase in 2011 in our internally
generated cash flows from our operations and the Company's
liquidity situation much improved from the end of 2010, we are
favourably positioned to take advantage of the exploration and
development opportunities within our own portfolio of assets, and
are able to consider other meaningful investments going
forward."
Financial and Operating Summary
|
|
Fourth Quarter |
Year |
(000s, except per share and
operational data) |
|
2011 |
|
2010 |
2011 |
2010 |
|
|
|
|
|
|
|
|
Financial
|
|
|
|
|
|
|
|
Revenue from oil and gas sales
|
$ |
27,747 |
$ |
10,125 |
$ |
86,196 |
$ |
44,440 |
Gross margin (3)
|
|
7,685 |
|
(617) |
|
20,912 |
|
1,423 |
Net loss |
|
(74,758) |
|
(41,695) |
|
(111,802) |
|
(54,655) |
Basic and diluted loss per share
|
|
(0.54) |
|
(0.39) |
|
(0.81) |
|
(0.51) |
Total assets at period end
|
|
349,311 |
|
362,965 |
|
349,311 |
|
362,965 |
Total debt at period end
|
|
47,524 |
|
44,886 |
|
47,524 |
|
44,886 |
|
|
|
|
|
|
|
|
|
Operational |
|
|
|
|
|
|
|
|
Average daily production (boed)
(1) |
|
3,625 |
|
2,515 |
|
2,761 |
|
2,413 |
Total sales (boe)
(2) |
|
279,830 |
|
149,455 |
|
972,346 |
|
751,828 |
Operating netback ($/boe)
(3) |
|
61.33 |
|
21.55 |
|
55.84 |
|
35.92 |
(1) |
Company share, gross before deduction of ANH royalties |
(2) |
Company share, net after deduction of ANH royalties |
(3) |
See Additional Financial Measures in the MD&A. |
Fourth Quarter 2011 Highlights
- Production: Total production averaged 3,625
barrels oil-equivalent ("boe") per day ("boed") in the fourth
quarter of 2011 as compared to 2,515 boed in the fourth quarter of
2010. Fuelled by the discoveries at Cubiro, the Company's gross
share of production for the month of December 2011 averaged 4,181 boed, up 76% from
the December 2010 monthly average
rate of 2,374 boed.
- Revenues: Improvements in the Company's light oil
marketing strategy in 2011 combined with improved oil prices and
production growth, increased revenues in the fourth quarter of 2011
to $27.7 million, or 174% higher than
the same period a year ago.
- Operating netback: The Company reported its
fourth consecutive quarter of improved operating netbacks, which
averaged $61.33 per boe in the fourth
quarter of 2011.
- G&A expenses: Through cost savings
initiatives implemented in early 2011 and production growth, the
Company reduced G&A to approximately $12 per boe sold in the fourth quarter of 2011
compared with an average of $25 per
boe sold in 2010.
Fiscal Year 2011 Highlights
- Reserves: A successful exploration drilling
program at Cubiro in 2011 was the key driver behind a 4.0 MMbbl, or
43%, increase in the Company's 2P oil reserves, a 394% reserve
replacement, as per the December 31,
2011 Petrotech report compared with the December 31, 2010 report.
- Production: The Company met its production
guidance for 2011. The Company's gross share of production for the
year averaged 2,761 boed.
- Liquidity: The Company strengthened its balance
sheet in 2011. Cash at December 31,
2011 stood at $14.1 million
and the working capital deficit has been reduced by $26.5 million since December 31, 2010. As a result of production
growth and netback improvements in 2011, cash flow from operating
netbacks amounted to $54.3 million in
2011, increasing significantly over the course of the year from
$3.2 million in the fourth quarter of
2010 to $17.2 million in the fourth
quarter of 2011. This provides the Company with a strong internally
generated source of cash flow to meet its obligations as they
become due and to re-invest in its annual work program on its
properties.
- Value creation: The Company continues to take
action to develop its portfolio and to reduce its risk through
joint venture relationships. In 2011, the Company announced a
strategic partnership with YPF S.A. to farm-out a portion of its
interests in Carbonera and Catguas and to explore further business
opportunities with respect to several of its other properties. In
addition, the Company also announced a farm-out arrangement with
respect to its Santa Cruz
exploration property and executed a conditional assignment
agreement to increase the Company's working interest in the
Arrendajo ANH block where the Azor-1X discovery is currently on
production. Each of these farm-out/ farm-in arrangements are
subject to ANH approval. In December
2011, the Company sold its working interest in the Cerrito
gas property for cash proceeds of $7.5
million.
The net loss for the fourth quarter of 2011
amounted to $74.8 million or
$0.54 per share, bringing the fiscal
year 2011 net loss to $111.8 million
or $0.81 per share. The 2011 net loss
includes $49.7 million of write-downs
related to the Company's strategy with respect to its non-core oil
and gas assets, $36.1 million related
to wells drilled in 2010 and 2011 that did not ultimately result in
proved reserves, a $6.5 million
one-time charge for the 2011-2014 Colombian equity tax and a
$6.5 million non-cash charge for
stock options granted during the year.
Capital expenditure guidance for 2012 has been
updated to a range of $70 million to $80
million, mainly as a result of the farm-in with Interoil
Colombia E&P Inc. on block LLA-47 and investments at Cubiro to
replace rental oil facilities to realize production cost savings.
The 2012 capital expenditure program is fully funded by the
Company's cash balances, cash flow from operations, a new
$10 million local bank facility and
farm-out arrangements. The Company will provide further guidance on
spending and the work plan after the current first quarter
exploration program is evaluated and remains subject to final board
approval.
Reserves
The total gross proved and probable ("2P") light
and medium oil reserves of the Company, based on its working
interests in five oil properties in Colombia, increased by 4.0 MMbbl or 43% in
2011 to 13.3 MMbbl, before deduction of ANH royalties, or 12.2
MMbbl net to the Company, driven primarily by four discoveries on
the Cubiro block: Petirrojo, Copa B, Copa A Sur and Yopo.
The total gross 2P oil-equivalent reserves of
the Company, based on its working interests in six properties in
Colombia, is approximately 24.7
MMboe before deduction of ANH royalties or 22.9 MMboe net to the
Company. The Company's interest in 2P oil-equivalent reserves
decreased by approximately 46% compared with December 2010 as a result of the sale of Cerrito,
and technical revisions at Carbonera and Rio Magdalena. Gas volumes are expressed in
billions of cubic feet ("Bcf") and when expressed in oil equivalent
were converted using 6,000 cubic feet of gas equivalent to one
barrel.
The reserves are based on an independent reserve
and resource assessment report prepared by Petrotech Engineering
Ltd. ("Petrotech") following all industry standard procedures and
in conformity to the COGE guidelines, as reported in the Company's
NI 51-101 Form F1, filed on SEDAR at www.sedar.com and available on
the Company's website at www.petromagdalena.com. The
following table summarizes the change in the Company's 2P reserves
from December 31, 2010 to
December 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas |
|
|
|
|
|
L & M Oil |
Natural Gas |
Liquids |
Oil Equivalent |
|
|
Gross |
Net |
Gross |
Net |
Gross |
Net |
|
Gross |
Net |
|
|
(MMbbl) |
(MMbbl) |
(Bcf) |
(Bcf) |
(MMbbl) |
(MMbbl) |
|
(MMboe) |
(MMboe) |
December 2010 |
|
9.3 |
8.6 |
99.8 |
91.4 |
4.4 |
4.0 |
|
30.3 |
27.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 2011 |
|
13.3 |
12.2 |
52.3 |
48.9 |
2.7 |
2.5 |
|
24.7 |
22.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve
Changes,
Net of Production |
|
4.0 |
3.6 |
(47.5) |
(42.5) |
(1.7) |
(1.5) |
|
(5.6) |
(4.9) |
(1) |
"Gross reserves" are the Company's share of the reserve before
deduction of ANH royalties. |
(2) |
"Net reserves" are the Company's share of the gross reserves
after deduction of ANH royalties. |
In 2011, the before-tax net present value of the
future net revenues, discounted at 10%, ("BTNPV10 future net
revenues") from the Company's interest in 2P oil reserves increased
by 84% to $438.9 million. Overall,
the BTNPV10 future net revenues of the Company's oil-equivalent 2P
reserves increased to $539.9 million,
approximately 37% higher compared to the 2010 year-end assessment
completed by Petrotech.
Improved oil prices contributed in part to this
increase as the December 31, 2011 oil
price for West Texas Intermediate ("WTI") closed at $98.83 per barrel compared with $91.40 per barrel a year ago. However, the
primary value driver was the Company's shift in its focus in 2011
to its core oil properties. In 2011, the volume of 2P oil
reserves increased to 54% of the total gross boe reserves at
December 31, 2011. More importantly,
the Company's 2P oil reserves increased to 81% of the total BTNPV10
future net revenues, up from 60% a year ago, principally as a
result of the successful exploration and development program at
Cubiro in 2011. At December 31, 2011,
the Company's interest in the Cubiro property's BTNPV10 future net
revenues increased by 180% to $383
million or 71% of the total BTNPV10 future net revenues. The
following table summarizes the BTNPV10 future net revenues as
reported in the Company's NI 51-101 Form F1 and the change from
December 31, 2010 to December 31, 2011:
|
|
|
|
|
|
($ millions) |
|
L&M Oil |
Natural Gas &
Natural Gas
Liquids |
|
Total |
|
|
|
|
|
|
December 2010 |
|
$ 238.0 |
$
156.0 |
|
$
394.0 |
|
|
|
|
|
|
|
|
|
|
|
|
December 2011 |
|
$
438.9 |
$
101.0 |
|
$
539.9 |
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
$
200.9 |
$
(55.0) |
|
$
145.9 |
In 2011, the after-tax net present value of the
future net revenues, discounted at 10%, from the Company's interest
in 2P oil and gas reserves increased by 43% to $390.5 million.
Production Update
With average production at 3,850 boed in the
first quarter of 2012, the Company has had four consecutive
quarters of production growth, 68% higher than the same quarter in
2011 and 6% higher than in the fourth quarter of 2011.
The Company's production guidance for 2012
remains unchanged and is expected to average between 4,300 to 4,700
boed for the year. This guidance is based on an updated production
profile of the Company's thirteen producing oil fields and the ten
development wells planned to be drilled from now to the end of the
year. It does not include production volumes for any exploration
wells currently in process. The disruptions experienced at Cubiro
in the first quarter temporarily delayed the Company's production
schedule but did not result in any significant impact on the annual
production guidance for 2012. Production has averaged approximately
4,200 boed since the blockade ended in mid-March 2012.
Cernicalo-1ST on Production - Cubiro
Block, Llanos Basin:
The Cernicalo-1ST, a sidetrack of the CernÃcalo
1 exploration well in Polygon B of the Cubiro Block, was put on
production on February 25, 2012 from
the Guadalupe and C7 formations. The Guadalupe is producing
23.9 degree API oil and the C7 is producing 28 degree API oil. Over
the last seven days of March 2012,
the well produced at a combined average rate of 510 boed (Company
share - 357 boed), with a water cut of 57%. The structure is on
trend with the Barranquero field to the north and the Tijereto
Sur-1X exploration well to the south.
Copa 4 Development well - Cubiro Block,
Llanos Basin:
Copa 4, a development well in the Copa field was
spud on March 31, 2012 and is
currently drilling at 4,650 feet measured depth (MD) in the
Carbonera Formation. The well is expected to be completed within
the next two weeks in the Carbonera C5. This is the same interval
in Copa-1 that has already produced 290,000 Bbls and is expected to
produce to an ultimate total recovery of 497,000 bbls from this
well.
Exploration Update
Alondra-1X Exploration well - Cubiro
Block, Llanos Basin:
The Alondra-1X exploration well, spudded on
March 28, 2012, reached total depth
(TD) of 6,513 feet MD on April 5,
2012 in the Guadalupe Formation and found the top of the
Carbonera C7 sand at 5,989 feet MD.
The Alondra-1X was abandoned based on LWD logs,
and on April 9, 2012, a sidetrack was
started targeting a different structural compartment on the same
prospect. At the present depth of 2,685 feet MD, results from the
Alondra-1ST are expected in mid-April
2012. The well is in Polygon B of the Cubiro Block, where
PetroMagdalena has a 70% working interest. The Alondra prospect is
on trend with, and 3.4 kilometres north of, the Barranquero
Field.
Santa
Cruz -1X Exploration well - Santa Cruz Block, Catatumbo
Basin:
The testing program continues in the
Santa Cruz-1X well. During
operations, it was determined that a cement squeeze was required to
ensure zone isolation over the Barco Formation and the Company
expects that additional cement squeezes will be required, making
the testing period longer than what was originally anticipated.
Results from these tests are now expected for the end of
April 2012.
The Santa
Cruz-1X well, located on the Santa Cruz Block in the
Catatumbo Basin in North Eastern Colombia, was drilled to a TD of
11,550 feet MD. Data related to well seismic, geological age dating
and logs, indicate that the well drilled the main fault plane at
the level of the Leon-Guayabo formations. In the footwall of the
main inverse fault, a normal section was found including sediments
from the Carbonera to the Catatumbo formations. Laboratory analysis
of cuttings is in progress and an interpretation effort will
continue, to review the geological model.
PetroMagdalena has a 70% working interest in the
Santa Cruz-1X well and is the
operator of the Santa Cruz Block.
Cantaclaro-1X Exploration well -
Carbonera Block, Catatumbo Basin:
The Cantaclaro-1X exploration well on the
Carbonera Block, spudded on March 15,
2012, was drilled to the top of the target La Luna Formation
at a depth of 4,560 feet MD. Intermediate 9-5/8 inch casing has
been set and the next operation is to install underbalanced
drilling equipment. The La Luna target formation will then be
drilled, highly deviated, and the well is estimated to reach TD at
the base of the La Luna Formation at a measured depth of 5,480 feet
MD. Simultaneous underbalanced drilling and testing is planned to
resume in five days. PetroMagdalena has signed an MOU to farm-out
60% of the Carbonera block to YPF as part of a $23 million work program, subject to ANH
approval.
Conference Call
Management will hold a conference call today at
9:00 a.m. (Eastern Time) to discuss
the 2011 fourth quarter and year end results and to provide an
operational update. Analysts and interested investors are invited
to participate as follows:
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Toronto & International:
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(647) 427-7450 |
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North
America:
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(888) 231-8191 |
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Conference ID: |
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66765074 |
A playback of this conference call will be
available by dialling 416-849-0833 with the above conference ID
number until April 24, 2012.
PetroMagdalena is a Canadian-based oil and
gas exploration and production company, with working interests
in 19 properties in five basins in Colombia. Further information can be obtained
by visiting our website at www.petromagdalena.com.
All monetary amounts in U.S. dollars unless
otherwise stated. This news release contains certain
"forward-looking statements" and "forward-looking information"
under applicable Canadian securities laws concerning the business,
operations and financial performance and condition of
PetroMagdalena. Forward-looking statements and forward-looking
information include, but are not limited to, statements with
respect to estimated production and reserve life of the various oil
and gas projects of PetroMagdalena; the estimation of oil and gas
reserves; the realization of oil and gas reserve estimates; the
timing and amount of estimated future production; costs of
production; success of exploration activities; and currency
exchange rate fluctuations. Except for statements of historical
fact relating to the company, certain information contained herein
constitutes forward-looking statements. Forward-looking statements
are frequently characterized by words such as "plan," "expect,"
"project," "intend," "believe," "anticipate", "estimate" and other
similar words, or statements that certain events or conditions
"may" or "will" occur. Forward-looking statements are based on the
opinions and estimates of management at the date the statements are
made, and are based on a number of assumptions and subject to a
variety of risks and uncertainties and other factors that could
cause actual events or results to differ materially from those
projected in the forward-looking statements. Many of these
assumptions are based on factors and events that are not within the
control of PetroMagdalena and there is no assurance they will prove
to be correct. Factors that could cause actual results to vary
materially from results anticipated by such forward-looking
statements include changes in market conditions, risks relating to
international operations, fluctuating oil and gas prices and
currency exchange rates, changes in project parameters, the
possibility of project cost overruns or unanticipated costs and
expenses, labour disputes and other risks of the oil and gas
industry, failure of plant, equipment or processes to operate as
anticipated. Although PetroMagdalena has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be anticipated, estimated or
intended. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
PetroMagdalena undertakes no obligation to update forward-looking
statements if circumstances or management's estimates or opinions
should change except as required by applicable securities laws. The
reader is cautioned not to place undue reliance on forward-looking
statements.
Statements concerning oil and gas reserve
estimates may also be deemed to constitute forward-looking
statements to the extent they involve estimates of the oil and gas
that will be encountered if the property is developed. Boe may be
misleading, particularly if used in isolation. A boe conversion
ratio of 6 mcf:1 bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. Estimated values of
future net revenue disclosed do not represent fair market
value.
Neither 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 news release.
Glossary
1P: Proven reserves |
G&A: General and Administrative Expenses |
2P: Proven + Probable reserves |
MMCF: Million Cubic Feet |
3P: Proven + Probable + Possible reserves |
MD: Measured Depth |
ANH: Agencia Nacional de Hidrocarburos |
MMBBLS: Million Barrels of Oil |
API: American Petroleum Institute |
MMBTU: Millions British Thermal Unit |
BOE: Barrels of Oil Equivalent |
|
BOFD: Barrels of Fluid Per Day |
NPV: Net Present Value |
BOPD: Barrels of Oil Per Day |
PSI: Pounds per Square Inch. The unit of
pressure. |
BOEPD: Barrels of Oil Equivalent Per Day |
TD: Total Depth of the well |
BS&W: Basic Sediments and Water |
TVD: True Vertical Depth of the well |
E&PC: Exploration & Production
Contract |
TVDSS: True Vertical Depth Sub Sea |
ESP: Electric Submersible Pump |
WI: Working Interest |
FOB: Freight on Board |
WTI: West Texas Intermediate Oil Price Index |
SOURCE PetroMagdalena Energy Corp.