Petroamerica Announces the Financial and Operating Results for the Three and Twelve Months Ended December 31, 2013, 2013 Year-End Reserves Results and Provides an Operations Update
CALGARY, April 28, 2014 /CNW/ - Petroamerica Oil Corp. (TSX-V: PTA) ("Petroamerica" or the "Company"), a Canadian oil and gas company operating in Colombia, is pleased to announce the financial and operating results for the three and twelve months ended December 31, 2013, the results of its 2013 year-end independent reserves evaluation and provide an operational update of the Company's activities in Colombia. Copies of the Company's Management Discussion and Analysis 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. The financial results for all periods presented are in United States dollars unless otherwise indicated.
2013 Highlights:
- Continued strong production performance and oil sales from the Las Maracas field on the Los Ocarros Block. This field has contributed an average of 5,266 barrels of oil per day ("bopd") (Company working interest, before royalties) of production and 2.0 million barrels ("bbls") in sales (net of royalties) for the year;
- Generated revenue, after royalties, of over $203 million for the year, an increase of over 370% from the prior year, on sales of 2.1 million bbls of oil, leading to positive funds flow from operations of $108.8 million ($0.19 per share) with an operating netback of over US $75 per barrel;
- Achieved average daily production for the year of 5,451 barrels of oil equivalent ("boe") per day ("boepd") (Company working interest, before royalties), with the average fourth quarter production of 6,341 boepd (Company working interest, before royalties), an increase of over 290% and 95% respectively over the comparable periods in the previous year;
- Exited the year with production of 6,296 boepd (Company working interest, before royalties), a 46% increase over the December 31, 2012 exit rate of 4,156 boepd (Company working interest, before royalties);
- Replaced 97% of proved ("1P") reserves and 96% in proved and probable ("2P") reserves over the prior year, with net 1P reserves (Company working interest, before royalty) of 3.1 million boe and 2P reserves (Company working interest, before royalty) of 4.9 million boe at December 31, 2013;
- Total 1P, 2P and proved plus probable plus possible ("3P") reserves net present values ("NPV") before tax discounted at 10%, of $133.9 million, $194.8 million and $260.0 million, respectively;
- Drilled 5 successful appraisal and development wells (Las Maracas-8, 9, 10, 11 and 12) and 4 exploration wells, resulting in discoveries at Rumi-1 on the El Eden block, Curriara-1 on the El Porton block, the Mirador Formation at the La Casona Field on the El Eden Block and in the Une Formation at the Las Maracas Field on the Los Ocarros Block; and
- Initiated production operations for the La Casona-1 discovery well.
Quarterly highlights include:
- Generated revenue of over $56 million, after royalties, leading to positive funds flow from operation of $26.1 million ($0.04 per share) with an operating netback of approximately US $75 per barrel;
- Achieved average daily production of 6,341 boepd, exiting the quarter at daily production of 6,296 boepd;
- Closed the year with over $66 million in cash and short term investments, an increase of 149% from 2012.
The following table presents the highlights of Petroamerica's financial and operating results.
| (in $000 US except share, per share or unless otherwise noted) | Q4 2013 | Q3 2013 | 12 mos 2013 | 12 mos 2012 | ||||||||
| Oil revenue - net of royalties | $ | 56,689 | $ | 54,794 | $ | 203,255 | $ | 43,083 | ||||
| Funds flow from operations | $ | 26,055 | $ | 35,322 | $ | 108,790 | $ | 16,301 | ||||
| Funds flow per share - basic | $ | 0.04 | $ | 0.06 | $ | 0.19 | $ | 0.03 | ||||
| Funds flow per share - diluted | $ | 0.04 | $ | 0.06 | $ | 0.18 | $ | 0.03 | ||||
| Income (loss) for period | $ | 10,429 | $ | 18,164 | $ | 53,877 | $ | (4,757) | ||||
| Total comprehensive income (loss) | $ | 6,069 | $ | 17,013 | $ | 49,357 | $ | (3,910) | ||||
| Income (loss) per share - basic | $ | 0.02 | $ | 0.03 | $ | 0.09 | $ | (0.01) | ||||
| Income (loss) per share - diluted | $ | 0.02 | $ | 0.03 | $ | 0.09 | $ | (0.01) | ||||
| Total assets | $ | 213,171 | $ | 216,644 | $ | 213,171 | $ | 136,374 | ||||
| Total cash | $ | 63,737 | $ | 64,864 | $ | 63,737 | $ | 26,774 | ||||
| Notes payable | $ | 31,587 | $ | 32,413 | $ | 31,587 | $ | 32,772 | ||||
| Shareholders' equity | $ | 136,098 | $ | 128,566 | $ | 136,098 | $ | 83,773 | ||||
| Exploration costs | $ | 6,704 | $ | 5,773 | $ | 12,803 | $ | 15,474 | ||||
| Capital expenditures | $ | 18,277 | $ | 17,635 | $ | 73,942 | $ | 40,139 | ||||
| Common shares outstanding | 589,908,260 | 582,808,260 | 589,908,260 | 578,671,594 | ||||||||
| Weighted average shares outstanding | ||||||||||||
| Basic | 583,786,521 | 581,097,499 | 579,818,429 | 578,344,490 | ||||||||
| Diluted | 608,389,978 | 605,383,772 | 602,796,899 | 578,344,490 | ||||||||
| (in $000 US except share, per share or unless otherwise noted) | Q4 2013 | Q3 2013 | 12 mos 2013 | 12 mos 2012 | ||||||||
| Average production - bopd | 6,341 | 5,951 | 5,451 | 1,392 | ||||||||
| Selling price $/bbl | $ | 104.53 | $ | 108.00 | $ | 105.13 | $ | 106.76 | ||||
| Royalty $/bbl | $ | (8.93) | $ | (9.90) | $ | (8.80) | $ | (8.65) | ||||
| Average transportation costs $/bbl | $ | (17.23) | $ | (18.69) | $ | (17.46) | $ | (20.54) | ||||
| Average production cost $/bbl | $ | (3.46) | $ | (1.84) | $ | (3.24) | $ | (7.08) | ||||
| Operating netback $/bbl | $ | 74.91 | $ | 77.57 | $ | 75.63 | $ | 70.49 | ||||
| Funds flow netback$/bbl | $ | 44.66 | $ | 64.51 | $ | 54.68 | $ | 32.08 | ||||
| Share trading | ||||||||||||
| High | $ | 0.36 | $ | 0.35 | $ | 0.40 | $ | 0.37 | ||||
| Low | $ | 0.28 | $ | 0.24 | $ | 0.21 | $ | 0.10 | ||||
| Close | $ | 0.35 | $ | 0.33 | $ | 0.35 | $ | 0.35 | ||||
| Trading volume | 93,205,300 | 59,394,000 | 259,425,400 | 286,403,100 |
Fourth Quarter Financial Summary
For the three months ended December 31, 2013, the Company reported $56.7 million in revenue, net of royalties, from the sale of 593 Mboe. The realized sales price was $104.53 per boe generating an operating netback of approximately $75 per barrel.
For the fourth quarter of 2013, the Company's net income was $10.4 million ($0.02 per share diluted), due to the strong production levels through the quarter and continued strong oil prices. The Company's capital expenditures for the fourth quarter were $18.3 million, all invested in Colombia. These capital expenditures were funded from available cash on hand. As at December 31, 2013, the Company held 12 Mbbls of oil in inventory.
2013 Year-End Company Interest Reserves
The Company's Colombian reserves were evaluated by independent qualified reserves evaluator, GLJ Petroleum Consultants Ltd. ("GLJ"), and the reserves summarized here are taken directly from the independent reserves report prepared by GLJ, with an effective date of December 31, 2013 (the "GLJ Report"). The GLJ Report was prepared in compliance with the National Instrument 51-101 (Standards of Disclosure for Oil and Gas Activities) and in accordance with the definitions, standards and procedures of COGE (Canadian Oil and Gas Evaluation) Handbook. A complete filing of the Company's reserves as required by NI 51-101 will be will be filed on SEDAR with the Company's Annual Information Form.
The following table presents a summary of the Company's oil and gas reserves as of December 31, 2013.
2013 Year-End Reserves Summary
| Reserves Category | December 31, 2012 (Mboe) | December 31, 2013 (Mboe) | ||
| Total Proved | 3,250 | 3,147 | ||
| Total Proved plus Probable | 5,081 | 4,891 | ||
| Total Proved plus Probable plus Possible | 7,924 | 6,717 | ||
| Note: Company working interest reserves, before royalty. |
The following table presents a summary of the Company's net present values of future cash flows as of December 31, 2013.
2013 Year-End Reserves Net Present Value Summary
| Reserves Category | December 31, 2012 (Millions $) | December 31, 2013 (Millions $) | ||
| Total Proved | 141.5 | 133.9 | ||
| Total Proved plus Probable | 205.6 | 194.8 | ||
| Total Proved plus Probable plus Possible | 304.3 | 260.0 | ||
| Note: Net present values before tax discounted at 10%. |
The oil price forecast used to calculate the net present values can be found on the GLJ website at www.gljpc.com.
2013 Year-End Reserves Reconciliation
| Mboe | Total Proved | Total Proved plus Probable | ||
| December 31, 2012 | 3,250 | 5,081 | ||
| Technical Revisions | 1,693 | 1,278 | ||
| Extensions | 43 | 82 | ||
| Exploration Discoveries | 151 | 440 | ||
| Production | (1,990) | (1,990) | ||
| December 31, 2013 | 3,147 | 4,891 |
| Note: Positive technical revisions include Las Maracas and La Casona Fields; downward technical revisions include the Balay Field. Extensions and new discoveries include Rumi, Curiara and La Casona. |
Reserves Discussion
All of the Company's oil reserves are located in the Llanos Basin of Colombia.
The Company produced approximately 1.99 million boe during 2013, and on a 2P basis, replaced approximately 96% of this production with new reserve adds through positive technical revisions, extensions and new discoveries. On a per barrel basis, the calculated future net present value before tax, discounted at 10%, for the 2P reserves category is $49.60 per boe and the 2P reserves life index using fourth quarter 2013 production levels is estimated at 2.1 years.
According to the GLJ report, 90% of the 2P reserves are classified as light to medium oil and 10% of the reserves are associated with natural gas or natural gas liquids.
Definitions of Reserve Categories
"Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual quantities recovered will exceed the estimated proved reserves.
"Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
"Possible" reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability quantities actually recovered will equal or exceed the sum of the proved plus probable plus possible reserves.
Operations Update
Company Production
March production averaged 6,506 boepd (Company working interest) compared to average production of 6,497 boepd for the previous month, setting a Company record for average monthly production.
Rumi (Non-operated, 40% Working Interest)
The Rumi-1 exploration well was drilled and completed in the fourth quarter of 2013 and encountered oil bearing reservoirs in the Une formation, testing at rates of approximately 350-1,000 bopd. A long-term test facility is currently under construction and production is expected to commence during the month of May 2014. Future appraisal drilling on the Rumi structure will be contingent on the production performance during the long-term test.
Curiara (Non-operated, 25% Working Interest)
The Curiara long-term test facility was commissioned and the Curiara-1 well started producing on April 5, 2014 at rates of approximately 250 bopd of 42 degree API oil. This rate is temporary and restricted by authorized flaring 1.5 million cubic feet per day of gas, while gas dehydration and gas compressors are commissioned. The results of this long-term test will determine the forward appraisal plans for this discovery.
Exploration, Appraisal and Development Drilling in 2014
A summary of exploration, appraisal and development drilling expected to take place over the near term is provided below:
| Prospect/Well | Well Type | Block | Working Interest | Projected Timing | ||||||||
| Las Maracas-15 | Development | Los Ocarros | 50% | Q2 2014 Spud | ||||||||
| Las Maracas-16 | Development | Los Ocarros | 50% | Q2 2014 Spud | ||||||||
| Crypto-1 | Exploration | El Porton | 50% | Q3 2014 Spud | ||||||||
| Malavar-1 | Exploration | LLA-10 | 50% | Q3 2014 Spud | ||||||||
| Zampoña -1 | Exploration | Los Ocarros | 50% | Q3 2014 Spud | ||||||||
Outlook
Given the strong production performance coming from our Las Maracas field, as well as anticipated additional production from the Rumi-1 and La Casona-2 wells, the Company is revising its 2014 average production guidance upwards from 5,000 to 5,500 boepd to 6,000 boepd.
The Company is also projecting a revised capital spending program for 2014 of approximately $54 million, a decrease of $16 million from the guidance provided early in 2014 of approximately $70 million.
With the revised production estimates and the resulting cash flows, the current cash holdings of approximately $98 million as well as the reduction in planned capital spending for the year, the Company expects to be able to fully fund its operations for the year and still have free cash to pursue new business opportunities. These opportunities could include exploration farm-ins, producing asset acquisitions or corporate mergers and acquisitions, with the objective of growing the business and thereby enhancing overall shareholder value in the Company.
Petroamerica Oil Corp.
Consolidated Statements of Financial Position
| As at | As at | |||||||
| December 31, | December 31, | |||||||
| (thousands of United States dollars) | 2013 | 2012 | ||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 63,737 | $ | 26,774 | ||||
| Short-term investments | 2,894 | - | ||||||
| Trade and other receivables | 42,754 | 23,312 | ||||||
| Prepayments and deposits | 508 | 98 | ||||||
| Crude oil inventory | 348 | 3,680 | ||||||
| 110,241 | 53,864 | |||||||
| Non-current assets | ||||||||
| Restricted cash | 5,170 | 3,896 | ||||||
| Property, plant and equipment | 72,889 | 35,299 | ||||||
| Exploration and evaluation assets | 24,871 | 36,336 | ||||||
| Deferred tax asset | - | 6,979 | ||||||
| 102,930 | 82,510 | |||||||
| Total assets | $ | 213,171 | $ | 136,374 | ||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Current equity tax | $ | 377 | $ | 436 | ||||
| Current income tax | 19,546 | 782 | ||||||
| Accounts payable and accrued liabilities | 15,400 | 17,179 | ||||||
| 35,323 | 18,397 | |||||||
| Non-Current liabilities | ||||||||
| Equity tax | $ | - | $ | 374 | ||||
| Stock appreciation rights liability | 2,085 | - | ||||||
| Notes payable | 31,587 | 32,772 | ||||||
| Deferred tax liability | 2,818 | - | ||||||
| Decommissioning liabilities | 5,260 | 1,058 | ||||||
| Total liabilities | 77,073 | 52,601 | ||||||
| Shareholders' equity | ||||||||
| Share capital | 138,936 | 136,417 | ||||||
| Contributed surplus | 24,079 | 23,630 | ||||||
| Translation reserve | (1,172) | 3,348 | ||||||
| Deficit | (25,745) | (79,622) | ||||||
| 136,098 | 83,773 | |||||||
| Total liabilities and shareholders' equity | $ | 213,171 | $ | 136,374 | ||||
Petroamerica Oil Corp.
Consolidated Statements of Loss and Comprehensive Loss
| Year ended December 31 | |||||||
| (thousands of United States dollars, except per share amounts) | 2013 | 2012 | |||||
| Revenue | |||||||
| Oil revenue - net of royalties | $ | 203,255 | $ | 43,083 | |||
| 203,255 | 43,083 | ||||||
| Expenses | |||||||
| Production | (6,833) | (3,076) | |||||
| Transportation | (36,835) | (8,926) | |||||
| Purchased oil | (3,434) | - | |||||
| Exploration and evaluation | (12,803) | (15,474) | |||||
| Depletion and depreciation | (31,928) | (6,339) | |||||
| Impairment of property, plant and equipment | (3,228) | (6,255) | |||||
| General and administration | (13,338) | (9,427) | |||||
| Share-based payments | (2,998) | (1,802) | |||||
| (111,397) | (51,299) | ||||||
| Finance and other | (5,197) | (3,178) | |||||
| Impairment of accounts receivable | - | (1,812) | |||||
| Foreign exchange gain (loss) | 5,186 | (403) | |||||
| (11) | (5,393) | ||||||
| Income (loss) before income taxes | 91,847 | (13,609) | |||||
| Current income tax expense | (28,173) | (778) | |||||
| Deferred tax (expense) recovery | (9,797) | 9,630 | |||||
| Net income (loss) for the year | 53,877 | (4,757) | |||||
| Other comprehensive (loss) income | |||||||
| Items that will not be reclassified subsequently to income or (loss): | |||||||
| Reserve on translation of foreign operations | |||||||
| and net investments in foreign operations | (4,520) | 847 | |||||
| Other comprehensive (loss) income | (4,520) | 847 | |||||
| Total comprehensive (loss) income | $ | 49,357 | $ | (3,910) | |||
| Basic income (loss) per share | $ | 0.09 | $ | (0.01) | |||
| Diluted income (loss) per share | $ | 0.09 | $ | (0.01) | |||
| Weighted average number of basic | |||||||
| common shares outstanding | 579,818,429 | 578,344,490 | |||||
| Weighted average number of diluted | |||||||
| common shares outstanding | 602,796,899 | 578,344,490 | |||||
Petroamerica Oil Corp.
Consolidated Statements of Changes in Equity
| (thousands of United States dollars) | Share Capital | Contributed surplus | Translation reserve | Deficit | Total equity | ||||||||||
| Balance at January 1, 2013 | $ | 136,417 | $ | 23,630 | $ | 3,348 | $ | (79,622) | $ | 83,773 | |||||
| Net income for the year | - | - | - | 53,877 | 53,877 | ||||||||||
| Other comprehensive loss | - | - | (4,520) | - | (4,520) | ||||||||||
| Total comprehensive income (loss) | - | - | (4,520) | 53,877 | 49,357 | ||||||||||
| Warrants exercised | 2,426 | (361) | - | - | 2,065 | ||||||||||
| Stock options exercised | 93 | (35) | - | - | 58 | ||||||||||
| Share-based payments | - | 845 | - | - | 845 | ||||||||||
| Balance at December 31, 2013 | $ | 138,936 | $ | 24,079 | $ | (1,172) | $ | (25,745) | $ | 136,098 | |||||
| Share Capital | Contributed surplus | Translation reserve | Deficit | Total equity | |||||||||||
| Balance at January 1, 2012 | $ | 136,336 | $ | 20,611 | $ | 2,501 | $ | (74,865) | $ | 84,583 | |||||
| Net loss for the year | - | - | - | (4,757) | (4,757) | ||||||||||
| Other comprehensive income | - | - | 847 | - | 847 | ||||||||||
| Total comprehensive income (loss) | - | - | 847 | (4,757) | (3,910) | ||||||||||
| Warrants issued pursuant to debt offering | 81 | 1,299 | - | - | 1,380 | ||||||||||
| Warrant issue costs | - | (70) | - | - | (70) | ||||||||||
| Warrants exercised | (12) | (12) | |||||||||||||
| Share-based payments | - | 1,802 | - | - | 1,802 | ||||||||||
| Balance at December 31, 2012 | $ | 136,417 | $ | 23,630 | $ | 3,348 | $ | (79,622) | $ | 83,773 |
Petroamerica Oil Corp.
Consolidated Statements of Cash Flows
| Year ended December 31 | |||||||
| (thousands of United States dollars) | 2013 | 2012 | |||||
| Operating activities | |||||||
| Net income (loss) for the year | $ | 53,877 | $ | (4,757) | |||
| Items not involving cash: | |||||||
| Share-based payments | 2,998 | 1,802 | |||||
| Depletion and depreciation | 31,928 | 6,339 | |||||
| Unrealized foreign exchange (gain) loss | (6,634) | 816 | |||||
| Deferred tax expense (recovery) | 9,797 | (9,630) | |||||
| Accretion and amortization | 1,062 | 716 | |||||
| Impairment of property, plant and equipment | 3,228 | 6,255 | |||||
| Impairment of exploration and evaluation assets | 12,534 | 12,948 | |||||
| Impairment of accounts receivable | - | 1,812 | |||||
| Net changes in non-cash working capital balances: | |||||||
| Changes in short-term investments | (2,894) | - | |||||
| Changes in trade and other receivables | (19,442) | (19,392) | |||||
| Changes in prepayments and deposits | (410) | 314 | |||||
| Changes in crude oil inventory | 3,460 | (3,126) | |||||
| Changes in accounts payable, accrued liabilities and equity tax | (2,212) | 10,448 | |||||
| Changes in current income tax | 18,764 | 782 | |||||
| Cash provided by operating activities | 106,056 | 5,327 | |||||
| Investing activities | |||||||
| Exploration and evaluation expenditures | (16,375) | (14,980) | |||||
| Property, plant and equipment expenditures | (53,465) | (21,424) | |||||
| Restricted cash investments | (1,376) | 3,983 | |||||
| Interest received | - | 1,388 | |||||
| Cash used in investing activities | (71,216) | (31,033) | |||||
| Financing activities | |||||||
| Stock options exercised | 58 | - | |||||
| Issuance of notes payable, net of costs | - | 33,439 | |||||
| Warrants exercised | 2,065 | 69 | |||||
| Cash provided by financing activities | 2,123 | 33,508 | |||||
| Increase in cash and cash equivalents during the year | 36,963 | 7,802 | |||||
| Cash and cash equivalents, beginning of year | 26,774 | 18,972 | |||||
| Cash and cash equivalents, end of year | $ | 63,737 | $ | 26,774 | |||
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 regulatory and partner approvals on the Company's development plan, drilling and operational opportunities and the timing associated therewith, test results and the timing thereof, the use of available cash on hand in addition to the potential exploration and development opportunities and expectations regarding regulatory approval and the overall 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, and reliance on industry partners.
Data obtained from the initial testing results at the referenced wells, which may include bbls of oil produced and levels of water-cut, should be considered to be preliminary until a further and detailed analysis or interpretation has been done on such data. The test results disclosed in this press release are not necessarily indicative of long-term performance or of ultimate recovery. The reader is cautioned not to unduly rely on such results as such results may not be indicative of future performance of the well or of expected production results for the Company in the future.
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.
'boe' may be misleading if used in isolation. Throughout this press release the calculation of boe is at a conversion rate of 6,000 cubic feet of natural gas for one barrel of oil and is based on an energy conversion method at the burner tip and does not represent a value equivalence at the wellhead.
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.
Contact
Nelson Navarrete
President and CEO
Colin Wagner
CFO
Ralph Gillcrist
COO and Executive Vice President Exploration & Business Development
Tel Bogota, Colombia: +57-1-744-0644
Tel Calgary, Canada: +1-403-237-8300
Email: investorrelations@pta-oil.com
Web Page: www.PetroamericaOilCorp.com
