Americas Petrogas Announces 2014 Results and Reserves
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E-mailCALGARY, ALBERTA -- (Marketwired) -- 05/01/15 -- Americas Petrogas Inc. ("Americas Petrogas" or the "Company") (TSX VENTURE: BOE) announces that it has filed its 2014 audited consolidated financial statements, including the Auditor's Report thereon, and Management's Discussion and Analysis ("MD&A") relating to its 2014 year-end results. These filings can be accessed electronically on the System for Electronic Document Analysis and Retrieval (SEDAR) website: www.sedar.com and on the Company's website at www.americaspetrogas.com.
The Company also filed on SEDAR the disclosure and reports relating to reserves data and other oil and gas information required pursuant to National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.
The following Summary of Selected Financial and Operational Highlights have been derived from the audited consolidated financial statements and MD&A. Readers are strongly encouraged to review the entire audited consolidated financial statements, including the Auditor's Report thereon, and MD&A.
All amounts are in Canadian dollars unless otherwise stated.
Summary of Selected Financial and Operational Highlights
($ in thousands, except share, per share, and
per barrel amounts) Year ended December 31
2014 2013
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Gross oil sales revenue $ 30,999 $ 63,018
Net revenue(1) $ 26,033 $ 54,500
Operating netback (including Oil Plus
benefits)(2) $ 11,270 $ 57,874
Operating netback (including Oil Plus
benefits) per barrel(2) $ 31.89 $ 73.72
Operating netback (excluding Oil Plus
benefits) per barrel(2) $ 31.89 $ 43.69
Net income (loss) attributable to owners of
the Company(3) $ (52,851) $ (11,755)
Cash flow from operating activities $ 9,753 $ 31,354
Earnings (loss) per share- basic and diluted $ (0.24) $ (0.06)
Funds flow from operations(4) $ (1,476) $ 43,855
Per share - basic $ (0.01) $ 0.21
Per share - diluted $ (0.01) $ 0.20
Weighted average number of common shares
outstanding(5)
Basic 223,284,768 212,669,147
Diluted 223,284,768 214,836,413
Capital expenditures $ 20,773 $ 84,172
Average barrels sold per day 968 2,151
Average selling price per barrel $ 87.71 $ 80.27
($ in thousands) December 31, 2014 December 31, 2013
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Cash and cash equivalents $ 14,718 $ 18,334
Working capital(6) $ 5,518 $ 21,687
Notes:
1. "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 r evenue" as an indicator
of operating performance.
2. "Operating Netback" is a non-GAAP measure and is calculated as revenues
from oil sales less royalties and production costs. The Company uses
"operating netback" as an indicator of operating performance,
profitability and liquidity. Operating netback is calculated as
revenues from oil sales less royalties and production costs. "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 year ended December 31,
2013, operating netback including Oil Plus benefits was $57.9 million
(calculated as gross oil sales revenue of $63.0 million less royalties
of $8.5 million plus production costs recovery of $3.4 million). For the
year ended December 31, 2013, operating netback excluding Oil Plus
benefits was $34.3 million (calculated as gross oil sales revenue of
$63.0 million less royalties of $8.5 million plus production costs of
$20.2 million). For the year ended December 31, 2014, operating netback
excluding was $11.3 million (calculated as gross oil sales revenue of
$31.0 million less royalties of $5.0 million plus production costs of
$14.7 million).
3. For 2014 and 2013, net loss attributable to owners of the Company
included $17.9 million and $23.4 million, respectively, of non-cash,
foreign exchange losses on intercompany loans.
4. "Funds flow from operations" is an additional GAAP measure because it is
presented in the consolidated statement of cash flows ('Cash provided by
(used by) operating activities, before changes in non-cash working
capital'). The Company uses "funds flow from operations" and "funds flow
from operations per share" 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.
5. 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 year
ended December 31, 2014, nil (year ended December 31, 2013 - 2,167,266)
common shares were deemed to be issued for no consideration in respect
of options.
6. 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.
-- Oil Plus Benefits: During 2014, $7.3 million of Oil Plus benefits were
collected from Oil Plus receivables recognized in 2013. In 2013, a total
of $19.5 million of Oil Plus benefits were collected from Oil Plus
receivables recognized in 2012 and 2013. An additional $19.6 million of
Oil Plus benefits, which have not been recognized in the financial
statements to date, have been applied for and remain to be collected.
-- Gross Oil Sales: During the year ended December 31, 2014, an average of
968 barrels of oil was sold per day (net) at an average selling price of
$87.71 generating gross oil sales of $31.0 million. This compares to the
year ended December 31, 2013 when an average of 2,151 barrels of oil was
sold per day (net) at an average selling price of $80.27 generating
gross oil sales of $63.0 million.
-- Net Loss: For 2014, the Company's net loss was $52.9 million, which
included $17.9 million of non-cash, foreign exchange losses on
intercompany loans. This compares to net loss for 2013 of $11.8 million,
which included $23.4 million of non-cash, foreign exchange losses on
intercompany loans.
Barclay Hambrook, President and CEO of Americas Petrogas stated, "2014 presented numerous challenges to our Company. Many of these challenges were beyond our control. We are energetically reviewing strategic alternatives to enhance shareholder value. A number of companies are showing interest in opportunities our Company has to offer. Jefferies LLC, the Company's financial advisor, continues to assist us."
Mr. Guimar Vaca Coca, President and Managing Director of Americas Petrogas Argentina, the Company's wholly-owned subsidiary, stated, "Recently, more companies are showing interest in joint ventures, farm-outs and similar transactions with Americas Petrogas. As this is an important election year in Argentina, there is growing optimism towards increased investment in the country's hydrocarbon sector, and in particular, the Vaca Muerta shales."
Even with the active review of strategic alternatives and increased interest by third parties, there is no assurance that the steps being undertaken will be successful.
Reserves
The information set forth below is derived from independent engineering reports which have been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook and the reserves definitions contained in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities. The full content of the Company's Statement of Reserves Data and Other Oil and Gas Information for the year ended December 31, 2014, including the significant assumptions, is filed on SEDAR.
SUMMARY OF OIL AND GAS RESERVES
AS OF DECEMBER 31, 2014
BASED ON FORECAST PRICES AND COSTS
Company Reserves(1)
--------------------------------------------
Light and Medium Oil
--------------------------------------------
Gross Net
Reserves Category MSTB(2) MSTB(2)
------------------------------- ---------------------- ---------------------
TOTAL PROVED 2,606 2,023
TOTAL PROBABLE 4,071 2,710
---------------------- ---------------------
TOTAL PROVED + PROBABLE 6,676 4,733
---------------------- ---------------------
---------------------- ---------------------
TOTAL POSSIBLE 9,745 5,922
---------------------- ---------------------
TOTAL PROVED + PROBABLE +
POSSIBLE 16,421 10,655
---------------------- ---------------------
---------------------- ---------------------
Company Reserves(1)
---------------------------------------------
Natural Gas
Heavy Oil Natural Gas Liquids
------------ ----------------- -------------
Gross Net Gross Net Gross Net
Reserves Category MSTB MSTB MMscf(3) MMscf(3) Mbbl Mbbl
------------------------------- ------ ----- -------- -------- ------ ------
TOTAL PROVED 0 0 3,832 2,700 0 0
TOTAL PROBABLE 0 0 19,877 17,817 0 0
------ ----- -------- -------- ------ ------
TOTAL PROVED + PROBABLE 0 0 23,710 20,518 0 0
------ ----- -------- -------- ------ ------
------ ----- -------- -------- ------ ------
TOTAL POSSIBLE 0 0 25,136 21,617 0 0
------ ----- -------- -------- ------ ------
TOTAL PROVED + PROBABLE +
POSSIBLE 0 0 48,846 42,135 0 0
------ ----- -------- -------- ------ ------
------ ----- -------- -------- ------ ------
1. "Gross Reserves" are the Company's working interest (operating or non-
operating) share before deducting of royalties and without including any
royalty interests of the Company. "Net Reserves" are the Company's
working interest (operating or non-operating) share after deduction of
royalty obligations, plus the Company's royalty interests in reserves.
2. "MSTB" represents 1,000 stock tank barrels.
3. "MMscf" represents million standard cubic feet.
NET PRESENT VALUE
AS OF DECEMBER 31, 2014
BASED ON FORECAST PRICES AND COSTS
Company
Before Income Tax. Discounted at 10%/yr.
Reserves Category (US dollars)
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TOTAL PROVED $24,339,000
TOTAL PROBABLE 84,986,000
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TOTAL PROVED + PROBABLE 109,325,000
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TOTAL POSSIBLE 121,447,000
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TOTAL PROVED + PROBABLE + POSSIBLE $230,772,000
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Highlights and Recent Activities
Argentina
-- In November 2014, the Neuquen province in Argentina issued a decree
granting Americas Petrogas and its joint venture partners (ExxonMobil
and Gas y Petroleo del Neuquen) an evaluation period on the four Los
Toldos Blocks (LT-1 Block, LT-2 Block, LT-3 Block and LT-4 Block), which
measure approximately 163,800 acres or 663 square kilometers gross. The
evaluation period spans four (4) years beginning May 2014 and ending May
2018.
-- During the last quarter of 2014, the Company re-started drilling on
Medanito Sur with a four-well program. All of these wells were completed
and have been placed on production, utilizing the Company's own
production facilities at Medanito Sur.
-- With respect to the Company's unconventional Vaca Muerta shale
exploration wells on the Los Toldos blocks, the Company, in conjunction
with its partner, ExxonMobil, continued to conduct long-term production
testing on the LTE.x-1 well and the ADA.x-1 well.
-- In addition, the Company and ExxonMobil plan to connect the ALL.x-1 well
on the LT-1 Block to the nearby regional gas pipeline in 2016.
-- In June 2014, the Company completed a public offering (the "Offering")
of 19,166,666 units (the "Units") at a price of $0.90 per Unit
("Offering Price") for gross proceeds of $17.3 million. Each Unit
consisted of one common share (each, a "Common Share") and one-half of
one Common Share purchase warrant (each whole Common Share purchase
warrant, a "Warrant"), with each Warrant entitling the holder thereof to
acquire one Common Share in the capital of the Company at a price of
$1.125 until 36 months from the closing date of the Offering.
-- Ryder Scott Company (Houston-based independent petroleum engineering
firm) estimated (as of March 31, 2014), that the Company has net 7.56
billion boe P50 Best Case Unrisked Prospective (Recoverable) Resources
(73% gas and 27% oil/condensate) in the Company's nine unconventional
shale oil and shale gas properties. The Ryder Scott estimates only
considered the Vaca Muerta, Lower Agrio and Los Molles shales. The
report did not consider additional zones of interest such as the
Mulichinco, Quintuco, Tordillo, and other prospective formations.
-- Management is continuing to work diligently on a review of strategic
alternatives aimed at enhancing shareholder value. The opportunities
being considered by the review include joint ventures, farm-outs, sale
of selected assets and corporate transactions.
-- The Company and its partner, Gas y Petroleo del Neuquen (owned by the
provincial government of the Neuquen province), received an extension
for the drilling of the committed well on Loma Ranqueles (LRa.x-2 well)
to June 2015. Management has received interest from potential companies
regarding the Loma Ranqueles block and has had ongoing discussions
regarding a potential farm-out, partial sale or joint venture.
-- With respect to the Huacalera Block, the Company and YPF, the operator,
are continuing to have discussions with the government regarding new
terms and conditions for the commitments associated with the exploration
permit.
Peru
-- 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 Americas Petrogas' Peruvian
subsidiary. The Company has already signed the surface rights access
agreement for the property.
-- In 2014, the Company officially recorded, with the public registry in
Peru, 8,800 additional hectares (approximately 21,700 acres or 88 square
kilometers) of concessions in the Bayovar district within the Sechura
Desert, Peru. These 8,800 hectares of registered new concessions are
located to the northeast of lands currently held by Vale S.A., which
operates a producing phosphate mine in the Bayovar district in
conjunction with Mosaic Company and Mitsui & Co., Ltd. When added to the
Company's original Bayovar Property (concessions 5, 6, 7 and 8), which
measures in excess of 82,000 hectares (202,600 acres or 820 square
kilometres), the Company now holds registered concessions totaling in
excess of 90,800 hectares (224,300 acres or 908 square kilometers) in
the Bayovar district within the Sechura Desert, Peru. The new
concessions are immediately to the east of the Company's Bayovar 6 and
Bayovar 8 concessions. The Company has staked an additional 1,200
hectares of lands in the same area for which registration remains
pending.
-- In 2015, the Company received its inaugural NI 43-101 mineral resource
estimate for its Bayovar phosphate project. The independent estimate was
prepared by Golder Associates, supervised by Jerry DeWolfe, MSc. P.Geo,
an Independent Qualified Person defined under NI 43-101. The independent
estimate was based on the Company's historic drill holes on the Bayovar
6, 7 and 8 concessions on its Bayovar Property located in the Sechura
Desert, Peru. In late 2014 and early 2015, the Company drilled numerous
new holes which are currently undergoing testing.
-- In August 2014, the Company announced discovery of near-surface Sechura
phosphate rock on its Bayovar Property. The Company's Peruvian
subsidiary completed a trenching program on Bayovar concession 6, one of
four concessions on Americas Petrogas' Bayovar Property. A total of five
(5) trenches were sampled over a distance of 350 meters. The lab results
were favourable.
For further information regarding the Company's financial results, financial position and related changes, please see the consolidated financial statements, including the Auditor's Report thereon, and the related MD&A.
An updated corporate presentation will be available on the Company's website by Tuesday, May 5.
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 Neuquen 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 Neuquen Basin, Argentina. Americas Petrogas and Indian Farmers Fertiliser Co-operative Limited (IFFCO) own GrowMax Agri Corp., a private company involved in exploration for near-surface phosphates, potash and other minerals, and potential development of a fertilizer project in Peru.
Forward Looking Information
This Press Release contains forward-looking information including, but not limited to, the Company's goals and growth strategy, long-term production testing of the LTE.x-1 well and the ADA.x-1 well, connecting of the ALL.x-1 well to a regional gas pipeline, drilling, production at Medanito Sur, outstanding Oil Plus benefits, strategic opportunities available to the Company and the ongoing review of strategic alternatives, new contract terms on the Huacalera Block, registration of additional staked land in Peru, testing of new holes in Peru, and estimates of reserves and resources and potential of the Company's phosphate project in Peru. Additional forward-looking information is contained in the Company's Annual MD&A, and reference should be made to the additional disclosures of the assumptions, risks and uncertainties relating to such forward-looking information in that document.
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.
Statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be profitably produced in the future.
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.
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.
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.
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
Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingences may include such factors as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as Contingent Resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage.
In the case of discovered resources or a subcategory of discovered resources other than reserves, there is no certainty that it will be commercially viable to produce any portion of the resources. For discovered hydrocarbons, the term 'unrisked' means that no chance of development risk ("commercial risk") has been incorporated in the hydrocarbon volume estimates.
For additional details regarding the Ryder Scott Resource Report and the update thereto, including applicable definitions, disclosures, advisories and disclaimers, please refer to the news releases of Americas Petrogas dated August 22, 2013 and April 30, 2014 which are filed on SEDAR at www.sedar.com.
The Company's reserve estimates have been prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook"). Accordingly, the Company classifies its reserves as proved, probable or possible. Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable - it is likely that the actual remaining 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 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 that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves. Statements of reserves are only estimates and may not correspond to the ultimate quantities of oil and gas recovered.
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.
Contacts: Americas Petrogas Inc. Barclay Hambrook President & Chief Executive Officer (403) 685-1888 [email protected] www.americaspetrogas.com
Source: Americas Petrogas Inc.
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