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Press release from CNW Group

Petroamerica Announces the Financial Results for Three and Six Months Ended June 30, 2012 with Highlights on the Las Maracas Production Start Up

Monday, August 20, 2012

Petroamerica Announces the Financial Results for Three and Six Months Ended June 30, 2012 with Highlights on the Las Maracas Production Start Up18:29 EDT Monday, August 20, 2012CALGARY, Aug. 20, 2012 /CNW/ - Petroamerica Oil Corp. (TSXV: PTA) ("Petroamerica" or the "Company"), a junior oil and gas company operating in Colombia, is pleased to announce the financial and operating results for the three and six months ended June 30, 2012. Copies of the Company's Management Discussion and Analysis ("MD&A") 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.Quarterly highlights include:(all balances in Canadian dollars, unless otherwise noted)Closing of the $35M debt financing on April 19, 2012, allowing the Company, through a combination of cash on hand and projected production revenues, to move forward with its exploration and field development plans;Acquisition of additional 25% working interest on Los Ocarros Block from the former operator on the block, bringing working interest position on the entire block to 50% and allowing for the aggressive development of the Las Maracas Field;Commencement of production and oil sales from the Las Maracas-2 side track discovery well.  To date, this well has produced over 124,000 barrels of oil;Spudding of the Las Maracas-3 well on June 28, 2012, resulting in the successful appraisal of the existing discovery as well as the discovery of a new deeper oil pool;Net production and sales volumes for the three months ended June 30, 2012 were 55,772 barrels and 46,774 barrels respectively, with an average sales price of US$107.02 per barrel and a net back of US$65.57 per barrel.The following table presents the highlights of Petroamerica's financial and operating results for the three and six months ended June 30, 2012 and 2011. Three Months Ended June 30 Six Months Ended June 30 (in $000 except share and per share and per barrel amounts) 2012  2011  2012  2011Oil revenue - net of royalties $4,696  $2,532  $6,262  $2,532Loss for period $(418)  $(8,695)  $(4,079)  $(19,112)Total comprehensive income (loss) $722  $(10,225)  $(3,776)  $(17,245)Loss per share -  Basic and Diluted $(0.00)  $(0.02)  $(0.01)  $(0.04)Total assets $125,012  $109,525  $125,012  $  109,525Total cash $32,911  $2,556  $32,911  $2,556Notes payable $32,204  $-  $32,204  $-Shareholders' equity $84,169  $75,230  $84,169  $75,230            Exploration costs / (recovery) $(58)  $6,901  $2,148  $13,407Capital expenditures $3,902  $5,432  $9,446  $5,432            Common shares outstanding 578,331,594  578,331,594  578,331,594  578,331,594Weighted average shares outstanding           Basic and Diluted 578,331,594  509,726,422  578,331,594  464,791,036            Average daily production - bbls 613  304  389  304Total sales volumes -bbls 514  291  334  291Average daily production - bbls 541  304  389  304Average selling price US$/bbl $107.02  $107.83  $110.00  $107.83Average royalty US$/bbl $8.56  $8.63  $8.80  $8.63Average transportation costs US$/bbl $17.49  $8.13  $15.33  $8.13Average production cost US$/bbl $15.41  $26.53  $16.09  $26.53Average netback US$/bbl $65.57  $64.54  $69.79  $64.54            Share trading            High $0.17  $0.28  $0.20  $0.74Low $0.12  $0.12  $0.10  $0.12Close $0.13  $0.16  $0.13  $0.16Trading volume 36,075,300  121,027,100  139,586,200  305,271,600 Second Quarter Financial SummaryFor the three months ended June 30, 2012, the Company reported $4,695,861 in oil revenue, net of royalties, from the sale of 46,774 barrels of oil.  The realized sales price was US $107.02 per barrel generating an operating netback of approximately US $66 per barrel.For the second quarter of 2012, the Company's net loss was $418,000 ($0.00 per share diluted). The Company's capital expenditures for the second quarter were $3.9 million, all invested in Colombia. These capital expenditures were funded from available cash on hand.Operations UpdateProduction from the Mirador formation on the Las Maracas-2 sidetrack discovery well began on April 23, and the well has remained on production since then. To date the well has produced over 124,000 barrels of oil. The well is currently producing over 1,100 barrels of oil per day ("bopd") with a 1.6% watercut. On July 30, 2012 the Company announced that the Las Maracas-3 well, which began drilling on June 28, 2012, had successfully appraised the Mirador formation discovery made by the Las Maracas-2 sidetrack well, and discovered a new deeper oil pool in the Gacheta formation.  The Las Maracas-3 well encountered 30 feet of net oil pay in the Mirador formation and 29 feet of net oil pay in the Gacheta formation, and produced 30o API oil under natural flow, from a 14 foot perforated section in the Gacheta reservoir at a stabilized rate of 1,491 bopd with a 1% water cut   The Las Maracas-3 well is now producing from the Gacheta formation through the long-term test facility under electro-submersible pump at rates of approximately 2,000 bopd with a 2.7% watercut. Since production on the Las Maracas-3 well began, the well has produced over 31,000 barrels of oil. The Las Maracas-4 well began drilling on July 30, 2012, and on August 16, 2012 the Company announced that the well had reached total depth of 12,522 feet measured depth with electrical logs indicating more than 65 feet of prospective oil play in the Mirador and Gacheta formations.  The Las Maracas-4 well has now been logged and cased and a work over rig is expected to be brought in to complete Las Maracas-4 as a Gacheta formation producer. The final development plan and total number of development wells to be drilled to develop this accumulation will be determined by the results of the long-term tests on the three Maracas wells. However, it is anticipated that up to two additional producing wells and one water disposal well could be drilled in the fourth quarter of 2012.For the six month period ended June 30, 2012, the Balay-1 and Balay-2 wells, which have been on long-term production test since July 14, 2010 and June 24, 2011 respectively, have produced at an average combined gross rate of 1,574 bopd under electro-submersible pump.  From the inception of the long-term production test these wells have produced a combined total of over 1.2 million barrels of oil.  The Balay-3 well, which was completed early in January 2012, is expected to be converted to a water disposal well as part of the field development plan. The Balay-4 well is scheduled to begin drilling in September and the results of this well will determine the extent of field development drilling activity and facilities construction for 2013. For the six months ended June 30, 2012, the Company sold 60,774 barrels of oil and recognised over $6.2 million in revenue, net of royalties, from these sales.Financial UpdateOn April 19, 2012 the Company closed $35 million in debt financing by issuing 3,500 units at a price of $10,000 per unit.  Each unit consists of $10,000 in principal amount of senior secured notes bearing interest at 11.5% per annum, payable quarterly, with a maturity date of April 19, 2015 (the "Notes"), and one warrant entitling the holder to purchase 10,000 common shares of the Company at $0.20 per share until April 19, 2015.  The Notes have been secured by the Company's property and are senior to all other indebtedness and liabilities of the Company.  The Company expects to use the proceeds raised to support the appraisal and development programs for the Las Maracas and Balay discoveries as well as to support additional development, appraisal and other costs that are expected to arise from the 2012 exploration program and for general corporate purposes.OutlookWith the successful completion of the debt financing the Company now has the financial resources from a combination of cash on-hand and projected production revenues, to execute its exploration and development plans for the current year and beyond.Following the encouraging results at Las Maracas-3 and Las Maracas-4 on the Los Ocarros Block, including the successful appraisal of the existing discovery and the discovery of a new deeper oil pool, the Company, together with its partner, plans to aggressively exploit the Las Maracas accumulations with the objective of accelerating the Company's production and cash flows.  Given the positive indications from the Las Maracas-4 well it is possible that an additional two producers and one water disposal well will be added before year-end, subject to partner and ANH approvals.The Balay Field development plan is now sanctioned and the Company and its partners expect to develop the Balay Field, starting with the drilling of Balay-4 in the third quarter of this year.  As part of this plan, Balay-3 is expected to be converted to a water disposal well, and the construction of the permanent production facility is envisaged to take place in 2013.On the exploration front, a successful start to the 2012 drilling campaign was observed with the new deeper oil pool discovery at Las Maracas-3. For the remainder of the year, the Company plans to participate in the drilling of four more exploration wells, one of which could occur in the first quarter of 2013.The first exploration well, La Casona-1 on the El Eden Block, is planned to spud in September using the same rig that is currently drilling Las Maracas-4. The start of the Altillo Este-1 well on the CPO-1 Block has been delayed due to landowner issues and therefore a September spud date is now anticipated. A high impact well, Curiara-1 on the El Porton Block, is expected to spud late in the fourth quarter of 2012. The drilling of the Malavar-1 well on the LLA-10 Block is expected to occur in the first quarter of 2013 due to environmental permitting delays. The exploration well on the SSJN-5 Block previously included in the 2012 program will no longer occur due to the Company's withdrawal from this block. All of the prospects to be drilled are situated in the Llanos Basin and have been de-risked with 3D seismic.PETROAMERICA OIL CORP. Condensed Consolidated Statements of Financial Position  (Unaudited - Expressed in Canadian dollars)          As at   As at    June 30  December 31   2012  2011Assets       Current assets       Cash and cash equivalents   $32,911,399  $19,294,554 Trade and other receivables  13,830,595  7,242,516 Prepayments and deposits  377,918  417,837 Crude oil inventory  1,720,206  563,530   48,840,118  27,518,437       Non-current assets       Restricted cash   $7,808,846  $7,926,079 Property, plant and equipment   28,656,190  14,881,718 Exploration and evaluation assets  39,706,582  44,560,366          76,171,618  67,368,163Total assets   $125,011,736  $94,886,600       Liabilities       Current liabilities        Current equity tax  $440,162  $404,703 Accounts payable and accrued liabilities  4,358,246  5,016,607          4,798,408  5,421,310       Non-Current  liabilities        Deferred tax liabilities   $2,601,828  $2,601,828 Decommissioning liabilities  684,555  176,000 Notes payable  32,203,697  - Equity tax   554,040  668,231Total liabilities   40,842,528  8,867,369       Shareholders' equity       Share capital   $140,483,641  $140,483,641 Contributed surplus   23,094,850  21,168,550 Reserves  795,315  492,924 Deficit  (80,204,598)  (76,125,884)   84,169,208  86,019,231Total liabilities and shareholders' equity   $125,011,736  $94,886,600 PETROAMERICA OIL CORP. Condensed Consolidated Statements of Loss and Comprehensive Loss(Unaudited - Expressed in Canadian dollars)              Three months ended June 30Six months ended June 30   2012  2011 2012  2011Revenue            Oil revenue - net of royalties  $4,695,861  $2,532,009 $6,261,696  $2,532,009   4,695,861  2,532,009 6,261,696  2,532,009            Expenses                        Production  (1,566,516)  (894,851) (1,943,801)  (894,851) Exploration and evaluation   58,090  (6,901,143) (2,147,740)  (13,407,181) Depreciation, depletion and amortization   (412,507)  (449,171) (1,139,564)  (450,606) General and administration  (1,986,994)  (1,441,321) (4,126,796)  (3,541,377) Share-based payments   (319,534)  (921,117) (704,133)  (2,512,221) Equity tax and other   -  - -  (1,422,650)               (4,227,461)  (10,607,603) (10,062,034)  (22,228,886)             Interest income  323,343  197,028 579,320  377,169 Interest and financing fees  (964,819)  82,804 (1,078,511)  (143,240) Foreign exchange (loss) gain   (45,882)  548,301 437,046  427,113 Loss on disposal of investments  -  - -  (1,674,352) Accretion   (199,520)  - (216,231)  -               (886,878)  828,133 (278,376)  (1,013,310)            Loss before income taxes  (418,478)  (7,247,461) (4,078,714)  (20,710,187)            Current income tax   -  114 -  -Deferred tax (expense) recovery   -  (1,447,718) -  1,597,854            Net loss  for the period  (418,478)  (8,695,065) (4,078,714)  (19,112,333)            Other comprehensive (loss) income             Reserve on translation of foreign operations              and net investments in foreign operations  1,140,278  (1,530,109) 302,391  583,377 Net change in fair value of available-for-sale investments  -  - -  1,284,150            Other comprehensive income (loss)  1,140,278  (1,530,109) 302,391  1,867,527            Total comprehensive income (loss)   $721,800  $(10,225,174) $  (3,776,323)  $(17,244,806)            Basic and diluted loss per share  $(0.00)  $(0.02) $(0.01)  $(0.04)            Weighted average number of basic and diluted             common shares outstanding  578,331,594  509,726,422 578,331,594  464,791,036 PETROAMERICA OIL CORP. Condensed Consolidated Statements of Changes in Equity(Unaudited - Expressed in Canadian dollars)                      Share Capital   Contributedsurplus   Fair valuereserve  Translationreserve   Deficit   Total equity                    Balance at January 1, 2012  $140,483,641  $21,168,550  $-  $492,924  $(76,125,884)  $86,019,231                   Net loss for the period   -  -  -  -  (4,078,714)  (4,078,714)Other comprehensive loss  -  -  -  302,391  -  302,391                   Total comprehensive income (loss)   -   -   -   302,391   (4,078,714)  (3,776,323)                   Warrants  -  1,289,571  -  -  -  1,289,571Warrant issue costs  -  (67,404)  -  -  -  (67,404)Share-based payments  -  704,133  -  -  -  704,133                   Balance at June 30, 2012  $140,483,641   $23,094,850   $-   $795,315   $(80,204,598)  $84,169,208                       Share Capital   Contributedsurplus   Fair valuereserve  Translationreserve   Deficit   Total equity                    Balance at January 1, 2011  $114,438,212  $13,141,128  $(1,284,150)  $(1,922,966)  $(44,206,637)  $80,165,587                   Net loss for the period   -  -  -  -  (19,112,333)  (19,112,333)Other comprehensive income   -  -  1,284,150  583,377  -  1,867,527                   Total comprehensive income (loss)   -   -   1,284,150   583,377   (19,112,333)  (17,244,806)                   Issue of share capital   26,846,161  4,753,739  -  -  -  31,599,900Transaction costs   (1,499,349)  (284,390)  -  -  -  (1,783,739)Share-based payments  698,617  2,306,103  -  -  -  3,004,720                   Balance at June 30, 2011  $140,483,641   $19,916,580   $-   $(1,339,589)  $(63,318,970)  $95,741,662  PETROAMERICA OIL CORP. Condensed Consolidated Statements of Cash Flows(Unaudited - Expressed in Canadian dollars)              Three months ended June 30Six months ended June 30   2012  2011 2012  2011            Operating activities            Net loss for the period  $(418,478)  $(8,695,065) $  (4,078,714)  $(19,112,333)Items not involving cash:            Share-based payments  319,534  921,117 704,133  2,512,221 Depreciation, depletion and amortization   412,507  449,171 1,139,564  450,606 Loss on disposal of investments  -  - -  1,674,352 Deferred tax expense (recovery)  -  1,447,718 -  (1,597,854) Unrealized foreign exchange (gain) loss  (1,587,668)  732,726 (841,446)  954,565 Accretion   199,520  - 216,231  - Impairment of exploration & evaluation assets  -  - -  2,650,720Net changes in non-cash working capital:            Changes in trade and other receivables   (4,743,399)  (7,287,183) (7,079,624)  (8,765,157) Changes in prepayments and deposits   154,111  3,700 40,322  31,250 Changes in crude oil inventory  (1,446,722)  (112,114) (1,156,726)  (98,747) Changes in accounts payable, accrued liabilities and equity tax  1,294,918  (7,560,010) 13,213  (1,893,757)                        Cash used in operating activities  (5,815,677)  (20,099,940) (11,043,047)  (23,194,134)            Investing activities            Exploration and evaluation expenditures  (2,944,427)  6,173,587 (5,208,078)  (5,181,176)Property, plant and equipment expenditures  (2,711,612)  - (3,831,727)  -Interest received   390,276  243,159 454,151  268,859Payment for assets relinquished  -  - -  (6,800,000)Restricted cash investments  -  - -  2,300,000Short-term investments  -  (22,000,000) -  (22,000,000)Proceeds from marketable securities  -  - -  2,441,347Cash used in provided by investing activities  (5,265,763)  (15,583,254) (8,585,654)  (28,970,970)            Financing activities            Issuance of equity, net of costs  -  29,816,161 -  29,816,161Issuance of debt, net of costs  33,243,580  - 33,243,580  -Proceeds on exercise of stock options  -  - -  492,500Cash provided by financing activities  33,243,580  29,816,161 33,243,580  30,308,661            Effect of foreign currency exchange rate changes on cash   140,274  (3,462) 1,966  278Increase (decrease) in cash and cash equivalents during the period  22,302,414  (5,870,495) 13,616,845  (21,856,165)Cash and cash equivalents, beginning of period  10,608,985  8,126,053 19,294,554  24,111,723            Cash and cash equivalents, end of period  $32,911,399  $2,255,558 $32,911,399  $2,255,558                        Interest paid  793,800  - 793,800  -Income tax paid  -  - -  - 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 the conversion of the Balay-3 well to a water disposal well, regulatory and partner approvals on the Company's development plan, drilling and operational opportunities and the timing thereof, expected spud dates for the Company's wells, the use of proceeds of the recently completed Note financing in addition to the potential exploration and development opportunities and expectations regarding regulatory approval and the 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, inclement weather conditions and reliance on industry partners.  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.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.For further information: Nelson Navarrete President and CEO Colin Wagner CFO Ralph Gillcrist Executive Vice President Exploration & Business Development Tel Bogota, Colombia: +57-1-629-3534 Tel Calgary, Canada: +1-403-237-8300 Email: investorrelations@pta-oil.com Web Page: www.PetroamericaOilCorp.com