CALGARY, 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			2011
Oil revenue - net of royalties	$	4,696		$	2,532		$	6,262		$	2,532
Loss 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		$	109,525
Total cash	$	32,911		$	2,556		$	32,911		$	2,556
Notes payable	$	32,204		$	-		$	32,204		$	-
Shareholders' equity	$	84,169		$	75,230		$	84,169		$	75,230
Exploration costs / (recovery)	$	(58)		$	6,901		$	2,148		$	13,407
Capital expenditures	$	3,902		$	5,432		$	9,446		$	5,432
Common shares outstanding		578,331,594			578,331,594			578,331,594			578,331,594
Weighted 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			304
Total sales volumes -bbls		514			291			334			291
Average daily production - bbls		541			304			389			304
Average selling price US$/bbl	$	107.02		$	107.83		$	110.00		$	107.83
Average royalty US$/bbl	$	8.56		$	8.63		$	8.80		$	8.63
Average transportation costs US$/bbl	$	17.49		$	8.13		$	15.33		$	8.13
Average production cost US$/bbl	$	15.41		$	26.53		$	16.09		$	26.53
Average netback US$/bbl	$	65.57		$	64.54		$	69.79		$	64.54
Share trading
High	$	0.17		$	0.28		$	0.20		$	0.74
Low	$	0.12		$	0.12		$	0.10		$	0.12
Close	$	0.13		$	0.16		$	0.13		$	0.16
Trading volume		36,075,300			121,027,100			139,586,200			305,271,600

 

Second Quarter Financial Summary

For 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 Update

Production 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 30^o 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 Update

On 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.

Outlook

With 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			2011
Assets
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			67,368,163
Total 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			668,231
Total 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			86,019,231
Total 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 30					Six months ended June 30
					2012			2011		2012			2011
Revenue
	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			Contributed surplus			Fair value reserve			Translation reserve			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			-			-			-			1,289,571
Warrant 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			Contributed surplus			Fair value reserve			Translation reserve			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			-			-			-			31,599,900
Transaction 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 30					Six 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			-			-		-			2,650,720
Net 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			268,859
Payment for assets relinquished				-			-		-			(6,800,000)
Restricted cash investments				-			-		-			2,300,000
Short-term investments				-			(22,000,000)		-			(22,000,000)
Proceeds from marketable securities				-			-		-			2,441,347
Cash 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		-			29,816,161
Issuance of debt, net of costs				33,243,580			-		33,243,580			-
Proceeds on exercise of stock options				-			-		-			492,500
Cash 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			278
Increase (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