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Press release from CNW Group

Petroamerica Announces Second Quarter 2013 Results and Surpasses 6,000 bopd Production Milestone

Wednesday, August 21, 2013

Petroamerica Announces Second Quarter 2013 Results and Surpasses 6,000 bopd Production Milestone

16:15 EDT Wednesday, August 21, 2013

CALGARY, Aug. 21, 2013 /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 six months ended June 30, 2013. 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.

Quarterly highlights include:

  • Generated net income of $11.2 million ($0.02 per share basic), funds flow from operations of $24.2 million ($0.04 per share basic) and positive cash flow from operations of $21.3 million ($0.04 per share basic), resulting in cash on hand at June 30 of over $47 million (current cash on hand: $55 million);
  • Realized a Brent referenced sales price of over $99 per barrel ("/bbl") and an operating netback of approximately $71/bbl;
  • Achieved quarter-over-quarter production growth with total Company average production for the second quarter of 5,046 barrels of oil per day ("bopd"), compared to 4,375 bopd in the first quarter. The Company achieved a production milestone of 6,000 bopd (total Company WI) on August 12, 2013;
  • Commissioning of the Las Maracas Field permanent production facility according to plan;
  • Participated in the drilling of three wells - Las Maracas-8, Las Maracas-9 and Curiara-1 - resulting in two oil producers and one oil discovery;
  • Initiated two wells - Las Maracas-9 which has since been completed as an oil producer and the La Casona-2 exploration well which was sidetracked and is still drilling.

The following table presents the highlights of Petroamerica's financial and operating results for the three and six months ended June 30, 2013 and 2012.

(in $000 US except share, per share or unless
otherwise noted)
      Q2 2013       Q1 2013       6 mos 2013       Q2 2012
                                 
Oil revenue - net of royalties     $ 46,105     $ 45,667     $ 91,772     $ 4,647
Funds flow from operations     $ 24,164     $ 22,477     $ 47,413     $ (707)
Funds flow per share- basic     $ 0.04     $ 0.04     $ 0.08     $ (0.00)
Funds flow per share- diluted     $ 0.04     $ 0.04     $ 0.08     $ (0.00)
                                 
Income (loss) for period     $ 11,171     $ 14,112     $ 25,284     $ (419)
Total comprehensive income (loss)     $ 11,389     $ 14,885     $ 26,274     $ (932)
Income (loss) per share -  basic      $ 0.02     $ 0.02     $ 0.04     $ (0.00)
Income (loss) per share -  diluted     $ 0.02     $ 0.02     $ 0.04     $ (0.00)
Total assets     $ 185,259     $ 165,734     $ 185,259     $ 122,674
Total cash     $ 47,352     $ 53,594     $ 47,352     $ 32,296
Notes payable     $ 31,482     $ 32,336     $ 31,482     $ 31,601
Shareholders' equity     $ 110,937     $ 99,306     $ 110,937     $ 82,595
                                 
Exploration costs     $ -     $ 326     $ (326)     $ 57
Capital expenditures     $ 25,130     $ 12,900     $ 38,030     $ 3,797
                                 
Common shares outstanding       580,798,260       580,721,594       580,798,260       578,331,594
                                 
Weighted average shares outstanding                                
Basic       580,782,473       579,909,594       580,357,760       578,331,594
Diluted       600,776,919       606,798,610       606,397,533       578,331,594
                                 
(in $000 US except share, per share or unless
otherwise noted)
      Q2 2013       Q1 2013       6 mos 2013       Q2 2012
                                 
                                 
Average production - bopd       5,046       4,375       4,746       613
Selling price $/bbl     $ 99.25     $ 109.37     $ 104.02     $ 107.02
Royalty $/bbl     $ 7.86     $ 9.07     $ 8.43     $ 8.56
Average transportation costs $/bbl     $ 15.97     $ 17.89     $ 16.92     $ 10.50
Average production cost $/bbl     $ 4.83     $ 2.90     $ 3.94     $ 22.64
Operating netback $/bbl     $ 70.59     $ 79.51     $ 74.73     $ 65.32
Funds flow netback$/bbl     $ 52.62     $ 57.08     $ 55.19     $ (12.67)
                                 
Share trading                                 
High     $ 0.36     $ 0.40     $ 0.40     $ 0.17
Low     $ 0.21     $ 0.28     $ 0.21     $ 0.12
Close     $ 0.26     $ 0.36     $ 0.26     $ 0.13
Trading volume       46,649,300       60,176,800       106,826,100       36,075,300

Second Quarter Financial Summary
For the three months ended June 30, 2013, the Company reported $46.1 million in oil revenue, net of royalties, from the sale of 506,394 barrels of oil.  The realized sales price was $99.25/bbl generating an operating netback of $70.59/bbl.

For the second quarter of 2013, the Company's net income was $11.2 million ($0.02 per share diluted). The Company's capital expenditures for the second quarter were $25.1 million, all invested in Colombia, and primarily for facilities construction, development drilling on the Las Maracas Field, and exploration drilling at Curiara-1 and La Casona-2. These capital expenditures were funded from available cash on hand.

At the end of the second quarter, the Company's cash position was $47.4 million, and the Company holds Canadian $35 million of debt in Senior Notes payable on April 19, 2015.

Operations Update

  • Total Company production for the month of July averaged 5,653 bopd (Company working interest);
  • With the addition of production from the Las Maracas-11 well, on August 12, 2013, the Company's production exceeded 6,000 bopd;
  • The Las Maracas-10 well reached its target depth on August 6, and tested, under natural flow conditions, light oil (29.8° API) from a 16-foot perforated interval in the main Gacheta sand. The total duration of the test was 6 hours and the average oil rate through a 40/64 inch restricted choke was approximately 1,000 bopd with a wellhead pressure of 300 psi;
  • The Tuscany 109 rig was skidded and has commenced drilling the Las Maracas-12 development well;
  • Las Maracas-14 (Las Maracas Sur-1) is scheduled to be drilled following Las Maracas-12;
  • On the El Eden Block, the La Casona-2 well was sidetracked on July 5 for operational reasons.  The La Casona-2ST well is currently drilling through the Mirador formation and is showing encouraging preliminary results. The well is expected to reach its target depth in late August;
  • After completing La Casona-2ST, the Tuscany 119 rig will mobilize to drill the La Guira-1 well on the Los Ocarros Block, following which it is expected to return to the El Eden Block to drill the exploration well Rumi-1;
  • The long-term test production facility at La Casona is nearing completion and production from La Casona-1 is expected to commence before the end of September 2013;
  • The Curiara-1 well on the El Porton block is expected to be put on long-term test early in the first quarter of 2014 for a six month period, following which further testing of the discovery, including continued long-term test production and possible appraisal drilling, may ensue.

Activity Schedule
A summary of the expected drilling and testing activity, for the remainder of 2013 and the early part of 2014, is provided below:

Prospect/Well Activity Type Block  Working 
Interest
Timing/Status
La Casona-2 ST Appraisal El Eden 40% Drilling
Las Maracas-12 Development Los Ocarros 50% Drilling
 Las Maracas-14 (Sur-1)  Appraisal Los Ocarros 50% Q3 2013
La Guira-1 Exploration Los Ocarros 50% Q3 2013
La Casona-1  Long-Term Test  El Eden 40% Q3 2013
Las Maracas-15 Appraisal  Los Ocarros  50% Q4 2013
Rumi-1 Exploration El Eden 40% Q4 2013
Crypto-1 Exploration El Porton 100%  Q4 2013/Q1 2014 
Curiara-1 Long-Term Test El Porton 25% Q1 2014
Malavar-1 Exploration Llanos-10 50% Q1 2014

Outlook

With the completion of the production facilities on the Las Maracas field in the second quarter of 2013 and continued development drilling on the field, the Company expects production to remain strong throughout the remainder of this year.  Given the anticipated strong production performance, the Company is increasing its 2013 average production guidance from 4,500 bopd to 5,000 bopd.

The Company is projecting its capital spending program for 2013 to be approximately $87.0 million, a 24% increase from the original spending estimate of $70.0 million for the year.  This is largely due to additional exploration drilling and testing, increased appraisal and development drilling on the Las Maracas field, and increased drilling commitment with the additional working interest acquired on the El Porton block. This increase in projected capital spending is in-line with our increased production guidance, and notwithstanding exploration success, with strong oil prices expected throughout the rest of this year and a current cash position of approximately $55 million, the Company expects to be self-funding for the rest of 2013 and 2014.

The Company continuously assesses its exploration and development portfolio as well as reviewing new business opportunities within the oil and gas sector in Colombia with a view to ensuring that the Company is able to maintain and expand its asset base over the mid to long term.  These opportunities could involve farm-ins, asset purchase or other types of business combinations, and will be assessed on their merits as they arise.  The Company is also actively investigating options that would enable it to become an operator in Colombia.

PETROAMERICA OIL CORP.
Condensed Consolidated Interim Statements of Financial Position 
(Expressed in United States dollars)

                               
              As at       As at       As at
              June 30,       December 31,       January 1,
              2013       2012       2012
                               
Current assets                              
  Cash and cash equivalents            $ 47,352,396     $ 26,774,414     $ 18,972,335
  Trade and other receivables             37,364,833       23,312,242       7,121,566
  Prepayments and deposits             876,595       98,054       410,859
  Crude oil inventory             595,916       3,679,953       554,119
              86,189,740       53,864,663       27,058,879
                               
Non-current assets                              
  Restricted cash              4,147,849       3,895,640       7,793,713
  Property, plant and equipment             58,108,428       35,299,488       14,633,193
  Exploration and evaluation assets             36,813,108       36,336,044       43,816,208
  Deferred tax asset             -       6,979,717       -
              99,069,385       82,510,889       66,243,114
Total assets            $ 185,259,125     $ 136,375,552     $ 93,301,993
                               
Liabilities                               
Current liabilities                               
  Current equity tax            $ 192,638     $ 436,255     $ 397,944
  Current income tax             13,889,520       781,833       -
  Accounts payable and accrued liabilities             25,811,207       17,179,319       4,932,830
              39,893,365       18,397,407       5,330,774
                               
Non-Current  liabilities                               
  Deferred tax liability           $ 785,968     $ -     $ 2,558,377
  Decommissioning liabilities             1,804,664       1,057,926       173,061
  Notes payable             31,481,509       32,772,378       -
  Equity tax             356,735       374,016       657,072
Total liabilities              74,322,241       52,601,727       8,719,284
                               
Shareholders' equity                              
  Share capital             136,912,353       136,417,181         136,336,156
  Contributed surplus             24,024,238       23,630,314       20,611,065
  Translation reserve             4,337,984       3,347,728       2,500,283
  Deficit             (54,337,691)       (79,621,398)       (74,864,795)
              110,936,884       83,773,825       84,582,709
Total liabilities and shareholders' equity            $ 185,259,125     $ 136,375,552     $ 93,301,993
                               

PETROAMERICA OIL CORP.
Condensed Consolidated Interim Statements of Net Income (Loss) and Comprehensive Income (Loss)
(Expressed in United States dollars)

                                   
          Three months ended June 30       Six months ended June 30
          2013       2012       2013       2012
                                   
Revenue                                  
  Oil revenue - net of royalties       $ 46,105,133     $ 4,647,494     $ 91,771,911     $ 6,211,607
          46,105,133       4,647,494       91,771,911       6,211,607
                                   
Expenses                                  
                                   
  Operating         (10,533,613)       (1,550,381)       (19,933,553)       (1,927,251)
  Purchased oil         (2,623,753)       -       (2,623,753)       -
  Exploration and evaluation         -       57,491       (325,509)       (2,145,913)
  Depletion and depreciation         (7,186,236)       (412,714)       (14,357,079)       (1,138,971)
  General and administration         (2,169,199)       (1,966,528)       (4,571,690)       (4,103,976)
  Share-based payments         (233,114)       (316,243)       (484,860)       (700,419)
          (22,745,915)       (4,188,375)       (42,296,444)       (10,016,530)
                                   
  Finance and other         (1,226,909)       (832,334)       (2,498,367)       (706,898)
  Foreign exchange gain (loss)          484,861       (45,409)       (73,604)       436,988
          (742,048)       (877,743)       (2,571,971)       (269,910)
Income (loss) before income taxes         22,617,170       (418,624)       46,903,496       (4,074,833)
Current income tax expense         5,364,246       -       13,889,520       -
Deferred tax expense         6,081,518       -       7,730,269       -
Net income (loss) for the period         11,171,406       (418,624)       25,283,707       (4,074,833)
                                   
Other comprehensive income                                   
Items that will not be reclassified subsequently to income or (loss):                                  
  Reserve on translation of foreign operations                                   
  and net investments in foreign operations         217,958       (513,008)       990,256       155,738
Other comprehensive income (loss)         217,958       (513,008)       990,256       155,738
Total comprehensive income (loss)       $ 11,389,364     $ (931,632)     $ 26,273,963     $ (3,919,095)
Basic income (loss) per share       $ 0.02     $ (0.00)     $ 0.04     $ (0.01)
Diluted income (loss) per share       $ 0.02     $ (0.00)     $ 0.04     $ (0.01)
Weighted average number of basic                                   
  common shares outstanding         580,782,473       578,331,594       580,357,760       578,331,594
Weighted average number of diluted                                   
  common shares outstanding         600,776,919       578,331,594       606,397,533       578,331,594
                                   

PETROAMERICA OIL CORP.
Condensed Consolidated Interim Statements of Changes in Equity
(Expressed in United States dollars)

                                         
          Share Capital       Contributed
surplus
      Translation
reserve
    Retained
earnings (deficit)
      Total equity
                                         
Balance at January 1, 2013       $ 136,417,181     $ 23,630,314     $ 3,347,728   $ (79,621,398)     $ 83,773,825
                                         
Net income for the period          -       -       -     25,283,707       25,283,707
Other comprehensive income         -       -       990,256     -       990,256
Total comprehensive income         -       -       990,256     25,283,707       26,273,962
                                         
Warrants exercised         422,955       (63,571)       -     -       359,384
Stock options exercised         72,217       (27,365)       -     -       44,852
Share-based payments         -       484,860       -     -       484,860
Balance at June 30, 2013       $ 136,912,353     $ 24,024,238     $ 4,337,984   $ (54,337,691)     $ 110,936,884
                                         
          Share Capital       Contributed
surplus
      Translation
reserve
    Deficit       Total equity
                                         
Balance at January 1, 2012       $ 136,336,156     $ 20,611,065     $ 2,500,283   $ (74,864,795)     $ 84,582,709
                                         
Net loss for the period          -       -       -     (4,074,833)       (4,074,833)
Other comprehensive income          -       -       155,738     -       155,738
Total comprehensive loss         -       -       155,738     (4,074,833)       (3,919,095)
                                         
Warrants issued pursuant to debt offering         -       1,299,115       -     -       1,299,115
Warrant issue costs         -       (67,904)       -     -       (67,904)
Share-based payments         -       700,419       -     -       700,419
Balance at June 30, 2012       $ 136,336,156     $ 22,542,695     $ 2,656,021   $ (78,939,628)     $ 82,595,244
                 

PETROAMERICA OIL CORP.
Condensed Consolidated Interim Statements of Cash Flows
(Expressed in United States dollars)

                                   
          Three months ended June 30       Six months ended June 30
          2013       2012       2013       2012
                                   
Operating activities                                   
Net income (loss) for the period       $ 11,171,406     $ (418,624)     $ 25,283,707     $ (4,074,833)
Items not involving cash:                                  
  Share-based payments         233,114       316,243       484,860       700,419
  Depletion and depreciation         7,186,236       412,714       14,357,079       1,138,971
  Unrealized foreign exchange gain         (800,258)       (1,214,604)       (1,023,209)       (488,695)
  Deferred tax (recovery) expense         6,116,934       -       7,765,685       -
  Accretion and amortization         256,180       197,465       544,621       214,159
Net changes in non-cash working capital balances:                                  
  Changes in trade and other receivables          (13,254,544)       (4,286,252)       (14,052,591)       (6,892,150)
  Changes in prepayments and deposits          (273,558)       160,849       (778,543)       40,008
  Changes in crude oil inventory         632,233       (1,414,258)       3,397,561       (1,133,919)
  Changes in accounts payable, accrued liabilities and equity tax         4,670,002       1,069,002       8,370,992       (86,118)
  Changes in current income tax payable         5,364,246       -       13,107,687       -
Cash provided by (used in) operating activities         21,301,991       (5,177,465)       57,457,849       (10,582,158)
                                   
Investing activities                                   
Exploration and evaluation expenditures         (14,554,083)       (4,060,964)       (15,782,565)       (5,954,990)
Property, plant and equipment expenditures         (12,998,071)       (2,883,775)       (21,501,539)       (4,002,663)
Interest received         -       377,948       -       441,753
Cash used in investing activities         (27,552,154)       (6,566,791)       (37,284,104)       (9,515,900)
                                   
Financing activities                                   
Stock options exercised         6,820       -       44,852       -
Issuance of notes payable, net of costs         -       33,421,679       -       33,421,679
Warrants exercised         1,950       -       359,385       -
Cash provided by financing activities         8,770       33,421,679       404,237       33,421,679
                                   
(Decrease) increase in cash and cash equivalents
during the period
        (6,241,393)       21,677,423       20,577,982       13,323,621
Cash and cash equivalents, beginning of period         53,593,789       10,618,533       26,774,414       18,972,335
Cash and cash equivalents, end of period       $ 47,352,396     $ 32,295,956     $ 47,352,396     $ 32,295,956
                                   

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 proceeds of the financing and of available cash on hand 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, and reliance on industry partners. 

Data obtained from the initial testing results at the referenced wells, which may include barrels 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.

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
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

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