CALGARY, May 21, 2013 /CNW/ - ArPetrol Ltd. ("ArPetrol" or the "Company") (TSXV: RPT) announces its financial and operating results for the three months ended March 31, 2013 and provides an operational update on activities to date this year as well as an outlook for the remainder of 2013. The Company's interim condensed consolidated financial statements and management's discussion and analysis (MD&A) for the reporting period have been filed on SEDAR at www.sedar.com and posted on the Company's website at www.arpetrol.com.
Summary for the First Quarter 2013
Operating and Financial
ArPetrol's first quarter production averaged 230 barrels of oil equivalent per day (boe/d). This is a decrease of 22 boe/d from the fourth quarter of 2012 and a decrease of 34 boe/d from the first quarter of 2012. The decrease from the fourth quarter of 2012 and first quarter of 2012 resulted from compressor issues during the first quarter of 2013 and natural production declines.
The average realized natural gas price was $2.79 per thousand cubic feet (Mcf), $0.01 per Mcf lower than the price realized in the fourth quarter of 2012 and $0.06 per Mcf lower than in the first quarter of 2012. For natural gas liquids (NGL), average first-quarter 2013 prices were $68.94 per barrel, $3.45 per barrel higher than in the fourth quarter of 2012, and $6.82 per barrel lower than in the same period in 2012. The changes in natural gas and NGL pricing reflect commodity fluctuations in the Argentine market.
Third-party processing volumes averaged 72.1 million cubic feet per day (MMcf/d), 1.9 MMcf/d below the fourth quarter of 2012 and 12.7 MMcf/d above the first quarter of 2012. These volumes generated processing sales of $1,127,507 in the first quarter of 2013, an increase of $25,710 over the fourth quarter of 2012 and a decrease of $7,104 from the same period in 2012.
Capital expenditures for the quarter were $234,806. Expenditures were incurred for suspension work on the first well of the Company's extended-reach drilling program on its Faro Virgenes block.
Net income for the quarter was $1,726,730, compared to a net loss of $1,066,167 for the first quarter of 2012. During the first quarter ArPetrol recorded an unrealized foreign exchange gain of $2.8 million which was the major factor in generating net income.
ArPetrol had a working capital deficit of $0.8 million as at March 31, 2013, which will increase as a result of the rig demobilization at Faro Virgenes. The Company has no long-term debt.
| Summary of Results |
|
|
| (Cdn$ except shares outstanding and per boe1 amounts) |
|
Three Months Ended
March 31, |
| |
|
2013 |
2012 |
| |
|
|
| Financial |
|
|
|
|
| Production sales |
|
|
477,544 |
529,250 |
| Processing sales |
|
|
1,127,507 |
1,134,611 |
| Funds flow from operations1 |
|
|
(682,551) |
(620,307) |
| Cash from (used in) operating activities |
|
|
437,660 |
(133,208) |
| Comprehensive income (loss) |
|
|
2,205,035 |
(1,333,222) |
| Fixed asset expenditures |
|
|
234,806 |
2,896,592 |
| Weighted average shares outstanding |
|
|
|
|
| - basic and diluted 2 |
|
|
572,536,704 |
572,536,704 |
| |
|
|
|
|
|
| Operations |
|
|
|
|
| Production |
|
|
|
|
| Natural gas - Mcf per day |
|
|
1,208 |
1,454 |
| Natural gas liquids - bbls per day |
|
|
28 |
22 |
| Total - boe per day1 |
|
|
230 |
264 |
| Average sales price |
|
|
|
|
| Natural gas - $ per Mcf |
|
|
2.79 |
2.85 |
| Natural gas liquids - $ per bbl |
|
|
68.94 |
75.76 |
| Average operating netback |
|
|
|
|
| Production - $ per boe1 |
|
|
(3.47) |
1.15 |
| Processing - $ per Mcf processed1 |
|
|
0.05 |
0.10 |
Note 1: See advisories at the end of this news release with respect to non-IFRS measures and boe presentation.
Note 2: All outstanding warrants, stock options and convertible debentures were excluded in calculating the weighted-average number of dilutive common share outstanding, as they were determined to be anti-dilutive.
Gas Plant
The Company is in the later stages of negotiations on a new third party gas processing agreement to replace the current third party gas processing agreement expiring on June 30, 2013. The Company expects the new agreement to be in place before July 1, 2013, at improved rates, to allow continued and uninterrupted third party gas processing beyond the expiry of the current agreement.
Operational Update and Outlook
The Company recently signed a new agreement with improved pricing for the sale of its natural gas production. Starting May 1st, and continuing to September 30th, the Company will receive $US3.65 per Mcf of natural gas sold under the agreement, a 31% increase over the current price. For the period of October 1st to December 31st, the price received will be $US3.23 per Mcf. The Company can sell 100% of its production under the new agreement.
The Company's recently announced sale of its overriding royalty interests in non-operated properties in the Williston Basin of North Dakota has closed and gross cash proceeds of $US 594,000 have been received.
The Company continues to pursue and evaluate a broad range of strategic alternatives through its previously announced strategic review process with the assistance of its financial advisor, Raymond James Ltd.
The Company will continue to focus on consistent, safe and efficient operations at its producing and processing assets.
ArPetrol has continued discussions with contractors to manage payment schedules on past due amounts to allow sufficient time to provide a long-term solution for the Company. However, there is no certainty whether or not any contractors will pursue legal remedies relating to outstanding payables. There is uncertainty regarding the Company's ability to continue to operate as a going concern (see the financial statements and MD&A filed on SEDAR for complete disclosure).
Annual General Meeting
The Company has decided to cancel until further notice its previously announced June 18, 2013 Annual General Meeting. The postponement was made to allow additional time for the Company to review the results of its current strategic review process.
All values in this news release are in Canadian dollars unless otherwise indicated.
About ArPetrol Ltd.
ArPetrol is a Calgary-based publicly traded company engaged in oil and natural gas exploration, development and production and third-party natural gas processing in Argentina, where it owns and operates a gas processing facility with capacity of 85 million cubic feet (MMcf) per day. The Company's common shares are listed on the TSXV under the symbol "RPT".
Non-GAAP Measures
This news release includes references to financial measures commonly used in the oil and natural gas industry. The terms "operating netback" (production sales and processing sales less royalties, turnover taxes and operating expenses) and "funds flow from operations" (cash generated from operating activities before changes in refundable Argentinean taxes, foreign exchange on non-cash working capital, non-cash working capital, and translation adjustment on operating items) do not have any standardized meaning under International Financial Reporting Standards (IFRS), which have been incorporated into GAAP, and may not be comparable with similar measures presented by other companies. Funds flow from operations should not be considered an alternative to, or more meaningful than, cash generated from operating activities, net loss or other measures determined in accordance with IFRS, as an indicator of the Company's performance.
See the MD&A for the three months ended March 31, 2013, filed on SEDAR at www.sedar.com and on the Company's website, for further discussion, including a reconciliation of funds flow from operations to cash generated from operating activities which is the most directly comparable measure calculated in accordance with IFRS. There is no IFRS measure that is reasonably comparable to operating netback and a detailed calculation of such netbacks is presented in the MD&A for the three months ended March 31, 2013.
Boe Presentation
Production information is commonly reported in units of barrels of oil equivalent (boe). For purposes of computing such units, natural gas is converted to equivalent barrels of oil using a conversion factor of six thousand cubic feet (Mcf) to one barrel (bbl). This conversion ratio of 6:1 represents energy equivalency, which is primarily applicable at the burner tip, and does not represent a value equivalency at the wellhead. Such disclosure of boe may be misleading, particularly if used in isolation.
Forward-Looking Information
This news release contains certain forward‐looking statements relating, but not limited, to operational information, the working capital deficiency, the ability to negotiate with service providers and extend payment schedules until a long-term solution for the Company can be achieved, the pursuit of strategic alternatives and future financing, the possibility to improve and extend the contractual terms for the gas processing business, the timing of reaching agreements with third parties, and the ability or inability to continue as a going concern. Forward‐looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project", or similar words suggesting future outcomes. The Company cautions readers and prospective investors in the Company's securities not to place undue reliance on forward‐looking information as, by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by the Company.
Forward-looking information is based on management's current expectations and assumptions regarding, among other things, plans for and results of the strategic review process discussed below, the willingness of creditors to extend payment schedules until a long-term solution is achieved, the ability to improve and extend the gas processing agreements and the timing thereof, future operations and transactions, future capital and other expenditures (including the amount, nature, timing, availability and sources of funding thereof), future production and processing revenue, future economic conditions, future currency and exchange rates, future pricing, continued political stability in the areas in which the Company is operating, and the Company's continued ability to obtain and retain qualified management and staff and equipment in a timely and cost-efficient manner. Although the Company believes the expectations and assumptions reflected in such forward‐looking information are reasonable, they may prove to be incorrect.
Forward‐looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated by the Company, including but not limited to risks associated with uncertainty regarding the availability of a strategic alternative and the outcome of the strategic review process, uncertainty regarding the willingness of third parties to negotiate alternative contractual arrangements and payment schedules, uncertainty whether any creditors will commence legal proceedings, the risk of expiry of the existing gas processing agreements without having new agreements in place, risks associated with the oil and natural gas industry (e.g., operational risks in demobilization of the drilling rig, risks inherent in future drilling programs and the operation of the gas plant, and health, safety and environmental risks), the ability to retain management and staff, the inability to access funding and continue as a going concern, weather-induced delays and natural disasters, interruptions to production and processing revenue, production declines, the uncertainty regarding future revenues, union activities and labour issues in Argentina, change in government policies, the risk of commodity price changes, the risk of foreign exchange rate fluctuations (which may not be as favourable as those currently experienced), currency controls and a change in the manner and rates at which the Company is exchanging currency, and risks associated with international activity and political risks over which it has no control (including risks related to the general economic and business conditions in Argentina, economic, social or political instability or change, the uncertainty of negotiating with foreign governments, expropriation and/or nationalization, changes in export or exchange policies, adverse determinations or rulings by governmental authorities, and changes in energy policies or in the personnel administering them).
The forward‐looking information included herein is expressly qualified in its entirety by this cautionary statement. The forward‐looking information included herein is made as of the date hereof and the Company assumes no obligation to update or revise any forward‐looking information to reflect new events or circumstances, except as required by law.
Additional information relating to the Company is also available on SEDAR at www.sedar.com.
ArPetrol's head office address is 700, 815 8 Avenue S.W., Calgary, AB T2P 3P2
Neither the TSXV nor its Regulation Services Provider (as defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: ArPetrol Ltd.
For further information:
Tim Thomas, President and Chief Executive Officer
t.thomas@arpetrol.com
Or
Ian Habke, Chief Financial Officer
i.habke@arpetrol.com
ArPetrol Ltd.
Main Telephone: 403-263-6738
