CALGARY , May 26, 2014 /CNW/ - ArPetrol Ltd. ("ArPetrol" or the
"Company") (RPT.V) announces its financial and operating results
for the three months ended March 31, 2014 and provides an operational
update on activities to date this year as well as an outlook for the
remainder of 2014. 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 2014
Operating and Financial
ArPetrol's working capital position continued to improve during the
first quarter of 2014. The Company had a working capital of $1.4
million at the end of the first quarter of 2014 compared to a deficit
of $0.8 million at the end of 2013. The largest contributor to this
improvement comes from the Company's success in reaching settlement
agreements with the outstanding vendors from its 2012 drilling
program. Currently, ArPetrol has successfully concluded settlements
with all but one of its drilling vendors. Ongoing discussions are
progressing with this last vendor.
The Company had drawn $1.7 million on its short-term loan at the end of
the first quarter 2014.
ArPetrol's first quarter production averaged 242 barrels of oil
equivalent per day (boe/d). This is an increase of 78 boe/d from the
fourth quarter of 2013 and an increase of 14 boe/d from the first
quarter of last year. Fourth-quarter 2013 production was affected by
well performance issues which were resolved before the end of the
fourth-quarter.
The first-quarter 2014 average realized natural gas price was $4.21 per
thousand cubic feet (Mcf), $0.56 per Mcf higher than the price realized
in the fourth quarter of 2013 and $0.86 per Mcf higher than the first
quarter of 2013. This higher price during 2014 reflects the Company's
new gas sales contract signed during the year.
The average price realized for natural gas liquids (NGLs) in the quarter
was $81.30 per barrel (bbl), a decrease of $1.41 per bbl over the
fourth quarter of 2013. The reduced NGL pricing reflects the changing
dynamics in the Argentine markets.
ArPetrol continues to generate strong gas processing revenues from its
new gas processing contracts that it negotiated in 2013. During the
first-quarter of 2014, gas processing revenues were $2.2 million
consistent with the fourth-quarter of 2013 and double the $1.1 million
earned in the first-quarter of 2013.
There were no capital expenditures during the quarter.
Net income for the quarter was $1,613,357 million compared to a net loss
of $290,350 for the fourth quarter of 2013.
Summary of Results
(Cdn$ except shares outstanding
and per boe1 amounts)
|
Three Months Ended March 31,
|
|
2014
|
2013
|
Financial
|
|
|
Production sales
|
650,151
|
477,544
|
Processing sales
|
2,246,910
|
1,127,507
|
Funds flow from operations1 |
845,661
|
(682,551)
|
Cash from operating activities
|
903,213
|
2,175,384
|
Comprehensive income
|
2,464,939
|
2,205,035
|
Fixed asset expenditures
|
-
|
234,806
|
Weighted average shares outstanding
|
|
|
|
- basic and diluted 2 |
572,536,704
|
572,536,704
|
|
|
|
Operations
|
|
|
Production
|
|
|
|
Natural gas - Mcf per day
|
1,330
|
1,208
|
|
Natural gas liquids - bbls per day
|
20
|
28
|
Total - boe per day1 |
242
|
230
|
|
|
|
Average sales price
|
|
|
|
Natural gas - $ per Mcf
|
4.21
|
2.78
|
|
Natural gas liquids - $ per bbl
|
81.30
|
68.94
|
|
|
|
Operating netback
|
|
|
|
Production - $ per boe1 |
3.67
|
(3.47)
|
|
Processing - $ per Mcf processed1 |
0.21
|
0.05
|
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.
|
|
All values in this news release are in Canadian dollars unless otherwise
indicated.
|
Operational Update and Outlook
During the first quarter of 2014, ArPetrol continued its progress
towards a stable revenue generating company with a balance sheet that
supports its operations. The new gas processing contracts have
provided ArPetrol with a significant increase in processing revenue and
cash flow during the quarter and this is expected to continue during
2014. The Company has also improved its balance sheet by concluding
settlement agreements with all but one vendor from the 2012 drilling
program. Ongoing discussions are progressing with this last vendor.
The Company's 2014 outlook includes estimated production of 200 to 240
boe/d, estimated processing volumes of 70 to 80 MMcf/d and estimated
capital expenditures for maintenance and improvements of $0.8 million
to $1.2 million . In 2014, the Company is forecast to be self-funding
through projected cash flows, covering its capital expenditures and,
barring any unforeseen circumstances, the repayment of its short-term
loan by the year-end.
Over the next few months, Arpetrol will re-structure the Company and
develop a go forward strategic plan that will allow management to look
at and fund growth opportunities in Argentina and elsewhere when they
become available.
For the initial step of the corporate re-structuring, the Board of
Directors of Arpetrol has determined that it is in the best interests
of the company to implement the consolidation of the issued and
outstanding Arpetrol shares on the basis of one (1) new
post-consolidation share for every twenty five (25) shares
pre-consolidation shares held. The company believes that such a
consolidation may enhance the marketability of the common shares as an
investment and may facilitate future financings, issuance of shares or
any other form of securities, as the company is subject to the TSX
Venture Exchange minimum pricing rules for financings. Share
consolidation was approved at Arpetrol annual and special shareholder
meeting held on August 21, 2013 .
Based upon the number of issued and outstanding Arpetrol shares as of
May 22, 2014 , the issued and outstanding Arpetrol shares would be
reduced from 572,536,704 to approximately 22,901,468 shares. It is
expected that the share consolidation will become effective on June 2 ND, 2014 subject to receiving regulatory approvals.
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 per day. The
Company's common shares are listed on the TSXV under the symbol "RPT".
Non-IFRS 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, 2014 , 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, 2014 .
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 ability to maintain
processing rates and revenue in the same range as realized in the first
quarter, the ability to negotiate a settlement agreement with the
remaining service provider, the ability to reduce future expenses, the
ability to be self-funding and maintain positive cash flow in 2014,
estimated production volumes, processing volumes and capital
expenditures, the repayment of the Company's short term loan and timing
thereof, the pursuit of growth opportunities, 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, the
willingness of the remaining creditor to settle outstanding amounts,
future operations and transactions, future capital and other
expenditures (including the amount, nature, timing, availability and
sources of funding thereof), stable processing volumes, future
production and processing revenue, future economic conditions, future
currency and exchange rates, future pricing, the ability to repatriate
funds from Argentina , continued political stability in the areas in
which the Company is operating, the reduction of G&A and expenses, 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 uncertainty regarding the willingness of the remaining
creditor to negotiate a settlement or whether it will commence legal
proceedings , risks associated with the oil and natural gas industry
(e.g., operational risks for its producing assets 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 ability to continue as a going concern,
difficulties that may be encountered to repatriate funds,
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.
AR Petrol'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.