CALGARY, Oct. 21, 2013 /CNW/ - ArPetrol Ltd. ("ArPetrol" or the "Company") (TSXV: RPT) provides an operational update on activities.
Operating Update
ArPetrol's third-party processing volumes for the third quarter averaged 80 million cubic feet per day (MMcf/d), 15 MMcf/d above the average volumes for the second quarter of 2013. The increase in processing volumes in the third quarter of 2013 was a result of third-party operational improvements. These volumes generated fees of $0.29 per thousand cubic feet (Mcf), reflecting the new tariff agreements entered into with YPF S.A. and ENAP SiPetrol Argentina S.A., which agreements remain subject to completion of final documentation.
ArPetrol's third quarter production averaged 186 barrels of oil equivalent per day (boe/d). This is a decrease of 55 boe/d from the second quarter of 2013. The decrease resulted from some operational issues and natural production declines.
The average realized natural gas price was $3.95 per Mcf, $0.40 per Mcf higher than the price realized in the second quarter of 2013. For the period of October 1 to December 31, the price received is expected to be US$3.23 per Mcf. For natural gas liquids (NGLs), average third-quarter 2013 prices were $83.33 per barrel, $15.61 per barrel higher than in the second quarter of 2013. The changes in NGLs pricing reflect commodity fluctuations in the Argentine market, and an adjustment to second quarter revenues recorded in the third quarter.
Insider Loan and Outlook
ArPetrol's independent directors have approved a secured loan from Carrera Investments Corp., a corporation managed by a director of ArPetrol, and a syndicate of other directors for advances up to an aggregate amount of $1.9 million to facilitate the payment of trade payables in Argentina. The loan will bear interest at 12% per annum and will be secured by the assets of the Company. The loan has a maturity date of December 31, 2014, with earlier payment obligations triggered upon certain events and ArPetrol may repay the loan at any time. The loan is considered to be a related party transaction and is subject to the provisions of Multilateral Instrument 61-101 - "Protection of Minority Security Holders in Special Transactions". Exemptions are available from those requirements as there is no equity component to the loan, and the non-conflicted directors have determined that the loan is being made on reasonable, arm's length commercial terms. The loan is subject to the completion of definitive documentation.
The Company has concluded settlements with several of its third party contractors representing a significant portion of past due amounts, which settlements will be paid with proceeds of the insider loans. The Company will continue to pursue settlements with the remaining creditors in Argentina, including the creditor that initiated an arbitration proceeding in Argentina. There is no certainty whether or not any other remaining contractors will pursue legal remedies relating to outstanding payables.
The Company continues to pursue other ways to generate cash and reduce costs to clean up the balance sheet, while not risking the safe and efficient operation of its revenue generating assets.
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".
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 the pending completion of final documentation for the insider loan, the gas plant processing contracts and settlements with creditors, the expected natural gas prices for the fourth quarter, the continued negotiations with third party creditors, the efforts to generate cash and reduce future costs and expenses. 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 ability to complete final documentation with the counterparties on the agreed terms, the willingness of remaining creditors to negotiate settlements, 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, 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 risks associated with uncertainty regarding the willingness of third parties to negotiate settlements or alternative payment schedules, uncertainty regarding the outcome of the arbitration proceeding initiated by the creditor in Argentina and the cost of same, uncertainty whether any other creditors will commence legal proceedings and the costs of same, the risk that final agreements will not be reached with various counterparties, risks associated with the oil and natural gas industry (e.g., operational risks 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 other uncertainties 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, changes in export or exchange policies, adverse determinations or rulings by governmental authorities.
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
