CALGARY, Jan. 21, 2014 /CNW/ - ArPetrol Ltd. ("ArPetrol" or the "Company") (TSXV: RPT) provides an update on its activities and upcoming changes to its management team.
Outlook, Vendor Settlements, and Insider Loan Update
ArPetrol's 100% owned and operated gas plant in Argentina processed an average of 78 million cubic feet (MMcf) per day of natural gas in the fourth quarter of 2013, compared with 80 MMcf per day in the third quarter of 2013 and 74 MMcf per day in the fourth quarter of 2012. Processing fees at the gas plant were $0.30 per thousand cubic feet (Mcf) in the second half of 2013 under ArPetrol's new gas processing contracts with Enap Sipetrol S.A. and YPF S.A. The gas plant is expected to generate approximately 70% of the Company's revenues in Argentina in 2014. ArPetrol expects that the new gas processing contracts and revenues from production will enable it to realize profitable cashflow in 2014.
ArPetrol continues to produce from two wells, which assist in offsetting operating costs. Fourth quarter production averaged 164 barrels of oil equivalent per day (boe/d). This is a decrease of 22 boe/d from the third quarter of 2013 and a decrease of 88 boe/d from the fourth quarter of 2012. These decreases are due to natural production declines and some well performance issues. The performance issues were resolved before the end of the fourth quarter 2013, resulting in average production of approximately 225 boe/d since December 27, 2013.
The definitive documentation for the previously announced insider loan has been completed and $1.5 million has been drawn against the $1.9 million loan facility to assist in the payment of trade payables in Argentina and for general corporate purposes. ArPetrol has successfully concluded settlements with all but two of its vendors, representing settlements on $6.4 million of the accounts payable balance owing at September 30th 2013. This includes a settlement with the third party that had initiated arbitration proceedings, which have now been terminated. Of the two outstanding vendors, one agreement is awaiting signature and the other is in the final stages of negotiation. Once the funds currently on deposit with the drilling contractor are used to pay outstanding invoices, more than 90% of its outstanding payables with drilling contractors and vendors will have been settled.
Management Changes
Mr. Tim Thomas will be resigning as President & Chief Executive Officer of the Company effective after an orderly transition period, but will remain as a director of the Company. Mr. Ian Habke will be appointed as interim President of the Company, in addition to his current role as Chief Financial Officer. Mr. Abdel Badwi, a current director, will assume the position of interim Chief Executive Officer of the Company until a replacement is identified.
Mr. Claudio Ghersinich, Chairman of the Board of Directors, commented:
"The Board extends its sincere appreciation to Tim Thomas for his significant contribution to the Company since 2010. He did an excellent job during a difficult 2013 to help us achieve new gas processing contracts in Argentina and reach settlements with our vendors, leaving us with a cleaner balance sheet and better outlook for 2014. We wish him the very best in his next endeavours and look forward to continuing to work with him as a director of the Company."
Outlook
The Company is committed to further clean-up its balance sheet through negotiated settlement agreements with the remaining vendor, utilizing the remaining balance of the insider loan facility, increased gas processing fees and production revenues in Argentina. The Company expects to achieve positive cashflow in 2014 as the year progresses.
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 pending completion of final documentation and negotiation of settlements arrangements with the remaining creditors, future cash flow from the gas plant in Argentina (and the proportionate amount of the Company's revenue it will represent), the ability to realize profitable cash flow in 2014, the ability to further clean-up the balance sheet and generate increased revenues in Argentina. 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 remaining creditors to negotiate final settlements, the ability to sustain consistent processing and production volumes, future production and processing revenue, future economic conditions, future currency and exchange rates, the ability to repatriate funds from Argentina, 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 remaining creditors to negotiate settlements, uncertainty whether any creditors will commence legal proceedings and the costs of same, the ability to further clean-up the balance sheet, 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
