Operating Netback(1) increases $5.8 million or 467%; Increase in net revenue by over 350%; Positive Funds flow from Operations(2) of $4.8 million; $97.3 million of cash and investments
CALGARY, ALBERTA--(Marketwire - May 31, 2012) - Americas Petrogas Inc. ("Americas Petrogas" or the "Company") (TSX VENTURE:BOE) announces record production on the Medanito Sur and Rinconada Norte blocks. As well, during the quarter, the Company continued to execute on its investment plan on its oil and gas properties in Argentina and its potash, phosphates, and other minerals project in the Sechura Desert, Bayovar, Peru.
| First Quarter Highlights and Recent Developments |
- Achieved record operating netback of $7,082,158 or $45.86 per barrel during the first quarter of 2012 compared to $1,247,796 or $26.49 per barrel during the same period of 2011. See note (1).
- Record positive funds flow from operations for the quarter - generated positive funds flow from operations of $4,789,281 during the three months ended March 31, 2012 compared to negative funds flow of $237,883 during the same period of 2011. See note (2).
- Net revenue increased by $7.1 million compared to the same quarter of 2011, which is an increase of over 350%.
- $97.3 million of consolidated cash, cash equivalents and short-term investments as of March 31, 2012.
- Received a 25-year exploitation license, granted by the provincial government, for the Medanito Sur block in March 2012.
- With joint venture partner, ExxonMobil, completed drilling and casing of the LTE.x-1 well on the Los Toldos II block. The well encountered 343 metres or 1125 feet of the primary target Vaca Muerta Shale Formation with encouraging hydrocarbon shows.
- With joint venture partner, Apache, commenced a long-term production testing program on the Hua.x-1 well on the Huacalera block. The initial testing program is focused on one of several prospective intervals of the Vaca Muerta formation (1742 feet approximate gross thickness) with subsequent plans to test the Mulichinco formation (459 feet approximate gross thickness).
- Raised $70.8 million at $3.50 per share through a combined bought-deal financing with a major Canadian bank for $60.1 million and a non-brokered financing for $10.7 million.
- Commenced building our own oil facilities which will allow us to initially process up to approximately 6,300 barrels of oil per day.
- Drilled additional brine wells and performing pumping tests in Peru.
- Additional exploration for phosphates and other minerals in Peru.
| Outlook |
- With the completion of the recent financings and the growing cash flow from oil sales, the Company is in an enviable financial position to expand its production and reserves via both conventional and unconventional drilling. In the near future, the Company intends to drill additional unconventional wells which primarily target the Vaca Muerta shale -- on our 90%-owned Totoral block, on our Los Toldos blocks with our joint venture partner, ExxonMobil, and on other blocks.
- The capital program for conventional wells will be primarily directed to our large multi-year drilling inventory, which includes conventional well inventory of approximately 500 locations, most of which are development wells. More importantly, our technical and operations team, which grew production by 227% over the first quarter of 2011, will be taking its successes into our ongoing drilling program of conventional wells and shale wells. We look forward to reporting our future successes in due course.
- The Company is positioned to increase production, enhance reserves, and deliver solid growth from its large conventional and unconventional drilling program during 2012 and into 2013.
"The early success of Americas Petrogas's 2012 conventional drilling program, has significantly grown production and cash flow from our Eastern blocks." said Barclay Hambrook, President and Chief Executive Officer of Americas Petrogas Inc. "Several of these new wells were drilled after we received our 25 year exploitation license at Medanito Sur and are the first group of our approximately 30 conventional development, appraisal and exploration wells planned for this and early next year. In executing our plan, we will now fast-track the expansion of our company-owned oil facilities. Additionally, we are preparing for drilling 10 unconventional wells with Vaca Muerta shale as the primary target. These wells include those to be drilled in our 90%-owned Totoral block, those to be drilled with our joint venture partner, ExxonMobil, on our Los Toldos blocks, and others."
Financial and Operating Results
Copies of the Company's condensed interim consolidated financial statements and the related Management's Discussion and Analysis ("MD&A") for the quarter have been filed under the Company's profile at www.sedar.com and are also available on the Company's website at www.americaspetrogas.com. All amounts are in Canadian dollars unless otherwise stated.
| Three months ended March 31, 2012 | Three months ended March 31, 2011 | ||||||||||||
| Total | Per barrel | Total | Per barrel | ||||||||||
| Barrels of oil sold | 154,439 | 47,119 | |||||||||||
| Gross oil sales revenue | $ | 11,627,807 | $ | 75.29 | $ | 2,573,504 | $ | 54.62 | |||||
| Royalties | (2,544,183 | ) | (16.47 | ) | (585,723 | ) | (12.43 | ) | |||||
| Production costs | (2,001,466 | ) | (12.96 | ) | (739,985 | ) | (15.70 | ) | |||||
| Operating netback(1) | $ | 7,082,158 | $ | 45.86 | $ | 1,247,796 | $ | 26.49 | |||||
| Funds flow from operations(2) | $ | 4,789,281 | $ | (237,883 | ) | ||||||||
| Per share - basic and diluted(2) | $ | 0.02 | $ | 0.00 | |||||||||
| Net loss attributable to owners of the Company | $ | (3,812,288 | ) | $ | (6,631,007 | ) | |||||||
| Per share - basic and diluted | $ | (0.02 | ) | $ | (0.04 | ) | |||||||
| Capital additions | $ | 10,878,214 | $ | 2,441,575 | |||||||||
| Weighted average common shares outstanding | 194,527,273 | 162,799,150 | |||||||||||
| March 31, 2012 | December 31, 2011 | |||
| Cash and cash equivalents | $ | 57,553,246 | $ | 27,762,717 |
| Short-term investments(3) | $ | 39,783,340 | $ | 28,768,630 |
| Current assets | $ | 106,256,710 | $ | 60,771,658 |
| Current liabilities | $ | 17,388,471 | $ | 28,829,896 |
| Working capital(4) | $ | 88,868,239 | $ | 31,941,762 |
| Long-term debt | $ | - | $ | - |
| Notes: |
| (1) | Operating netback is a non-IFRS measure and is calculated as revenues from oil sales less royalties and production costs. Operating netback is used as an indicator of operating performance, profitability and liquidity. Operating netback does not have a standardized meaning prescribed by IFRS. It is unlikely for non-IFRS measures to be comparable to similar measures presented by other companies. See reconciliation above. |
| (2) | Funds flow from operations is an additional IFRS measure because it is presented in the consolidated statement of cash flows. Funds flow from operations and funds flow from operations per share are used to analyze operating performance and liquidity. Funds flow from operations is calculated as net cash generated from (used by) operating activities (as determined in accordance with IFRS) before changes in non-cash working capital. Funds flow from operations per share is calculated by dividing funds flow from operations by the weighted average number of shares outstanding. Funds flow from operations should not be considered an alternative to, or more meaningful than net cash generated from (used by) operating activities as determined in accordance with IFRS. |
| (3) | Short-term investments are bank-sponsored investments and other high credit rating instruments which are current in nature, with an initial maturity greater than three months when purchased and which are not redeemable at face value on demand. |
| (4) | Working capital is a non-IFRS measure and is calculated as current assets less current liabilities. Working capital is used to assess liquidity and general financial strength. Working capital does not have a standardized meaning prescribed by IFRS. It is unlikely for non-IFRS measures to be comparable to similar measures presented by other companies. Working capital should not be considered an alternative to, or more meaningful than current assets or current liabilities as determined in accordance with IFRS. |
Revenue
Oil production continued on the Company's conventional blocks. The Company's net oil sales revenue, after deducting royalties, increased 357% compared to the first quarter of 2011 and 176% compared to the fourth quarter of 2011. For the three months ended March 31, 2012, the Company reported gross oil sales revenues of $11,627,807 and net oil sales revenues, after deducting royalties, of $9,083,624 compared to net oil sales revenues, after deducting royalties, of $1,987,781 for the first quarter of 2011. In March 2012, the Company received a 25-year exploitation license on the Medanito Sur block and has since commenced a new drilling program.
Net Loss
The Company reported a net loss attributable to owners of the Company of $3,812,288 or $0.02 per share for the three months ended March 31, 2012 compared to a net loss of $6,631,007 or $0.04 per share for the same period of 2011. The decrease in net loss for the three months ended March 31, 2012, compared to the same period of 2011, can be attributed to: (i) increased profit from oil sales in 2012 and (ii) a non-cash loss recorded in 2011 on the conversion option associated with the convertible promissory note.
Cash Flow
With respect to funds flow from operations (an additional IFRS measure), the Company generated a positive inflow of $4,789,281 or $0.02 per share during the three months ended March 31, 2012 compared to an outflow of $237,883 (negligible per share amount) during the same period of 2011. Funds flow from operations reflects the net cash generated from (used by) operating activities (as determined in accordance with IFRS) before changes in non-cash working capital. Alternatively, it reflects net income (loss) on the statement of income, adjusted for non-cash items of income (loss) including, but not limited to, depletion and depreciation, stock-based compensation and unrealized foreign exchange items.
During the three months ended March 31, 2012, the Company used $2.2 million of cash in operating activities (which includes changes in non-cash working capital accounts), compared to the same period of 2011 when the Company generated $0.8 million from operating activities (which includes changes in non-cash working capital accounts). The cash outflow in 2012 is attributable to changes in non-cash working capital items. With respect to investing activities, the Company spent $21.7 million on capital expenditures in the three months ended March 31, 2012, compared to $2.3 million spent in the same period of 2011.
Financial Position
As of March 31, 2012, the Company has a cash position (including cash, cash equivalents and short-term investments) of $97.3 million. The increase in current assets during 2012, particularly cash and short-term investments, reflects the completion of two equity financings totaling 20,217,000 common shares in the first quarter of 2012. Accounts receivable has increased as a result of increased oil sales. The Company's reported exploration and evaluation assets have increased in 2012, as a result of continuing activities in Argentina and Peru. The Company's reported property, plant and equipment has increased, net of depletion, primarily as a result of continuing activities on the Company's conventional blocks. During the first quarter of 2012, the Company settled US$12.5 million of promissory notes.
For further information regarding the Company's financial results, financial position and related changes, please see the consolidated financial statements and the related MD&A.
About Americas Petrogas Inc.
Americas Petrogas Inc. is a Canadian company whose shares trade on the TSX Venture Exchange under the symbol "BOE". Americas Petrogas has conventional and unconventional shale oil and gas and tight sands oil and gas interests in numerous blocks in the Neuquén Basin of Argentina. Americas Petrogas has joint venture partners, including ExxonMobil and Apache, on various blocks in the shale oil and gas corridor in the Neuquén Basin, Argentina. Americas Petrogas also owns an 80% interest in GrowMax Agri Corp., a private company involved in the exploration and potential development of a potash, phosphates and other minerals project in Peru. For more information about Americas Petrogas Inc., please visit www.americaspetrogas.com
This Press Release contains forward-looking information including, but not limited to, the Company's goals and growth, estimates of reserves, testing plans in respect of the Hua.x-1 well, building of oil processing facilities, and exploration, development and production activities in respect of the projects in Argentina and Peru. Additional forward‐looking information is contained in the Company's MD&A for this quarter and the Company's Annual MD&A for December 31, 2011, and reference should be made to the additional disclosures of the assumptions, risks and uncertainties relating to such forward‐looking information in those MD&A documents.
Forward‐looking information is based on management's expectations regarding the Company's future growth, results of operations, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, plans for and results of drilling activity (including the timing, location, depth and the number of wells), environmental matters, business prospects and opportunities and expectations with respect to general economic conditions. Such forward‐looking information reflects management's current beliefs and assumptions and is based on information, including reserves information, currently available to management. Forward‐looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by the forward‐looking information, including but not limited to, risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production, delays or changes to plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of geological interpretations; the uncertainty of estimates and projections in relation to production, costs and expenses and health, safety and environment risks), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with foreign governments and third parties located in foreign jurisdictions and the risk associated with international activity.
Although the forward‐looking information contained herein is based upon assumptions which management believes to be reasonable, the Company cannot assure investors that actual results will be consistent with this forward-looking information. This forward‐looking information is made as of the date hereof and the Company assumes no obligation to update or revise this information to reflect new events or circumstances, except as required by law. Because of the risks, uncertainties and assumptions inherent in forward‐looking information, prospective investors in the Company's securities should not place undue reliance on this forward‐looking information.
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 THE RELEASE.
Contacts:
Americas Petrogas Inc.
Barclay Hambrook, P. Eng., MBA
President and CEO
(403) 685-1888
inquiries@americaspetrogas.com
www.americaspetrogas.com
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