CALGARY,
May 26, 2014 /CNW/ - ArPetrol Ltd.
("ArPetrol" or the "Company") (TSXV: RPT) 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 2ND, 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.