ArPetrol Ltd. announces third quarter 2012 financial and operating results
CALGARY, Nov. 13, 2012 /CNW/ - ArPetrol Ltd. ("ArPetrol" or the "Company") (TSXV: RPT) announces its financial and operating results for the three and nine months ended September 30, 2012 and provides an operational update on activities this year to date as well as an outlook for the remainder of 2012. The interim condensed consolidated financial statements and management's discussion and analysis (MD&A), have been filed on SEDAR at www.sedar.com and posted on the Company's website at www.arpetrol.com.
Third Quarter 2012 Summary
Operating and Financial
ArPetrol had positive working capital and drilling deposits of $0.7 million as at September 30, 2012 and no long-term debt.
Third quarter production averaged 227 barrels of oil equivalent (boe) per day. This is a decrease of 20 boe per day from the second quarter of 2012 and a decrease of 82 boe per day from the third quarter of 2011. This difference is due to a gas lift line failure and repair, facilities issues and natural declines.
To help offset the volume declines, the Company continues to realize higher prices for its production. For the third quarter of 2012 the average price received for its natural gas was $2.75 per thousand cubic feet (Mcf), 26 percent higher than the $2.19 per Mcf received in the third quarter of 2011.
The average realized price for natural gas liquids also increased year-on-year with third-quarter 2012 prices of $71.99 per barrel, 10 percent per barrel higher than the same period in 2011. These increases reflect the continued trend of strengthening market prices in Argentina. The first three quarters of 2012 realized average prices were consistent after adjusting for foreign exchange differences.
Processing volumes and revenues also continued to increase during the first three quarters of 2012 as third-party processing volumes returned to full volumes after the disruption in September 2010. Processing sales for the third quarter were $959,639, an increase of $608,927 over the same period last year. During the third quarter daily third-party processing volumes increased by 12 percent compared to the second-quarter of 2012, while process disruptions at our gas plant resulted in slightly lower liquids recovery and revenue.
Fixed asset expenditures for the third-quarter of 2012 were $15,498,061. Major expenditures were incurred for mobilization, drilling and suspension work for the first well of our extended reach drilling program on our Faro Virgenes block.
During the first three quarters of the year, the Company executed a development drilling program to access reserves reflected in the Company's December 31, 2011 Reserve Report. During the third-quarter of 2012 drilling difficulties caused the Company to abandon the well without accessing these reserves. To realize the expected cash flows from the reserves, additional capital investments are required, which, in combination with the costs incurred to date on the FV2001 well, resulted in an impairment of $8,917,192.
Net loss for the quarter was $10,453,864.
Summary of Results
(Cdn$ except shares outstanding and per
Three months ended
Nine Months Ended
|Funds flow from operations1||(1,084,937)||(1,099,790)||(2,604,382)||(3,242,616)|
|Cash generated from operating activities||(3,506,116)||(1,495,821)||(6,935,278)||(4,937,922)|
|Fixed asset expenditures||(15,498,061)||(386,061)||(26,701,417)||(822,836)|
|Weighted average shares outstanding (millions)|
|- basic and diluted||572.5||572.2||572.5||471.1|
|Natural gas - Mcf per day||1,245||1,710||1,344||1,780|
|Natural gas liquids - bbls per day||19||24||22||26|
|Total - boe per day1||227||309||246||323|
|Average sales price|
|Natural gas - $ per Mcf||2.75||2.19||2.83||2.45|
|Natural gas liquids - $ per bbl||71.99||65.45||71.49||60.08|
|Average operating netback|
|Production - $ per boe1||1.99||5.16||1.35||5.12|
|Processing - $ per Mcf processed1||0.06||(0.12)||0.06||(0.07)|
Note 1: See advisories at the end of this news release with respect to non-IFRS measures and BOE presentation.
Note 2: The unaudited consolidated results for the Company for the nine months ended September 30, 2011 reflect the results of the combined operations of ArPetrol Inc. and RPT Resources Ltd. (now ArPetrol Ltd.) from March 18, 2011 until September 30, 2011 and the results from ArPetrol Inc. only from January 1, 2011 to March 17, 2011.
Operational Update and Outlook
Over recent weeks, ArPetrol has been meeting with service providers and finalizing its review of costs associated with its drilling program on the Faro Virgenes concession. Based on its current cost estimates, ArPetrol estimates that it may face a negative working capital position following final demobilization of the rig. ArPetrol has initiated discussions with contractors to reduce its shortfall and manage payment schedules to allow sufficient time to provide a long-term solution for the Company. There is uncertainty regarding the Company's ability to continue to operate as a going concern (see the financial statements and MD&A filed on SEDAR for complete disclosure). The Company is continuing to pursue and review strategic and financing alternatives.
ArPetrol has also initiated discussions to improve and extend the contractual terms for its gas processing business to increase the operating cashflow generated by the gas plant.
All values in this news release are in Canadian dollars unless otherwise indicated.
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 (MMcf) per day. The Company's common shares are listed on the TSXV under the symbol "RPT".
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, 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 Canadian generally accepted accounting principles (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 income (loss) or other measures determined in accordance with IFRS, as an indicator of the Company's performance.
See the MD&A for the three and nine months ended September 30, 2012, 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 netbacks and a detailed calculation of such netbacks is presented in the MD&A for the three and nine months ended September 30, 2012, which is filed on SEDAR at www.sedar.com.
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.
This news release contains certain forward‐looking statements relating, but not limited, to operational information, cost estimates, expected capital expenditures, expected working capital deficits, the ability to negotiate with service providers, the pursuit of strategic alternatives and future financing, the possibility to improve and extend the contractual terms for the gas processing business, the availability of funding, 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, plans for and results of future operations and transactions, future capital and other expenditures (including the amount, nature, timing, availability and sources of funding thereof), 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, and the Company's continued ability to obtain and retain qualified 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 alternative contractual arrangements and payment schedules, the ability to negotiate improved gas processing contracts, the availability of a strategic alternative, risks associated with the oil and natural gas industry (e.g., operational risks in exploration and drilling; inherent uncertainties in interpreting geological data; changes in plans with respect to exploration or capital expenditures; the uncertainty of estimates and projections in relation to costs and expenses; and health, safety and environmental risks), the inability to access funding, weather delays and natural disasters, processing interruptions and natural declines, the uncertainty regarding future revenues, union activities and labour issues in Argentina, change in government policies, the risk of commodity price and foreign exchange rate fluctuations (which may not be as favourable as those being achieved today), and risks associated with international activity.
ArPetrol operates outside of Canada and as such, ArPetrol is subject to a number of political risks over which it has no control. These risks may include 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, changes in energy policies or in the personnel administering them and currency and inflation risks. See the "Risk Factors" section of the Company's Annual Information Form for a further description of these risks and uncertainties facing ArPetrol.
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
Ian Habke, Chief Financial Officer
Main Phone: 403-263-6738