ArPetrol Ltd. announces second-quarter 2013 financial and operating results
CALGARY, Aug. 21, 2013 /CNW/ - ArPetrol Ltd. ("ArPetrol" or the "Company") (TSXV: RPT) announces its financial and operating results for the three and six months ended June 30, 2013 and provides an operational update on activities to date this year as well as an outlook for the remainder of 2013. 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 Second Quarter 2013
Operating and Financial
As at June 30, 2013 ArPetrol had a working capital deficit of $2.2 million and has no long-term debt.
ArPetrol's second quarter production averaged 241 barrels of oil equivalent per day (boe/d). This is a increase of 11 boe/d over the first quarter of 2013 and a decrease of 6 boe/d from the second quarter of 2012. The increase over the first quarter of 2013 and the slight decrease from second quarter of 2012 resulted from compressor issues during the comparative periods being resolved in the second quarter which was partially offset by natural production declines.
The average realized natural gas price was $3.55 per thousand cubic feet (Mcf), $0.76 per Mcf higher than the price realized in the first quarter of 2013 and $0.68 per Mcf higher than in the second quarter of 2012. This increase is due to a new natural gas sales contract ArPetrol entered into during the quarter. Starting May 1, and continuing to September 30, the Company will receive US$3.65 per Mcf of natural gas sold under the agreement, a 31 percent increase over the old contract. For the period of October 1 to December 31, the price received will be US$3.23 per Mcf. The Company can sell 100 percent of its production under the new agreement. For natural gas liquids (NGLs), average second-quarter 2013 prices were $67.72 per barrel, $1.22 per barrel lower than in the first quarter of 2013, and $2.51 per barrel lower than in the same period in 2012. The changes in NGLs pricing reflect commodity fluctuations in the Argentine market.
Third-party processing volumes in July averaged approximately 83 million cubic feet per day (MMcf/d). Third-party processing volumes for the second quarter averaged 65.1 MMcf/d, 7.0 MMcf/d below the first quarter of 2013 and 1.2 MMcf/d below the second quarter of 2012. The decrease in processing volumes in the second quarter of 2013 was caused by third-party operational problems. These volumes generated processing sales of $1,042,011 in the second quarter of 2013, a decrease of $85,496 from the first quarter of 2013 and an increase of $34,668 from the same period in 2012.
Capital expenditures for the quarter were $1,745,554. Major expenditures were incurred for rig demobilization and suspension work on the Company's extended-reach drilling program at Faro Virgenes.
Net loss for the quarter was $2,020,072 compared to a net loss of $1,181,161 for the second quarter of 2012.
Summary of Results
(Cdn$ except shares outstanding
and per boe1 amounts)
Three Months Ended
Six Months Ended
|Funds flow from operations1||(373,157)||(891,614)||1,503,018||(1,519,445)|
|Cash from (used in) operating activities||(573,644)||(3,104,456)||1,747,257||(3,240,397)|
|Comprehensive (loss) income||(1,196,228)||(802,806)||1,008,807||(2,136,028)|
|Fixed asset expenditures||1,745,554||8,306,764||1,980,360||11,203,356|
|Weighted average shares outstanding|
|- basic and diluted 2||572,536,704||572,536,704||572,536,704||572,536,704|
|Natural gas - Mcf per day||1,294||1,335||1,251||1,395|
|Natural gas liquids - bbls per day||25||24||27||23|
|Total - boe per day1||241||247||235||256|
|Average sales price|
|Natural gas - $ per Mcf||3.55||2.87||3.19||2.86|
|Natural gas liquids - $ per bbl||67.72||70.23||67.08||72.88|
|Production - $ per boe1||4.30||0.98||0.53||1.06|
|Processing - $ per Mcf processed1||0.05||0.04||0.05||0.07|
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.
The Company has completed negotiations on a new third party gas processing agreement with one of the counterparties processing gas at its Faro Virgenes gas plant. The Company is in the later stages of negotiation with the second counterparty, allowing continued and uninterrupted third-party gas processing. ArPetrol expects these agreements will result in a significant increase in plant revenue in the third quarter of 2013 compared to the second quarter of 2013.
Operational Update and Outlook
The Company continues to pursue and evaluate a broad range of strategic alternatives through its previously announced strategic review process with the assistance of its financial advisor, Raymond James Ltd. To date, no acceptable proposals have been received.
With the benefit of the increased revenue from the Company's new gas plant processing contract, ArPetrol continues its discussions with third party contractors on past due amounts. The goal is to find mutually acceptable arrangements and payment schedules which will satisfy contractors while allowing the Company to find a long-term solution to its current financial difficulties. One contractor has initiated an arbitration proceeding in Argentina to resolve its outstanding payables, and the Company is evaluating that action and its response. There is no certainty whether or not any other contractors will pursue legal remedies relating to outstanding payables. There is continued 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).
To support our plan to improve the Company's balance sheet a review has been completed of the corporate cost structure and the Company intends to implement reductions without 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".
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 and six months ended June 30, 2013, 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 and six months ended June 30, 2013.
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, the working capital deficiency, the ability to negotiate with service providers and extend payment schedules until a long-term solution for the Company can be achieved, the pursuit of strategic alternatives and future financing, the possibility to improve and extend the contractual terms with the second counterparty for its gas processing contract, the timing of reaching agreements with third parties, the ability to maximize free cash flow and reduce expenses, 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 the strategic review process discussed below, the willingness of creditors to extend payment schedules until a long-term solution is achieved, the ability to improve and extend the gas processing agreement with the second counterparty and the timing thereof, 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, 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 availability of a strategic alternative and the outcome of the strategic review process, uncertainty regarding the willingness of third parties to negotiate alternative contractual arrangements and 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 a new gas processing agreement will not be reached with the second counterparty, risks associated with the oil and natural gas industry (e.g., operational risks in demobilization of the drilling rig, 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 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 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, the risk that the Corporation will not be able to effectively reduce expenses, 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.
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 Telephone: 403-263-6738