Alange Energy Announces Financial Results for the Quarter and Year ended December 31, 2010 and Internal Review Update

TORONTO, May 2 /CNW/ - Alange Energy Corp (TSXV: ALE) announced today the release of its audited consolidated financial statements for the year ended December 31, 2010 (the "2010 Financial Statements"), together with its Management's Discussion and Analysis (the "2010 MD&A"). These documents will be available on the Company's website at www.alangeenergy.com and at www.SEDAR.com.

Jaime Perez, the Company's Executive Chairman, stated "the events and results of 2010 provide us now with the opportunity to redirect Alange Energy towards steady, organic growth through results-oriented drilling on our core assets. We have refashioned the executive team; we have assembled a team that is highly motivated with each member having a track record of success in their respective field.  Completing the Internal Review allows us to look beyond what has happened, and look forward to what we can do as a team with a single common objective." Mr. Perez emphasized that:

  1. The internal review initiated by the Executive Committee of the board has been concluded,
  2. The Company has new leadership in place, with both management and the board having been restructured, and
  3. Alange Energy's exploration and drilling program is proceeding, funded through the C$70 million equity financing completed in March.

"I welcome everyone to read our press release in full for the details on all that has been accomplished", concluded Mr. Perez.

Financial Results

The Company announced its share of average daily production for the year 2010, before deduction of royalties, of 2,413 boed, resulting in revenues of $44.4 million, up approximately 253% from the end of 2009. In 2010, the Company successfully brought seven new wells into production, including six at Cubiro and one at La Punta, more than offsetting the normal annual production decline rates in the fields. Production levels for December 2010 were below the average for the fourth quarter as a result of severe weather difficulties. Cubiro continues to be the anchor in the producing portfolio, representing approximately 79% of total production in 2010.  For 2011, the Company plans to stabilize and steadily increase production at its existing producing properties, as well as explore and develop its high-potential exploration blocks. Alange Energy aims to grow production to 2,800 to 3,000 boed for its share of average daily production for 2011.

For the quarter ended December 31, 2010, the Company generated an operating loss from its oil and gas operations of $0.8 million, attributable to lower than normal operating netbacks due to the more costly "pipeline without a pipe" arrangement that has since been terminated. After exploration, general and administrative expenses, the Company reported a net loss of $31.9 million, or $0.04 per share, in the fourth quarter of 2010 compared with a net loss of $7.5 million, or $0.01 per share, in the fourth quarter of 2009.

Management, including newly appointed Chief Executive Officer Luciano Biondi, will hold a conference call on Monday, May 2, 2011 at 9:00 a.m. (Eastern Time) to provide an operational update, an internal review process update and to discuss the year-end results and strategy. Analysts and interested investors are invited to participate as follows:

Toronto & International:    (647) 427-7450
North America:                (888) 231-8191
Conference ID:   63325382

A playback of this conference call will be available by dialing 416-849-0833 with the above conference ID number until May 16, 2011.

Topoyaco Update

Alange Energy also updated the status of the Topoyaco-2 well, which, as previously announced, was suspended in December, 2010 to undergo additional testing.  These are long-term evaluation tests encompassing production, sampling, analyzing oil and water and testing well pressure, and the operator is awaiting ANH approval before this long-term evaluation plan can commence.  As well, with Pacific Rubiales Energy assuming effective operational control (subject to ANH approval), the primary focus at Topoyaco has shifted to the drilling of Prospect D which is planned to be drilled in the third quarter of 2011.  The previously announced additional testing in the Villeta Formation at Topoyaco-1 has resulted in 100% fresh water, with the result that the operator plans to abandon the well.

Background to Internal Review

As previously disclosed, the decision to undertake a review of the Company's internal controls and procedures, management systems and corporate governance practices (the "Internal Review") was made in early December 2010 following difficulties encountered by the Company's senior finance personnel and audit committee in receiving information in a timely manner from the Company's Colombia branch operation.  This information was necessary to complete the Company's third quarter 2010 financial reporting. At the time of filing its third quarter 2010 management's discussion and analysis (the "Q3 MD&A") on November 29, 2010, the Company was not aware that the production disclosure contained in the Q3 MD&A was based on capacity rather than production.

Although the necessary information to complete the Company's third quarter 2010 financial reporting was received prior to the filing of the Q3 MD&A, the audit committee and board of directors of the Company (the "Board") were not satisfied with the Company's systems and processes for the provision of such information on a timely basis. Accordingly, at the request of the Company's audit committee, the Board met on December 1, 2010 to develop an approach for reviewing the Company's internal reporting systems. A further meeting of the Board was held on December 9, 2010 at which the Board established a committee of all the independent directors of the Board (the "Executive Committee") to oversee and direct the Company's Internal Review.

Mandate of Executive Committee:

The mandate of the Executive Committee encompassed the following tasks:

  a) Conduct a complete review of all of the books of the Company, including accounting practices and systems, establish a comprehensive list of all of the liabilities of the Company, and establish the cash position of the Company.
   
  b) Restructure the investor relations and communications function.
   
  c) Conduct a contract review, including crude sales contracts, drilling contracts, substantial purchase contracts and security contracts.
   
  d) Review the management structure of the Company including all operational structures in the Company, and complete a comprehensive review of all roles and responsibilities of each position.
   
  e)  Review ANH and Ecopetrol contracts to include environmental, commitments and obligations, permitting and status of operations of all past and current operations within those contracts.
   
  f)  Complete a corporate finance and strategy review.

Summary of Work Performed

As previously disclosed, on December 13, 2010 the Executive Committee engaged the Company's auditors, PricewaterhouseCoopers LLP ("PwC"), to perform certain procedures relating to the Executive Committee's Internal Review. The Company also engaged Mr. Gregg Vernon, an external consultant to the Company since September, 2009 and a petroleum engineer with over 30 years' experience in various executive positions, to assist the Executive Committee with its due diligence investigations.  Mr. Mike Davies, the Company's Chief Financial Officer, was also requested to assist the Executive Committee with executing its mandate.

On December 14, 2010 the Executive Committee met with representatives of GMP Securities L.P. ("GMP") to gain an understanding of the general market perception of the Company. On January 7, 2011 the Executive Committee formally engaged GMP to provide the Executive Committee with a summary of market views of the Company and recommendations with respect to the Company's corporate governance, capital structure and financial reporting, as well as strategic opportunities available to the Company.

After completing a review of production reports respecting the Company's Cubiro area, Mr. Davies sent an e-mail on the afternoon of December 22, 2010 to Mr. Vernon and certain members of the Company's Executive Committee and copying the Company's auditors and in-house legal team, advising them that irregularities had been identified in the reporting of production results in the Cubiro area.  Mr. Davies expressed his concern and advised that he was in the process of attempting to determine the reasons for, and to quantify the effects of, these irregularities on the previously publicly disclosed production results of Alange, such investigations to include obtaining further explanation of the reporting differences from management in Bogota.  Later that day, Mr. Vernon sent an e-mail to the Executive Committee, advising that he believed there was insufficient information to conclude that there had been errors in reporting and recommending that investigations be completed before making any conclusions. At this point, the Company's audit committee and Executive Committee had not yet concluded that the Q3 MD&A production disclosure was inaccurate, as they required more complete information. Similarly, the scope of engagement of the Executive Committee and its professional advisors had not originally been specifically directed at reviewing production disclosure in the Q3 MD&A as the Company was not then aware that such disclosure was inaccurate; however, the scope of the Internal Review included gaining an understanding of the then current production reporting process and how the Company reconciled financial reporting results to actual production reported to the Colombian authorities for royalty purposes. The Company's auditors were also requested to provide internal control observations identified through the course of their inquiries.

At a meeting of the Executive Committee held on January 12, 2011, PwC reported its findings and recommendations with respect to the matter of the Company's production reporting and its preliminary findings on other aspects of its scope of work. At that meeting, the Executive Committee reviewed and considered the information it had received from PwC, Mr. Vernon, Mr. Davies and Mr. Luis Giusti Sr. (then the Company's Chief Executive Officer) with respect to the results of the due diligence investigations to that date, including the finding that the Q3 MD&A production disclosure was based on capacity rather than production. At the meeting, the Executive Committee appointed Mr. Vernon as Interim Chief Operating Officer, and tasked him with the responsibility to conduct a review of the Company's internal controls and systems as well as the implementation of systemic and management adjustments required based on the results of the Company's internal review process.

Prior to opening of markets on January 13, 2011, the Company issued a news release announcing the amended production numbers for its Q3 MD&A, the formation of the Executive Committee and the appointment of Mr. Vernon as Interim Chief Operating Officer. (Please refer to the Company's press release of January 13, 2011 for a full description of the amendment and announcement of the Internal Review.)

On January 13, 2011 the Company also filed an amended management's discussion and analysis for the third quarter 2010 (the "Amended Q3 MD&A") and Chief Executive Officer and Chief Financial Officer certifications with respect thereto. There was no requirement to re-file the Company's unaudited consolidated financial statements for the three and nine month periods ended September 30, 2010 previously filed on SEDAR since information set forth therein was based on actual production numbers and sales volumes rather than production capacity.

As previously disclosed, the Company had, through the Internal Review on behalf of the Executive Committee, identified at that time material weaknesses in its internal controls and tasked Mr. Vernon with the responsibility to conduct a review of the Company's internal controls and systems as well as the implementation of systemic and management adjustments.  Specifically, the Internal Review found that:

  1. the Company did not maintain effective operational control to determine its production;

  2. the Company did not maintain adequate controls over lines of communication between operational staff and management to assist in managing cash flow and to obtain a full understanding of the Company's current working capital position;

  3. the Company did not maintain adequate controls for the reliable sharing of information between the operational staff and finance staff;

  4. the Company did not maintain effective controls to ensure that material sales of assets of the Company are subject to a formal approval process;

  5. the Company did not maintain effective procedures with respect to competitive awarding of contracts to ensure the proper approval and documentation of significant contracts; and

  6. the Company did not maintain adequate controls over the timely communication between departments of information relating to issues that may impact the Company's financial reporting.

On January 19, 2011 GMP reported to the Executive Committee on the results of its review; after which they recommended a financing to the Board to ensure that exploration costs could be covered and to reduce the Company's debt, allowing it to strengthen its immediate and long-term financial position.  GMP then proposed to the Board a C$50 million (later increased to C$60 million and ultimately, through the exercise of an over-allotment option, C$70 million) bought deal financing (the "Offering"). Following receipt of the report of GMP and deliberation of, among other things, the recommendations of GMP (and those of its professional advisors previously received) and the results (to date) of the Internal Review, on January 19, 2011 the Company issued a news release updating the market on actions taken or to be undertaken by the Executive Committee on behalf of the Company.  These included a full analysis of the strategic opportunities available to the Company including development of the Company's portfolio of core assets, joint ventures and the sale of non-core assets.  (Please refer to the Company's press release of January 19, 2011 for a full description of the organizational, operational and strategic initiatives encompassed in the Internal Review.)

The Company also announced, in addition to the Offering, that, at the request of the Board, Mr. Giusti Sr. had stepped down as Chief Executive Officer and chair of the Board, but remained as a board member.  Mr. Vernon, the Company's Interim Chief Operating Officer, would henceforth act in the capacity of Chief Executive Officer, a position that was permanently filled in April, 2011. The Company stated that the board would also ensure it has the resources available to oversee the execution of the strategic plan that was being implemented under new leadership and a new management team. The Company also announced that each of Mr. Jose Luis Acevedo and Mr. Luis Urdaneta, both Executive Vice Presidents of the Company, had been relieved of their responsibilities.

Subsequent to January 19, 2011, the Executive Committee formally met thrice (on January 21, 2011, March 2, 2011 and April 26, 2011) to receive updates from Mr. Vernon and Mr. Davies on their investigations and actions taken to date.  Members of the Executive Committee often discussed issues amongst themselves outside of the context of formal committee meetings.

On March 7, 2011 the Company provided another update to the market on the continued Internal Review led by the Executive Committee, which detailed steps taken to terminate uneconomic contracts, reduce general and administrative ("G&A") expenses and pay down debt.  It also provided an update on production and announced the appointment of Ian Mann to the Board.  (Please refer to the Company's press release of March 7, 2011 for a full description of the update provided by the Company.)

On April 7, 2011 the Company provided another update to the market, which, among other things, announced the appointment of Mr. Luciano Biondi Golinucci (who had been acting as an advisor to Mr. Vernon to that point in the execution of his duties as acting Chief Executive Officer and under the Internal Review) as its Chief Executive Officer and the appointment of Mr. Jaime Perez Branger, a director of the Company, as Executive Chairman of the Board.  As well, the appointment of Camilo Valencia as an advisor to the Board was announced, as was the appointment of Messrs. Serafino Iacono and Miguel de la Campa as directors, replacing Mr. Horacio Santos and Mr. Giusti Sr., each of whom had tendered their resignation from the Company's Board. (Please refer to the Company's press release of April 7, 2011 for a full description of the update provided by the Company.)

On April 26, 2011, the Executive Committee met to receive oral reports from Messrs. Vernon and Davies on the progress to date of the Internal Review.  At the end of the meeting, the Executive Committee resolved that it was satisfied that the Internal Review had, to the best of their knowledge, identified all material issues regarding the Company's internal controls and procedures, management systems and corporate governance practices and that the Executive Committee had taken appropriate steps to address or commence addressing such issues.  The committee resolved to report to the Board at its next meeting (held on April 29, 2011) its conclusions, as well as its recommendation that the Internal Review be concluded and the Executive Committee disbanded.  On April 29, 2011, the Board accepted the Executive Committee's recommendations and resolved to implement the recommendations and to disband the Executive Committee.

Conclusions of Executive Committee and Recommendations Made or Actions Taken

Set out below are: (a) the significant issues identified during the course of the Internal Review, (b) the actions taken to resolve such identified issues, (c) the Executive Committee's view and recommendations with respect to the resolution of the issues, and (d) the procedure going forward.  The list below is not an exhaustive list of all of the activities, work and recommendations of the Executive Committee.  Readers are also referred to the 2010 Financial Statements and 2010 MD&A, which contain further details on some of these matters.

A.  STREAMLINE AND RENEW FOCUS OF CORPORATION'S BUSINESS

The following changes were implemented at the recommendation of the Executive Committee:

  • Recapitalized balance sheet with the proceeds of the Offering to repay approximately US$31 million of bank debt and to, among other things, provide funding for exploration and development of the Company's core assets in 2011.

  • Directed an immediate decrease in ongoing G&A expenses through, ultimately, a staff reduction of 10 senior managers, 20 support staff and 19 technical consultants in Colombia.  Additionally, G&A in 2010 included US$1.8 million of fees to consultants and advisors to assist the Company in local debt financings that the Company does not anticipate incurring in 2011 or thereafter.

  • Identified the Company's core oil assets on which to focus its endeavours - Cubiro, La Punta, Topoyaco, Santa Cruz, Mecaya, while identifying non-core assets to be disposed of or farmed out, in particular the gas assets and the Las Quinchas heavy oil interest.

B.  MANAGEMENT RESTRUCTURING

The following management changes, many of which were summarized above, were implemented at the recommendation of the Executive Committee:

  • January 13, 2011: Mr. Vernon was appointed the Company's Interim Chief Operating Officer.

  • January 17, 2011: Mr. Jose Luis Acevedo and Mr. Luis Urdaneta, both Executive Vice Presidents of the Company, were relieved of responsibilities.  Mr. Acevedo's was effective January 20, 2011.

  • January 19, 2011: Mr. Giusti Sr. stepped down as Chief Executive Officer and Mr. Vernon commenced acting in the capacity of Chief Executive Officer.

    In addition, the Executive Committee hired two experienced oil and gas industry consultants to support the implementation of the strategic plan initiatives: Mr. Biondi to focus on improvements to increase production from the Company's core assets and provide assistance and advice to Mr. Vernon in the execution of his duties, and Mr. Francisco Bustillos to work closely with the Company's Chief Financial Officer to lead the implementation of improved internal controls, processes and management systems in the Company's Colombian operations.

  • April 7, 2011: Mr. Biondi appointed Chief Executive Officer, with Mr. Vernon remaining as Interim Chief Operating Officer. Mr. Camilo Valencia appointed to act as an advisor to the Board and management.

Additionally, the Executive Committee directed that senior management from the Company's Canadian offices, including the General Counsel and Chief Financial Officer, spend significant additional time on location in the Company's Bogota offices, as well as continue to foster increased and improved interaction between the Toronto and Bogota offices.

At the middle management and staff levels, management was also directed to identify opportunities, wherever possible, to upgrade staffing, to continue to review the organizational structure for streamlining and to implement a focused training program where needed.  These processes are all well underway and are already resulting in improvements in functionality and morale.

C.  ADDRESS PREVIOUSLY DISCLOSED CONTROL WEAKNESSES

1.   The Company did not maintain effective operational control to determine its production.

As previously disclosed, work performed in the Internal Review determined that the production figures included in the MD&A for the third quarter 2010 needed to be revised.  This was as a direct result of the Internal Review and the work undertaken at the direction of the Executive Committee, including but not limited to, Mr. Vernon being directed to investigate and validate production data for 2010 including comparison to Colombian Ministry of Mines and Energy ("MME") filings, the Company's auditors checking the accuracy of the findings of Mr. Vernon by comparing the numbers he determined against MME filings, and requesting Mr. Giusti Sr. to explain his understanding of the basis of the previous disclosure of Company.  As a result of this work, among other steps, the internal production reporting system of the Company was revised to ensure production reporting is now, on a monthly basis, communicated to all senior management, the Board of Directors and reconciled to the certified filings with the MME.  These filings are generated by the Company for delivery to the MME, which then independently verifies them, as they form the basis for royalty calculations.  As such, they are regarded as the most reliable source of production information in Colombia.

2.   The Company did not maintain adequate controls over lines of communication between operational staff and management to assist in managing cash flow and to obtain a full understanding of the Company's current working capital position.

The following significant changes were made at the recommendation of the Executive Committee:

  • detailed review of working capital performed by Messrs. Davies and Bustillos;

  • continuing weekly treasury reporting;

  • a treasury analyst was appointed, responsible for short-term cash planning forecast process;

  • prepared 2011 cash flow monthly forecast, which will be continually modified as new information becomes available regarding key assumptions and new developments; and

  • implemented regular telephone/e-mail communications between Mr. Davies and Mr. Bustillos, as well as weekly meetings augmented by regular travel to Colombia by the Chief Financial Officer.

Additionally, a monthly financial reporting process will be implemented in 2011 to increase the availability of timely financial information to management and the Board so that they have increased flexibility to deal with any issues that may arise. The Company's auditors have observed the process and have provided advice regarding alternatives as management implemented improvements recently to the financial close and "procure to pay" processes.

3.   The Company did not maintain adequate controls for the reliable sharing of information between operational staff and finance staff.

As mentioned above, the Executive Committee recommended and management has implemented increased visits between Colombia and Toronto, and the newly appointed members of management in Colombia are in frequent contact with the Toronto office, with communication emphasized.  This has also led to an initiative for management to map core processes in the Company and implement improved processes, including communication and training for all staff involved in the process.

4.   The Company did not maintain effective controls to ensure that material sales of assets of the Company are subject to a formal approval process.

In addition to putting new members of management into place who are cognizant of, and committed to, approval guidelines, which has included implementing an expanded delegation of authorities matrix, the Executive Committee took the steps described in greater detail below under "Contract Awarding".

5.   The Company did not maintain effective procedures with respect to competitive awarding of contracts to ensure the proper approval and documentation of significant contracts.

New purchasing and contract management policies and procedures have been developed and have been and will continue to be communicated to all staff involved in the process, and a contracts review committee has been implemented to review all new contracts on a quarterly basis to ensure compliance with policies.  Additionally, please see the actions described in greater detail below under "Contract Awarding".

6.  The Company did not maintain adequate controls over the timely communication between departments of information relating to issues that may impact the Company's financial reporting.

On the recommendation of the Executive Committee, the Company's auditor was engaged to conduct a review of the financial close process and provide observations and advice on short-term solutions.  As well, the Colombian finance staff was reorganized and Mr. Bustillos appointed as the Vice President of Finance in Bogota to lead longer-term financial close process improvements, which includes the Canadian and Colombian finance teams collaborating on planning and implementing these improvements.

D.  CONTRACT AWARDING

In the Internal Review led by the Executive Committee, it was determined that:

  • The Company had established procedures for the awarding of contracts outlined in the "Contracting General Procedures" dated January 2010.

  • The Internal Review identified that the established processes and controls were not consistently applied.

  • A further review of contracts identified evidence of irregularities or improprieties with certain contracts.

As a result of these findings, the following further actions, which were only recently completed, were taken at the recommendation of the Executive Committee:

  • Contract summaries were prepared for all significant contracts presented by management.

  • The Executive Committee directed Messrs. Vernon and Davies and members of the General Counsel's office to review all contracts provided, confirm the summaries and to assess whether the contract had commercial terms, satisfied a valid need and provided the Company with commercial benefit, and whether there were any indications that those responsible for the contract would have benefited personally from it.

  • Certain Colombian contracts, including but not limited to Beta, CODIS, TSP, Gesca, and Parabola, were identified for further investigation, which included:

    • Interviewing the personnel involved in negotiating and approving the contracts in question.

    • Where considered necessary delegates of the Executive Committee met with the third parties to discuss the terms and negotiation process.

    • Communications, including e-mails of several former staff members were reviewed in respect of contracts for which they were responsible.

The investigation resulted in the Beta (drilling services), CODIS ("pipeline without a pipe" arrangement), TSP (also a "pipeline without a pipe" arrangement), Gesca (geoscientific services), and Parabola (Colombian public relations) contracts being determined to have no ongoing commercial benefit to the Company.  As well, the employment of three Colombian-based senior employees, along with that of a member of middle management, was terminated for cause due in part to their involvement in respect of these contracts.

The Company's Colombian lawyers have recently filed requests with the Colombian Ministry of Justice to investigate the CODIS contract and matters related to the Beta contracts, including the possible involvement of some Colombian-based employees.  Additionally, notices of arbitration have recently been filed in respect of the Beta master drilling contract and rig sale agreement.

The Company's debt agreements were also reviewed, including the Multibank agreement (a Colombian debt agreement that included financial covenants not presented to or approved by the Board), and as a result management has communicated the requirement to local finance management in Bogota for Chief Financial Officer and Board approval of all new debt or changes to existing debt agreements, including the covenants they contain.  The Multibank loan was one of the debt arrangements that were paid down from the proceeds of the Offering; as a result, the Company is no longer bound by these covenants.

The additional investigation of contracts determined that the remaining contracts that were reviewed are all of commercial benefit to the Company and there is no indication of improprieties on behalf of those that were involved in the negotiation or awarding of the contracts.  Nonetheless, and as discussed above, contracting procedures, which have been reviewed and approved by the Chief Financial Officer, have been revised and communicated to all personnel involved in the procurement function, including the requirement that all contracts above certain thresholds must go through the process regardless of whether the request is regarded to be a "rush".

Finally, given the contracting issues noted above, the Executive Committee directed management to conduct a review for any indication of payments to public officials or other Corruption of Foreign Public Officials Act ("CFPOA") violations.  Included in this review were social programs and donations; the review did not identify any indicators of CFPOA violations.  Steps were also taken to ensure that the current senior management team is aware of the CFPOA legislation and management was also mandated to ensure compliance with the legislation.

E.  CORPORATE GOVERNANCE AND INVESTOR RELATIONS

Many of the steps and changes outlined above are intended to improve the Corporation's corporate governance.

GMP advised, as part of its review, that there was a market perception that many of the Company's now former managers had a poor grasp of Canadian corporate governance and public disclosure guidelines.  Although, as a result of the steps outlined above, many new members of management are in place, the Executive Committee has recommended that all members of senior management and the Board be enrolled in the Institute of Corporate Directors, in order to take advantage of the education programs it offers and has mandated that all such persons should take at least one course with the institute in 2011.  The committee has also recommended that the General Counsel's office undertake seminars in Colombia for middle and upper management on public disclosure and corporate governance best practices.  These seminars will be conducted in the second half of 2011.

While the steps outlined immediately above are focused on improving corporate governance practices, it is the Executive Committee's belief that these improved practices will also improve the clarity, accuracy and consistency of communications by the Company to the market.  In this regard, the Company has renewed the mandate of its investor relations consultant, The Capital Lab Inc., and fully engaged it in providing the Company with a comprehensive plan to achieve and maintain the communications and investor relations objectives identified here.

Conclusion

Although the Internal Review and the Amended Q3 MD&A that resulted from it have been difficult for the Company and its shareholders, it has, in the view of the Executive Committee and the Board, proven to be a process that has also sharpened the Company's focus on its core assets and on delivering value to shareholders, a process that can truly get underway with the formal close of the Internal Review.  While the Internal Review, by its nature, has identified clear areas for improvement, and restoring investor confidence in Alange Energy remains the foremost commitment of the board of directors, it has also provided an opportunity for the Company to strengthen its balance sheet, controls, structure and perhaps most important of all, change its culture to one based on teamwork.

About Alange Energy Corp.

Alange Energy is a Canadian-based oil and gas exploration and production company, with working interests in 19 properties in five basins in Colombia. Further information can be obtained by visiting our website at www.alangeenergy.com.

All monetary amounts in U.S. dollars unless otherwise stated. This news release contains certain "forward-looking statements" and "forward-looking information" under applicable Canadian securities laws concerning the business, operations and financial performance and condition of Alange Energy. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and reserve life of the various oil and gas projects of Alange Energy; the estimation of oil and gas reserves; the realization of oil and gas reserve estimates; the timing and amount of estimated future production; costs of production; success of exploration activities; and currency exchange rate fluctuations. Except for statements of historical fact relating to the company, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as "plan," "expect," "project," "intend," "believe," "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Many of these assumptions are based on factors and events that are not within the control of Alange Energy and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions, risks relating to international operations, fluctuating oil and gas prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the oil and gas industry, failure of plant, equipment or processes to operate as anticipated. Although Alange Energy has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Alange Energy undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.

Statements concerning oil and gas reserve estimates may also be deemed to constitute forward-looking statements to the extent they involve estimates of the oil and gas that will be encountered if the property is developed. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Estimated values of future net revenue disclosed do not represent fair market value.

Neither 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 this news release. 

SOURCE Alange Energy Corp.

For further information:

Michael Davies, Chief Financial Officer
Peter Volk, General Counsel & Secretary
416-360-7915

Miranda Smith
Investor Relations Representative, The Capital Lab Inc.
647-428-7422

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Alange Energy Corp.

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