Petroamerica Announces 2014 Fourth Quarter Results and Provides an Operational Update

CALGARY, April 14, 2015 /CNW/ - Petroamerica Oil Corp. (TSX-V: PTA) ("Petroamerica" or the "Company"), a Canadian oil and gas company operating in Colombia, is pleased to announce the financial and operating results for the three and twelve months ended December 31, 2014, and to provide an operational update on the Company's activities in Colombia.

Copies of the Company's Management Discussion and Analysis ("MD&A"), Audited Financial Statements and Annual Information Form ("AIF") have been filed with the Canadian Securities Regulatory authorities and can be viewed or downloaded at the Company's website at www.petroamericaoilcorp.com or at www.sedar.com. The financial results for all periods presented are in United States dollars unless otherwise indicated.

2014 highlights:

  • Closed the strategic corporate acquisition of Suroco Energy Inc. adding significant new acreage, reserves and production in the Putumayo basin of Colombia;
  • Increased Proved plus Probable reserves ("2P") from 4.9 million barrels at the end of 2013 to 8.1 million barrels at the end of 2014, an increase of 66%;
  • Increased the total 2P reserve life index from 2.1 years at the end of 2013 to 4.1 years as at December 31, 2014;
  • Generated revenue (before royalty) for the year of approximately $216 million with an operating netback of approximately $50 per barrel and an average realised price of $94.55 per barrel;
  • Achieved average daily production of 6,246 barrels of oil equivalent per day ("boepd");
  • Drilled the Langur-1x oil discovery on the LLA-19 Block which is currently on long-term test;
  • Farmed down a 44.5% working interest ("WI") and acquired an additional 5% interest in the LLA-10 block, ultimately retaining a 50% WI. The farmee will pay 89% of the costs of the next exploration well;
  • Succesfully bid for the Putumayo exploration block, PUT-31, in the 2014 Colombia Bid Round in a consortium with Gran Tierra Energy Inc.

Quarterly highlights include:

  • Despite sliding oil prices in the fourth quarter of 2014, generated over $37 million in revenue (before royalty) realising a price of approximately $70 per barrel and a net back of $28 per barrel;
  • Achieved an average daily production of 5,988 boepd;
  • Closed the year with over $73 million in cash.

Financial and Operating Results

The following table presents the highlights of Petroamerica's financial and operating results.

(in $000 US except share, per share or unless otherwise noted)


Q4 2014


Q3 2014


Year ended

 December 31,

 2014


Year ended

 December 31,

 2013










Oil revenue – net of royalties

$

31,540

$

43,150

$

174,217

$

203,255

Funds flow from operations

$

16,719

$

1,048

$

62,616

$

108,790

Funds flow per share- basic

$

0.02

$

0.00

$

0.09

$

0.19

Funds flow per share- diluted

$

0.02

$

0.00

$

0.09

$

0.18










(Loss) income for period

$

(54,121)

$

(7,947)

$

(38,027)

$

53,877

Total comprehensive (loss) income 

$

(51,030)

$

(14,182)

$

(43,221)

$

49,357

(Loss) income per share -  basic 

$

(0.06)

$

(0.01)

$

(0.05)

$

0.09

(Loss) income per share -  diluted

$

(0.06)

$

(0.01)

$

(0.05)

$

0.09

Total assets

$

290,430

$

361,906

$

290,430

$

213,171

Total cash and short-term investments

$

73,296

$

63,221

$

73,296

$

66,631

Notes payable

$

29,933

$

30,718

$

29,933

$

31,587

Shareholders' equity

$

180,992

$

229,246

$

180,992

$

136,098










Exploration costs

$

1,232

$

715

$

1,586

$

12,803

Capital expenditures - excluding acquisition

$

19,449

$

9,564

$

46,586

$

73,942

Finding & development costs - 3 year /boe





$

26.54

$

23.63










Common shares outstanding (000's)


872,521


871,751


872,521


589,908

Weighted average shares outstanding:  









Basic (000's)


872,156


825,877


722,271


579,818

Diluted (000's)


872,156


825,877


722,271


602,797













Average production - bopd


5,988


6,009


6,246


5,451

Selling price $/bbl

$

70.07

$

94.59

$

94.59

$

105.13

Royalty $/bbl

$

(10.56)

$

(18.57)

$

(18.41)

$

(8.80)

Average transportation costs $/bbl

$

(14.36)

$

(14.87)

$

(16.43)

$

(17.46)

Average production cost $/bbl

$

(17.38)

$

(15.46)

$

(10.05)

$

(3.24)

Operating netback $/bbl

$

27.77

$

45.69

$

49.70

$

75.63

Cash netback$/bbl

$

12.90

$

39.10

$

39.47

$

67.13










Share trading 









High

$

0.44

$

0.44

$

0.44

$

0.40

Low

$

0.14

$

0.28

$

0.14

$

0.21

Close

$

0.14

$

0.30

$

0.14

$

0.35

Trading volume (000's)


127,071


171,755


448,586


259,425

Fourth Quarter Financial Summary

For the three months ended December 31, 2014, the Company reported $37 million in revenue (before royalties) from the sale of 530 thousand barrels of oil equivalent ("boe").  The realized sales price was $70.07 per boe generating an operating netback of approximately $28 per barrel.

For the fourth quarter of 2014, the Company's net loss was $54.1 million ($0.06 per share diluted), a result of lower realised oil prices and an impairment charge of $70 million as a result of carrying value adjustments on assets held due to the 2014 year-end reserves evaluation that was primarily driven by lower oil price projections for future years. This charge, which was not seen in 2013, coupled with the lower realized price of oil in the fourth quarter of 2014, were strong contributing factors behind the Company having a comprehensive loss of approximately $43 million for the current year, versus comprehensive income of approximately $49 million for fiscal 2013.  The Company's capital expenditures for the fourth quarter were $19 million, all invested in Colombia. As at December 31, 2014, the Company held 42 thousand barrels of oil ("Mbbls") in inventory.

Current Financial Status

The Company currently holds approximately $55 million in cash and an additional $11 million in restricted cash.  It also has a $35 million Canadian dollar denominated debenture outstanding, currently valued at approximately $28 million, with a due date of April 19, 2015. It is the Company's intention to pay the debenture off in full at the maturity using cash-on-hand.  The Company is also in advanced discussions with several parties to establish a new debt facility.  The Company expects to finalise this facility and have it in place by the end of the second quarter of 2015.  The Company has no other debt outstanding.

Updated 2014 Reserves Information

Updated reserves information as of December 31, 2014 prepared by independent reserves evaluator GLJ Petroleum Consultants Ltd. has been included as part of the MD&A for the year ended December 31, 2014.  Additional reserves information as required under NI 51-101 and updated net present value figures revised from the February 25, 2015 press release have also been included in the Company's AIF, which has been filed on SEDAR.

2015 First Half Guidance

The Company has revised its capital spending projection for the first half of 2015 from $20 million as announced on January 12, 2015 to $12.9 million.  This reduction is due to a combination of movement of the drilling of the Langur-2 appraisal well (on the LLA-19 block) to the third quarter of 2015, and the removal of the Calatea-2 exploration well on the (El Porton block) from the current drilling plans.  The Company was notified by its farmin partner on the El Porton block that it intended to withdraw from the El Porton farmout agreement and not drill the Calatea-2 exploration well.  Petroamerica is presently evaluating all options that are available to protect its interests in the block. 

In addition, due to a combination of the delay in the Langur-2 well and a number of operational issues, including pump failures on key production wells on both the Las Maracas and Suroriente fields, the Company projects that production for the first six months of 2015 will average approximately 4,200 boepd, down from the 5,400 boepd that had been previously projected and announced in January 2015. In general, cost control objectives are the primary focus in all the producing fields, which has impacted the normal production maximization measures that would occur under a stronger oil price environment.  The Company estimates that 75% of this shortfall is a result of the revised drilling plan, and the higher than projected downtime resulting from temporary problems with downhole pumps and production reduction related to  the current cost-reduction focus of our well and infrastructure operations.

A summary of activity expected to take place over the first six months of 2015 is provided below:

Prospect/Well

Activity Type

Block

Working

 Interest

Timing/Status

La Casona-2

Long-Term Test

El Eden

40%

Continuing

Langur-1

Long-Term Test

LLA-19

50%

Continuing

Operations Update

Company WI production (before royalties) for the fourth quarter averaged 5,988 boepd, exiting the year at 5,441 boepd for December 31, 2014. First quarter 2015 production averaged 4,587 boepd, with 2,546 boepd coming from the Llanos Basin and 2,041 bopd from the Putumayo Basin.

After commencing long-term testing with an electro-submersible pump ("ESP") in January, the  Langur-1X exploration well (refer to the Company's press release of January 12, 2015) produced for a period of 33 days before being shut-in due to an ESP failure in mid-February.  The well was returned to production on March 26, after a delay that allowed negotiation of a reduced daily tariff, with the same rig used to drill the well.  After restarting the well, the average rate over the most recent 17 days has been 466 barrels of oil per day ("bopd") and a watercut of 55%, or 208 bopd net to the Company before royalty.  The ESP is currently being operated at a restricted rate to minimize fluid handling costs while continuing to evaluate the long-term production potential.

Operations have been suspended at the Quinde-3 well, after a workover that included a fracture treatment and installation of sand control measures failed to establish inflow from the well despite early indications of connection with the reservoir.  A go forward plan is under discussion that will balance cost control concerns with evaluation of the reasons for the lack of inflow from a zone that, by log analysis, appears to have similar reservoir properties and oil saturations to other wells in the Quinde producing field. 

PETROAMERICA OIL CORP.
Consolidated Statements of Financial Position




As at 



As at 




December 31,



December 31,

(thousands of United States dollars)



2014



2013








Assets 







Current assets








Cash and cash equivalents


$

73,296


$

63,737


Short-term investments



-



2,894


Trade and other receivables



13,825



42,754


Prepayments and deposits



463



508


Crude oil inventory



2,096



348




89,680



110,241








Non-current assets








Restricted cash 



11,065



5,170


Property, plant and equipment



134,711



72,889


Exploration and evaluation assets



54,974



24,871




200,750



102,930

Total assets 


$

290,430


$

213,171








Liabilities 







Current liabilities 








Current equity tax 


$

-


$

377


Current income tax



2,459



19,546


Accounts payable and accrued liabilities



38,803



15,400


Notes payable



29,933



-




71,195



35,323








Non-current  liabilities 








Stock appreciation rights liability



1,554



2,085


Notes payable



-



31,587


Deferred tax liability



26,750



2,818


Decommissioning liabilities



9,939



5,260

Total liabilities 



109,438



77,073








Shareholders' equity








Share capital



226,492



138,936


Contributed surplus



24,638



24,079


Translation reserve



(6,366)



(1,172)


Deficit



(63,772)



(25,745)




180,992



136,098

Total liabilities and shareholders' equity 


$

290,430


$

213,171

 

 

PETROAMERICA OIL CORP.
Consolidated Statements of income (loss) and comprehensive income (loss)




Year ended December 31

(thousands of United States dollars, except per share amounts)


2014



2013

Revenue








Oil revenue - net of royalties


$

174,217


$

203,255




174,217



203,255








Expenses















Production



(22,981)



(6,833)


Transportation



(37,566)



(36,835)


Purchased oil



(1,625)



(3,434)


Exploration and evaluation



(1,586)



(12,803)


Depletion and depreciation



(45,119)



(31,928)


 Impairment of property, plant and equipment



(69,869)



(3,228)


 General and administration



(18,822)



(13,338)


Transaction costs



(8,495)



-


Share-based payments



(769)



(2,998)




(206,832)



(111,397)


Finance and other



(6,021)



(5,197)


Foreign exchange gain 



1,345



5,186




(4,676)



(11)

Income (loss) before income taxes



(37,291)



91,847

Current income tax expense



(8,556)



(28,173)

Deferred tax recovery (expense)



7,820



(9,797)

Net (loss) income for the period



(38,027)



53,877

Other comprehensive loss 







Items that will be reclassified subsequently to income or (loss):







Reserve on translation of foreign operations 



(5,194)



(4,520)

Total comprehensive (loss) income 


$

(43,221)


$

49,357

Basic income (loss) per share


$

(0.05)


$

0.09

Diluted income (loss) per share


$

(0.05)


$

0.09

Weighted average number of basic 








common shares outstanding



722,270,745



579,818,429

Weighted average number of diluted 








common shares outstanding



722,270,745



602,796,899

 

 

PETROAMERICA OIL CORP.
Consolidated Statements of Changes in Equity

(thousands of United States dollars)



Share Capital 



Contributed

 surplus 



Translation

 reserve 



Deficit



Total  equity 

Balance at January 1, 2014


$

138,936


$

24,079


$

(1,172)


$

(25,745)


$

136,098

Net loss for the year



-



-



-



(38,027)



(38,027)

Other comprehensive loss



-



-



(5,194)



-



(5,194)

Total comprehensive loss 



-



-



(5,194)



(38,027)



(43,221)

Issue of share capital 



79,300



-



-



-



79,300

Warrants exercised



8,273



(495)



-



-



7,778

Stock options exercised



172



(65)



-



-



107

Share-based payments



-



1,119



-



-



1,119

Cancellation of shares



(189)



-



-



-



(189)

Balance at December 31, 2014


$

226,492


$

24,638


$

(6,366)


$

(63,772)


$

180,992

















(thousands of United States dollars)



Share Capital 



Contributed

 surplus 



Translation

 reserve 



Deficit



Total  equity 

Balance at January 1, 2013


$

136,417


$

23,630


$

3,348


$

(79,622)


$

83,773

Net income for the year



-



-



-



53,877



53,877

Other comprehensive loss



-



-



(4,520)



-



(4,520)

Total comprehensive (loss) income 



-



-



(4,520)



53,877



49,357

Warrants exercised



2,426



(361)



-



-



2,065

Stock options exercised



93



(35)



-



-



58

Share-based payments



-



845



-



-



845

Balance at December 31, 2013


$

138,936


$

24,079


$

(1,172)


$

(25,745)


$

136,098

 

 

PETROAMERICA OIL CORP.
Consolidated Statements of Cash Flows




Year ended December 31

(thousands of United States dollars)



2014



2013

Operating activities 







Net income (loss) for the year


$

(38,027)


$

53,877

Items not involving cash:








Share-based payments



769



2,998


Depletion and depreciation



45,119



31,928


Unrealized foreign exchange gain



(8,677)



(6,634)


Deferred tax (recovery) expense 



(7,820)



9,797


Accretion and amortization



1,901



1,062


Abandonment expenditures



(518)



-


Impairment of property, plant and equipment



69,869



3,228


Impairment of exploration and evaluation assets



-



12,534




62,616



108,790


Net changes in non-cash working capital



24,593



(2,734)

Cash provided by operating activities



87,209



106,056

Investing activities 







Exploration and evaluation expenditures



(16,068)



(16,375)

Property, plant and equipment expenditures



(27,564)



(53,465)

Restricted cash investments



-



(1,376)

Corporate acquisition, net of cash acquired



(10,777)



-

Cash used in investing activities



(54,409)



(71,216)

Financing activities 







Repayment of long-term debt



(28,500)



-

Stock options exercised



107



58

Warrants exercised



5,341



2,065

Cancellation of shares



(189)



-

Cash (used in) provided by financing activities



(23,241)



2,123

Increase in cash and cash equivalents during the period



9,559



36,963

Cash and cash equivalents, beginning of year



63,737



26,774

Cash and cash equivalents, end of year


$

73,296


$

63,737

 

 

Forward Looking Statements:

This news release includes information that constitutes "forward-looking information" or "forward-looking statements". Statements relating to "reserves" or "resources" are deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the resources and reserves described can be profitably produced in the future. More particularly, this news release contains statements concerning expectations regarding regulatory and partner approvals on the Company's development plan, drilling and operational opportunities and the timing associated therewith, test results and the timing thereof, anticipated reserve life of the combined Company's assets, potential future acquisitions and other statements, expectactions, beliefs, goals, objectives, assumptions and information about possible future conditions, results of operations or performance, the use of available cash on hand in addition to the potential exploration and development opportunities and expectations regarding regulatory approval and the overall strategic direction of the Company.  The forward-looking statements contained in this document, including expectations and assumptions concerning the obtaining of the necessary regulatory approvals, including ANH approval, and the assumptions, opinions and views of the Company or cited from third party sources, are solely opinions and forecasts which are uncertain and subject to risks.

A multitude of factors can cause actual events to differ significantly from any anticipated developments and although the Company believes that the expectations represented by such forward-looking statements are reasonable, undue reliance should not be placed on the forward-looking statements because there can be no assurance that such expectations will be realized. Material risk factors include, but are not limited to: the inability to obtain regulatory approval, including ANH approval, for the transfer of participating interests and/or operatorship for the Company's properties,  the risks of the oil and gas industry in general, such as operational risks in exploring for, developing and producing crude oil and natural gas, market demand and unpredictable shortages of equipment and/or labour, changes or fluctuations in production levels, the size of oil and natural gas reserves or resources; incorrect assessments of the value of acquisitions and exploration and development programs; geological, technical, drilling, production and processing problems; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; fluctuations in oil and gas prices, foreign currency exchange rates and interest rates, and reliance on industry partners. 

Data obtained from the initial testing results at the referenced wells, which may include barrels of oil produced and levels of water-cut, should be considered to be preliminary until a further and detailed analysis or interpretation has been done on such data. The test results disclosed in this press release are not necessarily indicative of long-term performance or of ultimate recovery. The reader is cautioned not to unduly rely on such results as such results may not be indicative of future performance of the well or of expected production results for the Company in the future.

Readers should also note that even if the drilling program as proposed by the Company is successful, there are many factors that could result in production levels being less than anticipated or targeted, including without limitation, greater than anticipated declines in existing production due to poor reservoir performance, mechanical failures or inability to access production facilities, among other factors.

Neither the Company nor any of its subsidiaries nor any of its officers, directors or employees guarantees that the assumptions underlying such forward-looking statements are free from errors nor does any of the foregoing accept any responsibility for the future accuracy of the opinions expressed in this document or the actual occurrence of the forecasted developments.

The forward-looking statements contained in this document are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Use of "boe"

'boe' may be misleading if used in isolation.  Throughout this press release the calculation of barrels of oil equivalent ("boe") is at a conversion rate of 6,000 cubic feet ("cf") of natural gas for one barrel of oil and is based on an energy conversion method at the burner tip and does not represent a value equivalence at the wellhead.

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 this release.

SOURCE Petroamerica Oil Corp.

For further information: Ralph Gillcrist, President and CEO; Colin Wagner, CFO; Tel Bogota, Colombia: +57-1-744-0644, Tel Calgary, Canada: +1-403-237-8300; Email: investorrelations@pta-oil.com, Web Page: www.PetroamericaOilCorp.com

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