Petroamerica Announces 2014 Year-End Reserves Increasing 2P Reserves Year-on-Year by 66%

CALGARY, Feb. 25, 2015 /CNW/ - Petroamerica Oil Corp. (TSX-V: PTA) ("Petroamerica" or the "Company"), is pleased to announce the results of its 2014 year-end independent reserves evaluation. All per barrel reserve figures reported below are Company Working Interest before royalty and on a barrels of oil equivalent ('boe') basis.  All financial amounts are reported in United States dollars unless otherwise stated.

2014 Highlights:

  • Record Company production of 2.3 million boe which is equivalent to 6,271 barrels of oil per day (Company working interest, before royalties) for 2014.
  • Total Proved reserves growth of 42% from 3.1 million boe at year-end 2013 to 4.5 million boe at year-end 2014 (98% light to medium oil).
  • Total Proved plus Probable ('2P') reserves growth of 66% from 4.9 million boe at year-end 2013 to 8.1 million boe at year-end 2014 (97% light to medium oil).
  • Total Proved plus Probable plus Possible reserves growth of 95% from 6.7 million boe at year-end 2013 to 13.1 million boe at year-end 2014
  • Increased Total 2P reserve life index from 2.1 years at year-end 2013 to 4.1 years at year-end 2014.
  • Completed the strategic acquisition of Suroco Energy Inc. ('Suroco') adding considerable reserves growth across all categories and extending the reserves life of the Company.

2014 Year-End Company Interest Reserves
The Company's Colombian reserves were evaluated by independent qualified reserves evaluator, GLJ Petroleum Consultants Ltd. ("GLJ"), and the reserves summarized here are from the independent reserves report prepared by GLJ, with an effective date of December 31, 2014 (the "GLJ Report"). The GLJ Report was prepared in compliance with National Instrument 51-101 (Standards of Disclosure for Oil and Gas Activities) and in accordance with the definitions, standards and procedures of COGE (Canadian Oil and Gas Evaluation) Handbook. A complete filing of the Company's reserves as required by NI 51-101 will be filed on SEDAR with the Company's Annual Information Form.

The following table presents a summary of the Company's oil and gas reserves as of December 31, 2014.

2014 Year-End Reserves Summary (in thousands of boe)

Reserves Category

2013

2014

Total Proved

3,147

4,474

Total Proved plus Probable

4,891

8,133

Total Proved plus Probable plus Possible

6,717

13,124

 

The following table presents a summary of the Company's net present values of future cash flows as of December 31, 2013 and 2014.

2014 Year-End Reserves Net Present Value Summary (in millions)

Reserves Category

2013

2014

Total Proved

$133.9

$89.2

Total Proved plus Probable

$194.8

$175.9

Total Proved plus Probable plus Possible

$260.0

$309.4

Note: Net present values before tax discounted at 10%, calculated using the GLJ January 2015 ICE Brent oil price forecast. Estimated values disclosed above do not necessarily represent fair market value.

 

The oil price forecast used to calculate the net present values can be found on the GLJ website at www.gljpc.com.

Year-End Reserves Reconciliation (in thousands of boe)


Total Proved

Total Proved plus Probable


December 31, 2013

3,147

4,891


Technical Revisions1

100

(1,189)


Extensions

-

-


Exploration Discoveries2

192

544


Acquisitions3

3,324

6,176


Production

(2,289)

(2,289)


December 31, 2014

4,474

8,133


1.

Positive technical revisions were in Las Maracas Field (Proved), downward technical revisions include Las Maracas (Probable), La Casona, Balay, Rumi, and Curiara Fields.  

2.

A new exploration discovery was added at the Langur Field (Llanos 19 Block).

3.

Acquisition of Suroco Energy in July, 2014, adding Putumayo Basin producing and exploration assets.

 

Reserves Discussion

The Company's reserves are located in the Llanos and Putumayo Basins of Colombia.

The Company produced approximately 2.3 million boe during 2014 (98% oil), of which 2.0 million boe were produced from the Company's legacy Llanos assets, and 0.3 million boe were produced from the Putumayo assets that were acquired in 2014.  On a 2P basis, with the acquisition of Suroco in mid-2014 and reserve additions from the Langur exploration discovery, the Company replaced approximately 1.5 times its production and more than offset any negative technical revisions.

On a per barrel basis, the calculated future net present value before tax, discounted at 10%, for the 2P reserves category is $21.63 per boe. The 2P reserve life index, calculated by dividing the total 2P reserve estimate by the forecasted 2P 2015 production volume, is 4.1 years.

Financial Update

The Company currently has approximately $53 million in cash and short-term investments, and using cash-on-hand, intends to pay off a $35 million Canadian dollar denominated debenture at maturity on April 19, 2015.  In order to take advantage of a strong US dollar, the Company has purchased $30 million Canadian dollars for approximately US $24.6 million at an average exchange rate of US $0.8191 for each Canadian dollar.  The Company plans to purchase the final $5 million Canadian dollar tranche prior to the debenture maturity date.

Additionally, the Company is currently engaged in advanced discussions with several parties to establish a new debt facility. It is expected that this new facility will be finalised and in place in the second quarter of 2015.

The Company has purchased puts for 3,000 barrels of oil per day at $50 per barrel ICE Brent for March through May 2015, effectively setting a price floor without limiting the upside in a volatile oil market.

The Company anticipates releasing its 2014 year-end financial statements, management discussion and analysis and annual information form in April of 2015. 

Definitions of Reserve Categories

"Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable.  It is likely that the actual quantities recovered will exceed the estimated proved reserves.

"Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves.  It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

"Possible" reserves are those additional reserves that are less certain to be recovered than probable reserves.  There is a 10% probability quantities actually recovered will equal or exceed the sum of the proved plus probable plus possible reserves.

About Petroamerica:

Petroamerica Oil Corp. is a Canadian oil and gas exploration and production company with activities in Colombia. Petroamerica's shares are listed on the TSX Venture Exchange under the symbol "PTA". A summary of the Company property holdings has been included in the current presentation located at www.PetroamericaOilCorp.com.

Forward Looking Statements:

This news release includes information that constitutes "forward-looking information" or "forward-looking statements". More particularly, this news release contains statements concerning expectations regarding, drilling and operational opportunities and the timing associated therewith, expectations regarding the payment of the outstanding debentures and the source of funding thereto, expectations regarding adding a new debt facility, test results and the timing thereof, reserves information, 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; 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, sources and availability of debt capital and reliance on industry partners. 

Statements relating to reserves are deemed to be forward-looking statements or information, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitable in the future.  There are numerous uncertainties inherent in estimating quantities of reserves, including many factors beyond the control of Petroamerica.  The reserve data included herein represents estimates only.  In general, estimates of economically recoverable oil and natural gas reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary considerably from actual results.  All such estimates are to some degree speculative and classifications of reserves are only attempts to define the degree of speculation involved. The assumptions relating to reserves are contained in the report of GLJ Petroleum Consultants Ltd. for Petroamerica dated effective December 31, 2014.

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.

'boe' may be misleading if used in isolation.  Throughout this press release the calculation of boe is at a conversion rate of 6,000 cubic feet 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: 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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