Petroamerica Announces 2015 Second Quarter Results

CALGARY, Aug. 25, 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 six months ended June 30, 2015, and to provide an operational update on the Company's activities in Colombia.

Copies of the Company's Management Discussion and Analysis ('MD&A') and Interim Financial Statements 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.

Ralph Gillcrist, President and CEO of Petroamerica commented, "The second quarter results reflect the Company's response to the low oil price environment that has prevailed since late last year, where the emphasis was on cash preservation and balance sheet strength. Inevitably, this deferred investment strategy has resulted in lower than expected production levels. In this low price environment, the Company is focused on low cost operations that will enhance production. This work has already commenced at the Las Maracas field, with a work over campaign targeting low watercut production where results have exceeded expectations. At the Cohembi field, the Company has identified a number of low risk workovers and development drilling locations that, subject to partner approval and oil pricing, it will consider implementing.  On the exploration and appraisal front, the Company has a number of exciting high impact drilling activities in the pipeline, including a low-side fault prospect expected to spud in the fourth quarter on the LLA-10 Block, N Sand appraisal drilling on the PUT-7 Block where the environmental impact study has been submitted and drilling is anticipated late in the first quarter of 2016, and the high impact Tinigua prospect expected to spud in the first half of 2016. Petroamerica is largely carried on the LLA-10 and Tinigua wells. Additionally, the integration of PetroNova is progressing smoothly with this acquisition expected to add significant near to mid-term upside to the Company's portfolio."

Financial and Operating Highlights:


  • Announced agreement to acquire the shares of PetroNova Inc. ('PetroNova') This acquisition was completed on July 29, 2015, adding four blocks (two operated) to the Company's portfolio, and production of approximately 350 barrels of oil equivalent per day ('boepd') before royalty;
  • Tightened up the share structure with a ten for one share consolidation shortly after the acquisition of PetroNova;
  • Generated over $18 million in revenue (before royalty) in a challenging oil price environment, realizing a sales price of over $54 per barrel (Brent reference price: $63.50) and an operating net back of almost $21 per barrel of oil equivalent ('boe');
  • Recognized funds flow from operations in the quarter of $3.0 million ($0.03 per share);
  • Obtained extensions into 2016 on the drilling commitments on the El Porton, LLA-19 and PUT-7 blocks.

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)



Q2 2015



Q1 2015



6 mos 2015



Q2 2014














Oil revenue – net of royalties


$

15,873


$

17,055


$

32,928


$

47,825

Funds flow from operations


$

3,022


$

2,294


$

5,315


$

18,222

Funds flow per share- basic


$

0.03


$

0.03


$

0.06


$

0.31

Funds flow per share- diluted


$

0.03


$

0.03


$

0.06


$

0.30














(Loss) income for period


$

(2,024)


$

(6,952)


$

(8,976)


$

6,431

Total comprehensive (loss) income 


$

(2,628)


$

(9,344)


$

(11,972)


$

8,562

(Loss) income per share -  basic 


$

(0.02)


$

(0.08)


$

(0.10)


$

0.11

(Loss) income per share -  diluted


$

(0.02)


$

(0.08)


$

(0.10)


$

0.10

Total assets


$

230,849


$

265,016


$

230,849


$

232,336

Total cash 


$

23,504


$

55,222


$

23,504


$

101,325

Notes payable


$

-


$

27,623


$

-


$

31,981

Shareholders' equity


$

169,525


$

171,885


$

169,525


$

160,248














Exploration costs


$

-


$

-


$

-


$

263

Capital expenditures - excluding acquisition


$

950


$

2,538


$

3,488


$

6,257














Common shares outstanding (000's)



87,252



87,252



87,252



60,106

Weighted average shares outstanding:  













Basic (000's)



87,252



87,252



87,252



59,628

Diluted (000's)



87,252



87,252



87,252



61,569



























Average production - boepd



3,634



4,587



4,108



6,513

Selling price $/boe


$

54.47


$

46.88


$

50.29


$

105.10

Royalty $/boe


$

(6.80)


$

(5.18)


$

(5.91)


$

(23.98)

Average transportation costs $/boe


$

(12.25)


$

(14.00)


$

(13.22)


$

(17.26)

Average production cost $/boe


$

(14.54)


$

(10.78)


$

(12.47)


$

(5.00)

Operating netback $/boe


$

20.88


$

16.92


$

18.69


$

58.86

Cash netback $/boe


$

8.92


$

9.35


$

9.14


$

50.80









$





Reference price - Brent ($/bbl)


$

63.50


$

55.13


$

59.35


$

109.69














Share trading 













High


$

1.45


$

1.60


$

1.60


$

3.80

Low


$

1.00


$

1.10


$

1.00


$

2.80

Close


$

1.05


$

1.40


$

1.05


$

3.70

Trading volume (000's)



7,085



9,355



16,440



8,691














Second Quarter Financial Summary

For the three months ended June 30, 2015, the Company reported $18.1 million in revenue (before royalties) from the sale of 333 thousand boe.  The realized sales price was $54.47/boe generating an operating netback of $20.88/boe.

For the second quarter of 2015, the Company's net loss was $2.0 million ($0.02 per share diluted). This loss is due to the low realized oil price in the second quarter of 2015 as well as the recognition of over $7 million in non-cash depletion and depreciation expense in the current quarter.  The Company's capital expenditures for the second quarter were $1.0 million, all invested in Colombia. As at June 30, 2015, the Company held 45 thousand barrels of oil ('Mbbls') in inventory.

The Company continues to focus on reducing field operating expenditures. On a per barrel basis, production costs were $14.54 for the second quarter of 2015, a reduction from $15.46/boe and $17.38/boe in the third and fourth quarters of 2014 respectively, but an increase from $10.78/boe in the first quarter of 2015.  The increase in the production costs in the second quarter over the first quarter of 2015 is due primarily to higher water handling costs on Langur, combined with lower production volumes.  These costs were expensed in the second quarter, affecting the overall per barrel operating costs in the quarter in which they have been recognized.  Transportation costs have been reduced from $14.87/boe and $14.36/boe in the third and fourth quarters of 2014 respectively to $12.25/boe in the current quarter.  These savings have been achieved through a combination of negotiations with service providers, positive foreign exchange movements and utilizing the lowest cost transportation routes, such as routing most of the Company's production from the Suroriente block through the Ecuador OCP pipeline where direct transportation costs are between $10 and $11/boe.

Current Financial Status

The Company, as of the date of this press release, holds approximately $25 million in cash, $11 million in estimated working capital, and over $13 million in restricted cash.  On April 19, 2015, the Company repaid the Canadian dollar denominated $35 million debenture that had been in place since April 2012 using cash-on-hand and is currently debt free.  The Company is currently projecting that as a direct result of cost savings initiatives, improvements in the realized oil price, and changes to the capital spending plans for the current year, it will maintain sufficient cash to meet all of its planned commitments throughout the rest of 2015 and into early 2016.

2015 Second Half Guidance

The Company is targeting gross company share production (net before royalty) for full-year 2015 of 3,600 boepd.  Petroamerica's expected capital spending projection for the same period is approximately $8.5 million.  Given the continued volatility of the oil markets, the Company will continue to review its production and capital guidance for the rest of the year.

Operations Update

Company working interest ('WI') production (before royalties) for the second quarter of 2015 averaged 3,634 boepd, with 2,106 boepd coming from the Llanos Basin and 1,528 boepd from the Putumayo Basin.  Production for the first half of 2015 averaged 4,108 boepd, approximately 2% below the April guidance estimate of 4,200 boepd due to the cumulative impact of a number of minor factors.  In Suroriente, the shortfall was primarily due to the deferral of several pump repairs (Cohembi-14, Cohembi-2, and Quinde-6) and an 8-day period in June when normal transportation was reduced to 25% of production capacity as a result of local community road blockages. In the Las Maracas field, two key oil wells were temporarily shut in until repairs were completed in July, and downtime was incurred for the Las Maracas-15 well while conducting a recompletion to access and test oil zones with additional production potential.  For the month of July, total Company WI production was 3,210 boepd.  The Las Maracas recompletion and well repair activity carried into July, and the field is now returning to normal operations.  The recompletions at Las Maracas-5 and Las Maracas-15 were conducted to enhance field production by opening new low watercut zones in favor of previous high watercut zones.  The Las Maracas-15 well has stabilized at approximately 1,286 boepd (643 boepd net to the Company before royalty) at below 70% watercut.  The Las Maracas-5 well has tested at 1% watercut, but has not established a stable rate and the evaluation is ongoing.  Company working interest production to August 23 was approximately 3,770 boepd, and with the recent Las Maracas recompletion contribution, has been approximately 4,104 boepd for the most recent 6 days up to August 23.

In the Suroriente block, Petroamerica and the operator have been continuously evaluating options to conduct the well repairs and also reactivate the development drilling program in a cost-effective manner and taking into account current oil prices.

2015/2016 Program Update

Following the acquisition of PetroNova, and including wells already scheduled by Petroamerica, a number of high impact exploration prospects are expected to be drilled in the near-term. A summary of exploration, appraisal and development operations expected for the remainder of 2015 and early 2016 is outlined in the following table:

Prospect/Well


Activity Type


Block


Working
Interest


Expected

Timing/Status

Tautaco


Exploration


LLA-10


50% (carried)1


Q4 2015

Crypto


Exploration


El Porton


100%


Q1 2016

Cumplidor N Sand


Appraisal


PUT-7


50%


Q1 2016

Tinigua-1


Exploration


Tinigua


40% (carried)2


1H 2016

Cohembi-16 NSand3


Development


Suroriente


15.8%


Q1 2016

Cohembi-17 NSand3


Development


Suroriente


15.8%


Q1 2016












  1. PTA's share of capital for drilling the Tautaco well is 5.5% of the well costs, with the remainder being fully carried under a farm-in arrangement with Parex Resources Inc.
  2. Under the farm-in agreement with Metapetroleum, PTA will pay 10% of capital for drilling the Tinigua-1 well, and retain a 40% working interestDrilling costs for an optional second well will be fully carried by Metapetroleum up to $7 million.
  3. Contingent on oil price

We have recently received contract phase extensions from the ANH for the PUT-7, LLA-19 and the El Porton blocks.  The Company is continuing to move forward with activities to drill the required wells within this time frame, and has recently submitted an environmental license application to the regulatory authority for drilling of the Cumplidor N Sand prospect on PUT-7.





PETROAMERICA OIL CORP.

Condensed Consolidated Interim Statements of Financial Position



As at 


As at 


June 30,


December 31,

(thousands of United States dollars)

2015


2014





Assets 




Current assets





Cash and cash equivalents

$

23,504


$

73,296


Trade and other receivables

10,202


13,825


Prepayments and deposits

4,021


463


Crude oil inventory

2,096


2,096






39,823


89,680





Non-current assets





Restricted cash

13,516


11,065


Property, plant and equipment

121,016


134,711


Exploration and evaluation assets

56,494


54,974






191,026


200,750





Total assets 

$

230,849


$

290,430





Liabilities 




Current liabilities 





Current equity tax

$

206


$

-


Current income tax

19


2,459


Accounts payable and accrued liabilities

22,006


38,803


Notes payable

-


29,933






22,231


71,195





Non-current  liabilities 





Decommissioning liabilities

10,424


9,939


Deferred tax liability

27,613


26,750


Stock appreciation rights liability

1,056


1,554





Total liabilities 

61,324


109,438





Shareholders' equity





Share capital

226,492


226,492


Contributed surplus

25,143


24,638


Translation reserve

(9,362)


(6,366)


Deficit

(72,748)


(63,772)






169,525


180,992





Total liabilities and shareholders' equity 

$

230,849


$

290,430





PETROAMERICA OIL CORP.

Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss)












Three months ended June 30


Six months ended June 30

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


2015


2014


2015


2014










Revenue



















Oil revenue - net of royalties


$

15,873


$

47,825


$

32,928


$

99,527



15,873


47,825


32,928


99,527

Expenses



















Production


(4,841)


(2,948)


(9,250)


(4,992)


Transportation


(4,078)


(10,172)


(9,806)


(21,513)


Purchased oil


-


-


-


(1,625)


Exploration and evaluation


-


(263)


-


(354)


Depletion and depreciation


(7,034)


(9,417)


(16,084)


(18,950)


Colombian equity tax


-


-


(501)


-


General and administration


(3,612)


(3,738)


(5,428)


(6,473)


Transaction costs


(10)


(1,229)


(10)


(1,229)


Share-based payments


85


(1,793)


(112)


(1,992)



(19,490)


(29,560)


(41,191)


(57,128)


Finance and other


(430)


(1,209)


(1,940)


(2,501)


Foreign exchange gain (loss)


884


(3,849)


2,827


1,843



454


(5,058)


887


(658)

Income (loss) before income taxes


(3,163)


13,207


(7,376)


41,741

Current income tax expense


(116)


(9,296)


(779)


(15,810)

Deferred tax recovery (expense)


1,255


2,520


(821)


(1,888)

Net income (loss) for the period


(2,024)


6,431


(8,976)


24,043

Other comprehensive income (loss)









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












Reserve on translation of foreign operations


(604)


2,131


(2,996)


(2,051)

Total comprehensive income (loss) 


$

(2,628)


$

8,562


$

(11,972)


$

21,992

Basic income (loss) per share


$

(0.02)


$

0.11


$

(0.10)


$

0.40

Diluted income (loss) per share


$

(0.02)


$

0.10


$

(0.10)


$

0.39

Weighted average number of basic

     common shares outstanding


87,252,085


59,627,870


87,252,085


59,491,594

Weighted average number of diluted

     common shares outstanding


87,252,085


61,569,229


87,252,085


61,432,953










PETROAMERICA OIL CORP.











Condensed Consolidated Interim Statements of Changes in Equity


(thousands of United States dollars)


Share Capital


Contributed

surplus


Translation

 reserve


Deficit


Total  equity












Balance at January 1, 2015


$

226,492


$

24,638


$

(6,366)


$

(63,772)


$

180,992












Net loss for the period


-


-


-


(8,976)


(8,976)

Other comprehensive loss


-


-


(2,996)


-


(2,996)












Total comprehensive loss 


-


-


(2,996)


(8,976)


(11,972)












Share-based payments


-


505


-


-


505












Balance at June 30, 2015


$

226,492


$

25,143


$

(9,362)


$

(72,748)


$

169,525























(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 income for the period


-


-


-


24,043


24,043

Other comprehensive loss


-


-


(2,051)


-


(2,051)












Total comprehensive income (loss) 


-


-


(2,051)


24,043


21,992












Warrants exercised


2,333


(346)


-


-


1,987

Stock options exercised


57


(22)


-


-


35

Share-based payments


-


136


-


-


136












Balance at June 30, 2014


$

141,326


$

23,847


$

(3,223)


$

(1,702)


$

160,248













PETROAMERICA OIL CORP.









Condensed Consolidated Interim Statements of Cash Flows














Three months ended June 30


Six months ended June 30

(thousands of United States dollars)


2015


2014


2015


2014










Operating activities 









Net income (loss) for the year


$

(2,024)


$

6,431


$

(8,976)


$

24,043

Items not involving cash:










Share-based payments


(85)


1,793


112


1,992


Depletion and depreciation


7,034


9,417


16,084


18,950


Unrealized foreign exchange (gain) loss


(706)


2,807


(3,059)


(2,601)


Deferred tax expense (recovery)


(1,255)


(2,520)


821


1,888


Accretion and amortization


58


294


333


577



3,022


18,222


5,315


44,849


Net changes in non-cash working capital


(2,896)


(16,341)


(20,922)


4,229

Cash provided by (used in) operating activities


126


1,881


(15,607)


49,078










Investing activities 









Short term investing activities


-


(30,099)


-


(29,990)

Exploration and evaluation expenditures


(130)


(717)


(1,520)


(2,075)

Property, plant and equipment expenditures


(589)


(4,394)


(1,540)


(14,331)

Restricted cash investments


(2,451)


-


-


-

Cash used in investing activities


(3,170)


(35,210)


(5,511)


(46,396)










Financing activities 









Repayment of long-term debt


(28,674)


-


(28,674)


-

Stock options exercised


-


35


-


35

Warrants exercised


-


1,036


-


1,987

Cash provided by financing activities


(28,674)


1,071


(28,674)


2,022










Increase (decrease) in cash and cash equivalents during the period


(31,718)


(32,258)


(49,792)


4,704

Cash and cash equivalents, beginning of period


55,222


100,699


73,296


63,737










Cash and cash equivalents, end of period


$

23,504


$

68,441


$

23,504


$

68,441



















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, potential future acquisitions and other statements, expectations, 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. 

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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