PetroMagdalena Announces Filing of Third Quarter 2011 Results

TORONTO, Nov. 29, 2011 /CNW/ - PetroMagdalena Energy Corp. (TSXV: PMD) has filed today its interim condensed consolidated financial statements for the three and nine months ended September 30, 2011, together with its Management's Discussion and Analysis ("MD&A") for the corresponding period. These documents will be posted on the Company's website at www.petromagdalena.com and at www.sedar.com.

Luciano Biondi, the Company's Chief Executive Officer, stated: "we are very encouraged by the continuing operational and financial improvements evidenced in our third quarter results. As we carry our exploration and development program into the fourth quarter, we are setting the stage to exit 2011 on a significantly more solid foundation upon which we can continue to build our production and reserve growth in 2012. Our preliminary investment programs for 2012 stay the course we have established this past year, leveraging our successes in our core oil assets and creating value in our other properties through our strategic partnerships."

Financial and Operating Summary

A summary of the financial and operating results for the three and nine months ended September 30, 2011 is as follows:

(000s, except per share and operational data)       Three months ended
September  30,
    Nine months ended
September 30,
        2011     2010     2011     2010
                           
Financial                          
Revenue from oil and gas sales     $ 21,258   $ 13,124   $ 58,449   $ 34,315
Gross margin (3)       4,569     306     13,227     2,040
Net loss         (14,030)     (7,153)     (37,044)     (12,960)
Basic and diluted loss per share       (0.10)     (0.07)     (0.27)     (0.12)
Total assets at period end       368,450     370,736     368,450     370,736
Total debt at period end       41,634     32,349     41,634     32,349
                           
Operational                          
Average daily production (boed) (1)       2,708     2,561     2,469     2,378
Total sales (boe) (2)         235,078     211,895     692,516     602,373
Operating netback ($/boe) (3)       55.11     41.29     53.62     39.49
        (1)      Company share, gross before deduction of royalties.
        (2)      Company share, net after deduction of royalties.
        (3)      See Additional Financial Measures in the MD&A.

Third Quarter Highlights

  • Reserves: Three new discoveries in the third quarter of 2011 were the key driver behind a 5.0 MMbbls, or 86%, increase in 2P oil reserves at Cubiro as per the September 30, 2011 Petrotech report compared with December 31, 2010 report.
  • Production: The Company remains on track to meet its production guidance for 2011. Fuelled by the discoveries at Cubiro, the Company's gross share of production for the month of September averaged 3,248 barrels oil-equivalent per day ("boed"), up 37% from the December 2010 monthly average rate of 2,374 boed.
  • Revenues: The shift in Cubiro's deliveries to Guaduas to take advantage of Vasconia pricing for light-medium oil combined with production growth increased revenues in the third quarter to $21.3 million, or 62% higher than the same period a year ago. 
  • Operating netback: The Company reported its third consecutive quarter of improving its operating netback, which averaged $55.11 per boe in the third quarter of 2011.
  • G&A expenses: The cost savings initiatives implemented in the first quarter of 2011 have resulted in two consecutive quarters of reduced G&A expenses. Combined with the Company's production growth, G&A per boe decreased by 42% to approximately $13 per boe sold in the third quarter of 2011 compared with the same period a year ago.
  • Liquidity: The Company has taken steps to strengthen its balance sheet in 2011. Cash at September 30, 2011 stood at $12.3 million and the working capital deficit has been reduced by $44 million since December 31, 2010.
  • Value creation: The Company continues to take action to develop its portfolio and to reduce its risk through joint venture relationships. During the third quarter the Company announced a strategic partnership with YPF S.A. to farm-out a portion of its interests in Carbonera and Catguas and to explore further business opportunities with respect to several of its other properties. Subsequent to September 30, 2011, the Company also announced a farm-out arrangement with respect to its Santa Cruz exploration property and a farm-in to give the Company a control position in the Arrendajo exploration property. All of these farm-out/ farm-in arrangements are subject to ANH approval.

The net loss for the third quarter of 2011 includes a $15.2 million non-cash write-off under successful efforts accounting of costs associated with the Paramito-1 exploration well drilled at the Carbonera block in 2009. After completing its evaluation of test results to-date, the Company has decided not to proceed with this well.

Management will hold a conference call on Wednesday, November 30, 2011 at 9:00 a.m. (Eastern Time) to discuss the third quarter results. Analysts and interested investors are invited to participate as follows:

          Toronto & International:        (647) 427-7450
          North America:                    (888) 231-8191
          Conference ID:       32146371
                 

A playback of this conference call will be available by dialling 416-849-0833 or 1-855-859-2056 (toll free) with the above conference ID number until December 14, 2011.

PetroMagdalena 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.petromagdalena.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 PetroMagdalena. 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 PetroMagdalena; 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 PetroMagdalena 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 PetroMagdalena 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. PetroMagdalena 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 PetroMagdalena Energy Corp.

For further information:

Michael Davies
Chief Financial Officer
(416) 360-7915

Miranda Smith
Investor Relations Representative
(647) 428-7422

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PetroMagdalena Energy Corp.

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