/NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
CALGARY, Nov. 19 /CNW/ - On Friday, November 16th, 2007, the Government
of Argentina published a resolution which set out changes to the computation
of Argentina's export retention factor with respect to crude oil. Given the
fiscal regime changes announced in the resolution, it appears the Argentina
Federal Government will now retain all of the increase in crude oil prices
over an international reference price of US$60.90 per barrel. This export
retention factor is applied to crude exported from Argentina.
Petro Andina sells all of its crude domestically, to Argentina-based
refiners. Domestic crude is priced through the application of a related
adjustment called the export parity factor. This parity factor, negotiated
within the industry, has previously had the effect of equalizing crude price
realizations between the domestic and export markets. Petro Andina has been
advised that domestic pricing issues raised by the new export retention factor
should be resolved during the next two weeks, but cannot offer any assurance
with respect to this timing.
Petro Andina sells its oil production in Argentina to buyers under terms
of crude oil sales contracts that are indexed to the Medanito marker crude
blend. The contracts provide Petro Andina with a field realization for its
crude oil that is determined by a WTI reference price, less the export parity
factor, transportation, quality adjustments from the Medanito marker price,
and other market conditions that prevail at the time of negotiation of the
contract. Sales contracts typically have a six month term and the Company's
existing contract expires on December 31, 2007.
Petro Andina has conducted a preliminary analysis of the fiscal regime
changes, assuming that the export retention factor is applied with the same
effect to domestic crude sales. Based on the information currently available,
it appears that Petro Andina's field realization under its existing sales
contract would be capped at approximately US$38.00 per barrel, on a go-forward
basis, at times when the reference price exceeds US$60.90 per barrel. For
purposes of comparison, Petro Andina's field realization was US$40.89 per
barrel for the quarter ended September 30, 2007 and was US$38.32 per barrel
for the nine months then ended. The related WTI reference prices were
approximately US$75.70 per barrel and US$68.00 per barrel respectively during
these periods. Petro Andina's field realization may also be influenced by
other variables subject to commercial negotiation with the buyer.
On November 7, 2007 Petro Andina announced a proposed 2008 Capital
Budget, setting out capital spending plans of Cdn$140 million for next year,
of which Cdn$135 million was targeted for Argentina. In developing the 2008
capital program the Company used a projected field realization of
approximately US$39.50 per barrel, or US$1.50 higher than the projected cap of
US$38.00 per barrel. At the present time, Petro Andina does not believe the
fiscal regime change would materially alter the economic benefit of the
projects in its capital program. However, the ultimate size of the Company's
capital program for 2008 will be dependent on several other factors in
addition to its per barrel field realization.
Petro Andina is continuing to monitor developments with respect to the
fiscal regime change.
About Petro Andina Resources Inc.
Petro Andina is engaged in the exploration for and development and
production of oil and natural gas in Argentina and to a lesser extent Canada.
The Company is continuing to develop its existing reserves and to conduct
appraisal and exploration drilling on its 457,000 acre (260,000 acre net) land
position in the Neuquén basin. Petro Andina is headquartered in Calgary,
This news release does not constitute an offer to sell securities, nor is
it a solicitation of an offer to buy securities, in any jurisdiction. All
sales will be made through registered securities dealers in jurisdictions
where the offering has been qualified for distribution. The securities offered
are not, and will not be, registered under the securities laws of the United
States of America, nor any state thereof and may not be sold in the United
States of America absent registration in the United States or the availability
of an exemption from such registration.
The Toronto Stock Exchange has not received and does not accept
responsibility for the adequacy or accuracy of this news release.
This document contains forward-looking information that involves known
and unknown risks, uncertainties and other factors that may cause actual
results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking information. For this purpose, any statements that are
contained herein that are not statements of historical fact may be deemed to
be forward-looking information, including Management's discussion of the
Company's plans and future operations. Without limiting the foregoing, the
words "believes," "anticipates," "plans," "intends," "will," "should,"
"expects," "projects," and similar expressions are intended to identify
forward-looking information. The associated risks include, but are not limited
to, those associated with competition, the ability to generate revenue and
exploit operating margins, capital resources, the use of certain technologies
and materials, annual impairment tests, labour relations, insurance, damage
from weather and other disasters, operating and maintenance risks and
environmental risks, new information regarding reserves, changes in demand for
and volatility of commodity prices of crude oil and natural gas, legislative,
regulatory and political changes along with other factors discussed in this
presentation. The risks outlined should not be construed as exhaustive.
Accordingly, no assurance can be given that any events anticipated by the
forward-looking statements will transpire or, if they do, what their impact on
the Company might be. Investors are cautioned not to place undue reliance on
any forward-looking information. The forward-looking statements are made as of
the date hereof, and the Company undertakes no obligation to update or revise
any forward-looking information to reflect new events or circumstances except
as required by law. The Company assumes no responsibility or liability of any
nature whatsoever for the forward-looking statements contained herein. For
more information please contact Petro Andina Resources Inc.
For further information:
For further information: Melesia Kasha, Investor Relations, Petro Andina
Resources Inc., Phone: (403) 237-1700, Fax: (403) 265-8216; Bill Hogg, Chief
Financial Officer, Petro Andina Resources Inc., Phone: (403) 237-1701, Fax: