Petrolifera provides information on its short term money market investments



    CALGARY, Aug. 20 /CNW/ - Petrolifera Petroleum Limited (PDP - TSX) hereby
advises its shareholders and capital markets on the current status of the
company's exposure to short-term asset-backed security investments in Canada.
As at July 31, 2007 the company had approximately $37.7 million of its total
$64.6 million in cash and cash equivalents invested in asset-backed
securities. Petrolifera's cash management policy has been to invest in
short-term investments ("Notes") that are rated R1-High by the Dominion Bond
Rating Service ("DBRS"). This is the highest rating assigned to commercial
paper by DBRS. Through the facilities of the money desk of its Canadian
banker, the company had invested $20.0 million in Series A Notes issued by
MMAI-I Trust and $17.7 million in Series A Notes issued by Apsley Trust, for a
total maturing value of $37.7 million.
    As a result of recent disruptions in the global credit markets (and
specifically the market for asset-backed security investments in Canada), on
August 15, 2007 $20.0 million of Series A Notes issued by MMAI-I Trust and
$11.4 million of Series A Notes issued by Apsley Trust became due and payable,
but were not repaid and are currently outstanding. Petrolifera also holds
$6.3 million of Series A Notes issued by Apsley Trust which are due and
payable on August 31, 2007.
    Petrolifera has been monitoring and will continue to closely monitor
Canadian short-term credit markets. The company has been repeatedly informed
or advised that the situation which has developed is primarily related to
liquidity concerns in respect of asset-backed securities, rather than the
creditworthiness of the underlying assets owned by the aforementioned trusts.
The company has been in discussions with its Canadian banker and
representatives of the trusts and will continue to review and assess
developments.
    On August 16, 2007 a group of financial institutions, led by the Caisse
de dépôt et placement du Québec, announced that it had agreed in principle to
a long-term proposal and an interim agreement regarding asset backed
commercial paper, including the Notes issued by MMAI-I Trust and Apsley Trust.
The effect of this, if agreed to by the parties and Note holders would, among
other things, be to convert the Notes into term floating rate notes maturing
no earlier than the scheduled termination dates of the underlying assets.
There is no assurance as to the outcome of this proposal, or resulting
liquidity should this proposal be accepted. There may be circumstances under
which the company may be required to accept the outcome of such deliberations
and proposal, even though it may not agree with the proposal.
    The remainder of Petrolifera's cash and cash equivalents of approximately
$26.9 million are invested in term deposits in other jurisdictions or is held
in cash operating accounts. These balances are not expected to be affected by
the current situation in Canada.
    Petrolifera is unable to predict how long the current market disruption
will continue. The company believes that it has sufficient cash balances and
cash flow from operations, in addition to a previously-announced credit
facility that is expected to be finalized in the coming weeks, to fund its
planned operations during this period of market uncertainty. Based on the
information available to it at this time, the company does not anticipate that
the current situation will curtail any activities related to the execution of
its 2007 operating and capital spending program. The company will continue to
monitor these events and will update shareholders if and when appropriate.

    FORWARD LOOKING STATEMENTS

    This press release contains forward-looking statements, including
statements relating to third party initiatives to support asset-backed
securities, the anticipated impact to Petrolifera of the market disruption in
such securities and the availability of alternative sources of funding for
Petrolifera's operating and capital spending program. These statements are
based on current expectations and available information that involve a number
of risks and uncertainties, which could cause actual results to differ
materially from those anticipated. These risks include, but are not limited to
risks associated with the oil and gas industry (e.g. operational risks in
development, exploration and production, delays or changes in plans with
respect to exploration or development projects or capital expenditures; the
uncertainty of reserve estimates; the uncertainty of estimates and projections
in relation to production, costs and expenses and health, safety and
environmental risks), the risk of commodity price and foreign exchange rate
fluctuations, the uncertainty associated with negotiating with foreign
governments and risk associated with international activity. There can be no
assurance that the long term proposal and interim agreement will be
implemented or that such proposal will restore liquidity to the asset-backed
securities market to facilitate repayment of the Notes held by Petrolifera.
Further, there can be no assurance as to the timing for receipt of repayment
of such Notes or the amount available to satisfy such obligations given the
current status of the market and information regarding the underlying assets
held by such trusts. Additional risks and uncertainties are described in the
company's Annual Information Form which is filed on SEDAR at www.sedar.com.
    The company's ability to complete its capital program and potentially
increase production volumes and reserves is dependent on access to services,
drilling rigs and equipment and completion of the previously announced credit
facility. Similarly, the company's ability to increase sales of oil and
natural gas is dependent on sustained productivity of new and existing wells,
maintenance (or reduction) of water cuts and completion of certain
infrastructure and transportation systems that are currently under
construction. There can be no assurance that the flow rates of newly drilled
wells will result in stabilized production at these levels or that the
company's new or existing high productivity wells will not incur higher water
cuts than that reported or reductions in reservoir pressures, resulting in a
decision to further curtail production pending implementation of the proposed
pressure maintenance program or other remedial measures. Due to the risks,
uncertainties and assumptions inherent in forward-looking statements,
prospective investors in the company's securities should not place undue
reliance on these forward-looking statements. Forward-looking statements
contained in this press release are made as of the date hereof and are subject
to change. The company assumes no obligation to revise or update forward
looking statements to reflect new circumstances, except as required by law.





For further information:

For further information: Richard A Gusella, Executive Chairman,
Petrolifera Petroleum Limited Phone: (403) 538-6202 Fax: (403) 538-6225
inquiries@petrolifera.ca www.petrolifera.ca

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PETROLIFERA PETROLEUM LIMITED

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