CALGARY, ALBERTA -- (Marketwired) -- 08/30/13 -- Americas Petrogas Inc. ("Americas Petrogas" or the "Company") (TSX VENTURE: BOE) announces the Company continued to execute on its investment plan on its oil and gas properties in Argentina.
Summary Financial and Operational Highlights
Selected financial and operational information is outlined below and should be read in conjunction with the Company's condensed interim consolidated financial statements and the related Management's Discussion and Analysis ("MD&A") for the quarter, which have been filed on SEDAR under the Company's profile at www.sedar.com and are also available on the Company's website at www.americaspetrogas.com. All amounts are in Canadian dollars unless otherwise stated.
-- Net income: $5,121,233 in the second quarter of 2013 compared to a net loss of $4,731,206 for the equivalent period of 2012. This is the second consecutive quarter that the Company has reported profitability.-- Net revenue: increased by $6,371,527 or 75% compared to second quarter of 2012.-- Cash position: $36.7 million of consolidated cash, cash equivalents, short-term investments, and available-for-sale financial assets as of June 30, 2013.-- Oil sales volume: during the second quarter of 2013, the Company continued to produce and sell oil primarily from its Medanito Sur conventional block. During the second quarter of 2013, sales volume averaged 2,398 bopd (net), an increase of 70% over the second quarter of 2012 of 1,409 bopd (net).-- Operating netback: for the second quarter of 2013, operating netback (excluding Oil Plus benefits) was $44.72 per barrel and operating netback (including Oil Plus benefits) was $89.51 per barrel. For the second quarter of 2012, operating netback was $45.68 per barrel.-- Oil Plus benefits: during the second quarter of 2013, the Company recognized $11.2 million of Oil Plus benefits (related to production and reserve increases). This is in addition to $3.4 million recognized in the first quarter of 2013 and to $1.3 million recognized in the fourth quarter of 2012. Three months ended June 30 Six months ended June 30 2013 2012 2013 2012--------------------------------------------------------------------------------------------------------------------------------------------------------Gross oil sales revenue $ 17,224,255 $ 9,729,829 $ 33,673,901 $ 21,357,636Operating netback (including Oil Plus benefits)(1) $ 19,535,145 $ 5,855,237 $ 32,701,960 $ 12,937,395Operating netback (excluding Oil Plus benefits) per barrel(1) $ 44.72 $ 45.68 $ 46.20 $ 45.78Operating netback (including Oil Plus benefits) per barrel(1) $ 89.51 $ 45.68 $ 75.26 $ 45.78Net income (loss) attributable to owners of the Company $ 5,121,233 $ (4,731,206) $ 9,459,324 $ (8,543,494)Funds flow from operations(2) $ 14,991,901 $ 652,563 $ 24,865,931 $ 5,441,844 Per share - basic and diluted $ 0.07 $ 0.00 $ 0.12 $ 0.03Weighted average number of common shares outstanding(3) Basic 212,770,024 206,662,447 212,765,281 200,594,860 Diluted 214,706,607 215,034,615 216,124,726 210,564,885Cash flow from operating activities $ 12,312,757 $ 3,729,135 $ 17,778,014 $ 1,500,853Capital expenditures $ 27,063,531 $ 17,230,578 $ 54,359,681 $ 38,913,382Average barrels sold per day 2,398 1,409 2,401 1,553Average selling price per barrel $ 78.92 $ 75.91 $ 77.50 $ 75.57 June 30, 2013 December 31, 2012 --------------------------------------------------------------------- --------------------------------------------------------------------- Working capital(4) $ 33,326,325 $ 51,974,194 Equity outstanding Common shares 212,640,440 212,728,283 Stock options 18,135,593 11,821,750
(1)"Operating netback" is a non-GAAP measure and is calculated as revenues from oil sales less royalties and production costs. Operating netback is used as an indicator of operating performance, profitability and liquidity. Operating netback (excluding Oil Plus benefits) excludes any Oil Plus benefits credited to production costs. Operating netback (including Oil Plus benefits) is net of any Oil Plus benefits credited to production costs. Operating netback does not have a standardized meaning prescribed by IFRS. It is unlikely for non-GAAP measures to be comparable to similar measures presented by other companies. For the three months ended June 30, 2013, operating netback including Oil Plus benefits was $19,535,145 (calculated as gross oil sales revenue of $17,224,255 less royalties of $2,368,597 plus production costs recovery of $4,679,487). For the three months ended June 30, 2012, operating netback was $5,855,237 (calculated as gross oil sales revenue of $9,729,829 less royalties of $1,245,698 and production costs of $2,628,894). For the six months ended June 30, 2013, operating netback including Oil Plus benefits was $32,701,960 (calculated as gross oil sales revenue of $33,673,901 less royalties of $4,471,378 plus production costs recovery of $3,499,437). For the six months ended June 30, 2012, operating netback was $12,937,395 (calculated as gross oil sales revenue of $21,357,636 less royalties of $3,789,881 and production costs of $4,630,360).(2) "Funds flow from operations" is an additional GAAP measure because it is presented in the consolidated statement of cash flows. Funds flow from operations and funds flow from operations per share are used to analyze operating performance and liquidity. Funds flow from operations is calculated as net cash generated from (used by) operating activities (as determined in accordance with IFRS) before changes in non-cash balance sheet operating items. Funds flow from operations per share is calculated by dividing funds flow from operations by the weighted average number of shares outstanding. Funds flow from operations should not be considered an alternative to, or more meaningful than net cash generated from (used by) operating activities as determined in accordance with IFRS. Funds flow from operations per share should not be considered an alternative to, or more meaningful than earnings (loss) per share as determined in accordance with IFRS.(3) Diluted weighted average number of common shares outstanding is computed by adjusting basic weighted average number of common shares outstanding for dilutive instruments. The number of shares included with respect to options, warrants and similar instruments is computed using the treasury stock method, which assumes any proceeds received by the Company upon exercise of the in-the-money instruments would be used to repurchase common shares at the average market price for the period. For the three and six months ended June 30, 2013, 1,936,583 (three months ended June 30, 2012 - 8,372,168) and 3,359,445 (six months ended June 30, 2012 - 9,970,025) common shares were deemed to be issued for no consideration in respect of options.(4) Working capital is a non-GAAP measure and is calculated as current assets less current liabilities. Working capital is used to assess liquidity general financial strength. Working capital does not have a standardized meaning prescribed by IFRS. It is unlikely for non-GAAP measures to be comparable to similar measures presented by other companies. Working capital should not be considered an alternative to, or more meaningful than current assets or current liabilities as determined in accordance with IFRS.
Second Quarter Highlights and Recent Developments
-- Ryder Scott Company estimated that the Company has 56.1 Billion Barrels of Oil Equivalent ("BOE") initially in place and 8.3 Billion BOE Recoverable in the Company's nine unconventional shale oil and shale gas properties. The report only considered the Vaca Muerta, Agrio and Los Molles shales. The report did not consider additional zones of interest such as the Quintuco, Tordillo, Mulichinco and others.-- During the second quarter of 2013, Petrogas Argentina obtained two loans from the Industrial and Commercial Bank of China (Argentina) S.A. in the total amount of AR$50.0 million (approximately $9.5 million).-- Nine (9) conventional wells were drilled during the second quarter of 2013. Earlier in 2013, drilling on Medanito Sur resulted in the discovery of new production areas, including El Alpataco, El Calden Este, Amilcar and La Meseta. In total, twenty (20) conventional wells were drilled in the first half of 2013. As well, the Company invested $12.8 million in facilities and equipment during the first half of 2013.-- The Company, in conjunction with its partner, ExxonMobil, continued to conduct long-term production testing on the LTE.x-1 well and continued to analyze data relating to the ALL.x-1 well and ADA.x-1 well.-- During the second quarter of 2013, the Company made the necessary filings and received the necessary approvals to make a Normal Course Issuer Bid ("NCIB") to buy-back some of its common shares commencing on June 21, 2013 and terminating on June 20, 2014 or such earlier date as all shares which are subject to the NCIB are purchased. Up to the current date, the Company has bought back and cancelled 207,000 common shares for a total cost of approximately $185,000.
"We are pleased with our results this quarter, generating $19.5 million of operating netback at $89.51 per barrel, including Oil Plus benefits, and $5.1 million of net income," said Barclay Hambrook, President and Chief Executive Officer. Mr. Hambrook went on to say, "The results of the Ryder Scott Company report were excellent and this report clearly highlights the large upside potential of Americas Petrogas' Neuquen Basin blocks."
For further information regarding the Company's financial results, financial position and related changes, please see the consolidated financial statements and the related MD&A.
About Americas Petrogas Inc.
Americas Petrogas Inc. is a Canadian company whose shares trade on the TSX Venture Exchange under the symbol "BOE". Americas Petrogas has conventional and unconventional shale oil and gas and tight sands oil and gas interests in numerous blocks in the Neuquen Basin of Argentina. Americas Petrogas has joint venture partners, including ExxonMobil and Apache, on various blocks in the shale oil and gas corridor in the Neuquen Basin, Argentina. Americas Petrogas also owns an 80% interest in GrowMax Agri Corp., a private company involved in the exploration for near-surface potash, phosphates and other minerals, and potential development of a fertilizer project in Peru. Indian Farmers Fertiliser Co-operative Limited (IFFCO) owns a 20% interest in GrowMax Agri Corp. For more information about Americas Petrogas Inc., please visit www.americaspetrogas.com.
This Press Release contains forward-looking information including, but not limited to, the Company's goals and growth, estimates of reserves and resources, production and cash flows, new production areas on the Medanito Sur block, production testing of the LTE.x-1 well, analysis relating to the ALL.x-1 well and ADA.x-1 well, results of the Ryder Scott Company report, the large upside potential of Americas Petrogas' Neuquen Basin blocks, exploration, appraisal and development activities related to conventional and unconventional oil and gas, and other exploration, development and production activities in respect of the projects in Argentina and Peru. The recovery and resources estimates for the Company's properties described in this Press Release are estimates only and there is no guarantee that the estimated resources will be recovered. The actual resources for the Company's properties may be greater or less than those calculated. Additional forward-looking information is contained in the Company's MD&A for this quarter and the Company's Annual MD&A for December 31, 2012, and reference should be made to the additional disclosures of the assumptions, risks and uncertainties relating to such forward-looking information in those MD&A documents.
Forward-looking information is based on management's expectations regarding the Company's future growth, results of operations, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, plans for and results of drilling activity (including the timing, location, depth and the number of wells), environmental matters, business prospects and opportunities and expectations with respect to general economic conditions. Such forward-looking information reflects management's current beliefs and assumptions and is based on information, including reserves and resources information, currently available to management. Forward-looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by the forward-looking information, including but not limited to, risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production, delays or changes to plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of geological interpretations; the uncertainty of estimates and projections in relation to production, costs and expenses and health, safety and environment risks, extensions of concessions and commitments), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with foreign governments and third parties located in foreign jurisdictions and the risk associated with international activity.
Although the forward-looking information contained herein is based upon assumptions which management believes to be reasonable, the Company cannot assure investors that actual results will be consistent with this forward-looking information. This forward-looking information is made as of the date hereof and the Company assumes no obligation to update or revise this information to reflect new events or circumstances, except as required by law. Because of the risks, uncertainties and assumptions inherent in forward-looking information, prospective investors in the Company's securities should not place undue reliance on this forward-looking information.
The term BOE (barrels of oil equivalent) is used in this press release. All calculations converting natural gas to BOE have been made using a conversion ratio of six thousand cubic feet (six "Mcf") of natural gas to one barrel of oil, unless otherwise stated. The use of BOE may be misleading, particularly if used in isolation, as the conversion ratio of six Mcf of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
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 THE RELEASE.
Americas Petrogas Inc.
Barclay Hambrook, P. Eng., MBA
President and CEO