Mr. Nelson Navarrete reports
PETROAMERICA ANNOUNCES THE FINANCIAL AND OPERATING RESULTS FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2013, 2013 YEAR-END RESERVES RESULTS AND PROVIDES AN OPERATIONS UPDATE
Petroamerica Oil Corp. has released its financial and operating results for the three and 12 months ended Dec. 31, 2013, the results of its 2013 year-end
independent reserves evaluation and provided an operational update of
the company's activities in Colombia. Copies of the company's
management's discussion and analysis, and financial statements have been
filed with the Canadian securities regulatory authorities, and can be
viewed or downloaded at the company's website or SEDAR. The financial results for all periods presented are in U.S. dollars, unless otherwise indicated.
Highlights for 2013:
- Continued strong production performance and oil sales from the Las
Maracas field on the Los Ocarros block. This field has contributed an
average of 5,266 barrels of oil per day (company working interest, before royalties) of production and two million barrels in sales (net of royalties) for the year;
- Generated revenue, after royalties, of over $203-million for the year,
an increase of over 370 per cent from the prior year, on sales of 2.1 million
bbl of oil, leading to positive funds flow from operations of $108.8-million (19 cents per share) with an operating netback of over $75 per
barrel;
- Achieved average daily production for the year of 5,451 barrels of oil
equivalent per day (company working interest, before royalties), with
the average fourth quarter production of 6,341 boepd (company working
interest, before royalties), an increase of over 290 per cent and 95 per cent,
respectively, over the comparable periods in the previous year;
- Exited the year with production of 6,296 boepd (company working
interest, before royalties), a 46-per-cent increase over the Dec. 31, 2012,
exit rate of 4,156 boepd (company working interest, before royalties);
- Replaced 97 per cent of proved (1P) reserves, and 96 per cent in proved and probable (2P) reserves over the prior year, with net 1P reserves (company working
interest, before royalty) of 3.1 million boe and 2P reserves (company
working interest, before royalty) of 4.9 million boe at Dec. 31,
2013;
- Total 1P, 2P and proved plus probable plus possible (3P) reserves net present values before tax, discounted at 10 per cent, of $133.9-million, $194.8-million and
$260.0-million, respectively;
- Drilled five successful appraisal and development wells (Las Maracas-8, 9,
10, 11 and 12), and four exploration wells, resulting in discoveries at
Rumi-1 on the El Eden block, Curriara-1 on the El Porton block, the
Mirador formation at the La Casona field on the El Eden block and in
the Une formation at the Las Maracas field on the Los Ocarros block;
- Initiated production operations for the La Casona-1 discovery well.
Quarterly highlights include:
- Generated revenue of over $56-million, after royalties, leading to
positive funds flow from operation of $26.1-million (four cents per share)
with an operating netback of approximately $75 per barrel;
- Achieved average daily production of 6,341 boepd, exiting the quarter at
daily production of 6,296 boepd;
- Closed the year with over $66-million in cash and short-term
investments, an increase of 149 per cent from 2012.
The table presents the highlights of Petroamerica's financial
and operating results.
FINANCIAL AND OPERATING HIGHLIGHTS
(In thousands of U.S. dollars, except per share or otherwise noted)
Q4 2013 Q3 2013 2013 2012
Oil revenue -- net of royalties $ 56,689 $ 54,794 $ 203,255 $ 43,083
Funds flow from operations 26,055 35,322 108,790 16,301
Funds flow per share -- basic 0.04 0.06 0.19 0.03
Funds flow per share -- diluted 0.04 0.06 0.18 0.03
Income (loss) for period 10,429 18,164 53,877 (4,757)
Total comprehensive income (loss) 6,069 17,013 49,357 (3,910)
Income (loss) per share -- basic 0.02 0.03 0.09 (0.01)
Income (loss) per share -- diluted 0.02 0.03 0.09 (0.01)
Exploration costs 6,704 5,773 12,803 15,474
Capital expenditures 18,277 17,635 73,942 40,139
Average production (bopd) 6,341 5,951 5,451 1,392
Selling price ($/bbl) 104.53 108.00 105.13 106.76
Royalty ($/bbl) (8.93) (9.90) (8.80) (8.65)
Average transportation costs ($/bbl) (17.23) (18.69) (17.46) (20.54)
Average production cost ($/bbl) (3.46) (1.84) (3.24) (7.08)
Operating netback ($/bbl) 74.91 77.57 75.63 70.49
Funds flow netback ($/bbl) 44.66 64.51 54.68 32.08
Fourth quarter financial summary
For the three months ended Dec. 31, 2013, the company reported $56.7-million in revenue, net of royalties, from the sale of 593,000 boe. The
realized sales price was $104.53 per boe generating an operating
netback of approximately $75 per barrel.
For the fourth quarter of 2013, the company's net income was $10.4-million (two cents per share diluted), due to the strong production levels
through the quarter and continued strong oil prices. The company's
capital expenditures for the fourth quarter were $18.3-million, all
invested in Colombia. These capital expenditures were financed from
available cash on hand. As at Dec. 31, 2013, the company held 12 million bbl of oil in inventory.
Year-end 2013 company interest reserves
The company's Colombian reserves were evaluated by independent qualified
reserves evaluator, GLJ Petroleum Consultants Ltd., and the reserves summarized here are taken directly from the
independent reserves report prepared by GLJ, with an effective date of
Dec. 31, 2013. The GLJ report was prepared in compliance with National
Instrument 51-101, and in accordance with the definitions, standards and procedures of
the Canadian Oil and Gas Evaluation Handbook. A complete filing of
the company's reserves as required by NI 51-101 will be will be filed
on SEDAR with the company's annual information form.
The table presents a summary of the company's oil and gas
reserves as of Dec. 31, 2013.
2013 YEAR-END RESERVES SUMMARY
Reserves category Dec. 31, 2012 Dec. 31, 2013
(Mboe) (Mboe)
Total proved 3,250 3,147
Total proved plus probable 5,081 4,891
Total proved plus probable plus possible 7,924 6,717
Company working interest reserves, before royalty.
The table presents a summary of the company's net present
values of future cash flows as of Dec. 31, 2013.
2013 YEAR-END RESERVES NET PRESENT VALUE SUMMARY
(In millions)
Reserves category Dec. 31, 2012 Dec. 31, 2013
Total proved $ 141.5 $ 133.9
Total proved plus probable 205.6 194.8
Total proved plus probable plus possible 304.3 260.0
Net present values before tax discounted at 10 per cent.
The oil price forecast used to calculate the net present values can be
found on the GLJ website.
2013 YEAR-END RESERVES RECONCILIATION
Total proved Total proved plus probable
(Mboe) (Mboe)
Dec. 31, 2012 3,250 5,081
Technical revisions 1,693 1,278
Extensions 43 82
Exploration discoveries 151 440
Production (1,990) (1,990)
Dec. 31, 2013 3,147 4,891
Positive technical revisions include Las Maracas and La Casona
fields; downward technical revisions include the Balay field.
Extensions and new discoveries include Rumi, Curiara and La
Casona.
Reserves discussion
All of the company's oil reserves are located in the Llanos basin of
Colombia.
The company produced approximately 1.99 million boe during 2013, and on
a 2P basis, replaced approximately 96 per cent of this production with new
reserve adds through positive technical revisions, extensions and new
discoveries. On a per-barrel basis, the calculated future net present
value before tax, discounted at 10 per cent, for the 2P reserves category is
$49.60 per boe and the 2P reserves life index using fourth quarter 2013
production levels is estimated at 2.1 years.
According to the GLJ report, 90 per cent of the 2P reserves are classified as
light to medium oil and 10 per cent of the reserves are associated with natural
gas or natural gas liquids.
March production averaged 6,506 boepd (company working interest)
compared with average production of 6,497 boepd for the previous month,
setting a company record for average monthly production.
Rumi (non-operated, 40-per-cent working interest)
The Rumi-1 exploration well was drilled and completed in the fourth
quarter of 2013, and encountered oil-bearing reservoirs in the Une
formation, testing at rates of approximately 350 to 1,000 bopd. A
long-term test facility is currently under construction, and production
is expected to commence during the month of May, 2014. Future appraisal
drilling on the Rumi structure will be contingent on the production
performance during the long-term test.
Curiara (non-operated, 25-per-cent working interest)
The Curiara long-term test facility was commissioned, and the Curiara-1
well started producing on April 5, 2014, at rates of approximately 250
bopd of 42-degree API oil. This rate is temporary and restricted by
authorized flaring 1.5 million cubic feet per day of gas, while gas
dehydration and gas compressors are commissioned. The results of this
long-term test will determine the forward appraisal plans for this
discovery.
Exploration, appraisal and development drilling in 2014
A summary of exploration, appraisal and development drilling expected to
take place over the near term is provided in the table.
EXPECTED EXPLORATION, APPRAISAL AND DEVELOPMENT DRILLING
Prospect/well Well type Block Working interest Projected timing
Las Maracas-15 Development Los Ocarros 50% Q2 2014 spud
Las Maracas-16 Development Los Ocarros 50% Q2 2014 spud
Crypto-1 Exploration El Porton 50% Q3 2014 spud
Malavar-1 Exploration LLA-10 50% Q3 2014 spud
Zampoca -1 Exploration Los Ocarros 50% Q3 2014 spud
Outlook
Given the strong production performance coming from the Las Maracas
field, as well as anticipated additional production from the Rumi-1 and
La Casona-2 wells, the company is revising its 2014 average production
guidance upward from 5,000 to 5,500 boepd to 6,000 boepd.
The company is also projecting a revised capital spending program for
2014 of approximately $54-million, a decrease of $16-million from the
guidance provided early in 2014 of approximately $70-million.
With the revised production estimates and the resulting cash flows, the
current cash holdings of approximately $98-million, as well as the
reduction in planned capital spending for the year, the company expects
to be able to fully finance its operations for the year and still have
free cash to pursue new business opportunities. These opportunities
could include exploration farm-ins, producing asset acquisitions, or
corporate mergers and acquisitions, with the objective of growing the
business and thereby enhancing overall shareholder value in the
company.
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(In thousands of U.S. dollars, except per share)
Year ended Dec. 31,
2013 2012
Revenue
Oil revenue -- net of royalties $ 203,255 $ 43,083
203,255 43,083
Expenses
Production (6,833) (3,076)
Transportation (36,835) (8,926)
Purchased oil (3,434) -
Exploration and evaluation (12,803) (15,474)
Depletion and depreciation (31,928) (6,339)
Impairment of property, plant and equipment (3,228) (6,255)
General and administration (13,338) (9,427)
Share-based payments (2,998) (1,802)
(111,397) (51,299)
Finance and other (5,197) (3,178)
Impairment of accounts receivable - (1,812)
Foreign exchange gain (loss) 5,186 (403)
(11) (5,393)
Income (loss) before income taxes 91,847 (13,609)
Current income tax (expense) (28,173) (778)
Deferred tax (expense) recovery (9,797) 9,630
Net income (loss) for the year 53,877 (4,757)
Other comprehensive (loss) income
Items that will not be reclassified subsequently to income or (loss)
Reserve on translation of foreign operations
and net investments in foreign operations (4,520) 847
Other comprehensive (loss) income (4,520) 847
Total comprehensive (loss) income 49,357 (3,910)
Basic income (loss) per share 0.09 (0.01)
Diluted income (loss) per share 0.09 (0.01)
We seek Safe Harbor.
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