PetroMagdalena Announces Shares for Debt Issuance

    




 TORONTO, Jan. 26, 2012 /CNW/ - PetroMagdalena Energy Corp.   today announced that it has entered into an agreement to issue shares  to settle certain debt owed to Pacific Rubiales Energy Corp. in  connection the exploration program at the Topoyaco block. 

 Luciano Biondi, Chief Executive Officer of the Company stated: "We have  taken many steps in 2011 to improve the Company's balance sheet and  preserve our liquidity to re-invest in our ongoing exploration and  development program in our core oil assets. This debt settlement  transaction eliminates the need for us to use our existing cash  balances to settle the remaining amounts owing to Pacific Rubiales." 

 The Company owes Pacific Rubiales approximately US$6 million in  connection with a cash call due to Pacific Rubiales as at December 31,  2011 for the Topoyaco exploration program. 

 The shares for debt agreement was negotiated at arms-length between the  two parties on January 19, 2012. Although the closing price of the  Company's common shares on the TSX Venture Exchange ("TSXV") on January  18, 2012 was CA$1.10 per share, the parties agreed that the shares for  debt transaction would be completed using a deemed share price of  CA$1.25 per share. As such, the Company will be issuing 4,826,600  (calculated using the Bank of Canada exchange rate at the close of  January 19, 2012) common shares in settlement of the above-noted debt.  The issuance of these common shares is subject to approval from the  TSXV. 

 PetroMagdalena is a Canadian-based oil and gas exploration and  production company, with working interests in 18 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. 

PetroMagdalena Energy Corp.


CONTACT:  Peter VolkGeneral Counsel and Secretary(416) 360-7915Belinda LabatteInvestor Relations Representative(647) 436-2152 


    

Copyright