PetroMagdalena announces filing of first quarter 2012 results

    




 TORONTO, May 31, 2012 /CNW/ - PetroMagdalena Energy Corp.   filed on May 30, 2012 its unaudited interim condensed consolidated  financial statements and Management's Discussion and Analysis ("MD&A")  for the three months ended March 31, 2012. These documents will be  posted on the Company's website at www.petromagdalena.com and at www.sedar.com under the Company's SEDAR profile. 

 Luciano Biondi, the Company's Chief Executive Officer, stated: "We are  continuing to build on our success from 2011. In the first quarter of  2012, we have growth in production, revenues and operating netback  compared with both the fourth quarter and the first quarter of last  year. Continued exploration success led to two new discoveries in the  first quarter of 2012 and as we commence the development phase of our  2012 drilling campaign, we remain on track to achieve our 2012  production guidance. We experienced blockades in the Llanos Basin this  year, yet we are encouraged with our progress in developing closer  working relationships with the community, its leaders and the regional  and central government to promote improved relations going forward. We  continue to work for sustainable solutions in the area." 

 Financial and Operating Summary 





                                               First Quarter

                                               2012       2011

                                                              

    Financial                                                 

    Revenue from oil and gas sales       $   31,012 $   20,837

    Gross margin (3)                         12,027      4,987

    Net loss (4)                           (10,152)   (10,333)

    Basic and diluted loss per share         (0.07)     (0.08)

    Total assets at period end              343,559    387,193

    Total debt (5) at period end             57,874     12,030

                                                              

    Operational                                               

    Average daily production (boed) (1)       3,847      2,294

    Total sales (boe) (2)                   299,614    256,532

    Operating netback ($/boe) (3)             74.66      52.27

     










    (1) Company share, gross before deduction of ANH royalties

    (2) Company share, net after deduction of ANH royalties

    (3) See Additional Financial Measures in the MD&A.

    (4) 2012 includes $17.5 million of costs for exploratory wells at Santa
        Cruz, Arrendajo and Cubiro that did not discover proved reserves.

    (5) Includes amounts due within one year and obligation under finance
        lease.






  

  

 First Quarter 2012 Highlights 

 Production: The Company is maintaining its guidance of an average gross production  of 4,300 to 4,700 boed for 2012. The Company's gross share of  production for the first quarter of 2012 averaged 3,847 boed, up 6%  from the fourth quarter of 2011 and up 68% from the first quarter a  year ago. The discoveries at Cernicalo and Azor added approximately 330  boed to the Company's gross share of production in the first quarter of  2012. An 11-day illegal protest in the province of Casanare in March  2012 temporarily disrupted trucking operations in the area and  adversely impacted the Company's gross share of production for the  first quarter of 2012 by approximately 171 boed. 

 Revenues: Stronger oil prices and increased production levels grew revenues in  the first quarter of 2012 to $31.0 million, up 12% from the fourth  quarter of 2011 and up 49% from the first quarter a year ago. An  approximately 24,000 bbls increase in net oil inventories from  Arrendajo and Cubiro in the first quarter of 2012 to approximately  54,000 bbls will reverse as sales are completed in the second quarter  of 2012.  

 Operating netback: The Company's operating netback increased to $74.66 per boe in the  first quarter of 2012, an approximate $13 per boe improvement compared  with the fourth quarter of 2011 and $22 per boe higher than the first  quarter of 2011. An approximate $3 per boe increase in revenues to $110  per boe, coupled with reductions in production and transportation costs  contributed to the Company's fifth consecutive quarter of operating  netback improvement. 

 G&A expenses: G&A of $3.4 million, or approximately $11 per boe sold, in the first  quarter of 2012 was in line with G&A in the fourth quarter of 2011 and  well below the $4.7 million incurred in the first quarter a year ago.  Continued production growth in 2012 is expected to maintain G&A at  approximately $10 to $11 per boe sold. 

 Exploration: Successful discoveries in the first quarter of 2012 at Cernicalo in the  Cubiro Block and Azor in the Arrendajo Block are expected to add to the  Company's 13.3 MMbbls of 2P oil reserves reported as of December 31,  2011. 

 Liquidity: The Company received $11.3 million of proceeds in March 2012 from a new  three-year term loan with a local Colombian bank to help fund an  expansion in the 2012 work program as a result of the new discoveries. 

 Net Loss: The net loss for the first quarter of 2012 amounted to $10.2 million or  $0.07 per share compared with a net loss of $10.3 million or $0.08 per  share in the first quarter last year. The 2012 first quarter net loss  includes $17.5 million of costs for exploratory wells at Santa Cruz,  Arrendajo and Cubiro that did not discover proved reserves. 

 2012 Outlook 

 On May 23, 2012, the Company announced the resolution of a blockade  affecting the Cubiro Block involving an illegal protest where public  roads in the province of Casanare were being blocked, leading to a lack  of public order in the area. Rig operations were interrupted and  trucking operations were halted, which impacted production schedules.  This was the third blockade in recent months, impacting a total of 44  production days and adversely impacting the Company's gross share of  production by approximately 90,000 bbls, or 250 boed on an annualized  basis. The Company's gross share of daily production has averaged  approximately 4,000 boed since operations resumed. The Company believes  that the steps taken during the recent blockade to increase its  connection to the local community will reduce the likelihood of further  such occurrences. Despite these disruptions, the Company continues to  expect that its daily average production in 2012 will average between  4,300 to 4,700 boed for the full year. This estimate is conservatively  based solely on planned development wells at Cubiro and Arrendajo and  does not include any production from exploration wells planned to be  drilled during the balance of 2012. 

 For 2012, the Company will continue with a capital and exploration  program focused on its core oil assets and leveraging its successes in  the 2011 drilling campaign. A revised budget in the range of $75 to $80  million has been approved for the 2012 work program. The 2012 work  program includes funding to drill the three exploration wells started  in the fourth quarter of 2011 and will continue the emphasis on Cubiro  and Arrendajo with up to eleven development wells and three more  exploration wells (Petirrojo-1X, Azor Sur-1X and Copa A Norte-1X). In  the second half of 2012, the Company will be working to commence its  exploration program at Mecaya in the Putumayo Basin, starting with the  acquisition of seismic data, leading to a workover well and development  well in 2013. At Carbonera, drilling commenced in mid-March of 2012 of  the Cantoclara-1X exploration well (formerly called San Roque-1). The  Company funded the Cantoclaro-1X well, due to the YPF farm-out not yet  finalized. Seismic acquisition is also being planned in 2012 for  Topoyaco. At Cubiro, the Company will invest approximately $4 million  to replace rental oil facilities to reduce production costs.  The  Company also expects to commence the exploration program in the second  half of 2012 on the LLA-47 block in the Llanos Basin with a 3D seismic  survey. The revised budget for the Company's capital and exploration  program for 2012 is fully funded by cash balances, cash from  operations, the $10 million local bank facility entered into in March  2012, proceeds from non-core assets dispositions and farm-in  arrangements. 

 Webcast 

 Management will hold a webcast on Thursday, May 31, 2012 at 9:00 a.m.  (Eastern Time) to discuss the 2012 first quarter results. Analysts and  interested investors are invited to participate as follows: 

 Audience Toll Free: 1 [phone] Audience Toll:1 [phone] Confirmation #: 32515414  

 A playback of this conference call will be available online at www.petromagdalena.com 

 PetroMagdalena is a Canadian-based oil and gas exploration and  production company, with working interests in 19 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. 

 Glossary 




     _____________________________________________________________________
    |1P: Proven reserves              |G&A: General and Administrative    |
    |                                 |Expenses                           |
    |_________________________________|___________________________________|
    |2P: Proven + Probable reserves   |MMCF: Million Cubic Feet           |
    |_________________________________|___________________________________|
    |3P: Proven + Probable + Possible |MD: Measured Depth                 |
    |reserves                         |                                   |
    |_________________________________|___________________________________|
    |ANH: Agencia Nacional de         |MMBBLS: Million Barrels of Oil     |
    |Hidrocarburos                    |                                   |
    |_________________________________|___________________________________|
    |API: American Petroleum Institute|MMBTU: Millions British Thermal    |
    |                                 |Unit                               |
    |_________________________________|___________________________________|
    |BBLS: Barrels of Oil             |NPV: Net Present Value             |
    |_________________________________|___________________________________|
    |BOE: Barrels of Oil Equivalent   |PSI: Pounds per Square Inch. The   |
    |                                 |unit of pressure.                  |
    |_________________________________|___________________________________|
    |BOFD: Barrels of Fluid Per Day   |TD: Total Depth of the well        |
    |_________________________________|___________________________________|
    |BOPD: Barrels of Oil Per Day     |TVD: True Vertical Depth of the    |
    |                                 |well                               |
    |_________________________________|___________________________________|
    |BOEPD: Barrels of Oil Equivalent |TVDSS: True Vertical Depth Sub Sea |
    |Per Day                          |                                   |
    |_________________________________|___________________________________|
    |BS&W: Basic Sediments and Water  |WI: Working Interest               |
    |_________________________________|___________________________________|
    |E&PC: Exploration & Production   |WTI: West Texas Intermediate Oil   |
    |Contract                         |Price Index                        |
    |_________________________________|___________________________________|
    |ESP: Electric Submersible Pump   |                                   |
    |_________________________________|___________________________________|
    |FOB: Freight on Board            |                                   |
    |_________________________________|___________________________________|





  


   

   

PetroMagdalena Energy Corp.


CONTACT:  Michael DaviesChief Financial Officer(416) 360-7915Belinda LabatteInvestor Relations Representative(647) 436-2152 


    

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