ArPetrol Ltd. (TSXV:RPT)
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CALGARY, June 30, 2011 /CNW/ --
CALGARY, June 30, 2011 /CNW/ - ArPetrol Ltd. ("ArPetrol" or the
"Corporation") (TSX-V: "RPT") is pleased to announce the highlights of
its unaudited interim financial and operating results for the three
month period ended March 31, 2011 and to provide an operational update.
The complete quarterly reporting package for the Corporation, including
the unaudited interim financial statements and associated management's
discussion and analysis, have been filed on SEDAR at www.sedar.com and posted on the Corporation's website at www.arpetrol.com.
ArPetrol is a Canada-based public corporation which is engaged in the
exploration, development and production of petroleum and natural gas
and owns and operates a 85 million cubic feet per day (MMcf/d) gas
processing facility in Argentina. The Corporation is the resulting
entity from the business combination of the Corporation (formerly RPT
Resources Ltd. ("RPT")) and ArPetrol Inc. (now ArPetrol Holdings Inc.,
a wholly owned subsidiary of the Corporation) ("ArPetrol Holdings")
described further below (the "Arrangement"). As at March 31, 2011, the
Corporation had $40 million of working capital to fund its operations
through the end of 2012 and is looking to expand its asset base in the
Austral and Nequen basins.
These are the first consolidated financial results for the Corporation
reflecting the Arrangement which has been accounted for as a reverse
asset acquisition with ArPetrol Inc. being the acquirer. As a result,
for accounting purposes, the Corporation is deemed to be a continuation
of ArPetrol Inc., rather than RPT, and its financial results reflect
the historical financial results of ArPetrol Inc. In addition, on
January 1, 2011, the Corporation adopted International Financial
Reporting Standards ("IFRS") for financial reporting purposes, using a
transition date of January 1, 2010. The unaudited consolidated
financial statements for the three months ended March 31, 2011,
including required comparative information, have been prepared in
accordance with International Financial Reporting Standards 1,
First-time Adoption of International Financial Reporting Standards, and
with International Accounting Standard 34, Interim Financial Reporting,
as issued by the International Accounting Standards Board. Previously,
the Corporation prepared its interim and annual consolidated financial
statements in accordance with Canadian generally accepted accounting
principles. Unless otherwise noted, 2010 comparative information has
been prepared in accordance with IFRS. The adoption of IFRS has not
had a material impact on the Corporation's operations, strategic
decisions or funds flow from operations.
First Quarter 2011 Highlights
Business Combination
The Arrangement and related transactions were completed on March 18,
2011 and included:
-- The amalgamation of a wholly-owned subsidiary of the
Corporation with ArPetrol Inc. to form ArPetrol Holdings and
pursuant to which the Corporation issued 7.494 common shares of
the Corporation for each common share of ArPetrol Inc. at a
deemed price of $0.13 per common share for aggregate deemed
consideration of approximately $27.9 million;
-- The recapitalization of the Corporation through a private
placement of 228,462,300 subscription receipts of the
Corporation at a price of $0.13 per subscription receipt for
aggregate gross proceeds of approximately $29.7 million. In
connection with the closing of the Arrangement, each
subscription receipt was exchanged for one common share of the
Corporation and one warrant to purchase one common share of the
Corporation at a price of $0.26 per share until January 11,
2013;
-- The appointment of a new management team led by Timothy Thomas
as President and Chief Executive Officer, Ian Habke as Chief
Financial Officer, Ian Moffat as Vice President, Exploration
and Troy Wagner as Vice President, Argentina;
-- The election of a new board of directors comprised of Claudio
Ghersinich (Chairman), Abdel Badwi, Jeffrey Boyce, Timothy
Thomas, Ronald Williams and Michelle Gahagan; and
-- The continuance of the Corporation to the Province of Alberta
under the name "ArPetrol Ltd.".
In addition, as previously disclosed in connection with the Arrangement,
Deloitte & Touche LLP, the auditor of ArPetrol Holdings and ArPetrol
Inc., has been appointed as the auditor of the Corporation. The
business combination with ArPetrol Inc. has been accounted for as a
reverse asset acquisition with ArPetrol Inc. being the acquirer,
whereby RPT's assets acquired and liabilities assumed were recorded at
their fair values as at March 18, 2011, being the closing date of the
Arrangement, and the results of RPT consolidated with those of ArPetrol
Holdings from that date. Accordingly, only twelve days of RPT's
operations are included in the consolidated results of the Corporation
for the first quarter of 2011 and as such, the business combination did
not have a material effect on results of operations of the Corporation
for such quarter.
Operating and Financial
During the first quarter of 2011, the Corporation's production through
its Argentine subsidiary averaged 372 barrels of oil equivalent per day
(boe/d). Total volumes for the quarter were in line with the first
quarter of 2010 at 365 boe/d and lower than the fourth quarter of 2010
at 402 boe/d.
Realized prices for Q1 2011 were $2.65 per thousand cubic feet (Mcf) of
gas and $59.04 per barrel of liquids. These prices were significantly
higher than the first quarter of 2010 which saw gas prices of $1.83 per
Mcf and oil prices of $43.24 per barrel. The gas price increase
results from receiving approval in July 2010 for the Gas Plus incentive
program in Argentina. The liquids price increase is due to general
increases in the market price in Argentina.
Processing revenue in the quarter was $411,507 compared to $730,814 for
the first quarter of 2010 and $45,164 for the fourth quarter 2010.
2011 processing revenue continues to be affected by the September 2010
disruption at the third party facility which ships gas to the
Corporation's gas plant for processing. The disruption was partially
rectified in January 2011 but is not expected to be fully rectified
until the third quarter of 2011.
Operating costs for the first quarter were $740,089, 32% higher than Q1
2010 and 13% higher than Q4 2010. In January 2010, the Company
started operating the gas plant and was evaluating its operations.
Minimal discretionary operating costs were spent during this period.
Funds flow from operations in the first quarter of 2011 was $208,740
compared to $520,696 in the first quarter of 2010 and ($83,136) in the
fourth quarter 2010.
The Corporation has contracted a service company with a strong
Argentinean presence and Latin American experience to provide
engineering, planning and project supervision services for the upcoming
2011 - 2012 drilling program, with drilling currently scheduled to
commence in the fourth quarter of 2011.
Results Summary
The unaudited interim consolidated results for the first quarter of 2011
reflect the results of the combined operations of the Corporation
(formerly RPT) and ArPetrol Inc. (now ArPetrol Holdings, a wholly owned
subsidiary of the Corporation) whereas prior comparative periods
represent the results of ArPetrol Inc. only. See "Business
Combination" above for further information.
Q1 2011 Q4 2010 Q1 2010
Financial ($Canadian
except share and boe
amounts)
Petroleum and natural gas 641,022 605,557 424,670
revenues (net)
Processing revenues (net) 411,507 45,164 730,814
Funds flow from 208,740 (83,136) 520,762
operations 2
Net loss and 2,168,125 3,132,419 454,390
comprehensive loss
Capital expenditures 21,830 206,907 111,765
Weighted average shares
outstanding
Basic and Diluted - 267.7 208.5 193.5
millions
Operations
Production
Natural Gas - Mcf per 2,062 2,322 2,058
day
Liquids - Bbls per 28 15 22
day
Total - boe per day 1 372 402 365
Average sales price
Natural gas - $ per 2.65 2.61 1.83
Mcf
Liquids - $ per Bbl 3 59.04 45.95 43.24
Average operating net
back
Production - $ per 5.48 4.16 2.88
boe
Processing - $ per 0.01 (1.70) 0.08
Mcf processed
Notes:
1. BOEs (barrels of oil equivalent) may be misleading, particularly
if used in isolation. A BOE conversion ratio of 6.0 Mcf per 1.0
Bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the well head.
2. Funds flow from operations is a non-IFRS measure and is calculated
as cash flow from operating activities before changes in non-cash
working capital and decommissioning expenditures. Management uses
funds flow from operations to analyze operating performance. See
MD&A for further discussion.
3. For Q1 2011, the average realized liquids price was $52.45.
Additional liquids revenue was recognized in the quarter from the
revaluation of liquids inventory held at year-end.
Outlook
The Corporation expects that in the third quarter of 2011 third party
gas processing volumes will return to the levels that were achieved
before the disruption at the third party facility which ships gas to
the Corporation's gas plant for processing, which levels were
approximately 76 MMcf/d.
In the fourth quarter of 2011, the Corporation plans to spud exploration
wells in the Austral and Nequen basins and to commence redevelopment
drilling on the Faro Virgenes field which is estimated to have proved
plus probable reserves of 8 MMboe as at December 31, 2010. As recently
announced, the Corporation has received a ten year extension of the
Faro Virgenes Concession to August 31, 2026.
Capital expenditures for 2011 are estimated at approximately $15
million.
Business Development
The Corporation believes that Argentina offers a wide range of growth
opportunities that would be complimentary to the Corporation's current
inventory of assets. Management is pleased with the opportunities
being presented to the Corporation by companies attracted by the
experienced management team and board of directors, as well as the
success of the recent financing. A number of alternatives are under
evaluation. While Argentina is its prime area of interest, the
Corporation may pursue acquisitions in other South American regions on
an opportunistic basis.
About ArPetrol Ltd.
The Corporation is a Calgary based public company currently engaged in
oil and gas exploration, development and production in Argentina. The
Corporation's Common Shares are listed on the TSX Venture Exchange
under the symbol "RPT".
Forward Looking Information
This news release contains certain forward‐looking statements relating,
but not limited, to operational information, contractual extensions,
anticipated processing volumes, drilling plans and the timing
associated therewith. Forward‐looking information typically contains
statements with words such as "anticipate", "estimate", "expect",
"potential", "could", or similar words suggesting future outcomes. The
Corporation cautions readers and prospective investors in the
Corporation's securities to not place undue reliance on forward‐looking
information as by its nature, it is based on current expectations
regarding future events that involve a number of assumptions, inherent
risks and uncertainties, which could cause actual results to differ
materially from those anticipated by the Corporation.
Forward looking information is based on management's current
expectations and assumptions regarding, among other things, plans for
and results of future transactions, future drilling activity, future
capital and other expenditures (including the amount, nature and
sources of funding thereof), future economic conditions, future
currency and exchange rates, continued political stability in the areas
in which the Corporation is operating, receipt of necessary government
approvals in a timely fashion and the Corporation's continued ability
to obtain and retain qualified staff and equipment in a timely and cost
efficient manner. Although the Corporation believes the expectations
and assumptions reflected in such forward‐looking information are
reasonable, they may prove to be incorrect.
Forward‐looking information involves significant known and unknown risks
and uncertainties. A number of factors could cause actual results to
differ materially from those anticipated by the Corporation including,
but not limited to, risks associated with the oil and gas industry
(e.g. operational risks in exploration; inherent uncertainties in
interpreting geological data; changes in plans with respect to
exploration or capital expenditures; the uncertainty of estimates and
projections in relation to 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
third parties (including governments) in countries other than Canada
and other risks associated with international activity.
In addition, statements relating to "reserves" contained herein are
deemed to be forward-looking statements, as they involve the implied
assessment, based on certain estimates and assumptions that the
resources described can be economically produced in the future. Terms
related to reserve classifications referred to herein are based on the
definitions and guidelines in the Canadian Oil and Gas Evaluation
Handbook. The Corporation's information circular filed on SEDAR at www.sedar.com and dated February 14, 2011 contains additional detail with respect to
the Corporation's reserves estimates and the independent report
prepared by Gaffney, Cline & Associates dated February 7, 2011 and
effective December 31, 2010, auditing the reserves attributable to the
principal properties of the Corporation in Argentina.
The forward‐looking information included in this news release is
expressly qualified in its entirety by this cautionary statement. The
forward‐looking information included herein is made as of the date
hereof and the Corporation assumes no obligation to update or revise
any forward‐looking information to reflect new events or circumstances,
except as required by law.
Additional information relating to the Corporation is also available on
SEDAR at www.sedar.com.
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 this release.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/June2011/30/c2521.html
p Tim Thomas, President and Chief Executive Officer /p p a href="mailto:t.thomas@arpetrol.com"t.thomas@arpetrol.com/a /p p or /p p Ian Habke, Chief Financial Officer /p p a href="mailto:i.habke@arpetrol.com"i.habke@arpetrol.com/a /p p ArPetrol Ltd.br/ Main Phone: (403) 263-6738 /p