CALGARY,
April 18, 2016 /CNW/ - ArPetrol Ltd.
("ArPetrol" or the "Company") (TSXV: RPT) is pleased to announce
its financial and operating results for the three months and year
ended December 31, 2015 and to
provide an operational update on activities this year to date as
well as an update on the pending sale of substantially all of the
assets of the Company. The consolidated financial statements and
management's discussion and analysis, have been filed on SEDAR at
www.sedar.com and posted on the Company's website at
www.arpetrol.com.
Fourth Quarter and Fiscal 2015 Summary
Operating and Financial
ArPetrol continued to improve its financial position during
2015. At December 31, 2015, the
Company had working capital of $3.1
million, compared to $1.5
million from December 31,
2014.
The Company's midstreaming activities continue to provide strong
revenues and operating netbacks (as defined below). During the
fourth quarter of 2015, the Company processed an average of 70
million cubic feet per day ("Mmcf/d") of third-party natural gas
generating an operating netback of $820,819. For the total year 2015 volumes
processed averaged 72 Mmcf/d generating an operating netback of
$3.9 million. This compared to an
average processing volume of 76 Mmcf/d and an operating netback of
$3.9 million for the total year
2015.
The Company's fourth quarter production averaged 269 barrels of
oil equivalent ("boe") per day ("boe/d"), an increase of 109 boe/d
from the third quarter of 2015. The higher production volumes were
the result of maintenance work completed in October 2015. This increase in production volumes
allowed us to generate a positive netback for the fourth quarter.
For the total year 2015, production averaged 208 boe/d compared to
223 boe/d for the total year 2014. The fourth quarter 2015 average
realized natural gas price was $6.49
per thousand cubic feet ("Mcf"), $0.69 per Mcf higher than the average price
realized in the third quarter of 2015. The average price realized
for natural gas liquids ("NGL") in the fourth quarter of 2015 was
$90.80 per barrel ("bbl"), a decrease
of $7.29 per bbl over the third
quarter of 2015.
The Company made $153,573 in
capital expenditures during the year.
Summary of Results
|
Three Months Ended
Dec 31,
(Unaudited)
|
Year ended Dec
31,
|
|
2015
|
2014
|
2015
|
2014
|
Financial
(Cdn$ except shares
outstanding)
|
|
|
|
|
|
|
|
|
|
Processing
revenues
|
2,506,937
|
2,047,011
|
9,426,346
|
8,583,910
|
Production
sales
|
1,072,587
|
543,366
|
2,963,849
|
2,594,807
|
Funds flow from
operations (1)
|
(50,943)
|
59,073
|
677,753
|
1,037,039
|
Cash generated from
(used in) operating activities
|
(664,347)
|
800,361
|
425,936
|
1,303,018
|
Net income
(loss)
|
(725,354)
|
(73,804)
|
(11,583,491)
|
3,946,620
|
Capital
expenditures
|
147,274
|
114,282
|
153,573
|
262,437
|
Weighted average
shares outstanding
(millions)
– basic and
diluted (2)(3)
|
22,490,468
|
22,901,468
|
22,631,759
|
22,901,468
|
Per Share Funds flow
from operations (2)
|
(0.02)
|
(0.02)
|
0.01
|
0.02
|
Per Share Net income
(loss)(2)
|
(0.03)
|
(0.00)
|
(0.51)
|
.02
|
|
|
|
|
|
Operations
|
|
|
|
|
|
|
|
|
|
Processing
|
|
|
|
|
|
Processing Volumes –
Mcf per day
|
70,002
|
73,518
|
72,212
|
75,604
|
|
Processing
Revenue
|
2,506,937
|
2,047,011
|
9,426,346
|
8,593,910
|
|
Operating Netback
(1)
|
820,819
|
339,450
|
3,898,650
|
3,935,021
|
|
Average Operating
Netback - $ per
Mcf processed(1)
|
0.14
|
0.04
|
0.14
|
0.15
|
|
|
|
|
|
Production
|
|
|
|
|
|
Natural gas – Mcf per
day
|
1,474
|
1,031
|
1,141
|
1,216
|
|
NGL – bbls per
day
|
26
|
15
|
18
|
20
|
|
Total – boe per day
(1)
|
269
|
186
|
208
|
223
|
Average sales
price
|
|
|
|
|
|
Natural gas – $ per
Mcf
|
6.49
|
4.43
|
5.70
|
4.47
|
|
NGL – $ per
bbl
|
90.80
|
89.03
|
90.01
|
83.85
|
Average operating
netback - $ per boe(1)
|
2.51
|
(4.58)
|
(2.18)
|
3.03
|
|
|
|
|
|
Notes:
|
(1)
|
See advisories at the
end of this news release with respect to non-IFRS measures and boe
presentation.
|
(2)
|
All outstanding
warrants, stock options and convertible debentures were excluded in
calculating the weighted-average number of dilutive common share
outstanding, as they were determined to be
anti-dilutive.
|
(3)
|
On June 2, 2014, the
Company completed a consolidation of its issued and outstanding
common shares on the basis of 25 pre - consolidation common shares
for each 1 post-consolidation common share. All share and per share
numbers have been adjusted to reflect this
consolidation.
|
|
All values in this
news release are in Canadian dollars unless otherwise
indicated.
|
|
Agreement to Sell Assets to Empresa Nacional Del
Petróleo
On March 18, 2016, the Company
announced the signing of a share and debt purchase agreement with
Empresa Nacional Del Petróleo, the state owned oil and gas company
of Chile, and its subsidiary ENAP
Sipetrol Argentina S.A. (the "Purchaser"), which provides for the
sale of substantially all of the assets of the Company to the
Purchaser for cash consideration of US$9
million plus net working capital at closing of the
subsidiaries being sold as part of the transaction. Completion of
the transaction is subject to customary conditions for a
transaction of this nature, including applicable regulatory and
stock exchange approvals and the approval by not less than 66 2/3%
of the votes cast by shareholders of the Company represented in
person or by proxy at a meeting of shareholders. An Annual and
Special Meeting of Shareholders of the Company is scheduled to be
held on May 13, 2016 for shareholders
to consider and approve the sale of assets to the Purchaser, as
well as the subsequent delisting of the Company's shares and the
liquidation and dissolution of the Company. The Notice of Meeting
and Information Circular for such meeting containing detailed
information with respect to the matters to be considered is
scheduled to be mailed to shareholders and filed on SEDAR on
April 22, 2016. The transaction is
expected to close later in May 2016
following the shareholders meeting.
Reserves
As a result of the pending sale of substantially all of the
assets of the Company to the Purchaser and the fact that the
Company does not intend to execute a drilling program, the Company
did not engage a third party reserve evaluator to prepare a report
relating to the Company's reserves as at December 31, 2015.
Last year Gaffney, Cline & Associates Inc. ("GCA") prepared
a reserve report as at December 31,
2014 (the "GCA Report") that included undeveloped reserves
expected to be recovered from a three well development drilling
program which required significant capital expenditures. The
Company does not currently have the financing required to execute
the drilling program, nor is the Company confident that it could be
raised in the next 12 months given the current investment climate.
In discussions with GCA, it was determined that without the ability
to raise the necessary financing GCA would not be able to recognize
any reserves from the drilling program and, without the revenues
from the development drilling, the Company's current producing
resources would also be deemed to be uneconomic and, as such,
incapable of being categorized as reserves.
Therefore, under National Instrument 51-101, management has
determined that the Company had no oil or gas reserves in the
Company's property in Faro Virgenes Argentina as at December 31, 2015. For further discussion, see
the Company's statement of reserves data and other oil and gas
information for the year ended December 31,
2015 which is available on SEDAR at www.sedar.com.
About ArPetrol Ltd.
ArPetrol is a Calgary-based
publicly traded company engaged in oil and natural gas exploration,
development and production and third-party natural gas processing
in Argentina, where it owns and
operates a gas processing facility with capacity of 85 MMcf/d. The
Company's common shares are listed on the TSXV under the symbol
"RPT".
Forward Looking Information
Certain information included in this press release contains
certain forward‐looking information relating, but not limited,
continued positive cash flow in 2016, the projected increase in
revenues and netbacks in 2016, the projected strengthening of the
US dollar and the impact thereof, processing revenue and cash flow,
the anticipated shareholder meeting and sale to the Purchaser and
the timing thereof, and the anticipated delisting of the Company's
shares and liquidation and dissolution of the Company.
Forward-looking information typically contains statements with
words such as "anticipate", "believe", "forecast", expect", "plan",
"intend", "estimate", "propose", "project", or similar words
suggesting future outcomes. The Company cautions readers and
prospective investors in the Company's securities not to 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 Company.
Forward-looking information is based on management's current
expectations and assumptions regarding, among other things, the
ability of the Company to receive, in a timely manner, the
necessary shareholder and stock exchange approvals, the ability of
the Company to satisfy, in a timely manner, the other conditions to
the closing of the transaction with the Purchaser, the ability to
sustain consistent processing and production volumes, future
production and processing revenue, future economic conditions,
future currency and exchange rates, the ability to repatriate funds
from Argentina, future pricing,
continued political stability in the areas in which the Company is
operating, and the Company's continued ability to obtain and retain
qualified management and staff and equipment in a timely and
cost-efficient manner. Although the Company 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
Company, including but not limited to risks and uncertainties
inherent in the nature of the transaction with the Purchaser,
including the failure of the Company to obtain necessary
shareholder and stock exchange approval, or to otherwise satisfy
the conditions to the transaction, in a timely manner by the
outside date or at all, risks of a material adverse change to the
Company's assets or revenue, risks associated with the oil and
natural gas industry (e.g., operational risks; the ability to
retain staff and equipment; and health, safety and environmental
risks), weather delays and natural disasters, union activities,
change in government policies, currency fluctuations and controls,
a change in the manner and rates at which the Company is exchanging
its currency, the risk of disruptions at the gas plant, increased
maintenance costs or other expenditures at the gas plant,
interruptions to production and processing revenue, production
declines, changes in commodity prices and revenues, increased costs
and other risks associated with international activity and
Argentina. ArPetrol operates
outside of Canada and as such, is
subject to a number of political risks over which it has no
control.
The forward-looking information included herein 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 Company assumes no obligation to update or revise
any forward-looking information to reflect new events or
circumstances, except as required by law.
Non-IFRS Measures
This news release includes references to financial measures
commonly used in the oil and natural gas industry. The terms
"operating netback" (production and processing revenue less
royalties, turnover taxes and operating expenses) and "funds flow
from operations" (cash generated from operating activities before
changes in non-cash working capital, and translation adjustment on
operating items) do not have any standardized meaning under
International Financial Reporting Standards ("IFRS") and may not be
comparable with similar measures presented by other companies.
Funds flow from operations should not be considered an alternative
to, or more meaningful than, cash generated from operating
activities, net income (loss) or other measures determined in
accordance with IFRS, as an indicator of the Company's
performance.
See the management's discussion and analysis for the year ended
December 31, 2015, filed on SEDAR at
www.sedar.com and on the Company's website, for further discussion,
including a reconciliation of funds flow from operations to cash
generated from operating activities which is the most directly
comparable measure calculated in accordance with IFRS. There is no
IFRS measure that is reasonably comparable to operating netbacks
and a detailed calculation of such netbacks is presented in the
"Results of Operations" section.
BOE Presentation. Production information is
commonly reported in units of barrels of oil equivalent. For
purposes of computing such units, natural gas is converted to
equivalent barrels of oil using a conversion factor of six thousand
cubic feet to one barrel. The 6:1 conversion ratio represents
energy equivalency, which is primarily applicable at the burner
tip, and does not represent a value equivalency at the wellhead.
Such disclosure of boe may be misleading, particularly if used in
isolation.
Reserves and Oil and Gas Advisories
The reserve data provided in this news release presents only a
portion of the disclosure required under National Instrument
51-101, Standards of Disclosure for Oil and Gas Activities.
Please see the Company's statement of reserves data and other oil
and gas information for the year ended December 31, 2015 which is available on SEDAR at
www.sedar.com.
Additional information relating to the Company is also available
on SEDAR at www.sedar.com.
Neither the TSXV nor its Regulation Services Provider (as
defined in the policies of the TSXV) accepts responsibility for the
adequacy or accuracy of this release.
SOURCE ArPetrol Ltd.