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 $153,573 in capital expenditures during the year.
Summary of Results
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Three Months Ended Dec 31,
(Unaudited)
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Year ended Dec 31,
|
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2015
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2014
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2015
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2014
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Financial
(Cdn$ 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)
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(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
|
|
|
|
|
|
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Operations
|
|
|
|
|
|
|
|
|
|
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Processing
|
|
|
|
|
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Processing Volumes – Mcf per day
|
70,002
|
73,518
|
72,212
|
75,604
|
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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
|
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NGL – bbls per day
|
26
|
15
|
18
|
20
|
|
Total – boe per day (1)
|
269
|
186
|
208
|
223
|
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Average sales price
|
|
|
|
|
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Natural gas – $ per Mcf
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6.49
|
4.43
|
5.70
|
4.47
|
|
NGL – $ per bbl
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90.80
|
89.03
|
90.01
|
83.85
|
|
Average operating netback - $ per boe(1)
|
2.51
|
(4.58)
|
(2.18)
|
3.03
|
|
|
|
|
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Notes:
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(1)
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See advisories at the end of this news release with respect to non-IFRS measures and boe presentation.
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(2)
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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.
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(3)
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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.
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All values in this news release are in Canadian dollars unless otherwise indicated.
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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.
