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
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