CALGARY, Jan. 21, 2014 /CNW/ - ArPetrol Ltd. ("ArPetrol"
or the "Company") (TSXV: RPT) provides an update on its activities
and upcoming changes to its management team.
Outlook, Vendor Settlements, and Insider Loan
Update
ArPetrol's 100% owned and operated gas plant in
Argentina processed an average of
78 million cubic feet (MMcf) per day of natural gas in the fourth
quarter of 2013, compared with 80 MMcf per day in the third quarter
of 2013 and 74 MMcf per day in the fourth quarter of 2012.
Processing fees at the gas plant were $0.30 per thousand cubic feet (Mcf) in the second
half of 2013 under ArPetrol's new gas processing contracts with
Enap Sipetrol S.A. and YPF S.A. The gas plant is expected to
generate approximately 70% of the Company's revenues in
Argentina in 2014. ArPetrol
expects that the new gas processing contracts and revenues from
production will enable it to realize profitable cashflow in
2014.
ArPetrol continues to produce from two wells,
which assist in offsetting operating costs. Fourth quarter
production averaged 164 barrels of oil equivalent per day
(boe/d). This is a decrease of 22 boe/d from the third
quarter of 2013 and a decrease of 88 boe/d from the fourth quarter
of 2012. These decreases are due to natural production
declines and some well performance issues. The performance issues
were resolved before the end of the fourth quarter 2013, resulting
in average production of approximately 225 boe/d since December 27, 2013.
The definitive documentation for the previously
announced insider loan has been completed and $1.5 million has been drawn against the
$1.9 million loan facility to assist
in the payment of trade payables in Argentina and for general corporate
purposes. ArPetrol has successfully concluded settlements
with all but two of its vendors, representing settlements on
$6.4 million of the accounts payable
balance owing at September
30th 2013. This includes a settlement with the
third party that had initiated arbitration proceedings, which have
now been terminated. Of the two outstanding vendors, one agreement
is awaiting signature and the other is in the final stages of
negotiation. Once the funds currently on deposit with the drilling
contractor are used to pay outstanding invoices, more than 90% of
its outstanding payables with drilling contractors and vendors will
have been settled.
Management Changes
Mr. Tim Thomas
will be resigning as President & Chief Executive Officer of the
Company effective after an orderly transition period, but will
remain as a director of the Company. Mr. Ian Habke will be appointed as interim President
of the Company, in addition to his current role as Chief Financial
Officer. Mr. Abdel Badwi, a
current director, will assume the position of interim Chief
Executive Officer of the Company until a replacement is
identified.
Mr. Claudio
Ghersinich, Chairman of the Board of Directors,
commented:
"The Board extends its sincere appreciation to
Tim Thomas for his significant
contribution to the Company since 2010. He did an excellent
job during a difficult 2013 to help us achieve new gas processing
contracts in Argentina and reach
settlements with our vendors, leaving us with a cleaner balance
sheet and better outlook for 2014. We wish him the very best
in his next endeavours and look forward to continuing to work with
him as a director of the Company."
Outlook
The Company is committed to further clean-up its
balance sheet through negotiated settlement agreements with the
remaining vendor, utilizing the remaining balance of the insider
loan facility, increased gas processing fees and production
revenues in Argentina. The
Company expects to achieve positive cashflow in 2014 as the year
progresses.
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 million cubic feet per day.
The Company's common shares are listed on the TSXV under the symbol
"RPT".
Boe Presentation
Production information is commonly reported in
units of barrels of oil equivalent (boe). For purposes of computing
such units, natural gas is converted to equivalent barrels of oil
using a conversion factor of six thousand cubic feet (Mcf) to one
barrel (bbl). This conversion ratio of 6:1 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.
Forward-Looking Information
This news release contains certain
forward‐looking statements relating, but not limited, to pending
completion of final documentation and negotiation of settlements
arrangements with the remaining creditors, future cash flow from
the gas plant in Argentina (and
the proportionate amount of the Company's revenue it will
represent), the ability to realize profitable cash flow in 2014,
the ability to further clean-up the balance sheet and generate
increased revenues in Argentina.
Forward‐looking information typically contains statements with
words such as "anticipate", "believe", "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 willingness of remaining creditors to negotiate
final settlements, 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, the
reduction of G&A and expenses, 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
associated with uncertainty regarding the willingness of
remaining creditors to negotiate settlements, uncertainty whether
any creditors will commence legal proceedings and the costs of
same, the ability to further clean-up the balance sheet, risks
associated with the oil and natural gas industry (e.g., operational
risks and health, safety and environmental risks), the ability to
retain management and staff, the inability to access funding and
continue as a going concern, weather-induced delays and natural
disasters, interruptions to production and processing revenue,
production declines, the other uncertainties regarding future
revenues, union activities and labour issues in Argentina, change in government policies, the
risk of commodity price changes, the risk of foreign exchange rate
fluctuations (which may not be as favourable as those currently
experienced), currency controls and a change in the manner and
rates at which the Company is exchanging currency, and risks
associated with international activity and political risks over
which it has no control, changes in export or exchange policies,
adverse determinations or rulings by governmental authorities.
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.
Additional information relating to the Company
is also available on SEDAR at www.sedar.com.
ArPetrol's head office address is 700, 815 8
Avenue S.W., Calgary, AB T2P
3P2
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.