Q3..record sales of $3million..options still being examined Mr. Ian Habke reports
ARPETROL LTD. ANNOUNCES THIRD-QUARTER 2014 FINANCIAL AND OPERATING RESULTS AND REPORTS POSITIVE WORKING CAPITAL OF $1.8 MILLION
Arpetrol Ltd. has released its financial and operating results for the three and nine months ended Sept. 30, 2014, and is providing an operational update on activities to date this year, as well as an outlook for the remainder of 2014 and 2015. The Company's interim condensed consolidated financial statements and management's discussion and analysis (MD&A) for the reporting period have been filed on SEDAR at www.sedar.com and posted on the Company's website at www.arpetrol.com.
Summary for the Third Quarter 2014
Operating and Financial
Arpetrol's working capital position is $1.8 million at the end of the third quarter of 2014, with an increase of $0.4 million from the second quarter of the year. This is a significant improvement compared to a deficit of $0.8 million at the end of 2013. The Company had drawn $1.0 million on its short-term loan at the end of the third quarter 2014. Subsequent to the quarter end the Company made a $500,000 loan repayment reducing the balance of the short-term loan to $0.5 million. The remaining amount will be repaid by the end of 2014.During the third quarter of 2014 the Company processed 76 million cubic feet (Mmcf) of third-party gas generating $2.2 million of revenue and $1.1 million of operating netback from processing. Processing revenue has been consistent at around $2 million per quarter since the third quarter of 2013 when the Company signed its new gas processing contract. Arpetrol's third quarter production averaged 244 barrels of oil equivalent per day (boe/d). This is an increase of 26 boe/d from the second quarter of 2014. Second quarter 2014 production was affected by equipment issues early in the quarter. Third-quarter 2014 production was also positively affected by a change to the gas lift configuration on our wells. Fourth quarter 2014 production to date is averaging over 240 boe/d. The third quarter 2014 average realized natural gas price was $4.83 per thousand cubic feet (Mcf), $0.46 per Mcf higher than the price realized in the second quarter of 2014 and $0.88 per Mcf higher than the third quarter of 2013. This higher price during 2014 reflects the Company's new gas sales contract and changing exchange rates. The average price realized for natural gas liquids (NGLs) in the quarter was $84.29 per barrel (bbl), an increase of $2.11 per bbl over the second quarter of 2014. There were $6,241 in capital expenditures during the quarter.
Summary of Results (Cdn$ except shares outstanding and per boe1 amounts)Three Months Ended September 30,Nine Months Ended September 30, 2014 2013 2014 2013 Financial Production sales 769,086 513,717 2,051,441 1,563,031 Processing sales 2,234,764 2,211,991 6,536,899 4,381,509 Funds flow from (used in) operations1 289,581 (2,644,813) 977,964 (1,357,619) Cash from (used in) operating activities 491,997 (3,541,000) 502,657 (1,793,743) Comprehensive (loss) income 67,436 (4,245,285) (133,469) (3,236,478) Fixed asset expenditures 6,241 34,898 148,155 2,015,258 Weighted average shares outstanding - basic and diluted 2,3 22,901,468 22,901,468 22,901,468 22,901,468 Operations Third Party Processing -MMcf per day 76 80 76 72 Production Natural gas - Mcf per day 1,330 999 1,279 1,166 Natural gas liquids - bbls per day 23 20 22 24 Total - boe per day1 244 186 235 219 Average sales price Natural gas - $ per Mcf 4.83 3.95 4.47 3.41 Natural gas liquids - $ per bbl 84.29 81.79 81.45 73.00 Operating netback Production - $ per boe1 3.20 3.21 5.07 1.30 Processing - $ per Mcf processed1 0.16 0.18 0.17 0.10
Note 1: See advisories at the end of this news release with respect to non-IFRS measures and boe presentation. Note 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. Note 3: On June 2, 2014 the Company completed a consolidation of its issued and outstanding common shares on the basis of twenty-five (25) pre-consolidation common shares for each one (1) post-consolidation common share. All share and per share numbers have been adjusted to reflect this consolidation.
Operational Update and Outlook
During the third quarter of 2014, Arpetrol continued its progress towards a stable revenue generating company with a balance sheet that supports its operations. The new gas processing contracts have provided Arpetrol with a significant increase in processing revenue and this is expected to continue during 2015. The Company's 2014 outlook includes estimated production of 200 to 240 boe/d, estimated processing volumes of 70 to 80 MMcf/d and estimated capital expenditures for maintenance and improvements of $0.8 million to $1.2 million. In 2015, the Company's forecasted cash flows will allow it to be self-funding and cover its capital expenditures and build cash throughout the year. Arpetrol continues to look at all strategic opportunities available to the Company. These include growing its production and processing asset base in Argentina, considering merger opportunities to grow the Company in new basins or considering the possible sale of assets.About Arpetrol Ltd.
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 sales and processing sales less royalties, turnover taxes and operating expenses) and "funds flow from operations" (cash generated from operating activities before changes in non-cash working capital) 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 loss or other measures determined in accordance with IFRS, as an indicator of the Company's performance.
See the MD&A for the three and nine months ended September 30, 2014, 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 netback and a detailed calculation of such netbacks is presented in the MD&A for the three and nine months ended September 30, 2014.
We seek Safe Harbor.