rPetrol earns $1.61-million in Q1
2014-05-26 07:13 ET - News Release
Mr. Ian Habke reports
ARPETROL LTD. ANNOUNCES FIRST-QUARTER 2014 FINANCIAL AND OPERATING RESULTS AND REPORTS POSITIVE WORKING CAPITAL OF $1.4 MILLION
ArPetrol Ltd. has released its financial and operating results for the three months ended March 31, 2014, and has provided an operational update on activities to date this year as well as an outlook for the remainder of 2014. 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 and posted on the company's website.
Summary for the first quarter 2014
Operating and financial
ArPetrol's working capital position continued to improve during the first quarter of 2014. The company had a working capital of $1.4-million at the end of the first quarter of 2014 versus a deficit of $800,000 at the end of 2013. The largest contributor to this improvement comes from the company's success in reaching settlement agreements with the outstanding vendors from its 2012 drilling program. Currently, ArPetrol has successfully concluded settlements with all but one of its drilling vendors. Continuing discussions are progressing with this last vendor.
The company had drawn $1.7-million on its short-term loan at the end of the first quarter 2014.
ArPetrol's first quarter production averaged 242 barrels of oil equivalent per day (boe/d). This is an increase of 78 boe/d from the fourth quarter of 2013 and an increase of 14 boe/d from the first quarter of last year. Fourth quarter 2013 production was affected by well performance issues which were resolved before the end of the fourth quarter.
The first quarter 2014 average realized natural gas price was $4.21 per 1,000 cubic feet, 56 cents per 1,000 cubic feet higher than the price realized in the fourth quarter of 2013 and 86 cents per 1,000 cubic feet higher than the first quarter of 2013. This higher price during 2014 reflects the company's new gas sales contract signed during the year.
The average price realized for natural gas liquids (NGL) in the quarter was $81.30 per barrel (bbl), a decrease of $1.41 per bbl over the fourth quarter of 2013. The reduced NGL pricing reflects the changing dynamics in the Argentine markets.
ArPetrol continues to generate strong gas processing revenues from its new gas processing contracts that it negotiated in 2013. During the first quarter of 2014, gas processing revenues were $2.2-million, consistent with the fourth quarter of 2013 and double the $1.1-million earned in the first quarter of 2013.
There were no capital expenditures during the quarter.
Net income for the quarter was $1,613,357 versus a net loss of $290,350 for the fourth quarter of 2013.
SUMMARY OF RESULTS Three months ended March 31, 2014 2013 Financial Production sales $650,151 $477,544 Processing sales 2,246,910 1,127,507 Funds flow from operations (loss) 845,661 (682,551) Cash from operating activities 903,213 2,175,384 Comprehensive income 2,464,939 2,205,035 Fixed asset expenditures - 234,806 Operations Production Natural gas -- mcf per day 1,330 1,208 Natural gas liquids -- bbls per day 20 28 Total -- boe per day 242 230 Average sales price Natural gas -- $ per mcf 4.21 2.78 Natural gas liquids -- $ per bbl 81.30 68.94 Operating netback Production -- $ per boe (loss) 3.67 (3.47) Processing -- $ per mcf processed 0.21 0.05
Operational update and outlook
During the first quarter of 2014, ArPetrol continued its progress toward 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 cash flow during the quarter and this is expected to continue during 2014. The company has also improved its balance sheet by concluding settlement agreements with all but one vendor from the 2012 drilling program. Continuing discussions are progressing with this last vendor.
The company's 2014 outlook includes estimated production of 200 to 240 boe/d, estimated processing volumes of 70 million to 80 million cubic feet per day and estimated capital expenditures for maintenance and improvements of $800,000 to $1.2-million. In 2014, the company is forecast to be self financing through projected cash flows, covering its capital expenditures and, barring any unforeseen circumstances, the repayment of its short-term loan by the year-end.
Over the next few months, ArPetrol will restructure the company and develop a go-forward strategic plan that will allow management to look at and finance growth opportunities in Argentina and elsewhere when they become available.
For the initial step of the corporate restructuring, the board of directors of ArPetrol has determined that it is in the best interests of the company to implement the consolidation of the issued and outstanding ArPetrol shares on the basis of one new postconsolidation share for every 25 shares preconsolidation shares held. The company believes that such a consolidation may enhance the marketability of the common shares as an investment and may facilitate future financings, issuance of shares or any other form of securities, as the company is subject to the TSX Venture Exchange minimum pricing rules for financings. Share consolidation was approved at ArPetrol annual and special shareholder meeting held on Aug. 21, 2013.
Based upon the number of issued and outstanding ArPetrol shares as of May 22, 2014, the issued and outstanding ArPetrol shares would be reduced from 572,536,704 to approximately 22,901,468 shares. It is expected that the share consolidation will become effective on June 2, 2014, subject to receiving regulatory approvals.
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