Alange Energy Announces Update on Internal Review Process, a Production Update and Appointment of New Director
Mar. 7, 2011 (PR Newswire) --
TORONTO, March 7 /PRNewswire-FirstCall/ - Alange Energy Corp. (TSXV: ALE) announced today an update on its internal review process, which is still ongoing:
The Company has terminated, without liability or further obligation, the "pipeline without a pipe" strategy for the direct export of its oil to the "Cartagena Oil Export Platform" which did not prove to be cost effective given the Company's current or anticipated levels of production. This platform included a sales agreement with Arcadia Petroleum Limited and Colombiana de Distribucion y Servicio CI S.A ("Codis") and three-year contracts with each of Transporte Sanchez Polo S.A. for the trucking of oil and with Codis for storage and port handling services in Cartagena. The Company has implemented a more conventional marketing contract with Pacific Rubiales Energy Corp. to significantly improve its netback per barrel, relative to the previous Cartagena Oil Export Platform, by selling its crude oil from Cubiro into the international market under a straightforward FOB ("Freight on Board") pricing model, without a minimum load requirement, through multiple delivery points to the existing Colombian pipeline infrastructure.
Management has continued to take steps to reduce the Company's ongoing G&A. To date, staff reductions include 10 senior managers, 20 support staff and 19 technical consultants. The Company has also cancelled the contract of a local public relations firm in Colombia. Management is continuing to review other contracts and activity-based spending to identify further cost savings.
To date, the Company has repaid $9 million of its long-term debt and is currently in the process of finalizing repayment of a further $22 million of credit line borrowings and long-term debt. The funding for these debt repayments was provided through the recently completed C$70 million equity financing. By the end of March, the Company expects to have only one long-term debt facility of approximately $12 million following the debt repayments.
The Company's share of production, before deduction of royalties, averaged 2,374 barrels of oil equivalent ("boe") per day in December 2010. The Company's production averaged 2,181 boe per day and 2,310 boe per day for January and February, respectively. Production at Cubiro during the first two months of 2011 has been impacted by trucking disruptions affecting many of the operators in the Llanos Basin. Oil represents approximately 88% of the Company's total share of production (before royalties) through the first two months of 2011.
The transfer of operatorship of Topoyaco to Pacific Rubiales Energy Corp. was completed and did not result in any payment or compensation. Although no longer the operator, Alange Energy retains its full economic interest of 50% in the block.
Further, the Company is pleased to announce the appointment of Mr. Ian Mann as an independent director to its board, effective immediately.
Mr. Mann is currently the President of Meridian Fund Managers Ltd., a BVI-registered fund manager that oversees two alternative investment funds primarily focused on global mining and oil and gas companies. Prior to 2003, Mr. Mann held senior management and partner positions with several Bermuda-based companies. He has over ten years of corporate governance experience as a non-executive Director of two Canadian-listed mining companies, L.G.R. Resources Inc. and Franc Or Resources Ltd. He holds an Honours Business Administration degree from The University of Western Ontario.
Mr. Mann joins the board to replace Mr. Boris Abad, who resigned on February 10, 2011; the appointment of Mr. Mann remains subject to regulatory approval.
The Company will be releasing its fourth quarter and year-end results on April 28, 2011. An updated reserves report, prepared in accordance with National Instrument 51-101, will be issued in conjunction with the financial results. It is expected that the internal review process will continue, and be concluded, by this date.
About Alange Energy Corp.
Alange Energy is a Canadian-based oil and gas exploration and production company, with working interests in 12 properties in four basins in Colombia. Further information can be obtained by visiting our website at www.alangeenergy.com.
All monetary amounts in U.S. dollars unless otherwise stated. This news release contains certain "forward-looking statements" and "forward-looking information" under applicable Canadian securities laws concerning the business, operations and financial performance and condition of Alange Energy Corp. ("Alange Energy"). Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and reserve life of the various oil and gas projects of Alange Energy; the estimation of oil and gas reserves; the realization of oil and gas reserve estimates; the timing and amount of estimated future production; costs of production; success of exploration activities; and currency exchange rate fluctuations. Except for statements of historical fact relating to the company, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as "plan," "expect," "project," "intend," "believe," "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Many of these assumptions are based on factors and events that are not within the control of Alange Energy and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions, risks relating to international operations, fluctuating oil and gas prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the oil and gas industry, failure of plant, equipment or processes to operate as anticipated. Although Alange Energy has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Alange Energy undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.
Statements concerning oil and gas reserve estimates may also be deemed to constitute forward-looking statements to the extent they involve estimates of the oil and gas that will be encountered if the property is developed. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Estimated values of future net revenue disclosed do not represent fair market value.
