Petromagdalena Announces Filing of Second Quarter 2011 Results and Update on Cubiro Exploration Wells
TORONTO, Aug. 29, 2011 /CNW/ - PetroMagdalena Energy Corp. (TSXV: PMD) announced today the filing of its interim condensed consolidated financial statements for the three and six months ended June 30, 2011, together with its Management's Discussion and Analysis. These documents will be available on the Company's website at www.petromagdalena.com and at www.sedar.com.
Luciano Biondi, the Company's Chief Executive Officer, stated: "we are pleased to report second quarter results under the new management team which reflect a stable cash position and the ongoing improvement in operating netback. The key focus points for the Company are maintaining a stable balance sheet, improving our economics and growing production. Our efforts so far have increased operating netback to $54 per boe in Q2, the highest quarterly average in our history and is a direct reflection of the Company's commitment to improving income and minimizing costs. We are very pleased with the advances we are making in our exploration program. The results in Petirrojo-1 are now followed with positive results in Copa B-1, where we have over 45 feet of log indicated pay in the C5 and C3 and after casing the well, we will begin testing. Our strategy builds on our core assets, expanding our work program at Cubiro with an additional development well and exploration well in Block B as a result of the successful Petirojo-1 discovery, and the exploration wells later this year in Topoyaco and Santa Cruz. Importantly, we received our environmental permit for the Santa Cruz block, and our partners are about to spud the Yaraqui-1X well at Topoyaco very soon. We look forward to continue providing our investors and analysts with timely information on our operations and exploration."
The Company reported revenues for the second quarter of 2011 of $16.4 million driven by the sale of 173,686 barrels of oil at an average selling price of $96 per barrel and 163,319 mcf of gas at an average selling price of $4.56 per MMbtu. Operating netback amounted to $10.8 million, or an average of $54 per barrel of oil-equivalent ("boe") in the second quarter, a $2 per boe improvement from the first quarter of 2011 as a result of production cost savings measures implemented at Cubiro and the shift of one-third of its oil deliveries from the Rubiales field to Guaduas during the second quarter. As announced last week, commencing in July, the Company is now delivering 100% of its oil under the marketing agreement with Pacific Rubiales Energy Corp. to Guaduas, a move that has enhanced its operating netback by more than $10 per barrel compared with previous deliveries to the Rubiales field. Cost savings initiatives implemented by management resulted in a reduction of G&A in the second quarter to $3.7 million, $0.2 million higher than previously expected due to the strengthening of the Colombian peso against the U.S. dollar in the second quarter.
For the second quarter of 2011, the Company reported a net loss of $12.7 million, or $0.09 per share. The second quarter net loss included a $4.0 million write-off of the La Punta-4 dry well, $3.6 million of share-based compensation expenses related to stock options granted in the second quarter and a $3.8 million foreign exchange loss. For the first half of 2011, the net loss of $23.0 million, or $0.17 per share, also includes the impact of the one-time charge of $6.3 million related to the 2011-2014 equity tax levied on companies in Colombia.
The Company's balance sheet continued to show improvement in the second quarter. At June 30, 2011, the cash position stood at $26.5 million and total debt amounted to $47.3 million, including the CA$31.1 million of 9% Secured Notes issued in May to fund the acquisition of additional working interests in the Cubiro and Yamu Blocks in the Llanos Basin.
The Company is pleased to announce that the Petirojo-1 discovery well, announced last week, has since tested an average rate of 1,766 bopd of 40.3 degrees API light oil over a 7-day test, which represents 1,237 bopd gross working interest share for the Company. After four days of constant production, the pump speed was increased to generate a second inflow rate by increasing the drawdown from 20% to 23.46%. Over the last 48 hours of the test, the well has produced at a stabilized rate of 2,020 bopd with a constant water cut of 31.5% and a 23.5% drawdown.
This month, with testing completed, production commenced from a successful new well, Yamu-2, at the Yamu property in the Llanos Basin. The Company's 10% working interest share of daily production from this new well is currently 95 bopd bringing the companies share of production from the Yamu block close to 180 bopd
On August 26, 2011, the Company received notification that the environmental permit for the Santa Cruz property has now been issued. The drilling location and timing are currently being finalized and it is expected that the first exploratory well, in which the Company will have a 70% working interest but fund only 40% of the cost as a result of the farm out announced last week, will spud in the fourth quarter of 2011.
The Company's capital and exploration program over the second half of 2011 is expected to be approximately $27 million to $30 million including the Petirojo-1, Yopa, Copa-B and Copa-A South exploratory wells and two development wells at Cubiro, the Yaraqui-1X exploratory well at Prospect D at Topoyaco and the exploratory well at Santa Cruz. With the recent successful new Petirojo-1 and Yamu-2 wells in August, together with risked production increases from the Cubiro drilling campaign, the Company continues to expect that it will meet its daily production guidance of an average of 2,800 boed for 2011.
Management will hold a conference call on Tuesday, August 30, 2011 at 11:00 a.m. (Eastern Time) to provide an operational update and to discuss the second quarter results. Analysts and interested investors are invited to participate as follows:
Toronto & International: (647) 427-7450
North America: (888) 231-8191 Conference ID: 96023876
A playback of this conference call will be available by dialling 416-849-0833 or 1-855-859-2056 (toll free) with the above conference ID number until September 14, 2011.
PetroMagdalena is a Canadian-based oil and gas exploration and production company, with working interests in 19 properties in five basins in Colombia. Further information can be obtained by visiting our website at www.petromagdalena.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 PetroMagdalena. 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 PetroMagdalena; 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 PetroMagdalena 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 PetroMagdalena 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. PetroMagdalena 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.
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