Americas Petrogas Inc.
TSX VENTURE : BOE

Americas Petrogas Inc.
GrowMax AgriCorp.

GrowMax AgriCorp.

May 03, 2010 10:12 ET

Americas Petrogas Announces 2009 Results and Reserves

CALGARY, ALBERTA--(Marketwire - May 3, 2010) -

Americas Petrogas Inc. ("Americas" or the "Company") (TSX VENTURE:BOE) announces that, on April 30, 2010, it filed its 2009 audited consolidated financial statements and Management's Discussion and Analysis (MD&A) relating to its 2009 year-end results. On the same day, the Company filed the disclosure and reports relating to reserves data and other oil and gas information required pursuant to National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities. These filings can be accessed electronically on the System for Electronic Document Analysis and Retrieval (SEDAR) website: www.sedar.com. All amounts are in Canadian dollars unless otherwise stated.

Results

  2009 2008
For the year ended December 31    
Revenue (interest income only) $34,686   $346,757  
Net Income (Loss) $4,001,673   ($3,868,573 )
Earnings (Loss) per share, basic and diluted $0.043   ($0.047 )
Cash flow used in operations ($3,199,832 ) ($2,534,099 )
Capital expenditures on property and equipment ($4,674,139 ) ($15,168,536 )
         
As of December 31        
Cash and cash equivalents $14,483,513   $7,701,196  
Working capital $12,976,741   $6,525,699  
Total assets $52,856,802   $48,829,011  
Long-term debt Zero   Zero  
Non-controlling interest $1,588,132   -  
Total shareholders' equity $49,614,126   $47,216,385  
         
Net Reserves (BOE) (1) (2) (3)        
  Total Proved (1P) 631,000   1,100,000  
  Total Proved plus Probable (2P) 9,538,000   10,647,000  
  Total Proved plus Probable plus Possible (3P) 52,685,000   59,837,000  

Note 1: BOE = barrels of oil equivalent. Conversion of natural gas to BOE on the basis of 1 BOE to 6 thousand cubic feet (Mscf) of natural gas. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 1 BOE for 6 Mscf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Note 2: The reserve estimates for 2009 and 2008 were prepared by an independent petroleum engineering firm in accordance with National Instrument 51-101 and the COGE Handbook. Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. There is at least a 90% probability that the quantities actually recovered will equal or exceed the estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is at least a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

Note 3: Decreases due to management decision to relinquish two properties, Calmuco and Barreales Colorado. For further information, see below.

Operational Highlights

Medanito Sur

The Company is pleased to have been formally recognized as a partner and operator on the Medanito Sur block during 2009.

In September 2009, the Company drilled its 4th well, El Calden xs-4, on the Medanito Sur block and in March 2010, the well was completed. This 4th well discovered light sweet crude oil (34 degree API) in the Pre-Cuyano formation, confirming the discovery made by the El Calden x-1 well in 2008. To date, all four wells drilled on the Medanito Sur block have been oil discoveries. Production and sales began in late February 2010.

Financing

Americas, the parent Company, was successful in raising $5,000,000 of equity financing in 2009. Of this amount $4.5 million was invested by the Indian Farmers Fertiliser Co-Operative (IFFCO) group. As well, the Company secured US$9,500,000 of equity financing via the issuance of shares by GrowMax Agri Corp., a subsidiary of Americas and the parent company of Americas Potash Peru S.A. ("Potash Peru"). This investment was also made by the IFFCO group. IFFCO is the world's largest manufacturer and marketer of fertilizer in the co-operative sector with over 50 million farmers associated with it and five fertilizer plants producing a total of approximately 8.2 million tonnes of phosphate and nitrogen fertilizers.

Bayovar Project in the Sechura Desert of Peru

In May 2009, the Company's subsidiary, Potash Peru, signed an agreement with the Community Foundation of San Martin de Sechura (the "Foundation") that permits Potash Peru the unconditional right of surface access in respect of its potash brine reservoirs and evaporite deposit located on Potash Peru's 82,195 hectare (approximately 202,000 acres or 820 sq.km.) Bayovar concession in the Sechura Desert in Northwest Peru.

Financial Review of 2009

The Company reported a net income of $4,001,673 or $0.043 per share for the year ended December 31, 2009 compared to a net loss of ($3,868,573) or ($0.047) per share for the same period in 2008. The net income in 2009 is mainly attributable to a reported gain of $8,404,917 that resulted from the issuance of common shares by GrowMax to IFFCO in mid-December 2009.

From a cash flow perspective, during the year ended December 31, 2009, the Company used $3.2 million in operating activities, compared to $2.5 million in 2008. The increase in 2009 was primarily due to the increase in general and administrative expenses. With respect to investing activities, the Company spent approximately $4.7 million on property and equipment in 2009, considerably less than in 2008. The decrease was a conscious decision made by management in order to preserve cash during the difficult and uncertain period of the financial markets and while the Company awaited receipt of the government decree and public deed for Medanito Sur. The other major cash flow item relating to investing activities was the inflow of US$9.5 million of proceeds attributable to the previously-mentioned issuance of common shares by GrowMax. Financing activities, completed in November 2009, raised $5.0 million via issuance of common shares. In 2008, prior to the dramatic decline of capital markets, the Company had raised approximately $15.1 million by issuing units comprising one common share and one-half of a warrant, the majority of which have already expired.

Subsequent to year-end, in February 2010, GrowMax raised an additional US$0.5 million and, in March 2010, the Company completed two equity financings raising gross proceeds of approximately $16 million (net approximately $14.9 million) by issuing 19,753,114 common shares. This additional funding, when combined with existing cash on hand of approximately $14.5 million at December 31, 2009, is expected to permit the Company to accelerate its capital expenditures plan and to continue to meet its exploration commitments.

The Company's balance sheet at December 31, 2009, compared to December 31, 2008, shows higher cash balances, which reflects the raising of equity financing in Americas and GrowMax, respectively. The Company's reported property and equipment decreased, despite the additional spending in the current period, because of the sizeable strengthening of the Canadian dollar (reporting currency) compared to the U.S. dollar and the Argentinean Peso (functional currencies). This currency strengthening also explains most of the decline in restricted investments, which are denominated in U.S. dollars. A new item on the 2009 balance sheet is non-controlling interest that arises from the previously-mentioned issuance of shares by GrowMax, which resulted in the introduction of a minority shareholder in GrowMax.

Relinquishment

In 2009, the Company relinquished two Argentinean blocks, Calmuco and Barreales Colorado. Though these properties had some gas potential, they were in a more remote part of the Neuquen Basin with limited infrastructure. Accordingly, costs of development and costs to deliver the gas to market would have been relatively high. Faced with this information, the Company decided to relinquish the properties, which eliminated some of the Company' near-term commitments. The Company's net reserves declined in 2009 because of the relinquishment of Calmuco, which had gas reserves attributed to it in 2008.

Fourth Quarter

  Three Months Ended December 31
  2009 2008
     
Revenue (interest income only) $962   $51,164  
Net Income (Loss) $6,789,837   ($1,614,270 )
Earnings (Loss) per share, basic and diluted $0.067   ($0.017 )
Cash flow used in operations ($890,806 ) ($1,450,013 )
Capital expenditures on property and equipment ($1,199,811 ) ($5,907,658 )

The Company recorded a net income in the fourth quarter of $6,789,837 or $0.067 per share. The income was attributable to the gain on the issuance of shares by GrowMax, one of the Company's subsidiaries related to the Bayovar potash (and other minerals) project.

For further information, including a more detailed financial review and discussion of operational highlights, please see the Company's consolidated financial statements for the year ended December 31, 2009 and the related MD&A for 2009 filed under the Company's profile at www.sedar.com.

About Americas Petrogas Inc.

Americas Petrogas Inc. is a Canadian company whose shares trade on the TSX Venture Exchange under the symbol "BOE". The Company has oil and gas exploration, development and production activities and holds over 1,808,000 acres of land in Argentina's most prolific Neuquen Basin. In Peru, the Company is developing a surface potash (and other minerals) brine reservoir and evaporite deposit at Bayovar in the Sechura Desert of Northwest Peru.

Certain statements in this Press Release constitute forward-looking statements under applicable securities legislation. Such forward-looking statements involve risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. This forward-looking information is subject to known and unknown risks and uncertainties and other factors, which may cause actual results, levels and timing of activity and achievements to differ materially from those expressed or implied by such information.

This press release includes reference to BOEs (barrels of oil equivalent). BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 1 BOE for 6 Mscf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THE RELEASE.

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