Petro Andina Resources Inc.

Petro Andina Resources Inc.

November 06, 2009 18:43 ET

Petro Andina Announces Closing of Arrangement With Pluspetrol

CALGARY, ALBERTA--(Marketwire - Nov. 6, 2009) -


Petro Andina Resources Inc. ("Petro Andina") (TSX:PAR) is pleased to announce that Pluspetrol Resources Corporation N.V., together with its wholly owned subsidiary 1462627 Alberta Ltd., (collectively, "Pluspetrol"), have completed the previously announced Plan of Arrangement transaction (the "Arrangement") involving Petro Andina, Pluspetrol and Parex Resources Inc. ("Parex" or "the Company"). Pursuant to the Arrangement Pluspetrol has acquired all of the issued and outstanding class A shares of Petro Andina for $7.65 per share pursuant to a Plan of Arrangement under the Business Corporations Act (Alberta).

As part of the Arrangement, Petro Andina shareholders also received, for each Class A share held, one common share and one-tenth of a common share purchase warrant (the "Parex Warrants") of Parex. Each whole Parex Warrant may be exercised to purchase one common share of Parex until December 6, 2009 at an exercise price of Cdn $3.00.

Parex is a newly formed international exploration company holding the Colombia and Trinidad & Tobago exploration assets formerly owned by Petro Andina. Parex's management and Board of Directors have extensive international and technical experience, being comprised of the former officers and directors of Petro Andina. Parex's portfolio of prospects in onshore Trinidad & Tobago and in Colombia's Llanos Basin have been advanced through Petro Andina's efforts over the past two years. Specifically, Parex has exploration contracts for 4 onshore blocks in Colombia with 489,000 gross acres and 3 onshore blocks in Trinidad & Tobago with 218,400 gross acres. Drilling in the exploration acreage is anticipated to begin in the first half of 2010.

Parex is well capitalized with no debt and gross working capital of approximately Cdn $98 million, inclusive of net proceeds from the Cdn $20 million subscription receipts offering and Cdn $10 million management private placement closed in conjunction with the Arrangement. Currently, US $23 million of working capital is temporarily restricted to support letters of credit related to Parex's ongoing exploration activities in the Llanos basin. The Company expects to place an alternative credit arrangement that would reduce or eliminate the need for restricted working capital and therefore increase working capital prior to the end of fiscal 2009. Inclusive of the common shares issued on these equity financings, Parex has approximately 59.3 million common shares and 4.9 million Parex Warrants outstanding. If all Parex Warrants outstanding are exercised, working capital would increase by approximately Cdn $15 million.

Conditional approval from the TSX Venture Exchange ("TSX-V") of the listing of the Parex common shares (TSX-V:PXT) and Parex share purchase warrants (TSX-V:PXT.W) issuable on the Arrangement has been received. Assuming all TSX-V listing conditions are met, trading on the TSX-V in the Parex common shares and Parex warrants is expected to commence on the opening of the market on November 12, 2009, with Petro Andina's Class A shares being delisted from the TSX on the close of the market on November 11, 2009.

Wayne Foo, President and CEO commented "this transaction to sell the Argentine business and redeploy working capital and additional equity to our high impact exploration blocks in Colombia and Trinidad is the result of the extremely hard work and expertise of our staff, the oversight provided by our Board and the guidance of our financial advisors, FirstEnergy Capital and ScotiaWaterous. We look forward to growing Parex like we grew Petro Andina and meeting with shareholders over the coming months."

This news release does not constitute an offer to sell securities, nor is it a solicitation of an offer to buy securities, in any jurisdiction. All sales will be made through registered securities dealers in jurisdictions where the offering has been qualified for distribution. The securities offered are not, and will not be, registered under the securities laws of the United States of America, nor any state thereof and may not be sold in the United States of America absent registration in the United States or the availability of an exemption from such registration.

Forward-Looking Statements

Certain statements regarding Petro Andina or Parex, including management's assessment of future plans and operations, may constitute forward-looking statements under applicable securities laws and necessarily involve known and unknown risks and uncertainties, most of which are beyond Petro Andina or Parex's control. Specifically, and without limitation, all statements included in this press release that address activities, events or developments that either Petro Andina or Parex expects or anticipates will or may occur in the future, including management's assessment of future plans and operations and statements with respect to the Arrangement and the stock exchange listing of securities issued under the Arrangement, may constitute forward-looking statements under applicable securities laws and necessarily involve known and unknown risks and uncertainties, most of which are beyond Petro Andina or Parex's control. These risks may cause actual financial and operating results, performance, levels of activity and achievements to differ materially from those expressed in, or implied by, such forward-looking statements. Although Petro Andina and Parex believe that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Such risks and uncertainties include, but are not limited to: the impact of general economic conditions in Canada, Argentina, Colombia and Trinidad & Tobago, industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced, in Canada, Argentina, Colombia and Trinidad & Tobago, competition, the lack of availability of qualified personnel, fluctuations in commodity prices, the results of exploration and development drilling and related activities, imprecision in reserve estimates, the production and growth potential of Petro Andina's assets, fluctuations in foreign exchange or interest rates, the ability to access sufficient capital from internal and external sources and obtaining required approvals of regulatory authorities, in Canada, Argentina, Colombia and Trinidad & Tobago. Many of these risk factors are discussed in further detail in Petro Andina's Annual Information Form dated March 31, 2009 on file with Canadian securities commissions and in the Information Circular, which will be filed under Petro Andina's profile on SEDAR at Readers are also referred to the risk factors described in other documents that Petro Andina files from time to time with securities regulatory authorities.

Although the forward-looking statements contained in this Press Release are based upon assumptions which management believes to be reasonable, neither Petro Andina or Parex can assure shareholders that actual results will be consistent with these forward-looking statements. With respect to forward-looking statements contained in this press release, Petro Andina and Parex have made assumptions regarding: current commodity prices and royalty regimes; timing of receipt of regulatory approvals; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the price of oil and natural gas; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment; effects of regulation by governmental agencies; royalty rates; future operating costs; and other matters.

Accordingly, neither Petro Andina nor Parex give any assurance nor make any representations or warranty that the expectations conveyed by the forward-looking statements will prove to be correct and actual results may differ materially from those anticipated in the forward-looking statements. Neither Petro Andina or Parex undertake any obligation to publicly update or revise any forward-looking statements other than required by applicable securities law.

Neither the The Toronto Stock Exchange nor the TSX Venture Exchange has reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Parex Resources Inc
    Michael Kruchten
    Manager, Investor Relations
    (403) 517-1733
    (403) 265-8216 (FAX)
    Parex Resources Inc.
    Kenneth G. Pinsky
    Vice President, Finance and Chief Financial Officer
    (403) 517-1729
    (403) 265-8216 (FAX)