Petro Andina Resources Inc.
TSX : PAR

Petro Andina Resources Inc.

September 29, 2009 19:25 ET

Petro Andina ExploreCo Announces Closing of $20 Million Subscription Receipt Financing

CALGARY, ALBERTA--(Marketwire - Sept. 29, 2009) -

NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Petro Andina Resources Inc. ("Petro Andina") (TSX:PAR) is pleased to announce that its wholly-owned subsidiary, Parex Resources Inc. (formerly 1485196 Alberta Ltd.) ("ExploreCo" or "Parex") has completed the previously announced bought deal subscription receipt financing co-led by FirstEnergy Capital Corp. and Scotia Capital Inc., and including CIBC World Markets Inc., Peters & Co. Limited, Raymond James Ltd., and Wellington West Capital Markets Inc. (collectively the "Underwriters"). Including the full exercise of the Underwriter's option, ExploreCo issued, on a private placement basis, 6.67 million Subscription Receipts at a price of $3.00 per Subscription Receipt for gross aggregate proceeds of approximately $20.0 million (the "Offering").

The proceeds from the Offering have been deposited in escrow with Valiant Trust Company pending the satisfaction of certain conditions, including (i) the receipt of all necessary regulatory approvals to the Offering, (ii) the receipt of all necessary regulatory, court and shareholder approvals of the previously announced Plan of Arrangement transaction (the "Arrangement") involving, among others, Petro Andina, ExploreCo and Pluspetrol Resources Corporation N.V., (iii) the Underwriters' being satisfied that the common shares of ExploreCo ("Parex Shares") will be listed on a recognized stock exchange not later than 20 days after the closing of the Arrangement, and (iv) the completion, in conjunction with the Arrangement, of a private placement to management of ExploreCo of not less than $6 million and not more than $10 million at a price of $3.00 per Parex Share (the "Management Private Placement").

Upon all conditions being met, and in conjunction with the completion of the Arrangement, the proceeds of the Offering will be released to ExploreCo and each Subscription Receipt will be exchanged for one Parex Share without additional payment. If closing of the Arrangement does not take place by December 31, 2009, the Arrangement is terminated at any earlier time (or Petro Andina has announced to the public that it does not intend to proceed with the Arrangement), or the Management Private Placement is not completed, holders of the Subscription Receipts will be entitled to a return of their full subscription price and their pro rata entitlement to the interest earned on the escrowed funds.

About Parex

As discussed in Petro Andina's September 3, 2009 press release, Parex (originally called 1485196 Alberta Ltd.) was formed to participate in the Arrangement, to become a new exploration company to be owned by former Petro Andina shareholders. Pursuant to the Arrangement, Parex and its subsidiaries are to carry on the business currently carried on by Petro Andina's subsidiaries in Colombia and Trinidad & Tobago. Accordingly, Parex will, after closing the Arrangement, have a portfolio of high impact prospects in onshore Trinidad & Tobago and in the Llanos Basin in Colombia that have been advanced through Petro Andina's efforts over the past two years. Specifically, Parex will exploration contracts for 4 onshore blocks in Colombia with 489,000 gross acres and 2 onshore blocks in Trinidad & Tobago with 211,000 gross acres.

After the closing of the Arrangement, Parex will have estimated, approximate working capital of $94.8 million, inclusive of the release of the net proceeds of the Offering to Parex and the receipt of the minimum funds from the Management Private Placement ($98.9 million if the maximum funds from the Management Private Placement are raised). The Parex share purchase warrants, to be issued to the holders of Parex Shares pursuant to the Arrangement, if fully exercised, could result in additional cash proceeds to Parex of approximately $15 million. This estimate of working capital is inherently difficult and dependent upon assumptions such as future results of Petro Andina's operations to October 31, 2009, foreign exchange rate fluctuations, costs of the Arrangement and other factors. Parex's actual working capital at the close of the Arrangement may be materially different then the current estimate.

Further, after closing the Arrangement, the current Petro Andina management and Board of Directors, having extensive international and technical experience, will continue on with Parex. The distribution of Parex Shares pursuant to the Arrangement thereby provides Petro Andina shareholders with the opportunity to participate directly in an accelerated, fully funded high-growth potential exploration company in attractive jurisdictions.

About Petro Andina

Petro Andina is engaged in oil and natural gas exploration, development and production in South America and the Caribbean region. The Company is continuing to develop its existing reserves and to conduct appraisal and exploration drilling on its 628,000 acre (346,000 net acre) land position in the Neuquen Basin of Argentina. Exploration activities have also begun on its 489,000 acre (244,500 net acre) exploration contracts in the Llanos Basin of Colombia and 211,000 acre (105,500 net acre) exploration contracts onshore Trinidad & Tobago. Petro Andina is headquartered in Calgary, Canada.

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 Resources Inc., 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'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.

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, obtaining required approvals of regulatory authorities, in Canada, Argentina, Colombia and Trinidad & Tobago and the consummation of the Arrangement, Offering and Management Private Placement being dependent on the satisfaction of customary closing conditions, regulatory approvals, the approval of Petro Andina's shareholders the approval of the Court. Many of these risk factors are discussed in further detail in Petro Andina's Annual Information Form dated December 31, 2008 on file with Canadian securities commissions. 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, Petro Andina cannot 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 has 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, Petro Andina gives no assurance nor makes 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. Petro Andina undertakes no obligation to publicly update or revise any forward-looking statements other than required by applicable securities law.

The Toronto Stock Exchange has not received and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

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