Americas Petrogas Inc.
TSX VENTURE : BOE

Americas Petrogas Inc.

May 01, 2009 09:00 ET

Americas Petrogas Announces 2008 Financial Results and Adopts Shareholders Rights Plan

CALGARY, ALBERTA--(Marketwire - May 1, 2009) -

2008 Financial and Operating Highlights

Americas Petrogas Inc. ("Americas" or the "Company") (TSX VENTURE:BOE) is pleased to announce its financial results for the year ended December 31, 2008. Copies of the Company's consolidated financial statements for the year ended December 31, 2008 and the related Management's Discussion and Analysis (MD&A) for 2008 have been filed under the Company's profile at www.sedar.com. All amounts are in Canadian dollars unless otherwise stated.



Results
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For the year ended December 31 2008 2007
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Revenue (interest income only) $346,757 $393,242
Net Loss ($3,868,573) ($948,346)
Loss per share, basic and diluted ($0.047) ($0.022)
Cash flow used in operations ($2,534,099) ($412,810)
Capital expenditures on property
and equipment ($15,168,536) ($11,301,886)

As of December 31
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Cash and cash equivalents $7,701,196 $9,275,869
Working capital $6,525,699 $6,183,372
Total assets $48,829,011 $29,147,449
Long-term debt Zero Zero
Total shareholders' equity $47,216,385 $25,834,720

Net Reserves (BOE) (1) (2)
Total Proved (1P) 1,100,000 2,804,000
Total Proved plus Probable (2P) 10,647,000 9,242,000
Total Proved plus Probable plus
Possible (3P) 59,837,000 47,597,000

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 2008 and 2007 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.


Review of 2008

The Company reported a net loss of $3,868,573 or $0.047 per share for the year ended December 31, 2008 compared to a net loss of $948,346 or $0.022 per share for the same period in 2007. The increase in net loss can be primarily attributed to: (a) costs associated with the reverse takeover and amalgamation transaction and the subsequent costs associated with being a reporting issuer and being listed on a stock exchange; and (b) a foreign exchange loss associated with holding Canadian dollars while the U.S. dollar, Americas' functional currency, strengthened against the Canadian dollar, Americas' reporting currency.

From a cash flow perspective, during the year ended December 31, 2008, the Company raised approximately $15.1 million (2007- $25.6 million) by issuing units comprised of one common share and one-half purchase warrant. The financings, which were priced at approximately $1.15 per unit, were completed in May and June 2008. Also, during the year ended December 31, 2008, the Company spent approximately $16.2 million (2007 - $14.4 million) on investing activities, including $15.2 million on property and equipment. The vast majority of those expenditures were attributable to: (a) the Medanito Sur concession, where three exploration wells were drilled during the year, and (b) a 3D seismic program on part of the Totoral and Yerba Buena Blocks, and (c) a 3D seismic program on Los Toldos II. The Company was also awarded an option right to acquire a brine, potash concession in Peru.

The Company's balance sheet at December 31, 2008, compared to December 31, 2007, reflects the key changes described above, namely, raising significant equity financing and expending large amounts on the resource properties, particularly Medanito Sur, TYB Blocks and Los Toldos. One other notable change in the balance sheet is a significant change in accumulated other comprehensive income/loss, which reflects a strengthening of the U.S. dollar, which is the functional currency for the head office operations and Peruvian operations, against the Canadian dollar, which is the Company's reporting currency.

The Company increased its Proved plus Probable reserves by 1,405,000 BOE due mainly to an increase at Medanito Sur as a result of the three wells drilled in 2008, each of which found light oil. The Company spent approximately US$5.8 million, excluding VAT, to drill, complete and tie-in these wells, resulting in a finding cost of approximately US$4.13 per barrel.



Fourth Quarter
---------------

Three months ended
------------------------------
2008 2007
------------------------------
Revenue (interest income only) $51,164 $130,577
Net Loss ($1,614,270) ($431,928)
Loss per share, basic and diluted ($0.017) ($0.008)
Cash flow used in operations ($1,450,013) ($144,388)
Capital expenditures on property and
equipment ($5,907,658) ($2,193,414)


The Company incurred a net loss in the fourth quarter of $1,614,270 or $0.017 per share. The loss was due primarily to $872,000 of realized and unrealized foreign exchange losses that arose from holding Canadian dollar cash and investments while the Canadian dollar weakened against the U.S. dollar. From a cash flow perspective, the Company: spent $1.45 million on operations, which includes realized foreign exchange losses; and spent a total of $6.3 million on investing activities, including changes in non-cash working capital related substantially all to capital expenditures. Very little financing activities occurred.

Adoption of Shareholders Rights Plan

The Company announces that it has adopted a shareholder rights plan (the "Plan") effective April 29, 2009. Americas will be seeking shareholder approval of the Plan at its next annual general and special meeting of shareholders.

The Plan is designed to ensure the fair and equal treatment of shareholders in connection with any take-over bid for outstanding common shares of Americas. The Plan is not intended to prevent or deter take-over bids that offer fair treatment and value to shareholders, but is designed to encourage offers that represent fair value to all shareholders. The Plan seeks to provide shareholders with adequate time to properly assess a take-over bid without undue pressure. It also provides the Board of Directors with adequate time to fully assess an unsolicited take-over bid, to allow competing bids to emerge, and, if applicable, to explore other alternatives to the take-over bid to maximize shareholder value.

Under the terms of the Plan, one right will be issued by Americas for each outstanding Americas common share at the close of business on April 29, 2009, and for each Americas common share issued in future (subject to the terms of the Plan). The rights issued under the Plan become exercisable only if a person acquires or announces its intention to acquire 20% or more of the common shares of the Company without complying with the "Permitted Bid" provisions of the Plan or without the approval of Americas' Board of Directors.

Permitted Bids must be made to all holders of Americas common shares by way of a take-over bid circular prepared in compliance with applicable securities laws and, among other things, must be open for acceptance for a minimum of 60 days. If at the end of 60 days at least 50% of the outstanding common shares other than those owned by the offeror and certain related parties have been tendered and not withdrawn, the bidder may take-up and pay for the shares but must extend the bid for a further 10 days to allow other shareholders to tender to the bid.

If a take-over bid does not meet the Permitted Bid requirements of the Plan, the rights will entitle shareholders, excluding the shareholder or shareholders making the take-over bid, to purchase additional common shares of the Company at a substantial discount to the market price of the common shares at that time.

Americas is not adopting a Plan in response to any proposal to acquire control of the Company. The Plan is similar to plans adopted by other Canadian companies and ratified by their shareholders.

Although effective as of April 29, 2009, the Plan is subject to approval by the TSX Venture Exchange and will be presented for ratification by the Company's shareholders at the next annual general and special meeting. If ratified by the shareholders, the Plan will have an initial term of 3 years.

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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