Americas Petrogas Inc.
TSX VENTURE : BOE

Americas Petrogas Inc.

August 28, 2015 15:14 ET

Americas Petrogas Completes Sale of Subsidiary to Tecpetrol

CALGARY, ALBERTA--(Marketwired - Aug. 28, 2015) - Americas Petrogas Inc. ("Americas Petrogas" or the "Company") (TSX VENTURE:BOE) announces that it has closed the previously announced sale transaction (the "Transaction") pursuant to which Tecpetrol International S.A. and Tecpetrol Internacional S.L. (Unipersonal) (collectively, the "Purchasers") acquired all of the issued and outstanding common shares of Americas Petrogas Argentina S.A. ("APASA"), a wholly-owned subsidiary of the Company, and assumed certain intercompany indebtedness owing by APASA to the Company and its other subsidiaries, for an aggregate cash purchase price of US$59.8 million (approximately Cdn$79.4 million based on the noon exchange rate on August 28, 2015, as reported by the Bank of Canada) after an initial working capital adjustment in accordance with the terms of the purchase and sale agreement entered into between the Purchasers and the Company (the "Sale Agreement"). The final Purchase Price is subject to any post-closing adjustments in accordance with the terms of the Sale Agreement. As part of the sale of the APASA shares, the Purchasers also assumed the third party financial debt of APASA in the amount of approximately US$2.5 million.

Following completion of the Transaction, the Company, through its other wholly-owned Argentine subsidiary, Energicon S.A., has retained the following interests in conventional and unconventional properties in the Neuquén Basin of Argentina:

Property Potential Working
Interest
Vaca Mahuida Conventional 25 %
Rinconada Norte Conventional 35 %
Loma Ranqueles Unconventional 25 %
Totoral, Yerba Buena, Bajada Colorada Conventional & Unconventional 90 %
Huacalera Unconventional 19.5 %

The Company also retains its 89% ownership interest in GrowMax Agri Corp., which holds phosphate, potash interests, and other minerals in Bayovar, Peru.

Mr. Barclay Hambrook, President & CEO, stated "Management is pleased to conclude this transaction with Tecpetrol after a long and extensive strategic process. The Transaction strengthens the Company's balance sheet and will allow Americas Petrogas to implement a new sustainable business plan. Going forward, the Company will restructure itself, re-evaluate the exploration and development of retained assets, and consider new investment opportunities in the Americas with a focus on generating sustainable cash flows."

Pursuant to the terms of the Sale Agreement, following closing of the Transaction, the first US$4,000,000 of proceeds from the Argentina Oil Plus program or any substitution thereof ("Oil Plus Benefits") collected by APASA (net of any third party collection costs, payments to partners and pre-existing entitlements by third parties to such proceeds, "Net Oil Plus Amounts") shall accrue for the benefit of the Purchasers. Thereafter, the Purchasers will pay to the Company 50% of any additional Net Oil Plus Amounts collected during the earlier of (a) eighteen (18) months following receipt of the first US$4,000,000 of Net Oil Plus Amounts set out above; and (b) twenty-four (24) months after the closing. As previously disclosed by Americas Petrogas, on July 13, 2015, the Government of Argentina announced the issuance on July 6, 2015 of Decree No. 1330/2015 which acknowledges that Oil Plus related debt of US$784 million is payable to certain oil companies and which authorizes the Government of Argentina to satisfy the debt through the issuance of US dollar-linked government bonds (BONAD 2018) and US dollar-denominated government bonds (BONAR 2024). The Government of Argentina subsequently confirmed that, until December 31, 2016, there will be a restriction on the transfer or sale of more than 2% per month of any BONAR 2024 government bonds received in payment of Oil Plus Benefits related debt. Accordingly, any payment of BONAR 2024 government bonds by the Purchasers to the Company will be subject to this restriction on transfer until December 31, 2016, following which any unpaid balance of BONAR 2024 government bonds collected by APASA following closing will be payable to the Company by the Purchasers. The Company will be entitled to any interest earned on any such BONAR 2024 government bonds prior to their payment to the Company.

About Americas Petrogas Inc.

Americas Petrogas Inc. is a Canadian company whose shares trade on the TSX Venture Exchange under the symbol "BOE". Americas Petrogas has conventional and unconventional shale oil and gas and tight sands oil and gas interests in numerous blocks in the Neuquén Basin of Argentina. Americas Petrogas and Indian Farmers Fertiliser Co-operative Limited (IFFCO) own GrowMax Agri Corp., a private company involved in the exploration for near-surface phosphates, potash and other minerals, and potential development of a fertilizer project in Peru.

Forward-Looking Information

Certain statements contained in this press release constitute "forward-looking statements" as such term is used in applicable Canadian securities laws. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or are not statements of historical fact should be viewed as "forward-looking statements". There are "forward-looking statements" included in this press release that relate to amounts and timing of Oil Plus Benefits, the issuance and receipt of Argentina bonds, the benefits of the Transaction, description of the business of the Company following the Transaction, implementation of a new sustainable business plan and consideration of new investment opportunities. Such forward looking statements involve known and unknown 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.

Forward‐looking information is based on management's expectations regarding the Company's future growth, results of operations, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, plans for and results of drilling activity (including the timing, location, depth and the number of wells), environmental matters, business prospects and opportunities and expectations with respect to general economic conditions. Such forward‐looking information reflects management's current beliefs and assumptions and is based on information, including reserves and resources information, currently available to management. Forward‐looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by the forward-looking information, including but not limited to, risks associated with the oil and gas industry (e.g., operational risks in development, exploration and production, delays or changes to plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of geological interpretations; the uncertainty of estimates and projections in relation to production, costs and expenses and health, safety and environment risks, extensions of concessions and commitments), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with foreign governments and third parties located in foreign jurisdictions and the risk associated with international activity and the risk of being unable to raise significant funds on terms acceptable to the Company to meet its capital and operating expenditure requirements in respect of its properties. Accordingly, because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.

Forward-looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Company undertakes no obligation to update forward-looking statements and if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable law.

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