Americas Petrogas Inc.
TSX VENTURE : BOE

Americas Petrogas Inc.

August 30, 2010 12:07 ET

Americas Petrogas Second Quarter Results

CALGARY, ALBERTA--(Marketwire - Aug. 30, 2010) -

Americas Petrogas Inc. ("Americas Petrogas" or the "Company") (TSX VENTURE:BOE) announces that during the second quarter, the Company continued to sell oil produced from its four exploratory wells on Medanito Sur block. As well, during the quarter, the Company continued to invest in both its Argentina oil and gas properties and its potash (and other minerals) fertilizer project in the Sechura Desert, Bayovar, Peru. Highlights of the second quarter of 2010 were as follows:

Highlights

  • The Company sold 37,017 barrels of oil during the quarter, generating $1.97 million of gross revenues and $1.49 million of net revenues;
  • In conjunction with its partners, the Company continued exploration drilling activities on the Vaca Mahuida block and subsequently applied to the Rio Negro government for an exploitation concession on the 253,000-acre block;
  • The Company obtained a US$3.45 million loan from an industry partner and co-venturer on the Vaca Mahuida block. The loan is non-interest bearing;
  • The Company finished drilling and testing its fifth well on Medanito Sur. The well identified hydrocarbons and has provided valuable information regarding the characteristics of the Medanito Sur block and the various zones within the block;
  • The Company entered into a farm-in agreement to acquire a 65% working interest in Rinconada Norte (approximately 96 square kilometers or 23,700 acres), which is located immediately south of the Company's Medanito Sur block. The Company has committed to drill three exploratory wells by November 30, 2011.
  • On the Bayovar, Peru potash (and other minerals) project in the Sechura Desert, the Company performed confirmation appraisal drilling which re-confirmed the presence of the subsurface brine over a substantial area.
  • As well, the Company conducted three separate pilot plant tests on the Bayovar concession which re-confirmed the historical results and the ability to produce carnallite using solar evaporation of brines in shallow ponds. Carnallite is a potassium magnesium chloride mineral that can be processed into potash.
  • Quarter-end balances: Cash is over $24 million and working capital is over $18 million.

Financial Results

Copies of the Company's consolidated financial statements and the related Management's Discussion and Analysis ("MD&A") for the quarter have been filed under the Company's profile at www.sedar.com and are also available on the Company's website at www.americaspetrogas.com All amounts are in Canadian dollars unless otherwise stated.

  June 30
  For the three months ended For the six months ended
  2010 2009 2010 2009
Net Revenue (including interest) $ 1,510,471 $ 10,055 $ 1,875,610 $ 31,071
Net Loss $ 1,840,539 $ 587,074 $ 2,919,158 $ 2,088,644
Loss per share, basic & diluted $ 0.015 $ 0.006 $ 0.025 $ 0.023
Cash flows used in operations $ 172,243 $ 744,999 $ 1,344,700 $ 1,497,523
Capital expenditures $ 6,097,919 $ 1,115,099 $ 8,117,913 $ 2,441,987
                 
    June 30, 2010   December 31, 2009    
Cash and cash equivalents $ 24,754,183 $ 14,483,513    
Total current assets $ 26,192,768 $ 14,614,491    
Total assets $ 73,086,970 $ 52,856,802    
Total current liabilities $ 7,704,578 $ 1,637,750    
Long-term debt   -   -    
Non-controlling interest $ 1,736,778 $ 1,588,132    
Total shareholders' equity $ 63,612,110 $ 49,614,126    

The Company continued to produce and sell oil in the second quarter of 2010, after beginning production earlier in the year. The Company is pleased to have increased its production and revenue for the second quarter of 2010 compared to the first quarter of 2010, when production first began. For the three months ended June 30, 2010, the Company reported gross revenues of $1,969,417 and net revenues, after deducting royalties and turnover taxes, of $1,494,497 compared to no revenues in 2009 and net revenues of $357,267 in the first quarter of 2010. However, the Company reported a net loss of $1,840,539 or $0.015 per share for the three months ended June 30, 2010 compared to a net loss of $587,074 or $0.006 per share for the same period in 2009 and a net loss of $1,078,618 or $0.010 per share for the three months ended March 31, 2010. The increase in net loss for this second quarter of 2010 compared to the same period in 2009 can be primarily attributed to: (a) typical start-up issues at Medanito Sur and a related increase in depletion, depreciation and accretion associated with the start-up of production; (b) increased stock-based compensation, general and administrative expenses; (c) a modest foreign exchange loss in 2010 compared to a sizable foreign exchange gain in 2009; offset by (d) a one-time gain on a non-interest bearing loan.

From a cash flow perspective, during the three months ended June 30, 2010, the Company used $0.2 million in operating activities, compared to $0.7 million in 2009. The decrease in 2010 was primarily due to the start and continuation of operations at Medanito Sur in 2010, which generated positive operating cash flows. With respect to investing activities, the Company spent approximately $6.1 million on property and equipment in the three months ended June 30, 2010, which is approximately $5.0 million more than in 2009. The increase related primarily to the Company's farm-in costs associated with Vaca Mahuida, additional exploration costs on Medanito Sur; and appraisal drilling activities at Bayovar, Peru in the Sechura desert to re-confirm historical potash (and other mineral) reserves. From a financing perspective, the Company obtained cash from two sources for the three months ended June 30, 2010: (a) A loan from a co-venturer on the Vaca Mahuida project for funding part of the Company's farm-in commitments; and (b) the exercise of warrants. These financing cash flows were offset by payments for share issue costs related to the equity financing, which the Company completed in March 2010.

The Company's balance sheet at June 30, 2010, compared to December 31, 2009, shows higher cash balances, which reflects the raising of equity financing in both Americas and GrowMax during the six months ended June 30, 2010 along with the aforementioned loan financing, which is reported in current liabilities. A couple of new items in current assets are account receivable and inventory related to the start-up of operations on Medanito Sur during 2010. The Company's reported property and equipment has increased mainly as a result of additional exploration activities on Vaca Mahuida, Medanito Sur and appraisal drilling at Bayovar. These activities and drilling also contributed to the increase in other long-term assets as value-added taxes were incurred relating to the activities and drilling. The increase in accounts payable and accrued liabilities was related primarily to production and exploration costs incurred on Medanito Sur that were unpaid as of June 30, 2010. Shareholders' equity has increased mainly because of the completion of two private placements in March 2010 for gross proceeds of approximately $16 million.

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 oil and gas exploration, development and production activities, and has interests in close to 1,800,000 acres of land in Argentina's most prolific Neuquen Basin. In Peru, through GrowMax Agri Corp., Americas Petrogas is developing a surface potash (and other minerals) brine reservoir and evaporite deposit at Bayovar in the Sechura Desert of Northwest Peru. Management, along with its partner/investor IFFCO, intends to build GrowMax into a potash and specialty fertilizers company.

This press release contains forward‐looking information including, but not limited to, expected development of a potash and specialty fertilizers project at Bayovar. Additional forward‐looking information is contained in the Company's Management's Discussion and Analysis for this quarter and the Company's Annual Management's Discussion and Analysis for December 31, 2009, and reference should be made to the additional disclosures of the assumptions and risks and uncertainties relating to such forward‐looking information in those Management's Discussion and Analysis documents.

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, 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 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), 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.

Although the forward‐looking information contained herein is based upon assumptions which management believes to be reasonable, the Company cannot assure investors that actual results will be consistent with this forward-looking information. This forward‐looking information is made as of the date hereof and the Company assumes no obligation to update or revise this information to reflect new events or circumstances, except as required by law. Because of the risks, uncertainties and assumptions inherent in forward‐looking information, prospective investors in the Company's securities should not place undue reliance on this forward‐looking information.

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