Americas Petrogas Inc.
TSX VENTURE : BOE

Americas Petrogas Inc.

November 29, 2010 16:19 ET

Americas Petrogas Third Quarter Results

CALGARY, ALBERTA--(Marketwire - Nov. 29, 2010) - Americas Petrogas Inc. ("Americas Petrogas" or the "Company") (TSX VENTURE:BOE) announces that during the third quarter, the Company continued to sell oil produced from 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 third quarter of 2010 and recent developments are as follows:

Highlights

  • The Company sold 30,832 barrels of oil during the quarter, generating $1.70 million of gross revenues and $1.27 million of net revenues;
  • The Company completed a 3D seismic data acquisition program on Gobernador Ayala IV. Analysis and interpretation of the results is ongoing.
  • The Company drilled three exploration wells on the Los Toldos II block. The wells are currently being studied and tested and results are expected by December;
  • The Company applied for an exploitation concession on its Medanito Sur block. The granting of such a license would allow the Company to move to a development stage on the block, which is currently producing from exploration wells.
  • GrowMax completed a pre-feasibility study on its Bayovar project.
  • Quarter-end balances: Cash is over $16 million and working capital is over $10 million.
  • In November, the Company completed two private placements, raising aggregate gross proceeds of $34,350,000, from the issuance of: (a) 28,800,000 common shares at a price of $1.00; and (b) an unsecured promissory note with a face value of $5,550,000, convertible into common shares by the holder or by Americas Petrogas at $1.00 per common share.
  • Also in November, the Company entered into an agreement with Apache Energia Argentina S.R.L., a subsidiary of Apache Corporation of Houston ("Apache"), to conduct exploration on Huacalera block, located in the western region of Argentina's Neuquen Basin, a region of the basin that contains conventional gas and oil and offers potential for unconventional gas from shale formations and tight reservoirs. Final approvals for this agreement are expected before the end of the year. Americas Petrogas Argentina ("Petrogas Argentina") would hold a 19.5% working interest in the Huacalera block. Petrogas Argentina is carried by Apache through drilling of a deep exploration well and, depending on the successful testing of the well from various formations, Apache has also agreed, at its own cost, to perform a 3D seismic program over a 100 square kilometer area of the block;

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.

    September 30
    For the three months ended     For the nine months ended
    2010     2009     2010     2009
Net Revenue (including interest) $ 1,295,124   $ 3,653   $ 3,170,734   $ 34,724
Net Loss $ 2,162,119   $ 699,520   $ 5,081,278   $ 2,788,163
Loss per share, basic & diluted $ 0.017   $ 0.008   $ 0.043   $ 0.030
Cash flows used in operations $ 402,735   $ 811,503   $ 1,747,434   $ 2,309,026
Capital expenditures $ 5,753,075   $ 1,032,342   $ 13,870,988   $ 3,474,328
                       
    September 30, 2010   December 31, 2009
Cash and cash equivalents $ 16,861,637 $ 14,483,513
Total current assets $ 18,582,069 $ 14,614,491
Total assets $ 69,298,259 $ 52,856,802
Total current liabilities $ 8,210,667 $ 1,637,750
Long-term debt   -   -
Non-controlling interest $ 1,645,981 $ 1,588,132
Total shareholders' equity $ 59,408,401 $ 49,614,126

The Company continued to produce and sell oil in the third quarter of 2010, after beginning production earlier in the year. For the three months ended September 30, 2010, the Company reported gross revenues of $1,700,953 and net revenues, after deducting royalties and turnover taxes, of $1,269,927 compared to no revenues in 2009 and net revenues of $1,494,497 in the second quarter of 2010. However, the Company reported a net loss of $2,162,119 or $0.017 per share for the three months ended September 30, 2010 compared to a net loss of $699,520 or $0.008 per share for the same period in 2009, and further compared to a net loss of $1,840,539 or $0.015 per share for the three months ended June 30, 2010. The increase in net loss for the third quarter of 2010 compared to the same period in 2009 can be primarily attributed to: (a) extra start-up costs at Medanito Sur and an increase in depletion, depreciation and accretion associated with the beginning of production; (b) increased stock-based compensation, general and administrative expenses; and (c) a modest foreign exchange gain in 2010 compared to a sizable foreign exchange gain in 2009.

From a cash flow perspective, during the three months ended September 30, 2010, the Company used $0.4 million in operating activities, compared to $0.8 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 $5.8 million on property and equipment in the three months ended September 30, 2010, which is approximately $4.7 million more than in the same period of 2009. The spending in the current quarter related primarily to the Company's exploration costs on Los Toldos II, Gobernador Ayala, Loma Ranqueles and Medanito Sur; and continuing activities at Bayovar, Peru in the Sechura desert, including completion of a pre-feasibility study. The Company had no financing activities in the current quarter.

The Company's balance sheet at September 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 first half of 2010 along with a loan financing obtained in May 2010, which is reported in current liabilities. A couple of new items in current assets are accounts 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, Los Toldos II, Gobernador Ayala, and Loma Ranqueles, along with continuing activities at the Bayovar potash (and other minerals) project. These activities also contributed to the increase in other long-term assets as value-added taxes were incurred relating to the activities. The increase in accounts payable and accrued liabilities was related primarily to exploration costs incurred on Los Toldos II and production and exploration costs incurred on Medanito Sur that were unpaid as of September 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 interests in 16 blocks involving exploration, development and production. API has proven conventional oil and gas reserves, as well as evolving unconventional resource plays including shale gas, shale oil, and tight sand oil and gas in Argentina's prolific Neuquen basin. For more information about Americas Petrogas, please visit www.americaspetrogas.com.

About GrowMax Agri Corp.

GrowMax Agri Corp., a subsidiary of Americas Petrogas Inc., 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. For more information about GrowMax Agri Corp., please visit www.growmaxagricorp.com.

Certain statements in this Press Release constitute forward-looking statements under applicable securities legislation. These statements include references to the timing of results from Los Toldos II, relevant aspects of the Apache agreement pertaining to Huacalera block, oil and gas reserves, the development of a surface potash (and other minerals) brine reservoir and evaporite deposit, and the building of a potash and specialty fertilizers company. 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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