Petro Andina Resources Inc.

Petro Andina Resources Inc.

May 20, 2009 08:34 ET

Petro Andina Resources Inc. Announces $23.6 Million Bought Deal Equity Financing

CALGARY, ALBERTA--(Marketwire - May 20, 2009) -


Petro Andina Resources Inc. (TSX:PAR) ("Petro Andina" or the "Corporation") is pleased to announce that it has entered into an agreement with a syndicate of underwriters led by FirstEnergy Capital Corp. and including Scotia Capital Inc., Peters & Co. Limited, Raymond James Ltd., RBC Capital Markets, Tristone Capital Inc. and Wellington West Capital Markets Inc. (the "Underwriters"), under which they have agreed to purchase for resale to the public, on a bought deal basis, 3,800,000 common shares of Petro Andina, at a price of $6.20 per common share resulting in gross proceeds of $23,560,000.

Petro Andina has also granted the underwriters an option, exercisable for a period commencing at closing of the offering and ending 30 days following closing of the offering, to purchase an additional 570,000 common shares at the same offering price which, if exercised, would increase the total gross proceeds to $27,094,000.

Net proceeds from this offering will initially be used for general corporate purposes, specifically to increase available working capital. Petro Andina has been encouraged by the results of its initial evaluation work in Colombia and Trinidad & Tobago new ventures. Subsequently, in 2009 and into 2010, the Corporation plans to accelerate the pace of activity on its Colombia blocks and Trinidad blocks with funding to be partially provided by this offering.

The Corporation previously announced 2009 capital expenditure guidance for Colombia of US$7.0 million and for Trinidad and Tobago of US$9.5 million. The Corporation plans to increase capital investment in Colombia by approximately US$4.0 million by increasing its acquisition of three dimensional ("3D") seismic from 250 square kilometers on block LLA 16 to 450 square kilometers in total on blocks LLA 16 and LLA 20. Acquiring the 3D seismic data concurrently on two blocks in 2009 is anticipated to allow the Corporation to subsequently commence a more substantial drilling program in Colombia in early 2010. The Corporation anticipates contracting two drilling rigs that would begin continuous operations in early 2010, resulting in potential incremental drilling capital expenditures in 2010 of US$12.0 - US$15.0 million (net to Petro Andina). The Corporation also plans at a minimum to double the size of the ongoing two dimensional ("2D") seismic acquisition program in Trinidad & Tobago by approximately 100 kilometers at a cost of US$2.0 million. Drilling in Trinidad & Tobago was originally scheduled for late 2010 or early 2011, however, the Corporation now expects to be in a position to drill a well in late 2009 or early 2010 due to its ongoing evaluation of existing seismic data and the anticipated evaluation of the new 2D data.

The closing price of Petro Andina's common shares on the Toronto Stock Exchange ("TSX") on May 19, 2009 was $6.71 per common share. Prior to this offering, Petro Andina has 42.1 million common shares issued and outstanding.

This transaction is subject to certain conditions including normal regulatory approvals and specifically, the approval of the TSX. The common shares will be offered in all provinces of Canada by way of short form prospectus. Closing is anticipated to occur on or about June 11, 2009.

About Petro Andina

Petro Andina is engaged in oil and natural gas exploration, development and production in South America and the Caribbean region. The Corporation 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 495,000 acre (247,500 net acre) holdings in the Llanos Basin of Colombia and 211,000 acre (105,500 net acre) holdings 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, including management's assessment of future plans and operations, timing of closing of the offering, use of proceeds from the offering and the Corporation's planned operations and expenditures in Colombia and Trinidad & Tobago 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, and obtaining required approvals of regulatory authorities, in Canada, Argentina, Colombia and Trinidad & Tobago. Many of these risk factors are discussed in further detail in the Corporation's Annual Information Form dated March 31, 2009 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.

With respect to forward-looking statements contained herein, Petro Andina has made assumptions regarding: current and future commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment; effects of regulation by governmental agencies; future operating costs; and other matters.

Although the forward-looking statements contained in this press release are based upon assumptions which management of the Corporation believes to be reasonable, the Corporation cannot assure potential investors that actual results will be consistent with these forward-looking statements. Accordingly, Petro Andina gives no assurance nor makes any representations or warranties 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, except as required by law.

The TSX 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)
    Petro Andina Resources Inc.
    Kenneth G. Pinsky
    Vice President, Finance and Chief Financial Officer
    (403) 517-1729
    (403) 265-8216 (FAX)