Santa Maria Petroleum Inc. Announces Third Quarter 2013 Results

CALGARY, ALBERTA--(Marketwired - Nov. 29, 2013) -

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Santa Maria Petroleum Inc. (formerly Quetzal Energy Ltd.) (TSX VENTURE:SMQ) announces its unaudited results for the three and nine months ended September 30, 2013.

POSITION OF THE COMPANY AND HIGHLIGHTS DURING THE THREE MONTHS ENDED SEPTEMBER 30, 2013

In late 2009 Santa Maria acquired working interests in four unexplored and undeveloped crude oil exploration blocks the Llanos Basin of Colombia. At the same time, the Company assumed obligations to guarantee the completion of certain work commitments stipulated in the various exploration and production contracts entered into by the respective operators of the blocks and the Agencia Nacional de Hidrocarburos (the "ANH"). Santa Maria's share of these work commitments have been supported by underlying Letters of Credit held by the Company's banks which may be called by the ANH if the work commitments are not met by deadlines established by the ANH.

Share capital issuances on the Toronto Venture Exchange in September 2009 and January 2011 provided the funds to acquire the properties and commence exploration programs on the properties. In 2010, the Company and its joint venture partners began programs to acquire and interpret new seismic data and reinterpret pre-existing seismic data. The joint venture partners then commenced with its exploration program and drilled the Canaguay-1 well on the Canaguaro block in 2010, the Mani and Flami wells on Block 27 in 2012, and two wells in Block 21 in 2013.

Following completion of the initial exploration programs, management determined that the only blocks suitable for further development were the Canaguaro Block and Block 27. However, given the Company's lack of available capital, and the state of the financial markets at the time, it was determined that the Company would be unable to fund further development of the Canaguaro Block and Block 27. Accordingly, management began discussions with other exploration companies with the view to finding an attractive merger, farm-in or possible sale that would yield a return to the shareholders. Over the months that followed, the Company entered into a series of transactions:

• On June 7, 2013 Santa Maria announced the sale of its 25% oil and gas interest in the Canaguaro Block to Petrominerales Ltd. ("Petrominerales") (TSX:PMG); the transaction was completed on September 7, 2013. Petrominerales paid Santa Maria a total of $US6.0 million in cash for its 25 per cent private participating interest. Certain customary post-completion price adjustments were completed and all vendor liabilities outstanding on that date will be paid by the end of September 2013. The funds were primarily used to reduce the liabilities incurred from drilling the Mani and Flami wells.
• On September 13, 2013 Santa Maria remitted $1,875,000 to the operators of Block 21 in Colombia as the third and final installment pursuant to the Amending Agreement to the original Participation Agreement for Block 21. The operator had previously completed the work commitments for Block 21 with the drilling of Calacho-1 and Rocamao No. 1 wells, both of which were abandoned following the completion of the testing programs. Santa Maria has satisfied its financial obligations in respect of this block and no further funding is required.
• On October 23, 2013 the Company announced that it had entered into an agreement with the operator of Block LLA36 in the Llanos Basin in Colombia that terminated the Company's participation interest in LLA36. $1.1 million in Letters of Credit that had been provided by Santa Maria to the ANH in order to guarantee work commitments on this block have been released and replaced by Letters Credit provided to the ANH by Montecz S.A. These Letters of Credit had been secured by a combination of cash on deposit and an Indemnification Agreement with Export Development Canada. Santa Maria has satisfied its financial obligations in respect of this block and no further funding is required.
• On November 23, 2013, the Company announced that it had entered into a Share Purchase Agreement (the "Share Purchase Agreement") with Global Oil & Gas Services Ltd. ("Global"), a company incorporated pursuant to the laws of Dubai, UAE, by which Global will acquire all of the shares of a newly incorporated wholly owned subsidiary of Santa Maria ("Newco"). Through a reorganization to be completed by December 18, 2013, Santa Maria shall transfer to Newco the assets and liabilities of its Colombian branch, including its participation interest in the investments, income and revenues of the LLANOS 27 Project in the Los Llanos Basin in Colombia (the "Project"), subject to a working capital adjustment. Under the working capital adjustment, Newco will have a cash balance of $US450,000 and all amounts receivable including refundable VAT and income tax amounts will be paid to Santa Maria. Santa Maria will pay all outstanding trade liabilities incurred to the closing date.
  
  Under the Share Purchase Agreement, Global shall replace the $US1.85 million Letter of Credit that had been provided by Santa Maria to the ANH in order to guarantee the operator's work commitments on this project. This Letter of Credit is currently secured by a guaranteed investment certificate. When the Letter of Credit is released and the working capital requirement is funded, the remaining funds, approximately $1.4 million will be transferred to the Company's general cash balances.

• On November 12, 2013 the Company sold its 10% overriding interests in two wells on its former Guatemalan properties for $70,000 to the current operator of those properties. The first well, Atzam-4, has been drilled and is currently producing at approximately 140 bopd. Drilling of the second well, Atzam-5, is schedule to be spud by year end.

Forward Looking Statements - Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of Quetzal, including, but not limited to the impact of general economic conditions, industry conditions, volatility of commodity prices, risks associated with oil and gas activities, currency fluctuations, dependence upon regulatory approvals, the availability of future financing and exploration risk. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.

Neither 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 this release.