Exploration & Production | Top Story | Quarterly / Earnings Reports | First Quarter (1Q) Update
Petroamerica Exits 1Q at 6,477 BOE/d; Talks Rumi, Curiara
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Petroamerica Oil Corp. has reported the financial and operating results for the three months ended March 31, 2014.
Quarterly highlights include:
- Generated revenue of over $51.7 million, after royalties, leading to positive funds flow from operation of $26.6 million($0.04 per share) with an operating netback of approximately US $64 per barrel;
- Achieved average daily production of 6,478 barrels of oil equivalent per day, exiting the quarter at daily production of 6,477 boepd;
- Closed the quarter with over $103 million in cash and short term investments, an increase of 55% from the close of 2013.
First Quarter Financial Summary
For the three months ended March 31, 2014, the Company reported $51.7 million in revenue, net of royalties, from the sale of 601 Mboe. The realized sales price was $105.76 per boe generating an operating netback of approximately$64 per barrel.
For the first quarter of 2014, the Company's net income was $17.6 million ($0.03 per share diluted), due to the strong production levels through the quarter and continued strong oil prices. The Company's capital expenditures for the first quarter were $11.3 million, all invested in Colombia. These capital expenditures were funded from available cash on hand. As at December 31, 2013, the Company held 12 Mbbls of oil in inventory.
Operations Update
Company Production
March production averaged 6,506 boepd (Company working interest) compared to average production of 6,497 boepd for the previous month, setting a Company record for average monthly production.
Rumi (Non-operated, 40% Working Interest)
The long term test facility for the Rumi-1 exploration well, which was drilled in the fourth quarter of 2013, was initiated on April 24, 2014 but was temporarily halted shortly thereafter due to problems with the electro-submersible pump. Once this pump is replaced in early June, the test is expected to recommence. Future appraisal drilling on the Rumi structure will be contingent on the production performance during the long-term test.
Curiara (Non-operated, 25% Working Interest)
The Curiara long-term test facility was commissioned and the Curiara-1 well started producing on April 5, 2014 at rates of approximately 250 bopd of 42 degree API oil. This rate is temporary and restricted by authorized flaring of 1.5 million cubic feet per day of gas, while gas dehydration and gas compressors are commissioned. The results of this long-term test will determine the forward appraisal plans for this discovery.
Exploration, Appraisal and Development Drilling in 2014
A summary of exploration, appraisal and development drilling expected to take place over the near term is provided below:
Outlook
On completion of Arrangement, the combined entity is expected to hold interests in eleven exploration and production contracts in the Llanos and Putumayo Basins of Colombia, covering over one million gross/500 thousand net acres, focusing on high netback light and medium oil. This portfolio will include a substantial inventory of exploration prospects and leads that will be pursued to support future production growth for the combined entity. Furthermore, the combined entity will also have significant exposure to the prolific N Sand play in the Putumayo Basin in addition to the current production operations, discoveries and exploration opportunities in the Llanos basin, enhancing the overall portfolio and diversifying the combined company's asset base. The combined 2P reserves, based on the reserves reports issued by both companies as at December 31, 2013, would total over 8 million boe, with a before tax net present value (discounted at 10%) of over $284 million. This does not include unbooked reserves not factored into the 2013 year end results that could be added in the near term as a result of recent drilling.
Production guidance for the Company alone for 2014 is currently estimated to average 6,000 boepd, an increase from the 5,000 to 5,500 boepd estimate that was provided earlier this year. Going forward, the Company will continue to monitor the overall production rates, and expects to provide regular updates to the expected production rates for the remainder of the year as well as provide production guidance for the combined entity once the Arrangement is completed.
Combined, the capital program for 2014 is projected to total $85.0 million, including a projected drilling program that includes 15 wells in the current year: 8 high impact exploration wells and 7 lower risk appraisal and development wells.
On completion of the Arrangement and providing for the revised production estimates and the resulting cash flows as well as the planned combined capital spending for the year, the Company expects to be able to fully fund internally its operations, both on a stand-alone and on a combined basis, for the year through the combination of free cash flow and cash on hand. However, the Company will continue to pursue new business opportunities to both enhance its current and projected land holdings to provide additional future growth.