First quarter production came in even higher than I expected. This one has incredible upside potential for us. Do not let the fact that it trades on the Pink Sheet in the U.S. scare you away. - Dan
"Production increased 23 percent quarter-over-quarter, averaging 40,802 barrels of oil per day ("bopd").
We grew our industry leading operating netbacks to US$69.34 per barrel, a 36 percent increase over 2010, consistent with the movement of world oil prices.
Our balance sheet remains strong with a US$566.1 million net working capital surplus and undrawn bank facilities at March 31, 2011. This financial flexibility gives us the strength to continue to execute our business plan of aggressive exploration and development in Colombia and Peru."
Petrominerales (PMG)
Petrominerales (PMG)
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
-
prince_jake_33
- Posts: 242
- Joined: Mon Apr 26, 2010 2:21 pm
Re: Petrominerales (PMG)
Thanks for the positive update.
Re: Petrominerales (PMG)
Highlights and Significant Transactions during the First Quarter
(Quarterly comparisons are first quarter 2011 compared to the first quarter of 2010 unless otherwise noted)
We increased crude oil production to 40,802 bopd, a 23 percent gain over the fourth quarter 2010 and a 7
percent rise over the first quarter of 2010.
We recorded funds flow from operations of $181.8 million, or $1.76 per basic share, 30 and 24 percent
increases over 2010.
Net income of $36.8 million included a $39.0 million non‐cash loss from new accounting under IFRS for our
convertible bond and the full amount of a four‐year Colombian equity tax of $27.7 million. Net income
adjusted for these two items was $103.5 million in the quarter, an 11 percent increase over the prior year.
Our operating netbacks increased to $69.34 per barrel in the quarter, a 42 percent increase quarter‐overquarter
and a 36 percent increase over the first quarter of 2010, primarily due to higher world oil prices.
We drilled seven exploration wells in the quarter and made significant discoveries that included Yatay on
our Guatiquia Block, Mantis and Yenac‐3 on our Casimena Block and Heliconia on our heavy oil acreage.
Tested Capybara‐2 well at rates of over 4,000 bopd of 29 degree API oil.
Our balance sheet remains strong. We ended the quarter with a working capital surplus of over $566.1
million.
(Quarterly comparisons are first quarter 2011 compared to the first quarter of 2010 unless otherwise noted)
We increased crude oil production to 40,802 bopd, a 23 percent gain over the fourth quarter 2010 and a 7
percent rise over the first quarter of 2010.
We recorded funds flow from operations of $181.8 million, or $1.76 per basic share, 30 and 24 percent
increases over 2010.
Net income of $36.8 million included a $39.0 million non‐cash loss from new accounting under IFRS for our
convertible bond and the full amount of a four‐year Colombian equity tax of $27.7 million. Net income
adjusted for these two items was $103.5 million in the quarter, an 11 percent increase over the prior year.
Our operating netbacks increased to $69.34 per barrel in the quarter, a 42 percent increase quarter‐overquarter
and a 36 percent increase over the first quarter of 2010, primarily due to higher world oil prices.
We drilled seven exploration wells in the quarter and made significant discoveries that included Yatay on
our Guatiquia Block, Mantis and Yenac‐3 on our Casimena Block and Heliconia on our heavy oil acreage.
Tested Capybara‐2 well at rates of over 4,000 bopd of 29 degree API oil.
Our balance sheet remains strong. We ended the quarter with a working capital surplus of over $566.1
million.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Petrominerales (PMG)
This is very important to note:
The majority of the PMG’s production is priced in relation to the Colombian Vasconia Blend. Historically the
Vasconia Blend prices were correlated with WTI; however, toward the end of 2010, the differential between WTI
and Brent crude widened resulting in Vasconia Blend prices being more correlated to Brent. In the first three
months of 2011 the Vasconia blend traded at a premium to WTI of $4.74 per barrel compared to a discount of
$4.17 per barrel in the same period of 2010. In addition, the first quarter oil sales price benefited from
marketing activities where the Company was able to sell some February production at March prices, benefiting
from the rising oil price environment. Combining these marketing activities and a 37 percent increase in Brent
benchmark prices, the first quarter sales price increased 37 percent.
The majority of the PMG’s production is priced in relation to the Colombian Vasconia Blend. Historically the
Vasconia Blend prices were correlated with WTI; however, toward the end of 2010, the differential between WTI
and Brent crude widened resulting in Vasconia Blend prices being more correlated to Brent. In the first three
months of 2011 the Vasconia blend traded at a premium to WTI of $4.74 per barrel compared to a discount of
$4.17 per barrel in the same period of 2010. In addition, the first quarter oil sales price benefited from
marketing activities where the Company was able to sell some February production at March prices, benefiting
from the rising oil price environment. Combining these marketing activities and a 37 percent increase in Brent
benchmark prices, the first quarter sales price increased 37 percent.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Petrominerales (PMG)
Columbian Equity tax: Very important to understand how this affected Q1 2011 results. IMO this should have been spread over the four year period, instead of being expensed all this quarter. GTE had the same issue. Result is going to be a significant jump in reported net income for both companies next quarter. - Dan
An equity tax is charged on equity capitalization levels in Colombia. The Colombian government approved new
legislation in December 2010 that obligates Colombian corporations and branches of foreign corporations to pay
an equity tax based on net equity as of January 1, 2011. The rate of tax applicable to Petrominerales is six
percent of net equity and is $33.2 million, payable evenly over four years starting in 2011 ($2.1 million per
quarter). The net present value of the entire liability, estimated at $27.7 million, was recorded as a liability and
expensed in the statement of operations in the first quarter of 2011. Under IFRS, this cost is classified as an
operating expense since the tax is not based on income and is not deductible for tax purposes. The discount of
$5.5 million on the liability is being accreted over four years, whereby $0.6 million was recorded as accretion in
net finance expenses on the statement of operations.
An equity tax is charged on equity capitalization levels in Colombia. The Colombian government approved new
legislation in December 2010 that obligates Colombian corporations and branches of foreign corporations to pay
an equity tax based on net equity as of January 1, 2011. The rate of tax applicable to Petrominerales is six
percent of net equity and is $33.2 million, payable evenly over four years starting in 2011 ($2.1 million per
quarter). The net present value of the entire liability, estimated at $27.7 million, was recorded as a liability and
expensed in the statement of operations in the first quarter of 2011. Under IFRS, this cost is classified as an
operating expense since the tax is not based on income and is not deductible for tax purposes. The discount of
$5.5 million on the liability is being accreted over four years, whereby $0.6 million was recorded as accretion in
net finance expenses on the statement of operations.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Petrominerales (PMG)
I will be sending a Flash Report on PMG to all of our Premium Members later today. Putting the final touches on it after a lunch break.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group