Review of 2008
Americas Petrogas reported that increase in net loss can be mainly attributed to: (a) costs associated with the reverse takeover and amalgamation transaction and the consequent costs related with being a reporting issuer and being listed on a stock exchange; and (b) a foreign exchange loss associated with holding Canadian dollars while the US dollar, Americas’ functional currency, strengthened against the Canadian dollar, Americas’ reporting currency.
From a cash flow perspective, for the year-end 2008, Americas Petrogas raised about CAD15.1 million (2007- CAD25.6 million) by issuing units included of one common share and one-half purchase warrant. The financings, which were priced at about CAD1.15 per unit, were completed in May and June 2008. Also, during the year ended December 31, 2008, Americas Petrogas spent about CAD16.2 million (2007 – CAD14.4 million) on investing activities, including CAD15.2 million on property and equipment. The vast majority of those expenditures were attributable to: (a) the Medanito Sur concession, where three exploration wells were drilled during the year, and (b) a 3D seismic program on part of the Totoral and Yerba Buena Blocks, and (c) a 3D seismic program on Los Toldos II. Americas Petrogas was also granted an option right to acquire brine, potash concession in Peru.
Americas Petrogas balance sheet for the year-end 2008, compared to previous year, reflects the key changes described above, namely, raising significant equity financing and expending large amounts on the resource properties, particularly Medanito Sur, TYB Blocks and Los Toldos.
Americas Petrogas raised its proved plus probable reserves by 1,405,000 BOE due mainly to an raise at Medanito Sur as a result of the three wells drilled in 2008, each of which found light oil. The company spent about CAD5.8 million, excluding VAT, to drill, complete and tie-in these wells, resulting in a finding cost of about CAD4.13 per barrel.
Americas Petrogas incurred a net loss in the fourth quarter of CAD1,614,270 or CAD0.017 per share. The loss was due mainly to CAD872,000 of realized and unrealized foreign exchange losses that arose from holding Canadian dollar cash and investments while the Canadian dollar weakened against the US dollar. From a cash flow perspective, the company: spent CAD1.45 million on operations, which comprises realized foreign exchange losses; and spent a total of CAD6.3 million on investing activities, including changes in non-cash working capital related considerably all to capital expenditures.
