CALGARY, Sept. 5 /CNW/ - Petrolifera Petroleum Limited ("Petrolifera" or the "Company") announced today that the Company has established and closed a three-year US$100 million revolving credit facility, to be provided by Standard Bank PLC ("Bank"). This reserve based facility will have an initial availability and total commitment of US$60 million and will bear interest at LIBOR plus 3.75%. The facility provides the Company with access to additional capital, if and when required, as well as increased financial flexibility. The Bank reserves the right to syndicate the facility.
The level of committed initial availability is based on the Company's oil and natural gas reserves, as assessed by GLJ Petroleum Consultants, the Company's independent petroleum engineer, as at December 31, 2006 and as adjusted by the Bank to incorporate cumulative production in the current year. The remainder of US$40 million may be available, within the established term, if the Bank determines from time to time that the oil and natural gas reserves of the Company support additional lending amounts and the total commitment under the facility is increased. Among other conditions, the amount available under the facility is subject to a semi-annual review, with the next review to be based on the Company's 2007 year-end reserve report scheduled for completion in late February or early March 2008.
The Company does not presently expect to draw on this facility before year-end, but may be required to access funds if the current asset backed commercial paper situation in Canada is not resolved in a timely manner. Petrolifera advised that a total of $37.7 million is presently overdue and owed to the Company by Apsley Trust and MMAI-I Trust. Petrolifera continues in its efforts to recover these funds in a timely manner. The Company also continues to monitor the situation closely and will provide updates when and if appropriate.
Petrolifera is currently of the opinion that it has the production, sales, cash flow and cash balances in other bank accounts in Argentina and Barbados to carry out its budgeted programs for the next several months, without accessing this new facility.
Petrolifera Petroleum Limited is a Calgary-based crude oil and natural gas exploration, development and production company. It is active in the Neuquen Basin, Argentina; in the Maranon and Ucayali Basins onshore Peru; and holds concessions onshore Colombia. The Company's shares are listed for trading on the Toronto Stock Exchange under the symbol PDP.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements, including statements relating to planned development activities and sources of funding in respect thereof. These statements are based on current expectations and available information that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production, delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections in relation to production, costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with foreign governments and risk associated with international activity and the risks and uncertainties relating to the market for asset backed commercial paper. There can be no assurance as to the timing for receipt of repayment of the asset backed commercial paper held by Petrolifera or the amount available to satisfy such obligations given the current status of the market and information regarding the underlying assets held by such trusts. Additional risks and uncertainties are described in the company's Annual Information Form which is filed on SEDAR at www.sedar.com.
The company's ability to complete its capital program and potentially increase production volumes and reserves is dependent on access to services, drilling rigs as well as access to sufficient capital to finance such expenditures. Similarly, the company's ability to increase sales of oil and natural gas is dependent on sustained productivity of new and existing wells, maintenance (or reduction) of water cuts and completion of certain infrastructure and transportation systems that are currently under construction. There can be no assurance that the flow rates of newly drilled wells will result in stabilized production at initially reported levels or that the company's new or existing high productivity wells will not incur higher water cuts than that reported or reductions in reservoir pressures, resulting in a decision to curtail production pending implementation of the proposed pressure maintenance program or other remedial measures. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in the company's securities should not place undue reliance on these forward-looking statements. Forward-looking statements contained in this press release are made as of the date hereof and are subject to change. The company assumes no obligation to revise or update forward looking statements to reflect new circumstances, except as required by law.