TORONTO, Jan. 26, 2012 /PRNewswire/ - PetroMagdalena Energy Corp. (TSXV: PMD) today announced that it has entered into an agreement to issue shares to settle certain debt owed to Pacific Rubiales Energy Corp. in connection the exploration program at the Topoyaco block.
Luciano Biondi, Chief Executive Officer of the Company stated: "We have taken many steps in 2011 to improve the Company's balance sheet and preserve our liquidity to re-invest in our ongoing exploration and development program in our core oil assets. This debt settlement transaction eliminates the need for us to use our existing cash balances to settle the remaining amounts owing to Pacific Rubiales."
The Company owes Pacific Rubiales approximately US$6 million in connection with a cash call due to Pacific Rubiales as at December 31, 2011 for the Topoyaco exploration program.
The shares for debt agreement was negotiated at arms-length between the two parties on January 19, 2012. Although the closing price of the Company's common shares on the TSX Venture Exchange ("TSXV") on January 18, 2012 was CA$1.10 per share, the parties agreed that the shares for debt transaction would be completed using a deemed share price of CA$1.25 per share. As such, the Company will be issuing 4,826,600 (calculated using the Bank of Canada exchange rate at the close of January 19, 2012) common shares in settlement of the above-noted debt. The issuance of these common shares is subject to approval from the TSXV.PetroMagdalena is a Canadian-based oil and gas exploration and production company, with working interests in 18 properties in five basins in Colombia. Further information can be obtained by visiting our website at www.petromagdalena.com . All monetary amounts in U.S. dollars unless otherwise stated. This news release contains certain "forward-looking statements" and "forward-looking information" under applicable Canadian securities laws concerning the business, operations and financial performance and condition of PetroMagdalena. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and reserve life of the various oil and gas projects of PetroMagdalena; the estimation of oil and gas reserves; the realization of oil and gas reserve estimates; the timing and amount of estimated future production; costs of production; success of exploration activities; and currency exchange rate fluctuations. Except for statements of historical fact relating to the company, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as "plan," "expect," "project," "intend," "believe," "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Many of these assumptions are based on factors and events that are not within the control of PetroMagdalena and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions, risks relating to international operations, fluctuating oil and gas prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the oil and gas industry, failure of plant, equipment or processes to operate as anticipated. Although PetroMagdalena has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. PetroMagdalena undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements. Statements concerning oil and gas reserve estimates may also be deemed to constitute forward-looking statements to the extent they involve estimates of the oil and gas that will be encountered if the property is developed. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Estimated values of future net revenue disclosed do not represent fair market value. 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 news release. SOURCE PetroMagdalena Energy Corp.