OilVoice - Petro Andina Announces Closing of Arrangement With Pluspetrol

Petro Andina Announces Closing of Arrangement With Pluspetrol

Saturday, November 07, 2009

Petro Andina Resources Inc. announces that Pluspetrol Resources Corporation N.V., together with its wholly owned subsidiary 1462627 Alberta Ltd., (collectively, "Pluspetrol"), have completed the previously announced Plan of Arrangement transaction (the "Arrangement") involving Petro Andina, Pluspetrol and Parex Resources Inc. ("Parex" or "the Company"). Pursuant to the Arrangement Pluspetrol has acquired all of the issued and outstanding class A shares of Petro Andina for $7.65 per share pursuant to a Plan of Arrangement under the Business Corporations Act (Alberta).

As part of the Arrangement, Petro Andina shareholders also received, for each Class A share held, one common share and one-tenth of a common share purchase warrant (the "Parex Warrants") of Parex. Each whole Parex Warrant may be exercised to purchase one common share of Parex until December 6, 2009 at an exercise price of Cdn $3.00.

Parex is a newly formed international exploration company holding the Colombia and Trinidad & Tobago exploration assets formerly owned by Petro Andina. Parex's management and Board of Directors have extensive international and technical experience, being comprised of the former officers and directors of Petro Andina. Parex's portfolio of prospects in onshore Trinidad & Tobago and in Colombia's Llanos Basin have been advanced through Petro Andina's efforts over the past two years. Specifically, Parex has exploration contracts for 4 onshore blocks in Colombia with 489,000 gross acres and 3 onshore blocks in Trinidad & Tobago with 218,400 gross acres. Drilling in the exploration acreage is anticipated to begin in the first half of 2010.

Parex is well capitalized with no debt and gross working capital of approximately Cdn $98 million, inclusive of net proceeds from the Cdn $20 million subscription receipts offering and Cdn $10 million management private placement closed in conjunction with the Arrangement. Currently, US $23 million of working capital is temporarily restricted to support letters of credit related to Parex's ongoing exploration activities in the Llanos basin. The Company expects to place an alternative credit arrangement that would reduce or eliminate the need for restricted working capital and therefore increase working capital prior to the end of fiscal 2009. Inclusive of the common shares issued on these equity financings, Parex has approximately 59.3 million common shares and 4.9 million Parex Warrants outstanding. If all Parex Warrants outstanding are exercised, working capital would increase by approximately Cdn $15 million.

Conditional approval from the TSX Venture Exchange ("TSX-V") of the listing of the Parex common shares (TSX-V:PXT) and Parex share purchase warrants (TSX-V:PXT.W) issuable on the Arrangement has been received. Assuming all TSX-V listing conditions are met, trading on the TSX-V in the Parex common shares and Parex warrants is expected to commence on the opening of the market on November 12, 2009, with Petro Andina's Class A shares being delisted from the TSX on the close of the market on November 11, 2009.

Wayne Foo, President and CEO commented "this transaction to sell the Argentine business and redeploy working capital and additional equity to our high impact exploration blocks in Colombia and Trinidad is the result of the extremely hard work and expertise of our staff, the oversight provided by our Board and the guidance of our financial advisors, FirstEnergy Capital and ScotiaWaterous. We look forward to growing Parex like we grew Petro Andina and meeting with shareholders over the coming months."

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