Crown Point Energy Inc. commented on the removal of currency controls in Argentina, which had imposed foreign exchange restrictions on the Argentine peso (“AR$”). Crown Point advises that it does not anticipate a negative impact on its operations and business plan in Argentina as a result of the Argentine government’s recently announced lifting of currency controls.
The following summarizes the impact of the AR$ and the United States dollar (“US$”) on the Company’s activities in Argentina. All numbers are presented in US$ unless otherwise stated.
- 100% of the Company’s crude oil revenues and 85% of the Company’s natural gas revenues are priced and invoiced in US$ and settled in AR$ at the time of receipt;
- the Company estimates that 100% of its finance and current income tax expenses, 80% of its general and administrative costs, 70% of its operating costs and 20% of its capital expenditures are invoiced and settled in AR$, therefore the AR$ devaluation reduces those costs and capital expenditures when converted to US$;
- Bonds received from the Petroleo Plus Program are protected from devaluation risk as they are denominated in US$ and settled in AR$ upon sale;
- the Company maintains its AR$ denominated cash holdings at a minimum
- the Company’s credit facility is AR$ denominated with a current outstanding balance of approximately AR$ 31.2 million. On December 16, 2015, prior to the lifting of the currency controls, the amount owing was approximately $3.2 million. On December 17, 2015, subsequent to the lifting of the currency controls, the estimated amount owing was approximately $2.3 million, approximately 30% less than the outstanding balance on December 16, 2015.
