UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K/A
(Amendment
No. 1)
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): June 15, 2006
GRAN
TIERRA ENERGY INC.
(f/k/a
GOLDSTRIKE INC.)
(Exact
name of registrant as specified in its charter)
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Nevada
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333-111656
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98-0479924
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
Number)
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300,
611 - 10th
Avenue S.W.
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||
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Calgary,
Alberta, Canada
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T2R
0B2
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(Address
of principal executive offices)
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(Zip
Code)
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(403)
265-3221
(Registrant’s
telephone number, including area code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Introductory
Note
On
June
21, 2006, Gran Tierra Energy Inc. (the “Company”) filed a Current Report on Form
8-K (the “ Initial Report”) to report the acquisition of all of the limited
partnership interests of Argosy Energy International (“Argosy”) and all of the
issued and outstanding capital stock of Argosy Energy Corp. The Company is
filing this Amendment to the Initial Report to include the financial statements
and pro forma financial information required under Item 9.01 of Form
8-K.
Item
2.01 Completion of Acquisition or Disposition of Assets.
Argosy
Acquisition
The
Company entered into a Securities Purchase Agreement dated May 25, 2006
with Crosby Capital LLC to acquire all of the limited partnership interests
of
Argosy Energy International and all of the issued and outstanding capital
stock
of Argosy Energy Corp. On June 20, 2006, the Company closed the Argosy
acquisition and paid consideration to Crosby consisting of $37.5 million
cash,
870,647 shares of our common stock and overriding and net profit interests
in certain of Argosy’s assets valued at $1 million.
Argosy
holds a diverse portfolio of producing properties, drill-ready prospects
and
exploration acreage in Colombia. Argosy’s oil production averaged approximately
987 barrels per day (net after royalty) during the fourth quarter of 2005.
Remaining proven reserves at December 31, 2005 are estimated by Huddleston
&
Co., independent reserve engineers, at 2.34 million barrels (net after
royalty),
according to an independent reserve assessment. Royalty rates are 20% and
8% for
Argosy’s producing properties. The
Argosy acquisition is expected to add production of approximately 856 barrels
per day of oil to our current production. Argosy
has a staff of approximately 74 (12 staff in Bogota, 62 field personnel),
and a portfolio of drilling opportunities.
1
Property
Summary
 |
The
Company is the operator and holds interests in 7 blocks in Colombia.
The Santana and Guayuyaco blocks are currently producing. The
Rio Magdalena, Talora, Chaza, Primavera and Mecaya blocks are in their
exploration phases.
Santana
The
Santana Contract area covers 1,120 acres and includes 4 producing fields -
Linda, Mary, Miraflor and Toroyaco - and 15 wells. Activities are governed
by terms of an Association Contract with Ecopetrol, and the Company is
the
operator. The properties are subject to a 20% royalty and the Company
holds a 35% interest in all fields with the exception of the Inchyaco-1
well in
the Mary field, where the Company holds a 25.83% working interest.
Ecopetrol holds the remaining interests. The Block has been
producing since 1991; a total of 20.2 million barrels (gross) have been
produced
to date (to December 31, 2005). Production (net after royalty)
averaged 405 barrels per day during June 2006. Remaining proven reserves
net to Gran Tierra (after royalty) are estimated at 1.626 million barrels
(at
December 31, 2005).
Oil
is
sold to Ecopetrol and is exported via the Trans-Andean pipeline. Oil
quality is approximately 26 degrees API. Oil prices are defined by
contract and are related to a West Texas Intermediate reference. By
contract, 25% of sales are denominated in pesos and 75% in US
dollars.
Guayuyaco
The
Guayuyaco Block covers 52,365 acres and comprises the area surrounding the
4 producing fields of the Santana Contract area. The Guayuyaco Block is
governed by an “Adjacent Play” Association Contract with Ecopetrol, providing a
royalty of 8%. The Company is the operator and has a 35%
participation interest. Solana also has a 35% participation interest and
Ecopetrol has a 30% participation interest. The Guayuyaco field
within the Block was discovered in 2005. Two wells are now producing, with
Guayuyaco-1 on stream in February 2005 and Guayuyaco-2 on stream in September
2005. Remaining proven reserves net to the Company (after
royalty) are estimated at 0.711 million barrels (at December 31,
2005). Production (net after royalty) averaged 395 barrels per day
during June 2006. Oil quality and sales terms are comparable to Santana
oil and volumes are similarly transported via the Trans-Andean pipeline
for
export.
A
combined 2D and 3D seismic survey was acquired over the Block in
2005. Ecopetrol may back-in to a 30% participation interest in
any new discoveries in the Block.
2
Rio
Magdalena
Argosy entered
into the Rio Magdalena Association Contract in February 2002. The Rio
Magdalena contract area covers 144,670 acres. The Company is the operator,
and according to terms of the contract, the Company is obligated to
drill two exploration wells prior to February, 2007. The first of these
wells, Popa-1, has been drilled and is currently in a testing phase.
According to the terms of the Association Contract, Ecopetrol may back-in
for a
30% participation at commerciality, and a sliding scale royalty applies,
currently at 8%.
Chaza
The
Chaza
Block covers 80,242 acres and is governed by terms of an Exploration &
Exploitation Contract with the government agency ANH, reflecting re-vamped
and
improved fiscal terms. The Chaza Contract was signed June 2005 and defines
a 6 year exploration period and 24 year production period. One well is
planned for 2006. The Company is the operator and has a 50% participation
interest. Solana also has a 50% participation interest.
Talora
The
Talora Exploration & Exploitation Contract was signed September 2004,
providing for a 6 year exploration period and 24 year production period.
The Talora contract area covers 108,333 acres. The Company is the operator
and has a 20% participation interest. PEI also has an 80% participation
interest.
Primavera
The
Primavera Exploration & Exploitation contract was signed May 2006. The
Primavera contract area covers 359,072 acres. The Company is the operator
and has a 15% participation interest. Chaco Resources also has a 55%
participation interest and Expet also has a 30% participation
interest.
3
Mecaya
The
Mecaya Exploration & Exploitation contract was signed June 2006. The
Mecaya contract area covers 74,128 acres. The Company is the operator and
has a 15% participation interest. MCP also has a 55% participation
interest and Expet also has a 30% participation interest.
Item
9.01 Financial Statements and Exhibits.
(a)
Financial statements of business acquired.
Index
to Financial Statements
|
Page(s)
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| Financial Statements for Argosy Energy International, LP for the three months ended March 31, 2006 |
5
|
|
Statement
of Income
|
6
|
|
Balance
Sheet
|
7
|
|
Statement
of Cash Flows
|
8
|
|
Statement
of Partner's Equity
|
9
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|
Notes
to Financial Statements
|
10-22
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| Financial Statements for Argosy Energy International, LP as of December 31, 2005 and 2004 |
23
|
|
Independent
Auditor's Report
|
24
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Statements
of Income
|
25
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|
Balance
Sheets
|
26
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|
Statement
of Cash Flows
|
27
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|
Statement
of Partner's Equity
|
28
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|
Notes
to Financial Statements
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29-44
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Supplemental
Oil and Gas Information
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45-49
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| Pro Forma Financial Statements for the three months ended March 31, 2006 and the year ended December 31, 2005: |
50
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|
Pro
Forma Statement of Operations for the period January 1, 2006
to March 31,
2006
|
51
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Pro
Forma Statement of Operations for the period January 1, 2005
to December
31,2005
|
52
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Pro
Forma Balance Sheet as at March 31, 2006
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53
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Notes
to Pro Forma Consolidated Financial Statements
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54-56
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4
ARGOSY
ENERGY INTERNATIONAL, LP
Unaudited
Financial Statements
March
31,
2006
5
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ARGOSY
ENERGY INTERNATIONAL, LP
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Statement
of Income (Unaudited)
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For
the three months ended March 31, 2006
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(Expressed
in thousands of US dollars)
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Oil
sales to Ecopetrol
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$
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3,575
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||
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Operating
cost (note 8)
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367
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|||
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Depreciation,
depletion and amortization
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190
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|||
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General
and administrative expenses
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282
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|||
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839
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|||
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Operating
profit
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2,736
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|||
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||||
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Other
income net
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79
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|||
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Income
before income and remittance taxes
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2,815
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|||
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||||
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Current
income tax (note 9)
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1,017
|
|||
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Deferred
remittance tax
|
109
|
|||
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Total
income and remittance taxes
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1,126
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|||
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Net
income
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$
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1,689
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See
accompanying notes to financial statements.
6
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ARGOSY
ENERGY INTERNATIONAL, LP
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Balance
Sheet (Unaudited)
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March
31, 2006
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|
(Expressed
in thousands of US dollars)
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|
Assets
|
||||
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Current
assets:
|
||||
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Cash
and cash equivalents (note 3)
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$
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2,670
|
||
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Accounts
receivable, net (note 4)
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3,898
|
|||
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Accounts
receivable reimbursement Ecopetrol
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1,186
|
|||
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Inventories:
|
||||
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Crude
oil
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211
|
|||
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Materials
and supplies
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626
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|||
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837
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||||
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Total
current assets
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8,591
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|||
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Other
long-term assets
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25
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|||
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Property,
plant and equipment (note 5):
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||||
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Unproved
properties
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3,831
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|||
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Proved
properties
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5,305
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|||
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9,136
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||||
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Total
assets
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$
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17,752
|
||
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Liabilities
and Partners' Equity
|
||||
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Current
liabilities:
|
||||
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Accounts
payable
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4,852
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|||
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Tax
payable
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1,721
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|||
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Employee
benefits
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97
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|||
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Accrued
liabilities
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547
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|||
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Total
current liabilities
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7,217
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|||
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Long-term
accounts payable (note 10)
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686
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Deferred
income tax
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473
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|||
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Deferred
remmittance tax
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1,210
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|||
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Total
liabilities
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9,586
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|||
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Partners'
equity (note 7)
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8,166
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|||
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Total
liabilities and partners' equity
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$
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17,752
|
||
See
accompanying notes to financial statements.
7
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ARGOSY
ENERGY INTERNATIONAL, LP
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|
Statement
of Cash Flows (Unaudited)
|
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For
the three months ended March 31, 2006
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(Expressed
in thousands of US dollars)
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Cash
flows from operating activities:
|
||||
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Net
income
|
$
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1,689
|
||
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Adjustments
to reconcile net income to net cash
|
||||
|
provided
by operating activities:
|
||||
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Depreciation,
depletion and amortization
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190
|
|||
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Deferred
remittance tax
|
109
|
|||
|
Changes
in assets and liabilities:
|
||||
|
Accounts
receivable
|
(3,147
|
)
|
||
|
Inventories
|
(62
|
)
|
||
|
Accounts
payable
|
(127
|
)
|
||
|
Tax
payable
|
395
|
|
||
|
Employee
benefits
|
(6
|
)
|
||
|
Accrued
Liabilities
|
25
|
|||
|
Deferred
income tax
|
(2
|
)
|
||
|
Deferred
remmittance tax
|
(3
|
)
|
||
|
Net
cash used in operating activities
|
(939
|
)
|
||
|
Cash
flows from investing activities:
|
||||
|
Increase
in long term investments
|
(9
|
)
|
||
|
Payments
from Petroleum Equipment International - Talora
|
200
|
|||
|
Additions
to property, plant and equipment
|
(303
|
)
|
||
|
Net
cash used in investing activities
|
(112
|
)
|
||
|
|
||||
|
Cash
flows from financial activities:
|
||||
|
Distributions
to partners
|
(3,250
|
)
|
||
|
Aviva
redemption shares
|
(153
|
)
|
||
|
Net
cash used in financial activities
|
(3,403
|
)
|
||
|
Decrease
in cash and cash equivalents
|
(4,454
|
)
|
||
|
Cash
and cash equivalents at beginning of year
|
7,124
|
|||
|
Cash
and cash equivalents at end of the period
|
$
|
2,670
|
See
accompanying notes to financial statements.
8
ARGOSY
ENERGY INTERNATIONAL, LP
Statement
of Partners' Equity (Unaudited)
For
the three months ended March 31,
2006
(Expressed
in thousands of US dollars)
|
|
Limited
|
General
|
Total
|
|||||||
|
|
partners'
|
partners'
|
partners'
|
|||||||
|
|
capital
|
capital
|
equity
|
|||||||
|
Balance
as of December 31, 2005
|
$
|
9,810
|
70
|
9,880
|
||||||
|
Redemption
of partnership payments interest -
Aviva
Overseas Inc. (note 10)
|
(152
|
)
|
(1
|
)
|
(153
|
)
|
||||
|
Distributions
to partners
|
(3,227
|
)
|
(23
|
)
|
(3,250
|
)
|
||||
|
Net
income
|
1,677
|
12
|
1,689
|
|||||||
|
Balance
as of March 31, 2006
|
$
|
8,108
|
58
|
8,166
|
See
accompanying notes to financial statements.
9
Argosy
Energy International, LP
Notes
to
Financial Statements (Unaudited)
March
31,
2006
(Expressed
in thousands of US dollars)
(1) Business
Activities
Argosy
Energy International, LP is a Utah (USA) Limited Partnership,
which established
a Colombian Branch in 1983.
Argosy
Energy International, LP is engaged in the business of exploring
for, developing
and producing oil and gas. The principal properties and operations
are located
in Colombia, which are carried out through its Colombian Branch
in the Putumayo,
Cauca, Tolima and Cundinamarca Provinces. The oil production
is sold to Empresa
Colombiana de Petróleos, the Colombian National Oil Company,
(“Ecopetrol”).
There
are
risks involved in conducting oil and gas activities in remote,
rugged and
primitive regions of Colombia. The guerrillas have operated
within Colombia for
many years and expose the Company’s operations to potentially detrimental
activities. The guerrillas are present in the Putumayo and
Río Magdalena areas
where the Company's properties are located. Since 1998, the
Company has only
experienced minor attacks on pipelines and equipment.
Operations
As
of
March 31, 2006, Argosy was participating in the following Association
Contracts
signed with Ecopetrol and Exploration and Exploitation Contracts
signed with the
Hydrocarbons National Agency - ANH.
|
Contract
|
Participation
|
Operator
|
Phase
|
|||||||
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Santana
|
35
|
%
|
ARGOSY
|
Exploitation
|
||||||
|
Guayuyaco
|
70
|
%
|
ARGOSY
|
Exploitation
|
||||||
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Aporte
Putumayo
|
100
|
%
|
ARGOSY
|
Abandonment
|
||||||
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Río
Magdalena
|
70
|
%
|
ARGOSY
|
Exploration
|
||||||
|
Talora
|
20
|
%
|
ARGOSY
|
Exploration
|
||||||
|
Chaza
|
50
|
%
|
ARGOSY
|
Exploration
|
The
first
four contracts have been signed with ECOPETROL and the last
two with ANH.
An
association contracts are those where the Government participate
as partner of
the field through the national oil company - ECOPETROL.
Exploration
and production
contracts (E&P) are those signed with the ANH - “Agencia Nacional de
Hidrocarburos” (National Agency for Hydrocarbons) in which the Government
only
receive royalties and taxes for the rights of exploration and
production but
there is not a participation from the national oil company
- ECOPETROL or any
other government entity.
(Continued)
10
Argosy
Energy International, LP
Notes
to
Financial Statements (Unaudited)
The
main
terms of the above-mentioned contracts are as follows:
Santana
Association Contract
On
May
27, 1987 (effective date July 27, 1987), Argosy Energy International,
LP signed
this association contract to explore for and produce oil, in the
area called
Santana. The contract is in its 19th year and the Company reduced
the area to a
5 kilometer reserve area around each field. The remaining contract
area is
approximately 1,100 acres.
Under
the
terms of the contract with Ecopetrol, a minimum of 25% of all revenues
from oil
sold to Ecopetrol is paid in Colombian pesos, which may only be
utilized in
Colombia. However, this proportion can be modified through parties
agreement.
Aporte
Putumayo - Association Contract
The
Aporte Putumayo area has been returned to the Government. Such
devolution is
subject to the approval of the environmental restoration of the
region by the
Environmental Ministry and the wells abandonment have to be approved
by
Ecopetrol and the Ministry of Mines.
Río
Magdalena Association Contract
On
December 10, 2001 (effective date February 8, 2002), Argosy Energy
International, LP and Ecopetrol signed this Association Contract,
to explore and
produce oil, in the area called Río Magdalena of approximately 145,000 acres,
located in the Middle Magdalena Valley of Colombia in the provinces
of
Cundinamarca and Tolima.
The
contract has a maximum duration of 28 years distributed as follows:
an
exploration period of 6 years and a production period of 22 years
starting on
the date of termination of the exploration period. The exploratory
well, Popa-1
was drilled during June and July and is on the completion
stage.
Upon
finalization of each phase, Argosy has the option to relinquish
the contract,
once completed the obligations for each phase.
BT
Letter Agreement
On
February 27, 2001 Argosy Energy International, LP signed a letter
agreement with
BT Operating Company for the acquisition and management of the
Río Magdalena
Exploration Area. BT and Argosy mutually agreed to pay their 50%
share of costs
under the terms of the Ecopetrol Association contract and provide
certain
services toward management and compliance of the obligations.
As
of
March 31, 2006 BT had not paid their obligations under this agreement
and
outstanding accounts receivable of $355 related to their share
of cost related
to the Río Magdalena Association Contract were provisioned as bad debts.
(Continued)
11
Argosy
Energy International, LP
Notes
to
Financial Statements (Unaudited)
Guayuyaco
Association Contract
On
August
2, 2002 (effective date September 30, 2002) Argosy Energy International,
LP
signed this association contract with Ecopetrol, to explore and
produce oil, in
the area called Guayuyaco. This Association contract gives Argosy
the right to
explore potential reserves in prospects adjacent to the existing
Santana oil
field. The block is located in the Putumayo and Cauca provinces
and covers
approximately 52.000 acres originally held under the Santana Risk
Sharing
Agreement.
The
Guayuyaco contract has a maximum duration of 27.5 years with an
exploration
period of 5.5 years and a production period of 22 years, which
starts upon
termination of the exploration period.
During
the second exploration phase, two wells were drilled (Guayuyaco-1
and
Guayuyaco-2) which were successful. Therefore, on December 28,
2005 Ecopetrol
accepted the Commerciality of the field.
Solana
Petroleum Exploration Commercial Agreement
Argosy
and Solana Petroleum Exploration entered into a commercial agreement
in 2003
whereby, Solana through fulfillment of certain obligations could
earn a
participating interest in the Inchiyaco Well Prospect (Santana
Association
Contract) and have an option to enter the next exploration prospect
under the
Guayuyaco Association Contract. Inchiyaco-1 was drilled and completed
as a
producing well in 2003 resulting in Solana’s sharing 26.21% interest in Argosy’s
net share of the prospect.
The
commercial agreement was revised in 2004, giving Solana the right
to share a 50%
interest in Argosy’s net share of the Guayuyaco association contract by paying
66.7% of two exploratory wells (Guayuyaco-1 and Juanambu-1) and
50% for a new
seismic program and additional projects.
Talora
Exploration and Exploitation Contract
On
September 16, 2004 (effective date) Argosy and the National Hydrocarbons
Agency
(ANH) signed the Talora Exploration and Exploitation Contract to
explore and
produce oil, in an area of approximately 108,000 acres located
in Tolima and
Cundinamarca Provinces.
The
contract has a maximum duration of 30 years with an exploration
period of 6
years and a production period of 24 years, which starts upon the
date in which
Argosy receives the oil field commerciality declaration from ANH.
The
contract may be relinquished at the end of each phase after fulfillment
of the
agreed obligations.
(Continued)
12
Argosy
Energy International, LP
Notes
to
Financial Statements (Unaudited)
Argosy
and Petroleum Equipment International (PEI) signed a commercial
agreement on
March 9, 2006. Through fulfillment of certain obligations PEI could
earn an 80%
of Argosy’s interest under the ANH contract on the Talora Block. In conjunction
with such assignment, Argosy shall designate PEI as the operator
previous
approval of the ANH.
Contractual
Commitments:
| Phase |
Starting
date
|
Obligations |
| 3 | December 16, 2006 | One exploratory well. |
| 4 | December 16, 2007 | One exploratory well. |
| 5 | December 16, 2008 | One exploratory well. |
| 6 | December 16, 2009 | One exploratory well. |
The
contract may be relinquished at the end of each phase after fulfillment
of the
agreed obligations.
Chaza
Exploration and Exploitation Contract
On
June
27, 2005 (effective date) Argosy and the National Hydrocarbons
Agency (ANH)
signed the Chaza Exploration and Exploitation Contract to explore
and produce
oil, in an area of approximately 80,000 acres located in Putumayo
and Cauca
Provinces.
The
contract has a maximum duration of 30 years with an exploration
period of 6
years and a production period of 24 years, which starts upon the
date in which
Argosy receives the oil field commerciality declaration from
ANH.
The
ANH’s
Resolution 0217, dated September 13, 2005, approved the 2005 assignment
of 50%
interest of the contract to Solana Petroleum Exploration.
Contractual
Commitments:
| Phase |
Starting
date
|
Obligations |
|
2
|
June 27, 2006 | One exploratory well. |
| 3 | June 27, 2007 | One exploratory well. |
| 4 | December 16, 2008 | One exploratory well. |
| 5 | December 16, 2009 | One exploratory well. |
| 6 |
December 16, 2010
|
One exploratory well. |
The
contract may be relinquished at the end of each phase after fulfillment
of the
agreed obligations.
(Continued)
13
Argosy
Energy International, LP
Notes
to
Financial Statements (Unaudited)
(2) Summary
of Significant Accounting Policies and Practices
(a) Foreign
Currency Translation
The
transactions and accounts of the Company's operations denominated
in currencies
other than US dollars are re-measured into United States dollars
in accordance
with Statement of Financial Accounting Standards FAS 52. The United
States
dollar is used as the functional currency. Exchange adjustments
resulting from
foreign currency balances are recognized in expense or income in
the current
period.
(b) Cash
Equivalents
Cash
equivalents are highly liquid investments purchased with an original
maturity of
three months or less.
(c) Inventories
Inventories
consist of crude oil and materials and supplies and are stated
at the lower of
cost or market.
(d) Property,
Plant and Equipment
The
Company follows the full cost method to account for exploration
and development
of oil and gas reserves whereby all productive and nonproductive
costs are
capitalized. The only cost center is Colombia. All capitalized
costs plus the
undiscounted future development costs of proved reserves are depleted
using the
unit of production method based on total proved reserves applicable
to the
country.
Proved
oil and gas reserves are the estimated quantities of crude oil
that geological
and engineering data demonstrate with reasonable certainty can
be recovered in
future years from known reservoirs under existing economic and
operating
conditions considering future production and development
costs.
Costs
related to initial exploration activities with no proved reserves
are initially
capitalized and periodically evaluated for impairment. The Company
capitalizes
internal costs directly identified with exploration and development
activities.
The net capitalized costs of oil properties are subject to a ceiling
test, which
limits such pooled costs to the aggregate of the present value
of future net
revenues attributable to proved oil and gas reserves discounted
at 10% plus the
lower of cost or market value of unproved properties. If capitalized
costs
exceed this limit, the excess is charged to expense and reflected
as additional
accumulated depreciation, depletion and amortization.
While
the
quantities of proved reserves require substantial judgment, the
associated
prices of oil reserves that are included in the discounted present
value of the
reserves are
objectively determined. The ceiling test calculation requires use
of prices and
costs in effect as of the last day of the accounting period, which
are generally
held constant for the life of the properties. As a result, the
present value is
not necessarily an indication of the fair value of the reserves.
Oil and gas
prices have historically been volatile and the prevailing prices
at any given
time may not reflect our Partnership’s or the industry’s forecast of future
prices.
(Continued)
14
Argosy
Energy International, LP
Notes
to
Financial Statements (Unaudited)
Gain
or
loss on the sale or other disposition of oil and gas properties
is not
recognized, unless the gain or loss would significantly alter the
relationship
between capitalized costs and proved reserves of oil and gas attributable
to a
country.
Support
equipment and facilities are depreciated using the unit of production
method
based on total reserves of the field related to the support equipment
and
facilities.
(e) Environmental
Liabilities and Expenditures
Argosy
accrues for losses associated with environmental remediation obligations
when
such losses are probable and can be reasonably estimated. These
accruals are
adjusted as further information develops or circumstances change.
Costs of
future expenditures for environmental remediation obligations are
not discounted
to their present value.
(f) Asset
Retirement Obligations
Liability
for asset retirement obligation is considered to be negligible
at this time,
based on projected production profiles, expiry dates and terms
of the
Association Contracts for current operations. However, the Company
has accrued
the costs related to environmental remediation and abandonment
of the wells
belonging to Aporte Putumayo Contract.
(g) Concentration
of Credit Risks
All
of
the Company’s production is sold to Ecopetrol; the sale price is agreed between
both parts, according to local regulations in Colombia.
(h) Income
Taxes
Deferred
income taxes are accounted for
under the asset and liability method. Deferred tax assets and liabilities
are
recognized for the future tax consequences attributable to differences
between
the financial statement carrying amounts of existing assets and
liabilities and
their respective tax basis and operating loss. Deferred tax assets
and
liabilities are measured using enacted tax rates expected to apply
to taxable
income in the years in which those temporary differences are expected
to be
recovered or settled. The effect on deferred tax assets and liabilities
of a
change in tax rates is recognized in income in the period that
includes the
enactment date.
(Continued)
15
Argosy
Energy International, LP
Notes
to
Financial Statements (Unaudited)
(i) Financial
Instruments Fair Value
The
carrying amounts of cash and cash equivalents approximate fair
value because of
the short maturity of those instruments. The carrying value of
other
on-balance-sheet financial instruments approximates fair value,
and the cost, if
any, to terminate off-balance-sheet financial instruments is
not
significant.
(j) Employee
Benefits
The
Company recognizes the obligations with its employees in accordance
with the
current Colombian labor law. These obligations include the severance
indemnity
and the legal service bonus each one equivalent to a monthly
salary per year and
interest on severance at the rate of 12% on the balance of severance
indemnities
paid. The relevant liability for these two concepts is shown
under the "Employee
benefits" account as current liabilities at the closing of the
period.
(k) Defined
Benefit Pension Plan
The
Company has a defined benefit pension plan covering one employee.
The benefits
are based on years of service, age and the employee’s compensation. Currently,
the cost of this program is not being funded. The actuarial study
is performed
at the end of each year in accordance with the guidelines established
by FAS
87.
(l) Use
of
Estimates
The
preparation of financial statements in conformity with generally
accepted
accounting principles requires management to make estimates and
assumptions that
affect the reported amounts of assets and liabilities, disclosure
of contingent
assets and liabilities at the date of the financial statements
and reported
amounts of revenues and expenses during the reporting period.
(m) Revenue
Recognition
The
Company recognizes revenue when the crude oil is delivered to
Ecopetrol.
Ecopetrol
pays the oil sales invoicing 25% in local currency and the 75%
in US Dollars,
according to the terms of the Oil Sales Contract executed between
Ecopetrol and
Argosy, through which the oil sale price is fixed, with expiration
dated
November 1, 2006.
(n) Management
Fee
The
Company accounts for the management fees received from its partners
as operator
of the contracts as a less value of the operating costs.
(Continued)
16
Argosy
Energy International, LP
Notes
to
Financial Statements (Unaudited)
(o) Comprehensive
Income
For
each
period presented in the accompanying statements of income, comprehensive
income
and net income are the same amount.
(3) Cash
and Cash Equivalents
The
following is a summary of cash and cash equivalents as of March 31,
2006:
|
Held
in United States dollars
|
$
|
2,040
|
||
|
Held
in Colombian pesos
|
157
|
|||
|
Short-term
investments
|
473
|
|||
|
$
|
2,670
|
(4) Accounts
Receivable
The
following is a summary of accounts
receivable as of March 31, 2006:
|
Trade
|
$
|
3,248
|
||
|
B.T.O.
Río Magdalena Agreement
|
355
|
|||
|
Vendor
Advances
|
177
|
|||
|
Petroleum
Equipment Investments - Talora
|
300
|
|||
|
Other
|
173
|
|||
|
4,253
|
||||
|
Less
allowance for bad debts
|
(355
|
)
|
||
|
$
|
3,898
|
(5) Property,
Plant and Equipment
The
following is a summary of property, plant and equipment as of March
31,
2006:
|
Oil
properties:
|
||||
|
Unproved
|
$
|
3,831
|
||
|
Proved
|
59,190
|
|||
|
63,021
|
||||
|
Less
accumulated depreciation, depletion, and amortization
|
53,885
|
|||
|
$
|
9,136
|
(6) Pension
Plan
The
components of pension cost as of March 31, 2006:
|
Interest
cost
|
$
|
8
|
||
|
Expected
return of assets
|
(13
|
)
|
||
|
Amortization
of unrecognized net transition
|
||||
|
obligation
(asset)
|
1
|
|||
|
Net
periodic pension cost
|
$
|
(4
|
)
|
(Continued)
17
Argosy
Energy International, LP
Notes
to
Financial Statements (Unaudited)
(7) Equity
Stockholders’
Capital
The
following is a detail of the stockholders’ participation in the
capital:
| Stockholder |
%
|
|||
| Crosby Capital L.L.C. | 98.75 | |||
| Argosy Energy Corp. ** | 0.71 | |||
| Dale E. Armstrong | 0.41 | |||
| Richard S. McKnight | 0.13 | |||
| 100.00 |
**
Argosy
Energy Corp. is a general partner interest. All others are limited
partnership
interests. Net income is allocated according to the participation
of each
stockholder in the Company’s capital.
Foreign
Exchange Restrictions
In
accordance with current legislation in Colombia, the branches of
foreign
companies in the oil industry are not under the obligation to refund
to the
Colombian exchange market the proceeds from their foreign currency
sales either
inside or outside the country. The net proceeds from oil exports
may be used by
the branches of oil companies to reimburse abroad the capital and
profits from
the operation in Colombia. As a result of this foreign exchange
liberation, the
branch cannot purchase foreign currency in the Colombian exchange
market to
remit profits, repatriate capital, repay external debt or pay foreign
currency
expenses.
Distributions
to Partners
On
March
30, 2006 the partners of Argosy Energy International resolved,
with the majority
vote of its partners, distribute the amount of $2,500 on March
1, 2005 and $750
on March 30, 2006, ratably to each of its partners.
(8) Operating
Cost
The
following is a summary of operating cost incurred as of March 31,
2006:
| Direct labor | $ | 111 | ||
| Maintenance, materials and lubricants | 86 | |||
| Repairs - third party | 123 | |||
| General expenses - other | 47 | |||
| $ | 367 |
(Continued)
18
Argosy
Energy International, LP
Notes
to
Financial Statements (Unaudited)
(9) Income
Taxes
All
of
the income and income tax was derived from activities of the Branch
in
Colombia.
Deferred
Remittance Tax
Deferred
remittance tax is calculated based upon commercial net income.
Commercial net
income of Colombian branches of foreign companies derived from
exploration,
development or production of hydrocarbons is levied an additional
remittance tax
of 7%.
The
law
establishes that when this income is reinvested in the country
for five years,
the payment of the remittance tax will be deferred, after which
time the payment
of this tax will be exonerated.
Under
the
law, reinvestment occurs when the net income remains five years
within the
equity of the entity.
Tax
reconciliation
Income
tax expense attributable to income from continuing operations was
$1,126 for the
period ended March 31, 2006, and differed from the amounts computed
by applying
the Colombian income tax rate of 35% (the statutory tax rate of
the
partnership’s Branch) to pretax income from continuing operations as a result
of
the following:
|
|
Basis
|
Amount
|
|
%
|
||||||
|
Income
before taxes
|
$
|
2,815
|
100.00
|
|||||||
|
Computed
“Expected” tax expense
|
985
|
35.00
|
||||||||
|
Tax
expense
|
1,126
|
40.00
|
||||||||
|
Difference
|
$
|
141
|
5.00
|
|||||||
|
Explanation:
|
||||||||||
|
Difference
in principles and translation
|
$
|
(312
|
)
|
(109
|
)
|
(3.88
|
)
|
|||
|
Surcharge
tax (10%)
|
|
92
|
3.28 | |||||||
|
Remitance
tax expense (7%)
|
|
146
|
5.19
|
|||||||
|
Inflation
adjustment
|
(23
|
)
|
(8
|
)
|
(0.28
|
|||||
|
No
deductible expenses
|
9
|
3
|
0.11
|
|||||||
|
No
deductible taxes (Industry and commerce, stamp tax
)
|
41
|
14
|
0.51
|
|||||||
|
Assessments
to financial movements
|
6
|
2
|
0.07
|
|||||||
|
Income
not taxable
|
4
|
1
|
0.00
|
|||||||
|
$
|
141
|
5.00
|
19
Argosy
Energy International, LP
Notes
to
Financial Statements (Unaudited)
The
deferred tax is originated in the following temporary differences:
|
Accrued
liabilities
|
$
|
201
|
||
|
Property,
plant and equipment
|
$
|
(674
|
)
|
|
|
Net
deferred tax liability
|
$
|
(473
|
)
|
|
|
Roll
forward of deferred taxes:
|
||||
|
Beginning
balance
|
$
|
475
|
||
|
Translation
|
(2
|
)
|
||
|
$
|
473
|
Major
Changes Introduced by Law 863 (December 29, 2003)
| 1) |
An
equity tax was created for fiscal years 2004, 2005 and
2006. Such tax must
be liquidated applying at 0.3 % over the net equity at
January
1st
of
each year. This applies to equities of 3.000 million pesos
in 2004, 3,183
million pesos in 2005 and 3,344 million pesos in 2006.
|
| 2) |
The
financial transaction tax increased from 3 per thousand
to 4 per thousand
and it is applicable through the year
2007.
|
| 3) |
Paid
taxes are not deductible except for 80% of industrial and
commercial and
Property Taxes.
|
| 4) |
The
10% income tax surcharge (3.5%) is applicable for years
2003 through 2006.
This payment is not deductible for tax
purposes.
|
20
Argosy
Energy International, LP
Notes
to
Financial Statements (Unaudited)
(10) Settlement
Agreement with Aviva Overseas Inc.
Effective
August 19, 2005 Argosy Energy International, LP, Argosy Energy
Corp., Crosby
Capital, LLC, and Aviva Overseas, Inc. entered into a settlement
agreement which
principal terms are as follows:
1.
The
parties agreed that the agreement is a negotiated resolution
of various disputes
between the parties.
2.
Aviva
Overseas, Inc. assigned and transferred all interests in
the partnership,
corresponding to 29,6196%, to Argosy Energy International,
LP as a redemption of
such interests.
3.
Argosy
Energy International, LP is required to make the following
payments to Aviva
Overseas, Inc.: an initial cash payment of $300 as reimbursement
to Aviva
Overseas, Inc. for a portion of its cost incurred in connection
with the
disputes, a 90 day promissory note amounted to $3,050, a
two year promissory
note in the amount of $1,125 (the “Note”, represented for 8 quarterly payments
of $153 beginning in November 2005, including interest at
8%), and an additional
payment (described below) accrued in the amount of $329 as
of the agreement
date. As of March 31, 2006, amounts outstanding under the
agreement include $856
due on the Note and $290 accrued for the additional payment.
The outstanding
amount is payable as follows: $614 in 2006 and $532 in 2007.
The
additional payment is calculated as follows: after the earlier
of i) The date
Argosy Energy makes final payment of the “Note”, or (ii) after the occurrence of
an event of default, Argosy shall make a payment in cash
in an amount equal to
(i) $56,250 multiplied by the numeric amount by which the
average daily closing
price of the New York Mercantile Exchange nearby month contract
for West Texas
Intermediate crude oil over the note term exceeds $55 per
barrel, reduced by
(ii) all interest paid by Argosy on the principal of the
Note. The additional
payment was recorded at the date of the settlement agreement
based on a
calculation of the required payment at that date.
Crosby
Capital, LLC has guaranteed the payments required by Argosy
Energy
International, LP.
The
new
ownership percentages in Argosy Energy International L.P.,
after the redemption
of the partnership interest held by Aviva Overseas Inc. is
as
follows:
|
Partner
|
Interest
|
Type
of interest
|
|||||
|
Crosby
Capital L.L.C.
|
98.7491
|
%
|
Limited
Partner
|
||||
|
Argosy
Energy Corporation
|
0.7104
|
%
|
General
Partner
|
||||
|
Dale
E. Armstrong
|
0.4122
|
%
|
Limited
Partner
|
||||
|
Richard
S. McKnight
|
0.1283
|
%
|
Limited
Partner
|
||||
|
Total
|
100.0000
|
%
|
|
||||
21
Argosy
Energy International, LP
Notes
to
Financial Statements (Unaudited)
(11) Disagreement
Between Argosy Energy International and Ecopetrol
As
of
March 31, 2006 the contracting parties of Guayuyaco Association Contract,
Ecopetrol and Argosy Energy International, consulted with their legal
advisors
to clarify the procedure for allocation of oil produced and sold
during the long
term test of the Guayuyaco-1 and Guayuyaco-2 wells. Ecopetrol has
advised Argosy
of a material difference in the interpretation of the procedure established
in
the Clause 3.5 of Attachment-B of the Guayuyaco association Contract.
Ecopetrol
interprets the contract to provide that the extend test production
up to a value
equal to 30% of the direct exploration costs of the wells is for
Ecopetrol’s
account only and serves as reimbursement of its 30% back in to the
Guayuyaco
discovery. Argosy’s contention is that this amount is merely the recovery of 30%
of the direct exploration costs of the wells and not exclusively
for benefit of
Ecopetrol. While Argosy believes its interpretation of the Guayuyaco
Association
Contract is correct, the resolution of this issue is still pending
of agreement
between the parties or determination through legal
proceedings.
The
estimated value of disputed production is US$2,361,188 which possible
loss is
shared 50% (US$1,180,594) with Solana Petroleum Exploration (Colombia)
S.A.
partner in the contract and 50% Argosy.
(12) Subsequent
Events
| • |
The
Company signed in May and June, 2006 two new exploration
and production
contracts with the National Hydrocarbons Agency (ANH) called
Primavera and
Mecaya, to explore and produce oil, respectively.
|
These
contracts have a maximum duration of 30 years with an exploration
period of 6
years and a production period of 24 years, which starts upon the
date in which
Argosy receives the oil field commerciality declaration from
ANH.
The
contracts may be relinquished at the end of each phase after fulfillment
of the
agreed obligations.
| • |
On
April 1, 2006 the partners of the partnership entered into
a redemption
agreement pursuant to which all of Dale E. Armstrong interest
and Richard
S. Meknight interest.
|
| • |
On
June 21, 2006, Gran Tierra Energy Inc. acquired all of
the outstanding
partnership interest in the Company.
|
22
ARGOSY
ENERGY INTERNATIONAL, LP
Financial
Statements
December
31, 2005 and 2004
With
Independent Auditors’ Report Thereon
23
Partners
of
Argosy
Energy International, LP:
We
have
audited the accompanying balance sheets of Argosy Energy International,
LP as of
December 31, 2005 and 2004, and the related statements of income,
partner’s
equity and cash flows for the years then ended. These financial
statements are
the responsibility of the Company’s management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We
conducted our audits in
accordance with auditing standards generally accepted in the
United States of
America. Those standards require that we plan and perform the
audit to obtain
reasonable assurance about whether the financial statements are
free of material
misstatement. An audit includes consideration of internal control
over financial
reporting as a basis for designing audit procedures that are
appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the
effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit includes examining,
on a test
basis, evidence supporting the amounts and disclosures in the
financial
statements. An audit also includes assessing the accounting principles
used and
significant estimates made by management, as well as evaluating
the overall
financial statement presentation. We believe that our audits
provide a
reasonable basis for our opinion.
In
our
opinion, the financial statements referred to above present fairly,
in all
material respects, the financial position of Argosy Energy International,
LP as
of December 31, 2005 and 2004, and the results of its operations
and its cash
flows for the years then ended in conformity with accounting
principles
generally accepted in the United States of America.
/s/
KPMG
Ltda
Bogotá,
Colombia
July
28,
2006
(Continued)
24
ARGOSY
ENERGY INTERNATIONAL, LP
Statements
of Income
Years
ended December 31, 2005 and 2004
(Expressed
in thousands of US dollars)
|
2005
|
2004
|
||||||
|
Oil
sales to Ecopetrol
|
$
|
11,891
|
6,393
|
||||
|
Operating
cost (note 9)
|
2,452
|
2,060
|
|||||
|
Depreciation,
depletion and amortization
|
697
|
357
|
|||||
|
General
and administrative expenses
|
1,082
|
859
|
|||||
|
4,231
|
3,276
|
||||||
|
Operating
profit
|
7,660
|
3,117
|
|||||
|
Other
income, net (note 10)
|
449
|
225
|
|||||
|
Income
before income and remittance taxes
|
8,109
|
3,342
|
|||||
|
Current
income tax (note 11)
|
2,187
|
1,026
|
|||||
|
Deferred
income tax
|
352
|
245
|
|||||
|
Deferred
remittance tax
|
353
|
146
|
|||||
|
Total
income and remittance taxes
|
2,892
|
1,417
|
|||||
|
Net
Income
|
$
|
5,217
|
1,925
|
See
accompanying notes to financial statements.
(Continued)
25
ARGOSY
ENERGY INTERNATIONAL, LP
Balance
Sheets
December
31, 2005 and 2004
(Expressed
in thousands of US dollars)
|
Assets
|
2005
|
2004
|
|||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents (note 3)
|
$
|
7,124
|
6,954
|
||||
|
Accounts
receivable, net (note 4)
|
951
|
584
|
|||||
|
Accounts
receivable reimbursement Ecopetrol
|
1,186
|
-
|
|||||
|
Inventories:
|
|||||||
|
Crude
oil
|
218
|
154
|
|||||
|
Materials
|
557
|
248
|
|||||
|
|
775
|
402
|
|||||
|
Total
current assets
|
10,036
|
7,940
|
|||||
|
|
|||||||
|
Other
long-term assets
|
16
|
10
|
|||||
|
Property,
plant and equipment (note 5):
|
|||||||
|
Unproved
properties
|
3,622
|
2,312
|
|||||
|
Proved
properties, net
|
5,401
|
3,211
|
|||||
|
|
9,023
|
5,523
|
|||||
|
Total
assets
|
$
|
19,075
|
13,473
|
||||
|
|
|||||||
|
|
|||||||
|
Liabilities
and Partners' Equity
|
|||||||
|
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable
|
4,979
|
1,745
|
|||||
|
Tax
payable
|
1,326
|
826
|
|||||
|
Employee
benefits
|
103
|
88
|
|||||
|
Accrued
liabilities
|
522
|
375
|
|||||
|
Total
current liabilities
|
6,930
|
3,034
|
|||||
|
Long-term
accounts payable (note 6)
|
686
|
-
|
|||||
|
Deferred
income tax
|
475
|
223
|
|||||
|
Deferred
remmittance tax
|
1,104
|
714
|
|||||
|
Pension
plan (note 7)
|
-
|
35
|
|||||
|
Total
liabilities
|
9,195
|
4,006
|
|||||
|
Partners'
equity (note 8)
|
9,880
|
9,467
|
|||||
|
Total
liabilities and Partners' equity
|
$
|
19,075
|
13,473
|
See
accompanying notes to financial statements.
(Continued)
26
ARGOSY
ENERGY INTERNATIONAL, LP
Statements
of Cash Flows
Years
ended December 31, 2005 and 2004
(Expressed
in thousands of US dollars)
|
2005
|
2004
|
||||||
|
Cash
flows from operating activities:
|
|||||||
|
Net
income
|
$
|
5,217
|
1,925
|
||||
|
Adjustments
to reconcile net income to net cash
|
|||||||
|
provided
by operating activities:
|
|||||||
|
Depreciation,
depletion and amortization
|
697
|
357
|
|||||
|
Bad
debt allowance
|
116
|
239
|
|||||
|
Deferred
income tax
|
352
|
245
|
|||||
|
Deferred
remittance tax
|
353
|
146
|
|||||
|
Pensions
|
24
|
59
|
|||||
|
Changes
in assets and liabilities:
|
|||||||
|
Accounts
receivable
|
(1,669
|
)
|
(191
|
)
|
|||
|
Inventories
|
(373
|
)
|
339
|
||||
|
Accounts
payable
|
2,620
|
1,245
|
|||||
|
Tax
payable
|
500
|
|
716
|
|
|||
|
Employee
benefits
|
15
|
28
|
|||||
|
Accrued
liabilities
|
147
|
102
|
|||||
|
Deferred
income tax
|
(100
|
)
|
(4
|
)
|
|||
|
Deferred
remmittance tax
|
37
|
58
|
|||||
|
Net
cash provided by operating activities
|
7,936
|
5,264
|
|||||
|
Cash
flows from investing activities:
|
|||||||
|
Increase
in long term investments
|
(65
|
)
|
(70
|
)
|
|||
|
Additions
to property, plant and equipment
|
(4,197
|
)
|
(748
|
)
|
|||
|
Net
cash used in investing activities
|
(4,262
|
)
|
(818
|
)
|
|||
|
|
|||||||
|
Cash
flows used in financial activities - Redemption of
partnership
|
|||||||
|
interest
- Aviva Overseas Inc.
|
(3,504
|
)
|
-
|
||||
|
Net
increase in cash and cash equivalents
|
170
|
4,446
|
|||||
|
Cash
and cash equivalents at beginning of year
|
6,954
|
2,508
|
|||||
|
Cash
and cash equivalents at end of year
|
$
|
7,124
|
6,954
|
See
accompanying notes to financial statements.
(Continued)
27
ARGOSY
ENERGY INTERNATIONAL, LP
Statements
of Partners' Equity
Years
ended December 31, 2005 and 2004
(Expressed
in thousands of US dollars)
|
|
Limited
|
General
|
Total
|
|||||||
|
|
partners'
|
partners'
|
partners'
|
|||||||
|
|
capital
|
capital
|
equity
|
|||||||
|
|
||||||||||
|
Balance
as of December 31, 2003
|
$
|
7,504
|
38
|
7,542
|
||||||
|
Net
income
|
1,915
|
10
|
1,925
|
|||||||
|
Balance
as of December 31, 2004
|
9,419
|
48
|
9,467
|
|||||||
|
Net
income
|
5,180
|
37
|
5,217
|
|||||||
|
Redemption
of partnership interest -
|
||||||||||
|
Aviva
Overseas Inc. (note 6)
|
(4,789
|
)
|
(15
|
)
|
(4,804
|
)
|
||||
|
Balance
as of December 31, 2005
|
$
|
9,810
|
70
|
9,880
|
See
accompanying notes to financial statements.
(Continued)
28
|
ARGOSY
ENERGY INTERNATIONAL,
LP
|
||||
|
|
||||
|
Notes
to Financial Statements
|
||||
|
|
||||
|
December
31, 2005 and 2004
|
||||
|
|
||||
|
(Expressed
in thousands of US dollars)
|
||||
(1) Business
Activities
Argosy
Energy International, LP is a Utah (USA) Limited Partnership, which
established
a Colombian Branch in 1983.
Argosy
Energy International, LP is engaged in the business of exploring
for, developing
and producing oil and gas. The principal properties and operations
are located
in Colombia, which are carried out through its Colombian Branch
in the Putumayo,
Cauca, Tolima and Cundinamarca Provinces. The oil production is
sold to Empresa
Colombiana de Petróleos, the Colombian National Oil Company, (“Ecopetrol”).
There
are
risks involved in conducting oil and gas activities in remote,
rugged and
primitive regions of Colombia. The guerrillas have operated within
Colombia for
many years and expose the Company’s operations to potentially detrimental
activities. The guerrillas are present in the Putumayo and Río Magdalena areas
where the Company's properties are located. Since 1998, the Company
has only
experienced minor attacks on pipelines and equipment.
Operations
As
of
December 31, 2005, Argosy was participating in the following Association
Contracts signed with Ecopetrol and Exploration and Exploitation
Contracts
signed with the Hydrocarbons National Agency - ANH.
|
Contract
|
Participation
|
Operator
|
Phase
|
|||||||
|
Santana
|
35
|
%
|
ARGOSY
|
Exploitation
|
||||||
|
Guayuyaco
|
70
|
%
|
ARGOSY
|
Exploitation
|
||||||
|
Aporte
Putumayo
|
100
|
%
|
ARGOSY
|
Abandonment
|
||||||
|
Río
Magdalena
|
70
|
%
|
ARGOSY
|
Exploration
|
||||||
|
Talora
|
20
|
%
|
ARGOSY
|
Exploration
|
||||||
|
Chaza
|
50
|
%
|
ARGOSY
|
Exploration
|
The
first
four contracts have been signed with ECOPETROL and the last two
with ANH.
An
association contracts are those where the Government participate
as partner of
the field through the national oil company - ECOPETROL.
Exploration
and production contracts (E&P) are those signed with the ANH - “Agencia
Nacional de Hidrocarburos” (National Agency for Hydrocarbons) in which the
Government only receive royalties and taxes for the rights of exploration
and
production but there is not a participation from the national oil
company -
ECOPETROL or any other government
entity.
(Continued)
29
ARGOSY
ENERGY INTERNATIONAL, LP
Notes
to
Financial Statements
The
main
terms of the above-mentioned contracts are as follows:
Santana
Association Contract
On
May
27, 1987 (effective date July 27, 1987), Argosy Energy International,
LP signed
this association contract to explore for and produce oil, in
the area called
Santana. The contract is in its 19th year and the Company reduced
the area to a
5 kilometer reserve area around each field. The remaining contract
area is
approximately 1,100 acres.
Under
the
terms of the contract with Ecopetrol, a minimum of 25% of all
revenues from oil
sold to Ecopetrol is paid in Colombian pesos, which may only
be utilized in
Colombia. However, this proportion can be modified through parties
agreement.
Aporte
Putumayo - Association Contract
The
Aporte Putumayo area has been returned to the Government. Such
devolution is
subject to the approval of the environmental restoration of the
region by the
Ministry of Environment and the treatment of the abandonment
of the wells agreed
with Ecopetrol and the Ministry of Mines.
Río
Magdalena Association Contract
On
December 10, 2001 (effective date February 8, 2002), Argosy Energy
International, LP and Ecopetrol signed this Association Contract,
to explore and
produce oil, in the area called Río Magdalena of approximately 145,000 acres,
located in the Middle Magdalena region of Colombia in the provinces
of
Cundinamarca and Tolima.
The
contract has a maximum duration of 28 years distributed as follows:
an
exploration period of 6 years and a production period of 22 years
starting on
the date of termination of the exploration period. The exploratory
well, Popa-1
was drilled during June and July and is on the completion stage.
Upon
finalization of each phase, Argosy has the option to cancel the
contract having
previously completed the obligations agreed for each phase.
BT
Letter Agreement
On
February 27, 2001 Argosy Energy International, LP signed a letter
agreement with
BT Operating Company for the acquisition and management of the
Río Magdalena
Exploration Area. BT and Argosy mutually agreed to pay their
50% share of costs
under the terms of the Ecopetrol Association contract and provide
certain
services toward management and compliance of the obligations.
As of December 31,
2005 BT had not met their obligations under this agreement and
outstanding
accounts receivable of $355 related to their share of costs related
to the Río
Magdalena Association Contract were provisioned as bad debts.
(Continued)
30
ARGOSY
ENERGY INTERNATIONAL, LP
Notes
to
Financial Statements
Guayuyaco
Association Contract
On
August
2, 2002 (effective date September 30, 2002) Argosy Energy International,
LP
signed this association contract with Ecopetrol, to explore
and produce oil, in
the area named Guayuyaco. This Association contract gives Argosy
the right to
explore potential reserves in prospects adjacent to the existing
Santana oil
field. The block is located in the Putumayo and Cauca provinces
and covers
approximately 52.000 acres originally held under the Santana
Risk Sharing
Agreement.
The
Guayuyaco contract has a maximum duration of 27.5 years with
an exploration
period of 5.5 years and a production period of 22 years, which
starts upon
termination of the exploration period.
Argosy
has the obligation of carry out the exploration work in two
phases, which were
completed. In the first phase, the Branch drilled the Inchiyaco
-1 exploration
well which was successful. During the second exploration phase,
two wells were
drilled, Guayuyaco-1 and Guayuyaco-2, which were successful.
Therefore, on
December 28, 2005, Ecopetrol accepted the Commerciality of
the
field.
Solana
Petroleum Exploration Commercial Agreement
Argosy
and Solana Petroleum Exploration entered into a commercial
agreement in 2003
whereby, Solana through fulfillment of certain obligations
could earn a
participating interest in the Inchiyaco Prospect and have an
option to enter the
next exploration prospect under the Guayuyaco Association Contract.
Inchiyaco-1
was drilled and completed as a producing well in 2003 resulting
in Solana’s
sharing 26.21% interest in Argosy’s net share of the prospect.
The
commercial agreement was revised in 2004, giving Solana the
right to share a 50%
interest in Argosy’s net share of the Guayuyaco association contract by paying
66.7% of two exploratory wells (Guayuyaco-1 and Juanambu-1)
and 50% for a new
seismic program and additional projects.
Talora
Exploration and Exploitation Contract
On
September 16, 2004, (effective date), Argosy and the National
Hydrocarbons
Agency (ANH) signed the Talora exploration and exploitation
contract to explore
and produce oil, in an area of approximately 108,000 acres
located in Tolima and
Cundinamarca Provinces.
The
contract has a maximum duration of 30 years with an exploration
period of 6
years and a production period of 24 years, which starts upon
the date in which
Argosy receives the oil field commerciality declaration from
ANH.
(Continued)
31
ARGOSY
ENERGY INTERNATIONAL, LP
Notes
to
Financial Statements
Contractual
Commitments:
| Phase | Starting date | Obligations |
|
|
||
| 3 | December 16, 2006 | One exploratory well. |
| 4 | December 16, 2007 | One exploratory well. |
| 5 | December 16, 2008 | One exploratory well. |
| 6 | December 16, 2009 | One exploratory well. |
The
contract may be relinquished at the end of each phase after
fulfillment of the
agreed obligations.
Chaza Exploration and Exploitation Contract
On
June
27, 2005 (effective date) Argosy and the National Hydrocarbons
Agency (ANH)
signed the Chaza exploration and exploitation contract to explore
and produce
oil, in an area of approximately 80,000 acres located in Putumayo
and Cauca
Provinces.
The
contract has a maximum duration of 30 years with an exploration
period of 6
years and a production period of 24 years, which starts upon
the date in which
Argosy receives the oil field commerciality declaration from
ANH.
The
ANH
Resolution 0217, dated September 13, 2005, approved the 2005
assignment of 50%
interest of the contract to Solana Petroleum Exploration.
Contractual
Commitments:
| Phase | Starting date | Obligations |
|
|
||
| 2 | June 27, 2006 | One exploratory well. |
| 3 | June 27, 2007 | One exploratory well. |
| 4 | December 16, 2008 | One exploratory well. |
| 5 | December 16, 2009 | One exploratory well. |
| 6 | December 16, 2010 | One exploratory well. |
The
contract may be relinquished at the end of each phase after
fulfillment of the
agreed obligations.
(Continued)
32
ARGOSY
ENERGY INTERNATIONAL, LP
Notes
to
Financial Statements
(2) Summary
of Significant Accounting Policies and Practices
(a) Foreign
Currency Translation
The
transactions and accounts of the Company's operations denominated
in currencies
other than US dollars are re-measured into United States dollars
in accordance
with Statement of Financial Accounting Standards FAS 52. The United
States
dollar is used as the functional currency. Exchange adjustments
resulting from
foreign currency balances are recognized in expense or income in
the current
period.
(b) Cash
Equivalents
Cash
equivalents are highly liquid investments purchased with an original
maturity of
three months or less.
(c) Inventories
Inventories
consist of crude oil and materials and supplies and are stated
at the lower of
cost or market.
(d) Property,
Plant and Equipment
The
Company follows the full cost method to account for exploration
and development
of oil and gas reserves whereby all productive and nonproductive
costs are
capitalized. The only cost center is Colombia. All capitalized
costs plus the
undiscounted future development costs of proved reserves are depleted
using the
unit of production method based on total proved reserves applicable
to the
country.
Proved
oil and gas reserves are the estimated quantities of crude oil
that geological
and engineering data demonstrate with reasonable certainty can
be recovered in
future years from known reservoirs under existing economic and
operating
conditions considering future production and development
costs.
Costs
related to initial exploration activities with no proved reserves
are initially
capitalized and periodically evaluated for impairment. The Company
capitalizes
internal costs directly identified with exploration and development
activities.
The net capitalized costs of oil properties are subject to a ceiling
test, which
limits such pooled costs to the aggregate of the present value
of future net
revenues attributable to proved oil and gas reserves discounted
at 10% plus the
lower of cost or market value of unproved properties. If capitalized
costs
exceed this limit, the excess is charged to expense and reflected
as additional
accumulated depreciation, depletion and amortization.
33
ARGOSY
ENERGY INTERNATIONAL, LP
Notes
to
Financial Statements
While
the
quantities of proved reserves require substantial judgment, the
associated
prices of oil reserves that are included in the discounted present
value of our
reserves are objectively determined. The ceiling test calculation
requires use
of prices and costs in effect as of the last day of the accounting
period, which
are generally held constant for the life of the properties. As
a result, the
present value is not necessarily an indication of the fair value
of the
reserves. Oil and gas prices have historically been volatile and
the prevailing
prices at any given time may not reflect our Partnership’s or the industry’s
forecast of future prices.
Gain
or
loss on the sale or other disposition of oil and gas properties
is not
recognized, unless the gain or loss would significantly alter the
relationship
between capitalized costs and proved reserves of oil and gas attributable
to a
country.
Support
equipment and facilities are depreciated using the unit of production
method
based on total reserves of the field related to the support equipment
and
facilities.
(e) Environmental
Liabilities and Expenditures
Argosy
accrues for losses associated with environmental remediation obligations
when
such losses are probable and can be reasonably estimated. These
accruals are
adjusted as further information develops or circumstances change.
Costs of
future expenditures for environmental remediation obligations are
not discounted
to their present value.
(f)
Asset
Retirement Obligations
Liability
for asset retirement obligation is considered to be negligible
at this time,
based on projected production profiles, expiry dates and terms
of the
Association Contracts for current operations. However, the Company
has accrued
the costs related to environmental remediation and abandonment
of the wells
belonging to Aporte Putumayo Contract.
(g) Concentration
of Credit Risks
All
of
the company’s production is sold to Ecopetrol in which the sale price is agreed
between both parts, according to local regulations in Colombia.
(h) Income
Taxes
Deferred
Income taxes are accounted for under the asset and liability method.
Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of
existing assets and liabilities and their respective tax basis
and operating
loss.
34
ARGOSY
ENERGY INTERNATIONAL, LP
Notes
to
Financial Statements
Deferred
tax assets and liabilities are measured using enacted tax rates
expected to
apply to taxable income in the years in which those temporary differences
are
expected to be recovered or settled. The effect on deferred tax
assets and
liabilities of a change in tax rates is recognized in income in
the period that
includes the enactment date.
(i) Financial
Instruments Fair Value
The
carrying amounts of cash and cash equivalents approximate fair
value because of
the short maturity of those instruments. The carrying value of
other
on-balance-sheet financial instruments, approximates fair value,
and the cost,
if any, to terminate off-balance-sheet financial instruments is
not
significant.
(j) Employee
Benefits
The
Company recognizes the obligations with its employees in accordance
with the
current Colombian labor law. These obligations include the severance
indemnity
and the legal service bonus each one equivalent to a monthly salary
per year and
interest on severance at the rate of 12% on the balance of severance
indemnities
paid. The relevant liability for these two concepts is shown under
the "Employee
benefits" account as current liabilities at the closing of the
period.
(k) Defined
Benefit Pension Plan
The
Company has a defined benefit pension plan covering one employee.
The benefits
are based on years of service, age and the employee’s compensation. Currently,
the cost of this program is not being funded. The actuarial study
is performed
at the end of each year in accordance with the guidelines established
by FAS
87.
(l) Use
of
Estimates
The
preparation of financial statements in conformity with generally
accepted
accounting principles requires management to make estimates and
assumptions that
affect the reported amounts of assets and liabilities, disclosure
of contingent
assets and liabilities at the date of the financial statements
and reported
amounts of revenues and expenses during the reporting period.
(m)
Revenue
Recognition
The
Company recognizes revenue when the crude oil is delivered to
Ecopetrol.
Ecopetrol
pays the oil sales invoicing 25% in local currency and the 75%
in US Dollars,
according to the terms of the Oil Sales Contract executed between
Ecopetrol and
Argosy, through which the oil sale price is fixed, with expiration
dated
November 1, 2006.
35
ARGOSY
ENERGY INTERNATIONAL, LP
Notes
to
Financial Statements
(n) Management
Fee
The
Company accounts for the management fees received from its partners
as operator
of the contracts as a less value of the operating costs.
(o)
Comprehensive
Income
For
each
period presented in the accompanying statements of income, comprehensive
income
and net income are the same amount.
(3) Cash
and Cash Equivalents
The
following is a summary of cash and cash equivalents as of December
31:
|
2005
|
2004
|
||||||
|
Held
in United States dollars
|
$
|
6,329
|
6,454
|
||||
|
Held
in Colombian pesos
|
394
|
185
|
|||||
|
Short-term
investments
|
401
|
315
|
|||||
|
$
|
7,124
|
6,954
|
|||||
(4) Accounts
Receivable
The
following is a summary of accounts receivable as of December
31:
|
2005
|
2004
|
||||||
|
Trade
|
$
|
675
|
81
|
||||
|
B.T.
Río Magdalena Agreement
|
355
|
239
|
|||||
|
Vendor
advances
|
172
|
60
|
|||||
|
Solana
joint account
|
-
|
324
|
|||||
|
Other
|
104
|
119
|
|||||
|
1,306
|
823
|
||||||
|
Less
allowance for bad debts
|
(355
|
)
|
(239
|
)
|
|||
|
$
|
951
|
584
|
|||||
36
ARGOSY
ENERGY INTERNATIONAL, LP
Notes
to
Financial Statements
(5) Property,
Plant and Equipment
The
following is a summary of property, plant and equipment as of December
31:
|
2005
|
2004
|
||||||
|
Oil
properties:
|
|||||||
|
Unproved
|
$
|
3,622
|
2,312
|
||||
|
Proved
|
59,096
|
56,218
|
|||||
|
62,718
|
58,530
|
||||||
|
Less
accumulated depreciation, depletion,
|
|||||||
|
and
amortization
|
53,695
|
53,007
|
|||||
|
$
|
9,023
|
5,523
|
|||||
| a. |
shares
of Common Stock of Argosy Energy Corp.
|
(6) Settlement
Agreement with Aviva Overseas Inc
Effective
August 19, 2005 Argosy Energy International, LP, Argosy Energy
Corp., Crosby
Capital, LLC, and Aviva Overseas, Inc. entered into a settlement
agreement which
principal terms are as follows:
1.
The
parties agreed that the agreement is a negotiated resolution of
various disputes
between the parties.
2.
Aviva
Overseas, Inc. assigned and transferred all interests in the partnership,
corresponding to 29,6196%, to Argosy Energy International, LP as
a redemption of
such interests.
3.
Argosy
Energy International, LP is required to make the following payments
to Aviva
Overseas, Inc.: an initial cash payment of $300 as reimbursement
to Aviva
Overseas, Inc. for a portion of its cost incurred in connection
with the
disputes, a 90 day promissory note amounted to $3,050, a two year
promissory
note in the amount of $1,125 (the “Note”, represented for 8 quarterly payments
of $153 beginning in November 2005, including interest at 8%),
and an additional
payment (described below) accrued in the amount of $329 as of the
agreement
date. As of December 31, 2005, amounts outstanding under the agreement
include
$990 due on the Note and $310 accrued for the additional payment.
The
outstanding amount is payable as follows: $614 in 2006 and $686
in
2007.
37
The
additional payment is calculated as follows: after the earlier
of i) The date
Argosy Energy makes final payment of the “Note”, or (ii) after the occurrence of
an event of default, Argosy shall make a payment in cash in an
amount equal to
(i) $56,250 multiplied by the numeric amount by which the average
daily closing
price of the New York Mercantile Exchange nearby month contract
for West Texas
Intermediate crude oil over the note term exceeds $55 per barrel,
reduced by
(ii) all interest paid by Argosy on the principal of the Note.
The additional
payment was recorded at the date of the settlement agreement
based on a
calculation of the required payment at that date.
Crosby
Capital, LLC has guaranteed the payments required by Argosy Energy
International, LP.
The
new
ownership percentages in Argosy Energy International L.P., after
the redemption
of the partnership interest held by Aviva Overseas Inc. is as
follows:
|
Partner
|
Interest
|
Type
of interest
|
|||||
|
Crosby
Capital L.L.C.
|
98.7491
|
%
|
Limited
Partner
|
||||
|
Argosy
Energy Corporation
|
0.7104
|
%
|
General
Partner
|
||||
|
Dale
E. Armstrong
|
0.4122
|
%
|
Limited
Partner
|
||||
|
Richard
S. McKnight
|
0.1283
|
%
|
Limited
Partner
|
||||
|
Total
|
100.0000
|
%
|
|||||
(7) Pension
Plan
Costs
of
the retirement plan are accrued based on various assumptions
and discount rates,
as described below. The actuarial assumptions used could change
in the near term
as a result of changes in expected future trends and other factors,
which
depending on the nature of the changes, could cause increases
or decreases in
the liabilities accrued.
The
components of pension cost as of December 31 are:
|
2005
|
2004
|
||||||
|
Interest
cost
|
$
|
34
|
31
|
||||
|
Expected
return of assets
|
(48
|
)
|
(30
|
)
|
|||
|
Amortization
of unrecognized net transition obligation
(asset)
|
3
|
3
|
|||||
|
Net
periodic pension cost
|
$
|
(11
|
)
|
4
|
|||
|
Changes
in plan assets:
|
|||||||
|
Fund
assets at beginning of year
|
300
|
232
|
|||||
|
Interest
earned
|
61
|
68
|
|||||
|
Fund
assets at end of year
|
$
|
361
|
300
|
38
ARGOSY
ENERGY INTERNATIONAL, LP
Notes
to
Financial Statements
|
2005
|
2004
|
||||||
|
Funded
status:
|
|||||||
|
Projected
benefit obligation
|
359
|
335
|
|||||
|
Assets
at fair value
|
361
|
300
|
|||||
|
Funded
status
|
2
|
(35
|
)
|
||||
|
Unrecognized
net transaction obligation remaining
|
31
|
32
|
|||||
|
Unrecognized
prior service cost
|
-
|
-
|
|||||
|
Adjustment
additional minimum liability
|
(2
|
)
|
(5
|
)
|
|||
|
Unrecognized
net loss or (gain)
|
(29
|
)
|
(27
|
)
|
|||
|
Prepaid
(unfunded accrued) pension cost
|
$
|
2
|
(35
|
)
|
The
Company’s fund asset to cover pension benefits is represented in a
mutual fund
amounting to $361 and $300, in 2005 and 2004, respectively.
The
weighted-average assumptions used to determine benefit obligations
at December
31 are as follows:
|
2005
%
|
2004
%
|
||||||
|
|
|||||||
|
Discount
rate
|
9.3
|
10.5
|
|||||
|
Rate
of compensation increase
|
4.7
|
6.0
|
Estimated
future benefit payments are expected to be paid as follows:
|
Year
|
Amount
|
|||
|
2006
|
25
|
|||
|
2007
|
23
|
|||
|
2008
|
22
|
|||
|
2009
|
20
|
|||
|
2010
|
19
|
|||
|
2011-
2016
|
250
|
No
expected contributions will be made to the plan during the year
2006.
39
ARGOSY
ENERGY INTERNATIONAL, LP
Notes
to
Financial Statements
(8) Equity
Stockholders’
Capital
The
following is a detail of the stockholders’ participation in the
capital:
|
Stockholders
|
2005
%
|
2004
%
|
|||||
|
|
|||||||
|
Crosby
Capital L.L.C.
|
98.75
|
69.50
|
|||||
|
Argosy
Energy Corp. .**
|
0.71
|
0.50
|
|||||
|
Aviva
Overseas, Inc
|
-
|
29.62
|
|||||
|
Dale
E. Armstrong
|
0.41
|
0.29
|
|||||
|
Richard
S. McKnight
|
0.13
|
0.09
|
|||||
|
100.00
|
100.00
|
**
Argosy
Energy Corp. is a general partner interest. All others are limited
partnership
interests. Net income is allocated according to the participation
of each
stockholder in the Company’s capital.
Foreign
Exchange Restrictions
In
accordance with current legislation in Colombia, the branches
of foreign
companies in the oil industry are not under the obligation to
refund to the
Colombian exchange market the proceeds from their foreign currency
sales either
inside or outside the country. The net proceeds from oil exports
may be used by
the branches of oil companies to reimburse abroad the capital
and profits from
the operation in Colombia. As a result of this foreign exchange
liberation, the
branch cannot purchase foreign currency in the Colombian exchange
market to
remit profits, repatriate capital, repay external debt or pay
foreign currency
expenses.
(9) Operating
Cost
The
following is a summary of operating cost incurred as of December
31:
|
2005
|
2004
|
||||||
|
Direct
labor
|
$
|
383
|
316
|
||||
|
Maintenance,
materials and lubricants
|
417
|
417
|
|||||
|
Repairs
- third party
|
700
|
752
|
|||||
|
General
expenses - others
|
952
|
575
|
|||||
|
$
|
2,452
|
2,060
|
40
(10)
Other
Income and Expenses, net
The
following is a summary of other income and expenses, net as
of December
31:
|
2005
|
2004
|
||||||
|
Oil
transportation
|
$
|
18
|
146
|
||||
|
Financial
income
|
171
|
65
|
|||||
|
Insurance
reimbursement
|
126
|
-
|
|||||
|
Other
income
|
217
|
162
|
|||||
|
Foreign
translation gain (loss)
|
33
|
(148
|
)
|
||||
|
Allowance
for bad debts
|
(116
|
)
|
-
|
||||
|
$
|
449
|
225
|
(11) Income
Taxes
All
of
the income and income tax was derived from activities of the
branch in
Colombia.
Deferred
Remittance Tax
Deferred
remittance tax is calculated based upon commercial net income.
Commercial net
income of Colombian branches of foreign companies derived from
exploration,
development or production of hydrocarbons is levied an additional
remittance tax
of 7%.
The
law
establishes that when this income is reinvested in the country
for five years,
the payment of the remittance tax will be deferred, after
which time the payment
of this tax will be exonerated.
Under
the
law, reinvestment occurs when the net income remains five
years within the
equity of the entity.
Tax
reconciliation
Income
tax expense attributable to income from continuing operations
was $2,892 and
$1,417 for the years ended December 31, 2005 and 2004, respectively,
and
differed from the amounts computed by applying the Colombian
income tax rate of
35% (the statutory tax rate of the partnership’s Branch) to pretax income from
continuing operations as a result of the following:
|
2005
|
2004
|
||||||||||||
|
|
Basis
Amount %
|
|
Basis
Amount %
|
||||||||||
|
Income
before taxes
|
$
|
8,109
|
100.00
|
3,342
|
100.00
|
||||||||
|
Computed
“Expected” tax expense
|
2,838
|
35.00
|
1,170
|
35.00
|
|||||||||
|
Tax
expense
|
2,892
|
35.66
|
1,417
|
42.40
|
|||||||||
|
Difference
|
$
|
54
|
0.66
|
247
|
7.40
|
||||||||
41
ARGOSY
ENERGY INTERNATIONAL, LP
Notes
to
Financial Statements
|
2005
|
2004
|
||||||||||||||||||
|
Basis
|
|
Amount
|
%
|
Basis
|
Amount
|
%
|
|||||||||||||
|
Explanation:
|
|||||||||||||||||||
|
Difference
in principles
|
$
|
(593
|
)
|
(207
|
)
|
(2.56
|
)
|
(49
|
)
|
(17
|
)
|
(0.51
|
)
|
||||||
|
Surcharge
tax (10%)
|
199
|
2.45
|
93
|
2.79
|
|||||||||||||||
|
Remittance
tax expense (7%)
|
353
|
4.35
|
146
|
4.37
|
|||||||||||||||
|
Inflation
adjustment
|
(53
|
)
|
(19
|
)
|
(0.23
|
)
|
(21
|
)
|
(7
|
)
|
(0.22
|
)
|
|||||||
|
No
deductible expense
|
32
|
11
|
0.14
|
16
|
6
|
0.17
|
|||||||||||||
|
No
deductible tax (Stamp tax)
|
130
|
46
|
0.56
|
57
|
20
|
0.60
|
|||||||||||||
|
Assessments
to financial
|
|||||||||||||||||||
|
movements
|
45
|
16
|
0.19
|
13
|
4
|
0.13
|
|||||||||||||
|
Equity
tax
|
25
|
9
|
0.11
|
31
|
11
|
0.33
|
|||||||||||||
|
Deduction
fixed real productive
|
|||||||||||||||||||
|
assets
|
(1,014
|
)
|
(355
|
)
|
(4.38
|
)
|
|||||||||||||
|
Income
not taxable
|
4
|
1
|
0.03
|
(23
|
)
|
(9
|
)
|
(0.26
|
)
|
||||||||||
|
$
|
|
54
|
0.66
|
247
|
7.40
|
||||||||||||||
|
The
deferred tax is the following:
|
|
2005
|
2004
|
||||||
|
Accrued
liabilities
|
$
|
201
|
183
|
||||
|
Property,
plant and equipment
|
(676
|
)
|
(406
|
)
|
|||
|
Net
deferred tax liability
|
$
|
(475
|
)
|
(223
|
)
|
||
|
Roll
forward of deferred taxes:
|
|||||||
|
Net
deferred tax to December 31:
|
|||||||