TIDMPPC
RNS Number : 9363Q
President Energy PLC
25 February 2019
25 February 2019
PRESIDENT ENERGY PLC
("President", "the Company" or "the Group")
Offer for Subscription for up to GBP6.5 million
and
Proposed Debt Conversion
President Energy (AIM: PPC), the upstream oil and gas company
with a diverse portfolio of production and exploration assets
focused primarily in South America, is pleased to announce that it
will today launch an Offer for Subscription (the "Offer") for up to
GBP6.5 million by the issue of up to 81,250,000 new Ordinary Shares
("Offer Shares") at a price per Offer Share of 8 pence (the "Offer
Price").
Following on from the latest acquisitions in December 2018 of
two concessions in the Rio Negro Province, Argentina, together with
the purchase of a strategic pan-regional gas pipeline network, the
Company has identified increasing opportunities to accelerate its
expansion programme in Rio Negro through the fast track development
of its gas assets which currently represent 19% of Group reserves
but only 3% of production.
After consultation with both existing and new potential
investors, President has determined that the optimal way of funding
the accelerated programme is through the Offer that is limited
under relevant regulations to a maximum amount equivalent to EUR8
million. In addition, and importantly, the Offer allows the Company
to expand its shareholder base and increase liquidity whilst at the
same time preserving the priority rights of existing holders. This
mechanism allows both shareholders and non-shareholders to
participate at the same Offer Price. President has received
indications from Shareholders representing a substantial part of
the Company's issued share capital that they intend to participate
in the Offer or, in the case of Peter Levine, the debt conversion
referred to below.
Further details of the Offer, including the full terms and
timing, will be set out in an Offer Document that will be sent to
Shareholders and will be available to download later today,
alongside an updated corporate presentation, on the Company's
website at www.presidentenergyplc.com. The application forms for
participation in the Offer will also be available on the Company's
website and can be used by both shareholders and non-shareholders.
All application forms must be submitted in accordance with the
instructions set out in the Offer Document.
The Offer Shares will be issued under the authorities granted to
the Company at its Annual General Meeting held on 29 June 2018. The
Offer will remain open until 1.00 p.m. on 8 March 2019 and it is
anticipated that the Offer Shares will be admitted to trading on
AIM on or about 13 March 2019.
Background and Use of Proceeds
President's progress in 2018 was very significant. Some of the
key performance indicators (unaudited, from internal management
accounts) for the Group were:
-- Turnover increased by 160% to US$47.2 million
-- Operational profit of US$14.3 million
-- Year-end net production increased by 194% to 3,300 boepd with
Rio Negro Province production increasing by nearly 100% since the
first acquisition there in late 2017
-- Operational free cash generation of US$21.5 million
-- Updated independently audited 1P Proven hydrocarbon reserves
as at 31 December 2018 of over 15 MMboe and 2P Proven and Probable
reserves of over 25 MMboe.
This progress is set to continue as month on month production
growth between this year and last year proceeds apace.
Consequently, President is targeting 50% production growth in each
of the next three years with production estimated to rise to
approximately 4,500 boepd in 2019, excluding the accelerated gas
production.
This organic growth in oil production is being powered by
President's current significant cash flow; however, following the
recent acquisition of the strategic pan-regional gas pipeline and
gas producing assets, the Directors consider that the Offer will
provide the supplementary equity funds to create a substantial gas
business alongside President's fast growth oil assets. Particular
emphasis is being placed on gas production by bringing forward a
number of important developments. Management believes that the
Company's gas assets have the potential to generate 30% of the
enlarged Group production by end 2020.
In summary, the proceeds will:
-- Accelerate and expand the already planned workover and
drilling programmes to allow more gas wells to be added to the
programme
-- Capitalise on the potential of the new Concessions purchased
in December 2018 (including the Company's 60 km owned and operated
strategic pan-regional pipeline) to expedite the development of
significant gas production, thereby broadening President's revenue
base
-- Accelerate the recommissioning of the currently
non-operational ex-Chevron Argentina gas plant at the Las Bases
Concession, Rio Negro Province, with an original designed capacity
of 35 MMcft/d of gas (6k boepd)
-- Expand the capacity of the newly acquired pipeline by
replacing a section currently having restricted flow capability
with larger volume steel pipes thereby permitting significantly
more gas to be transported from President's high potential Estancia
Vieja gas field through Las Bases to President's own tie-in to the
main trunk line.
Debt Conversion
At the same time as the Offer, IYA Global Limited ("IYA"), an
entity controlled and beneficially owned by Peter Levine, the
Group's Chairman, has confirmed that it will convert part of its
existing debt that it has with the Company into new Ordinary Shares
("Loan Conversion Shares") at the Offer Price such that the holding
of entities controlled by Peter Levine will equal approximately
29.95 per cent of the enlarged issued share capital of the Company
following completion of the Offer and the Loan Conversion. The Loan
Conversion Shares will be admitted to trading on AIM at the same
time as the Offer Shares or such later time as the appropriate
Resolution of the Company is passed by the Members to facilitate
such conversion in full. Further information regarding the quantum
of the Debt Conversion will be notified once the results of the
Offer are available.
The conversion of part of the existing IYA debt will reduce the
interest expense burden on the Company and will strengthen the
Company's balance sheet.
Peter Levine, Chairman, commented:
"Today's Offer allows us to introduce new investors who have
expressed concrete interest to come on board while ensuring that
our existing investor base and other non-institutional investors
are able to participate.
"The Group is currently well placed with current oil production
estimated to increase by 50% annually for the next three years
funded through existing resources. Our recently acquired gas assets
which are currently largely undeveloped have the potential to
generate around 30% of enlarged Group production within the next
two years.
"The proceeds of this Offer will place the Company in an even
better position not just to develop but to accelerate the multiple
opportunities available to us to progress our newly expanded
portfolio in the Neuquén Basin.
"The greater and speedier focus of increasing gas production
will enable President to have a more balanced and diversified
portfolio of energy assets which during 2019 will also include
power generation as well as sales of gas and oil to the market.
"Clearly a significant motivating force for the Directors as a
public company is to expand our shareholder base and improve
liquidity, which is important for all investors and we are pleased
at the level of interest we have seen in the President story and
our road map of growth for the future.
"I look forward to welcoming new shareholders and thank our
existing holders who have indicated their strong support."
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation (EU)
596/2014 ("MAR").
Conference call
The Company will be hosting a conference call, focussing on the
proposed Offer for Investors at 9.30 am (UK Time) on Monday 25
February. The dial in details are shown below and participants
should ask for the "President Energy Investor Call".
United Kingdom Toll-Free:
Dial in number: 0800 358 9473
Conference code: 48694297#
United Kingdom Toll:
Dial in number: +44 333 300 0804
Conference code: 48694297#
Contact:
President Energy PLC
Peter Levine, Chairman
Rob Shepherd, Group FD +44 (0) 207 016 7950
finnCap (Nominated Advisor & Joint
Broker)
Christopher Raggett, Scott Mathieson +44 (0) 207 220 0500
Panmure Gordon (Joint Broker)
Charles Lesser, Dominic Morley +44 (0) 207 886 2500
Tavistock (Financial PR)
Nick Elwes, Simon Hudson +44 (0) 207 920 3150
Notes to Editors
President Energy is an oil and gas company listed on the AIM
market of the London Stock Exchange (PPC.L) primarily focused in
Argentina, with a diverse portfolio of operated onshore producing
and exploration assets.
The Company has operated interests in the Puesto Flores,
Estancia Vieja, Puesto Prado and Las Bases Concessions, Rio Negro
Province as well as in the Neuquén Basin of Argentina and in the
Puesto Guardian Concession, in the Noroeste Basin in NW Argentina.
Alongside this, President Energy has cash generative production
assets in Louisiana, USA and further significant exploration and
development opportunities through its acreage in Paraguay and
Argentina.
The Group is also actively pursuing value accretive acquisitions
of high-quality production and development assets in Argentina
capable of delivering positive cash flows and shareholder returns.
With a strong institutional base of support, including the IFC,
part of the World Bank Group, an in-country management team as well
as a Board whose interests are aligned to those of its
shareholders, President Energy gives UK investors rare access to
the Argentinian growth story combined with world class standards of
corporate governance, environmental and social responsibility.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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February 25, 2019 02:01 ET (07:01 GMT)
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