TIDMPPC
RNS Number : 5692D
President Energy PLC
27 June 2019
27 June 2019
PRESIDENT ENERGY PLC
("President", "the Company", or "the Group")
AGM Statement
Company update
President (AIM: PPC), the upstream oil and gas company with a
diverse portfolio of production and exploration assets focused
primarily in Argentina, will hold its 2019 Annual General Meeting
at 11 am today at The Naval Club, 38 Hill St, Mayfair, London W1J
5NS. At the meeting, Peter Levine, Chairman, will read the
following statement:
"President is focused on building a major South American oil and
gas business that will deliver shareholders real value and
significant upside. This process is already well underway.
2018 was a year of real progress. All the Company's operating
fields in Argentina and Louisiana generated positive operating
profits with our reserves position in Argentina also improving. At
the year end President's net 1P proven reserves increased by 6% to
15.4 mmboe with the higher value Rio Negro assets increasing by 83%
to 8.1 mmboe. The Argentine assets NPV 10 pre-tax value was US$291
million with total Group value of over US$300 million,
demonstrating ability to secure better, higher value reserves.
The Company delivered on its transformational programme in 2018
and ended the year with two significant value enhancing
acquisitions in Argentina including a strategic gas pipeline also
under our belt. The Group is now well placed to materially expand
its medium and longer-term capacity and profitability with the
ongoing US$50 million work programme for 2019/20 of workovers and
new wells, the first part of which has already commenced. This
programme is aimed at delivering 50% exit production growth year on
year and accordingly President maintains its target of a 2019 year
end production rate of 4,900 boepd."
President today also provides the following trading update.
Highlights:
-- Further consolidation and expansion of President's Rio Negro strategic footprint
-- Multi-well workovers progressing with five already completed
and now two workover rigs in the fields working in parallel
-- Multi-target drilling to commence soon initially on the newly acquired Rio Negro Assets
-- Gas Production infrastructure work making good progress
-- First two months of Q2 underlines the profitable progress of the Company
-- New Paraguay detailed sub-surface work demonstrates promising
potential from the Cretaceous basin
-- Group Head of sub-surface appointment
Reunification of the Puesto Flores/Estancia Vieja Concession
The Province of Rio Negro has kindly agreed, subject to formal
decree which is anticipated during the summer, to the reunification
of the separate areas of Puesto Flores and Estancia Vieja fields by
the inclusion in that Concession (President 90%, Edhipsa 10%) of
the area situated in between those parts and formally known as part
of Loma de Kauffman.
This area spans approximately 70 square kilometres with the
reunified Concession now totalling some 240 square kilometres and
contains sub-surface features of potential interest and a well that
previously produced gas to surface. President's strategic
pan-regional gas pipeline runs through the land. Post reunification
the Puesto Flores/Estancia Vieja Concession will be one physical
unit and this is another step in President's planned strategy to
consolidate and expand its footprint and enhance critical mass in
Rio Negro. No consideration is anticipated to be paid for this
reunification.
A map showing the enlarged Concession, highlighting the
reunification is now on the website of President at
www.presidentenergyplc.com
Workovers
The workovers of wells have now been progressing for some three
months. The primary purpose of the programme is to stabilise the
inevitable natural decline in production of the well stock. The
secondary, but likewise important, purpose is to develop a greater
understanding of the potential productivity of the reservoirs.
Five workovers, so far only in the Puesto Flores field, have
been successfully re-completed and have been placed back on
production. The programme continues apace and President has now
added a second workover rig so that work will be carried out in
more than one of its Rio Negro fields at the same time. The
forthcoming wells to be addressed will be at Estancia Vieja, the
newly acquired Las Bases and Puesto Prada fields, as well as
continued work at Puesto Flores.
There has been inevitable planned disruption to production as
the workover of producing wells continues. Notwithstanding this, it
is currently anticipated that Rio Negro production will return to
the 2018 end of year highs before the end of Q3 from which point
production is expected to increase from the new wells. In the
meantime, production from the existing Puesto Prado and Puesto
Guardian fields remains satisfactory and stable.
Despite the major field work being carried out, now with two
rigs, the Group continues its profitable year on year progress and
significant free cash generation as is illustrated by the unaudited
results for the first two months of Q2 2019 which are referred to
below.
In Louisiana, it is anticipated that a workover will commence in
July at the Triche well to remedy what may be a casing leak.
Drilling
It is anticipated that drilling operations will commence before
the end of European summer with long lead items being ordered. The
first wells to be drilled in Rio Negro will be in the Puesto Prado
and Estancia Vieja fields and will be a mix of oil and gas
production, appraisal and exploration wells. Las Bases will
follow.
In the Puesto Guardian Concession, Salta Province it is
anticipated that in the latter part of this year drilling will
commence on a two well programme at the Dos Puntitos field.
In Louisiana, the results of the seismic re-processing to date
look very promising and it is now anticipated that drilling
operations at Jefferson Island will commence by the end of
September with an initial firm two well drilling programme and
further contingent wells thereafter subject to results. In
Louisiana production was recentlyshut-in and production suspended
due to high flood waters which have now receded with normal service
expected to be resumed within the next seven days.
Further details of all drilling activities will be given at the
time of commencement of each of the respective programmes.
Gas production
Significant steps have been taken to progress the plans to
commence and thereafter expedite gas production at the Company's
Rio Negro fields.
The first gas compressor has been ordered with letters of intent
issued for two more. It is anticipated that the first will be
installed and working at Las Bases by the end of September. Good
progress has also been made at the Las Bases plant itself and it is
anticipated that this could be recommissioned by the end of this
year or shortly thereafter.
Permits have now been obtained to build the 16 kilometre new
section of pipeline required to open up the Estancia Vieja field
gas to its full potential where there is between 60-100,000 m(3)
/day of shut-in gas from existing wells which is due to be
supplemented later this year by workovers and new drilling.
Paraguay
President has recently undertaken detailed petroleum system and
productivity studies of producing oilfields along the southern
margin of the Argentine and Paraguayan Cretaceous sedimentary basin
with a view to extending these known play types onto President's
Pirity Concession in Paraguay.
The Extensive 3d seismic data acquired by President in Paraguay
was re-studied with the specific objective of looking for prospects
that best resemble the existing oilfields in Argentina, and in
particular, the adjacent Palmar Largo field volcano-clastic
complex.
President's previously identified Delray Main prospect is now
believed to be directly analogous to the Palmar Largo
volcano-clastics with similar source, timing and migration
characteristics along with seismic expression. President has
identified two other satellite structures which offset this initial
prospect with potential in shallower cretaceous sands.
Internal management evaluations estimate an initial Pmean oil in
place of 85-90 million bbls (MMBO) at Delray Main. Pmean estimates
for the two satellite prospects are promising with 95 MMBO at
Delray West and 45-50 MMBO at Delray South.
A short sub-surface presentation reflecting such studies is now
on the web-site of President at www.presidentenergyplc.com.
With fresh eyes, President will now undertake a mature review of
the results of the Lapacho well drilled by the Company in 2014.
This year a new independent expert petrophysical analysis of the
logs in the well, including high definition fullbore formation
micromager , has suggested that there is inter alia some 24 metres
of mobile oil in the upper Paleozoic section of that well which was
the subject of an invalid drill stem test at the time.
Whilst there is no tangible news on any farm-out discussions, in
any event President still plans to commence operations in Paraguay
at the end of 2019/Q1 2020.
Argentina Q2 results to date
The Company continues to deliver progress with, as anticipated,
the full benefits of the workover and drilling programmes to be
felt in the second half of the year.
Unaudited turnover from Argentina alone for April and May is
estimated to be US$8 million giving an estimated figure for the
first five months of 2019 for the Group of in excess of US$20
million.
The estimated free cash generation from core operations in
Argentina after all opex during the said two months period was
nearly US$5 million, giving an estimated free cash generation from
Argentina alone for the first five months of the year in excess of
US$12 million.
Unaudited adjusted EBITDA in Argentina after all opex and
administration costs for April and May in Argentina is estimated to
be approximately US$3.3 million.
The above figures exclude all contributions from the Company's
profitable Louisiana operations.
New Senior Management appointment
President is pleased to announce the appointment of Dr Martin
Gee as Group Head of Sub-surface. This is a newly created position
for the Group. Martin, who has already commenced work with the
Company and from July will be based out of the Latam Operations
Centre in Argentina, has extensive experience in Geoscience. He
previously worked for Sibneft, Lukoil, Norsk Hydro, as well as
spending four years as Head of Exploration at Imperial Energy
during Peter Levine's tenure there. Martin has a PhD in Geophysics
from Oxford University and a first class BSc in Earth Sciences from
Cardiff University.
Summary
The reunification and thereby extension of the current Puesto
Flores/Estancia Vieja Concession is further evidence of President's
successful focus on consolidating and growing its critical mass in
conventional hydrocarbons in the Nequen Basin. The Company is most
grateful to the Province and to our respected partners Edhipsa for
their understanding and kind cooperation in this regard
President continues to make encouraging progress in its stated
objectives with the significant and challenging capital work
progressing simultaneously on many fronts. The fruits of this work
are expected to be seen in the latter part of this year.
Glossary
Boepd means barrels of oil equivalent per day
MMBO means million barrels of oil
Adjusted EBITDA has been calculated in line with the approach
used in the Annual Accounts for y/e 2018
Pmean oil in place means the mean original oil in place resource
estimate
Contact:
President Energy PLC
Peter Levine, Executive Chairman
Rob Shepherd, Group FD +44 (0) 207 016 7950
finnCap (Nominated Advisor)
Christopher Raggett, Scott Mathieson +44 (0) 207 220 0500
Panmure Gordon (Joint Broker) +44 (0) 207 886 2500
Charles Lesser, Dominic Morley
Whitman Howard (Joint Broker) +44 (0) 207 659 1234
Hugh Rich, Grant Barker
Tavistock (Financial PR) +44 (0) 207 920 3150
Nick Elwes, Simon Hudson
Dr Martin Gee
Dr Martin Gee, PhD in Geophysics (Oxon), BSc in Earth Sciences
(Cardiff) Group Head of Sub-surface is the qualified person who has
reviewed and approved the technical information contained in this
announcement
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 announcement contains inside information for the purposes
of article 7 of Regulation 596/2014
This information is provided by RNS, the news service of the
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END
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