TIDMPPC
RNS Number : 3272K
President Energy PLC
28 August 2019
28 August 2019
PRESIDENT ENERGY PLC
("President", "the Company" or "the Group")
Further update on Argentina, expansion of gas project, oil
production on track
President Energy (AIM: PPC), the upstream oil and gas company
with a diverse portfolio of production and exploration assets
focused primarily in Argentina, provides a further update on recent
activities in Argentina.
The Government of Argentina has recently issued a time limited
decree in an attempt to temporarily control prices at the fuel
pumps for end consumers ("the Decree"). The Decree, which is
effective for 90 days, on its wording, fixed, solely for oil
producers, the base values for the peso/dollar exchange rate and
the reference price of Brent used in the calculation of the oil
price receivable. The peso/dollar exchange rate as per the Decree
is fixed at 45.19/1 when payment for oil is made by offtakers and
the reference price of Brent is fixed at $59 per barrel.
The Decree has met significant resistance from oil producers and
key Provincial Authorities with the important Province of Neuquen
amongst others issuing court applications to have the Decree
declared illegal. President does not rule out a compromise being
reached in due course but not necessarily in early course.
Negotiations with key stakeholders continue with the
Government.
Notwithstanding this President will continue to be a profitable
Company in its Argentine operations irrespective of whether or not
the temporary Decree continues in effect. This is thanks to the
Group's focus on opex and cash management as well as its ability to
adapt quickly to the prevailing circumstances, pivoting where
appropriate. The Company is focussed on high-margin production
rather than production for its own sake. Whilst the current
volatility prevails, President has therefore deferred this year's
drilling campaign in favour of greater near term emphasis on
progressing and expanding its existing gas project. The prices for
gas are not directly affected by the Decree. It is now anticipated
well drilling will commence in Q1 2020 with an initial emphasis on
new gas wells.
In relation to the gas project:
(i) First limited volume gas sales from the Estancia Vieja and
Las Bases fields will commence by end September from four wells.
This is estimated at 400boepd (2.5 MMScft/d).
(ii) The 16km new gas pipeline providing additional capacity is
now projected to be completed by end December, with estimated
initial gas sales from a total of eight wells by the end of January
of 1,250 boepd (7.5 MMscft/d).
(iii) By end of March gas sales, then from a total of some 12
wells are estimated at 1,850 boepd (11 MMscft/d).
The projected gas volumes referred to above will be generated
from existing wells without any need for drilling. Stages (i) and
(ii) are from wells already tested to the level of the contributory
volumes expected above. All such wells were drilled for, and
produced, oil in deeper intervals with the gas left in place. Stage
(iii) volumes will be from oil wells drilled with gas shown in the
logs at higher intervals but which intervals were never tested nor
produced as gas was not the focus of the work undertaken at the
time by the previous operator. Stages (ii) and (iii) will require
workovers and production testing which are already planned and this
work will commence at the beginning of September, running through
the end of year and into spring 2020. President is currently
receiving US$3.9 MMbtu from its limited sales of associated gas
from its Puesto Flores operations though this winter rate is
currently expected to reduce to approximately US$2.4 MMbtu during
the summer months.
Present oil production remains stable and is showing step by
step increases as the extended workover continues. As stated
previously the average volumes for H2 are expected to show an
increase on Q2 2019 with at the present time three of our Rio Negro
fields now producing oil to various extents, Puesto Flores,
Estancia Vieja and Puesto Prada. Las Bases will come on line
producing gas at or around end September. The frac operation
conducted on the well PF0-16 has to date proved successful with a
sustained doubling of original production in that well to
approximately 120 bopd with minimal water. Monitoring continues and
the results so far suggest tailored frac operations can be utilised
in forthcoming sub-surface operations where appropriate.
A further announcement regarding H2 projected averages will be
made at the time of the announcement of H1 results in late
September.
Every challenge also brings opportunities. President's executive
team has built a strong network of contacts across Latin America
and is actively exploring the art of the possible where it can
leverage the cash flow and strategic geographic position of its
core business.
Peter Levine, Chairman, commented,
"From zero contribution in 2017, to some 5% of sales in 2018 and
on average similar so far this year, gas sales will increase
materially from Q1 2020 with a major contribution in both average
production and revenue to our Group expected to continue into the
future providing a much more balanced portfolio as well as moving
away from dependency on a limited number of hydrocarbon producing
wells.
"Although the management decisions we take reflect the macro
circumstances currently affecting our oil business, in doing so we
are in no way neglecting our core oil production. Our opportunities
in our oil assets and from our reserves remain, like assets in a
safe deposit, which can and should be unlocked at the optimum time
commercially.
"In the meantime we adapt, mobilise and concentrate the
resources at our disposal to expand our business in the most
expedient and profitable way possible."
Glossary
Boepd means barrels of oil equivalent
Bopd means barrels of oil per day
MMscft means million standard cubic feet of gas
MMbtu means million standard British thermal units
Contact:
President Energy PLC +44 (0) 207 016 7950
Peter Levine, Chairman
Rob Shepherd, Group FD
finnCap (Nominated Advisor) +44 (0) 207 220 0500
Christopher Raggett, Scott Mathieson
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
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
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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August 28, 2019 02:00 ET (06:00 GMT)
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