TIDMPPC
RNS Number : 4267Q
President Energy PLC
28 June 2022
PRESIDENT ENERGY PLC
("President", "the Company", or "the Group")
Audited Results for the year ended 31 December 2021
2022 update and outlook
Green House Capital, a new Alternative Energy Vehicle
AGM date
President (AIM: PPC), the upstream oil and gas company with a
diverse portfolio of production and exploration assets focused
primarily on Argentina, is pleased to announce its audited results
for the year ended 31 December 2021 and a 2022 update and
outlook.
Peter Levine, Chairman, commented:
"The year under report was very significant for President and
has resulted in a welcome return to net profit after tax after
considering all depreciation and impairments as well as the
spin-out of Atome Energy from the Group.
"Excluding depreciation, the core business in Argentina
delivered significantly increased operational profits year on year
with adjusted EBITDA multiplying nearly four-fold together with
materially increased Group free and net cash generation.
"Strategically major events occurred in the year. The farm-out
of our Paraguay exploration asset to the State energy Company of
Taiwan was closed and we will be drilling the first high impact
exploration well there later in the year. The spin out and IPO of
Atome Energy, our green energy company was successfully completed
at the very end of the year with some GBP20 million of added value
generated for our shareholders from both a dividend in specie and
the subsequent healthy rise in Atome's share price where its market
capitalisation is more than President's despite the latter still
owning approximately 28% of Atome.
"With the benefit of new drilling in Argentina just starting to
be felt, oil prices rising in our core activity areas and the
prospect of continued new strategic initiatives in both our core
hydrocarbon businesses and new alternative energies through our new
subsidiary, Green House Capital, we view the future with quiet
confidence".
The Company's Annual Report will be posted to shareholders by
the end of June.
Highlights FY2021
Financial
-- Profit after tax of US$4.6 million (2020 loss US$11.3
million), after depreciation, depletion, and amortisation of
US$11.5 million (2020: US$10.3 million)
-- Group revenue increased by 23% to US$34.1 million (2020:
US$27.8 million) due to recovery in realised commodity prices in
Argentina to US$40.6 per boe (2020: US$30.0 per boe 2020) and
US$43.1 (2020: US$29.9 per boe) in the US
-- Adjusted EBITDA* increased by 257% to US$7.5 million (2020:
US$2.1 million) with the Adjusted EBITDA contribution from
Argentina US$10.5 million (2020: US$2.9 million)
-- Free cash generation from core operations* (excluding
workovers) increased by 106% to US$12.8 million (2020: US$6.2
million)
-- Net cash generated by operating activities increased by 250%
to US$11.1 million (2020: US$4.4 million)
-- Borrowings at year end increased to US$29.3 million (2020:
US$17.7 million). Of this, US$18 million is third party financial
debt with the balance owed to IYA, an affiliate company of Peter
Levine. The increase in third party debt relates to the heavy capex
programme last year totalling just over US$ 14.8 million.
Corporate
-- Argentina bond issue of US$8.95 million at interest rate of
only 1.24% with credit rating of A- investment grade (included in
third party debt above)
-- Atome Energy PLC spin off with an IPO on the AIM market in
late December 2021 with an initial market capitalisation of GBP26
million
-- Paraguay farm-out to CPC the State Energy Company of Taiwan successfully completed
-- Matorras and Ocultar licences in Salta relinquished
Operations
-- Group net average production 2,473 boepd (2020: 2,714 boepd)
-- Three new wells drilled in Rio Negro, Argentina in H1 2021.
Three new well drilling programme in Salta, Argentina commenced
late 2021 and now successfully completed
-- Continued improvement in Argentina core operating performance
with well operating costs per boe in 2021, excluding royalties and
workovers*, reduced by 3% to US$17.0 per boe (2020: US$17.6)
-- Group-wide administrative costs per barrel* US$4.8 per boe
(2020: US$4.7 per boe) excluding directly attributable Atome
expenses.
Production and reserves
-- Net 2P (proven and probable) reserves in Argentina at year
end, as confirmed by an independent reserves audit, increased to
24.4 mmboe (2020: 24.3 mmboe)
-- Louisiana 1P current proven producing reserves estimated at 724 mboe (2020: 724 mboe)
* Calculation of all quoted metrics not directly corresponding
to GAAP measures are detailed in the Alternative Performance
Measure glossary and cross referenced to the Notes where
applicable
Peter Levine's full Chairman's Statement in the Annual Accounts
and Report is set out below:
The year under report was very significant for President and has
resulted in a welcome return to net profit after tax after
considering all depreciation and impairments as well as the
spin-out of Atome Energy from the Group.
Excluding depreciation, the core business in Argentina delivered
significantly increased operational profits year on year. Three
wells were drilled in Rio Negro Province, Argentina in the first
part of the year. The three well drilling campaign in Salta,
Argentina commenced late in Q4 for which we now are starting to see
the beneficial impact.
The new oil treatment plant in Rio Negro was completed
delivering a US$4 per barrel in savings and meaning we were no
longer dependent on a third-party pipeline to deliver oil.
Louisiana was unfortunately shut-in and under reduced production
for much of 2021 but following the successful workover at the start
of 2022, the US assets should overall show a creditable
contribution to profits.
On the strategic front, the long-mooted farm-out of our Paraguay
exploration asset was completed in favour of CPC, the State Energy
Company of Taiwan, a reputable and strong international partner,
with President remaining operator and retaining 50% interest. We
are due to commence drilling of the first exploration well later
this year.
Atome Energy, President's green energy business, was spun out
and successfully completed its Initial Public Offering at the end
of 2021. This resulted in a very significant dividend in specie
being declared in favour of President's shareholders, whilst the
Company retained some 28% of Atome whose share price has increased
over 40% in value since the IPO. The result is that, on a mark to
market basis, President has within the space of 12 months generated
for its shareholders as at current prices, approximately GBP20
million of value in and/or through Atome (on basis that the
dividend shares in Atome are still held).
It is regrettable, that President, due to the location of its
main operations, has not been able to really benefit significantly
from the highly inflated current hydrocarbon prices. However,
prices in Argentina are slowly increasing and with our ability to
periodically export oil, as well as production in Louisiana
recommenced, it does mean that this year will show benefits to us
from the current oil price boom.
Production
Natural Gas
Oil (bbls) (mmcf) Total (mmboe)
Country 2021 2020 2021 2020 2021 2020
Argentina 561,947 623,946 1,838.9 1,648.5 868.4 898.7
USA 19,831 50,582 87.0 263.3 34.3 94.5
581,778 674,528 1,925.9 1,911.8 902.7 993.2
-------- -------- -------- -------- --------------- ------
Net Reserves (mboe) Argentina USA Total
As at 31 December
2020 24,301.1 723.8 25,024.9
Revisions in reserves 966.8 34.3 1,001.1
Production (868.4) (34.3) (902.7)
As at 31 December
2021 24,399.5 723.8 25,123.3
---------- ------- ---------
Reserve revisions in Argentina reflect the results of production
performance, drilling and workovers in the year and the subsequent
independent auditor's reserve report by Claudio N. Larriestra. It
is important to note that the reserves as at 31 December 2021 do
not represent the total of what is present and/or recoverable in
the respective fields in Rio Negro but only rather what are present
and/or recoverable over the term of President's current licenses as
at the audit date.
Impact of COVID-19 on our operations
The first priority throughout 2021 remained the welfare and
health of our employees and families as well as our contractors
working in the field. Throughout the year, President continued to
monitor and check on the health of all its employees and follow
strict guidelines. Measures included restricting numbers travelling
to fields in vehicles, monitoring health of operatives daily and
social distancing. Production from operations has not been affected
and there have been no shut-in wells or choke back of our
wells.
The Company continued with social distancing measures, both in
the office and in the fields, and maintained a "flexible" work
schedule for the BA office, with employees still not back 100% in
the office but equipped with all necessary IT infrastructure when
working remotely. Morale remains excellent with a strong sense of
togetherness throughout and there has been no decrease in
efficiency. President has no offices in the UK or Louisiana so the
Company is well used to working remotely and economically.
Climate Change
President acknowledges and takes due regard to the increasing
emphasis on climate change around the World as evidenced by the
activities regarding Atome Limited, an entity we created to focus
on green hydrogen and ammonia. With regards to our core non
renewables business, we acknowledge climate change as a risk facing
President that will continue to be considered regularly by the
Board.
Current Trading
In relation to trading in the year to date
-- Current realised oil prices in Argentina are showing a small
month by month increase. Prices in Salta province are up 12% since
the start of the year with July realisations expected at US$66 per
barrel. The average Rio Negro oil price for the first five months
of this year to date, considering quantities we have been able to
export during the period has been US$63 per barrel
-- Oil prices received in Louisiana for May production were approximately US$109 per barrel
-- Of the new wells drilled in Salta, all three are successful
oil producers. The two in Dos Puntitas Field are slowly increasing
towards optimum production levels, targeting after a final acid
treatment and increase in pump capacity, some 190 bopd each. The
third new well has come on strongly from the outset and already
without need of fine tuning or stimulation is achieving over 200
bopd. Whilst capex was over budget due to unforeseen issues, the
programme has demonstrated it has been economically worthwhile
-- Daniel Musri, our new CEO, has started to implement a rigid
ground up review of well, field and infrastructure management to
mitigate the downtime and declines we have suffered in the past.
This is accompanied by an internal management realignment
-- In Louisiana, considering the volume of oil we have been
advised is still to be recovered in the Triche well, it has been
decided to install a form of artificial lift to maximise and
stabilise production levels, which to date have flowed naturally
without any support. This should enable the wells to be produced
consistently over a prolonged period and capitalise on the
prevailing oil prices. The installation of the new system is now
proceeding but in the view of the Louisiana management is necessary
to optimise the Triche well potential and take advantage of current
high oil prices
-- In Paraguay, work continues in preparation for spudding later
this year. Our partner is fully compliant with its obligations and
the main focus is not only agreeing with service segment providers
costs and timing which is ongoing but finalising agreement with the
rig contractor, who is undergoing an internal reorganisation.
Whilst this is out of our hands as to timing, we are assured that
we will be able to move forward with them in a concrete manner
within the next three months which would still be in line with
targeting commencement of drilling in the latter part of this year.
I remind all actual or potential investors of the risks involved in
exploration in such a context as we are in Paraguay and to measure
expectations both as to timing and results accordingly
-- As announced previously, we have within the Puesto Guardian
licence a significant gas exploration project at the Martinez del
Tineo field. We are launching a farm out process in Q3 2022, and
whilst this may well roll over into 2023 the size of the prize and
the increase in value in gas has made in our view the prospect more
enticing, with initial interest already being shown. Further
announcements will be made in due course.
Oil and gas business acquisition strategy
President remains committed to growing its oil and gas business
by acquisition where appropriate and material efforts continue to
be made in this regard, including considering opportunities outside
of its present areas.
Atome
As I have stated, those shareholders who have stayed with their
dividend in specie shares in Atome have seen a very healthy
benefit. To date, assuming all shareholders would have held their
shares, the benefit would have been some GBP20 million to members
as a whole.
The full market value of the Group's share in Atome is not shown
in the balance sheet for reasons relating to accounting standards
for investments in associates. Currently the holding of the Company
in Atome is considered an investment and will be reviewed as such
at all relevant times. President is very encouraged by Atome's
progress and remains supportive of its green objectives and
exciting business case.
Alternative Energies - Green House Capital
Following the successful creation, spin off and IPO of Atome,
bringing material value creation for shareholders of President, the
Company views similar steps as a fertile way of demonstrating to
the market its value as a company.
As part of the stated object of diversification of the Company's
interests and/or migration to businesses seemingly more appreciated
by the stock market, President has become a 75% beneficial
shareholder in the UK registered private limited company, Green
House Capital ("Green House") joining Alpha Oil Invest GmbH of Zug,
Switzerland, an investment fund beneficially owned by myself, also
a shareholder in Atome.
Green House is intended to become an incubator/ investor in
alternative energy related businesses capitalising, as with Atome,
on the capacity to identify and develop business opportunities
through, inter alia, the value creating experience of President and
Alpha as well as the formers' status as a public company. For the
avoidance of doubt to avoid conflict, Green House will not be
involved in any business that directly or indirectly competes with
Atome now, or in the future.
Further announcements in relation to Green House will be made at
the appropriate time.
President Energy is to become a 75% beneficial shareholder in
the UK registered private limited company, Green House Capital
("Green House") joining Alpha Oil Invest GmbH of Zug ("Alpha"),
Switzerland, an investment fund beneficially owned by Peter Levine,
CEO of President Energy.
President Energy is to pay nil consideration for its
interest.
The issuance of the shares in Green House to President is
considered a related party transaction pursuant to Rule 13 of the
AIM Rules for Companies. The Independent Directors of the Company,
being Alex Moody-Stuart, Rob Shepherd, and Jorge Dario Bongiovanni,
having consulted with the Company's nominated adviser, finnCap,
consider that the terms of the transaction are fair and reasonable
insofar as the Company's shareholders are concerned.
Annual General Meeting and Investor Q&A
The Annual General Meeting will be held on Friday 22 July 2022
at 11 a.m. BST at The Army and Navy Club, 36-39 Pall Mall, London,
SW1Y 5JN.
Contact:
President Energy PLC
Peter Levine, Chairman
Rob Shepherd, Group FD
Nikita Levine, Investor Relations +44 (0) 207 016 7950
finnCap (Nominated Advisor and Broker)
Christopher Raggett, Tim Harper +44 (0) 207 220 0500
Detailed financial review
2021 saw the recovery from the economic shock of the Covid-19
pandemic progress and attention shift back onto the challenges
arising from climate change. The need to develop new
environmentally friendly energy solutions was reflected in the
rapid and noteworthy emergence of Atome Energy. Under the
stewardship of President, Atome Energy has become an independent
AIM listed international green energy business. It has also had a
significant impact on President financial results at both Group and
Company level in 2021.
As a result of the dividend in specie of Atome Energy shares in
December 2021, a gain of US$13.1 million has been recognised at
Group and Company level which represents the market value returned
to shareholders by way of that dividend. In addition, the market
value of the investment retained by President is now shown on the
Company Balance Sheet resulting in a US$10.2 million gain in the
Company financial statements, although this is not reflected in the
Group Balance Sheet. With the accounting rules governing
consolidation of investments in associate undertakings with
significant influence, shareholders will need to look to the
Company Balance Sheet going forward to see the changes in the
market value of the investment. We have introduced a new note to
the Group accounts to highlight and explain the impact of Atome
Energy on the financial statements of the Group and Company (Note
33).
Revenue rose by 23% to US$34.1 million (2020: US$27.8 million)
due to higher realised prices in both Argentina and the USA; the
average Group product price was US$40.7/boe (2020: US$30.0/boe) due
to the recovery in market prices in the year. Overall Group
production fell by 9% to 2,473 boepd (2020: 2,714 boepd). Cost of
sales increased to US$33.4 million (2020: US$31.8 million) due to
higher depreciation and product price related royalty and tax
expenses.
Free cash generation from core operations excluding changes in
working capital, administrative expense, and non-recurring
workovers more than doubled to US$12.8 million (2020: US$6.2
million).
After depreciation, depletion, and amortisation of US$11.5
million (2020: US$10.3 million) and administrative expenses of
US$5.8 million (2020: US$4.6 million), the Group recorded an
operating loss of US$5.0 million (2020: loss US$8.7 million).
Included within administrative expenses are US$1.4 million of
directly attributable Atome Energy expenses largely offset by the
US$1.3 million non-operating gain arising on migration to an
associate investment, and directly linked to the US$1.3 million
receivable ultimately recovered in 2022. The overall impact of
Atome related expenses is essentially neutral in 2021.
A small impairment of US$0.1 million (2020: US$1.9 million) is
related to intangible exploration assets in Argentina and the
accounts show the impact of higher interest on Argentina borrowings
and lower foreign exchanged related treasury income.
Profit before tax for the year was US$5.7 million (2020: loss
US$10.3 million) with profit after tax totalling US$4.6 million
(2020 loss: US$11.3 million).
Argentine operating performance
Production in Argentina decreased by 3% to 868,427 boe (2020:
898,704 boe) or 2,379 boepd (2020: 2,455 boepd). Average realised
sales prices in Argentina rose by 35% to US$40.6 per boe (2020:
US$30.0 per boe) in line with the recovery in world prices during
the year.
Well operating costs in Argentina before non-recurring items*
fell by 3% to US$17.0/boe (2020: US$17.6/boe) as the focus remained
on cost control. Depreciation rose during the year to US$12.9/boe
(2020: US$10.9/boe)* following higher future development cost
estimates. The extension of the Rio Negro licence period and/or the
secondary recovery project which are both under discussion with the
Neuquén Province would lead to a significant reduction in
depreciation rates.
Overall, following the annual independent review, proved and
probable reserves in Argentina increased by 4%. There were no
impairment indicators in relation to Argentine assets in the
year.
USA operating performance
Production from the Group's working interest in US operations
fell by 64% to 94 boepd (2020: 258 boepd) following a four-month
outage of the Triche well and dislocation in production either side
of the outage. A successful capital workover commenced in late 2021
perforating different reservoir zones and production resumed in
2022.
Average realised prices in the US rose by 44% on the prior year
to US$43.1/boe (2020: US$29.9/boe). Well operating costs excluding
royalty related expenses and non-recurring workovers* rose to
US$14.3 /boe (2020: US$6.6 /boe) due to the production outage.
Depreciation rose during the year to US$6.3/boe (2020: US$3.6/boe)*
due to the higher capital cost while reserves remained
unchanged.
Corporate
Much of the focus in 2021 was on the value creation in bringing
Atome Energy to the market, development drilling in Argentina and
concluding the farm out of the Pirity Concession in Paraguay. To
that end, shareholder and High Court approval was obtained for a
capital reduction of Share Premium balance to facilitate the
dividend in specie to shareholders at the end of December 2021.
Following the reduction, there remains over US$90.0 million of
distributable reserves at the end of the year.
Development drilling and working capital in Argentina was funded
primarily through finance raised on the local market via the issue
of a bond and a number of promissory notes. This is the first time
that any member of the Group has issued a corporate bond and is
notable due to it being given the credit rating of A- local
investment grade by the Argentine affiliate of the worldwide credit
rating agency Fitch, Fix SCR. The covenant lite Bond is secured
solely on 60% of the sales proceeds from oil sales of the Puesto
Flores Concession, Río Negro Province, Argentina. Production from
all other Río Negro fields and the Puesto Guardian field in Salta
as well as all gas production in Argentina is not subject to nor
affected by this security.
The Group completed the farmout of part of its interest in the
Pirity Concession to CPC Corporation, Taiwan ("CPC"), the
state-owned energy company of Taiwan in November 2021. CPC and
President, through their subsidiary companies, now have an equal
50/50 interest in the Pirity Concession, Paraguay with President
continuing as operator under an international form of Joint
Operating Agreement. The Pirity licence was extended until
September 2023 and the Hernadarias licence until November 2023. The
successful conclusion of the farmout process, US$4.0 million
proceeds and licence extensions clear the way for a well to be
drilled to determine the potential economic value of the intangible
asset. Accordingly, management consider that it is appropriate to
continue to capitalise the balance of US$54 million at 31 December
2021 (2020: US$53 million).
Investment in the Oil & Gas Assets component of Property,
Plant and Equipment in the year amounted to US$14.7 million (2020:
US$8.9 million) with a three well development drilling campaign on
the Puesto Guardian licence in the northern Salta province in
Argentina started in early November 2021. Drilling of the third
well extended in to 2022. Investment in Rio Negro continued with
the drilling and completion of a further two wells on the Las Bases
and Estancia Vieja concessions in April 2021. A new oil treatment
plant designed, engineered, constructed, and completed in Rio Negro
is now delivering material savings of operating costs.
Overall, Trade and Other Payables increased to US$22.0 million
(2020: US$13.8 million) due to US$4.0 million Paraguay drilling
obligation, pre-IPO financial support for Atome (repaid post period
end as detailed below) and higher period end activity levels
reflected in trade creditor, accruals, and other payables. The
Group has a constructive obligation to use the US$4.0 million
proceeds received to drill the exploration well as defined in the
farm-out agreements.
Trade and Other Receivables increased to US$11.9 million (2020:
US$4.6 million). In financing Argentine drilling activity in 2021,
the Group managed currency exposure by prepaying for US$3.2 million
of drilling costs to be discharged on settlement in 2022. Under new
borrowing arrangements, proceeds are received net of interest
earned in future periods resulting in a prepayment of interest.
Following the flotation of Atome Energy at the end of December
2021, the Group had a receivable of US$1.3 million in relation to
the funding support provided to the Atome businesses. This amount
was settled in full in 2022.
At the end of the year, the Group had a net current liability of
US$9.2 million (2020: US$4.8 million). However, after deducting the
liabilities on drilling and acquisition investment activity, which
are periodic in nature as detailed in Note 19, the underlying net
current liability from ongoing operations is significantly lower at
US$3.2 million (2020: US$0.8 million). Year-end cash balances were
US$2.0 million (2020: US$1.1 million).
Key Performance Indicators
Key Performance Indicators are used to measure the extent to
which Directors and management are reaching key business objectives
for the Group. The principal methods by which the Directors monitor
the Group's performance are volumes of net production, well
operating costs, and the extent of exploration success. The
Directors also carry out a regular review of cash available for
exploration and development and review actual capital expenditure
and operating expenses against forecasts and budgets.
Increase/
2021 2020 (Decrease)
Production mboe
USA 34.3 94.5 -63.7%
Argentina 868.4 898.7 -3.4%
Total net hydrocarbons 902.7 993.2 -9.1%
------- ------- ------------
Well operating costs US$000*
USA 488 623 -21.7%
Argentina 15,538 15,867 -2.1%
Total operating costs 16,026 16,490 -2.8%
------- ------- ------------
Well operating costs per boe
US$*
USA 14.2 6.6 115.8%
Argentina 17.9 17.7 1.3%
Total well operating costs per
boe US$ 17.8 16.6 6.9%
------- ------- ------------
* Calculation of all quoted metrics not directly corresponding
to GAAP measures are detailed in the Alternative Performance
Measure glossary and cross referenced to the Notes where
applicable
Consolidated Statement of Comprehensive Income
Year ended 31 December 2021
2021 2020
Note US$000 US$000
Continuing Operations
Revenue 34,147 27,771
Cost of sales 2 (33,431) (31,775)
--------- ---------
Gross profit/(loss) 716 (4,004)
Administrative expenses 3 (5,764) (4,648)
--------- ---------
Operating profit /(loss) before impairment and non-operating
gains/(losses) (5,048) (8,652)
Presented as:
Adjusted EBITDA 7,526 2,115
Non-recurring items (751) (86)
EBITDA excluding share options 6,775 2,029
Depreciation, depletion & amortisation (11,456) (10,271)
Share based payment expense (367) (410)
Operating profit / (loss) (5,048) (8,652)
---------------------------------------------------------- ----- ---------
Non-operating gains / (losses) 4 14,494 (137)
Impairment credit / (charge) 5 (51) (1,884)
--------- ---------
Profit / (loss) after impairment and non-operating
gains/(losses) 9,395 (10,673)
Finance income 1,633 4,506
Finance costs (5,324) (4,084)
--------- ---------
Profit / (loss) before tax 5,704 (10,251)
Income tax (charge)/credit comprises:
Current tax income tax (charge)/credit - (2)
Deferred tax: foreign exchange arising on provision
for future taxes (1,341) (3,530)
Deferred tax being underlying provision for
future taxes 216 2,498
---------------------------------------------------------- ----- --------- ---------
Total income tax (charge)/credit (1,125) (1,034)
Profit / (loss) for the year from continuing
operations 4,579 (11,285)
Other comprehensive income, net of tax
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translation of foreign
operations - -
Total comprehensive profit /(loss) for the
year attributable
--------- ---------
to the equity holders of the parent 4,579 (11,285)
========= =========
Earnings / loss per share 6 US cents US cents
Basic profit/(loss) per share from continuing
operations 0.23 (0.69)
========= =========
Diluted profit(loss) per share from continuing
operations 0.22 (0.69)
========= =========
The accompanying accounting policies and notes form an integral
part of these financial statements.
Consolidated Statement of Financial Position
31 December 2021
2021 2020
ASSETS US$000 US$000
Non-current assets
Intangible exploration & evaluation
assets 54,304 52,703
Goodwill 705 705
Property, plant and equipment 59,148 54,489
Investment in associate 25 -
Deferred tax 350 567
Other non-current assets 103 102
114,635 108,566
--------- ----------
Current assets
Trade and other receivables 11,887 4,554
Stock 1,336 1,336
Cash and cash equivalents 2,014 1,144
15,237 7,034
--------- ----------
TOTAL ASSETS 129,872 115,600
========= ==========
LIABILITIES
Current liabilities
Trade and other payables 17,424 10,287
Borrowings 7,014 1,539
24,438 11,826
--------- ----------
Non-current liabilities
Trade and other payables 4,580 3,536
Long-term provisions 7,480 6,399
Borrowings 22,250 16,097
Deferred tax 2,283 1,375
36,593 27,407
--------- ----------
TOTAL LIABILITIES 61,031 39,233
========= ==========
EQUITY
Share capital 36,179 35,708
Share premium 48 257,992
Translation reserve (50,240) (50,240)
Profit and loss account 75,145 (174,631)
Reserve for share-based payments 7,709 7,538
TOTAL EQUITY 68,841 76,367
--------- ----------
TOTAL EQUITY AND LIABILITIES 129,872 115,600
========= ==========
Consolidated Statement of Changes in Equity
Year ended 31 December 2021
Reserve
for
Profit share-
and
Share Share Translation loss based
capital premium reserve account payments Total
US$000 US$000 US$000 US$000 US$000 US$000
Balance at 1 January
2020 24,465 245,692 (50,240) (163,346) 7,416 63,987
Share-based payments - - - - 122 122
Issue of ordinary
shares 2,604 2,213 - - - 4,817
Costs of issue - (434) - - - (434)
Debt conversion 3,344 3,869 - - - 7,213
Subscription 4,691 6,139 - - - 10,830
Issued in settlement 604 513 - - - 1,117
Transactions with
the owners 11,243 12,300 - - 122 23,665
-------- ---------- ------------ ---------- --------- ---------
Loss for the year - - - (11,285) - (11,285)
Total comprehensive
income for
the year - - - (11,285) - (11,285)
-------- ---------- ------------ ---------- --------- ---------
Balance at 1 January
2021 35,708 257,992 (50,240) (174,631) 7,538 76,367
Share-based payments - - - - 367 367
Debt conversion 82 58 - - - 140
Subscription 241 254 - - - 495
Exercise of options 148 48 - - (196) -
Capital reduction - (258,304) - 258,304 - -
Dividend in specie - - - (13,130) - (13,130)
Transactions with
the owners 471 (257,944) - 245,174 171 (12,128)
-------- ---------- ------------ ---------- --------- ---------
Profit for the year - - - 4,579 - 4,579
Other comprehensive
income
Exchange differences
on
translation - - 23 - - 23
Reclassified to profit
and loss - - (23) 23 - -
Total comprehensive
income for
the year - - - 4,602 - 4,602
-------- ---------- ------------ ---------- --------- ---------
Balance at 31 December
2021 36,179 48 (50,240) 75,145 7,709 68,841
======== ========== ============ ========== ========= =========
Attributable to the owners of the Company
Consolidated Statement of Cash Flows
Year ended 31 December 2021
2021 2020
US$000 US$000
Cash flows from operating activities
Cash generated by operating activities
(note 7) 11,078 4,438
Interest received 145 105
Taxes paid - -
Taxes refunded - -
11,223 4,543
--------- ---------
Cash flows from investing activities
Expenditure on exploration and evaluation
assets (1,652) (173)
Expenditure on development and production
assets (19,431) (11,395)
Proceeds from asset sales 29 78
Proceeds from Paraguay farm out 4,000 -
Acquisition & licence extension in Argentina (284) (678)
USA acquisition - (158)
Deposits with state authorities (1) 249
Expenditure on abandonment - -
(17,339) (12,077)
--------- ---------
Cash flows from financing activities
Loan drawn 11,731 4,954
Proceeds from issue of shares (net of
expenses) 495 5,213
Loan converted to equity - -
Repayment of obligations under leases (1,332) (868)
Repayment of borrowings (3,130) (5,076)
Payment of interest and loan fees (1,338) (696)
6,426 3,527
--------- ---------
Net increase/(decrease) in cash and cash
equivalents 310 (4,007)
Opening cash and cash equivalents at
beginning of year 1,144 895
Exchange gains/(losses) on cash and cash
equivalents 560 4,256
Closing cash and cash equivalents 2,014 1,144
========= =========
The accompanying accounting policies and notes form an integral
part of these financial statements.
Notes
1. Accounting policies and preparation
The financial information set out in this announcement does not
constitute the Company's statutory accounts for the years ended 31
December 2021 or 2020 but is derived from the 2021 accounts.
A copy of the statutory accounts for the year to 31 December
2020 has been delivered to the Registrar of Companies and is also
available on the Company's website. Statutory accounts for 2021
will be delivered in due course. The auditors have reported on
those accounts; their report was (i) unqualified, (ii) did not
include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006 in respect of the accounts for 2020 nor
2021.
Whilst the financial statements from which this preliminary
announcement is derived have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and applicable
law, this announcement does not itself contain sufficient
information to comply with IFRS. The Annual Report, containing full
financial statements that comply with IFRS, will be sent out to
shareholders by the end of June.
The Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future. Therefore, in the preparation of the
20120financial statements they continue to adopt the going concern
basis.
2021 2020
2 Cost of sales US$000 US$000
Depreciation 11,374 10,109
Royalties & production taxes 6,031 5,176
Well operating costs 16,026 16,490
33,431 31,775
======= =======
Well operating costs include US$751,000 (2020: US$86,000) in
non-recurring workover costs expensed in the period.
2021 2020
3 Administrative expenses US$000 US$000
Directors and staff costs (including
non-executive Directors) 2,530 2,391
Share-based payments 367 410
Depreciation 82 162
Other 2,785 1,685
5,764 4,648
======== =======
Attributable to Atome business included
above (1,397) -
4,367 4,648
======== =======
To allow for meaningful comparison, staff costs, share based
payments and depreciation expenses are reflected gross before the
effect of allocations to operating costs or balance sheet assets.
Other expenses are shown net of the effect of allocations US$1.3
million (2020: US$1.5 million).
Included with administrative expenses are US$1.4 million
directly attributable to the Atome Energy businesses which are no
longer part of the President Group following the flotation at the
end of December 2021.
4 Other non-operating (gains)/losses 2021 2020
US$000 US$000
Gain on dividend in specie of Atome shares (13,130) -
Reverse of provision for recoverable
taxes - 19
Movement on estimated credit loss on
trade debtors - 6
Gain on termination of leases (18) (86)
Other (gains)/losses arising on asset
disposals (29) 198
Gain on Atome transition to an associate
investment (1,317) -
(14,494) 137
========= =======
2021 2020
5 Impairment (credit) / charge US$000 US$000
Matorras & Ocultar in Argentina (intangible) 51 1,759
Jefferson Island (intangible) - 125
51 1,884
======= =======
Further details on the impairments are provided in Note 14 for
Intangible assets.
6. Earnings / (Loss) per share 2021 2020
US$000 US$000
Net profit / (loss) for the period attributable
to
the equity holders of the Parent Company 4,579 (11,285)
========== ==========
Number Number
'000 '000
Weighted average number of shares in issue 2,031,855 1,641,684
========== ==========
US cents US cents
Earnings /(loss) per share
Basic earnings / (loss) per share from
continuing operations 0.23 (0.69)
========== ==========
Diluted earnings / (loss) per share from
continuing operations 0.22 (0.69)
========== ==========
At 31 December 2021, 41,508,838 (2020: 32,146,921) share option
and share warrant awards were in issue that, if exercised, would
dilute earnings per share in the future. No dilution per share was
calculated for 2020 as with the reported loss they are
anti-dilutive.
7. Notes to the consolidated statement
cash flows 2021 2020
US$000 US$000
Profit / (loss) from operations before
taxation 5,704 (10,251)
Interest on bank deposits (145) (105)
Interest payable and loan fees 5,324 4,084
Depreciation of property, plant and equipment 11,456 10,271
Impairment (credit)/charge 51 1,884
(Gain) / loss on non-operating transaction (14,494) 137
Share-based payments 367 410
Foreign exchange difference (1,488) (4,401)
--------- ---------
Operating cash flows before movements
in working capital 6,775 2,029
Decrease / (increase) in receivables (2,430) 1,421
Movement in stock - 28
Increase / (decrease) in payables 6,733 960
Net cash generated by operating activities 11,078 4,438
========= =========
8 Segment reporting
Argentina Paraguay USA UK Total
2021 2021 2021 2021 2021
US$000 US$000 US$000 US$000 US$000
Revenue 32,669 - 1,478 - 34,147
Cost of sales
Depreciation 11,158 - 216 - 11,374
Royalties & production
taxes 5,612 - 419 - 6,031
Well operating costs 15,538 - 488 - 16,026
Administrative expenses 1,889 64 389 3,422 5,764
Segment costs 34,197 64 1,512 3,422 39,195
---------- --------- ------- -------- --------
Segment operating profit/(loss) (1,528) (64) (34) (3,422) (5,048)
========== ========= ======= ======== ========
Argentina Paraguay USA UK Total
2020 2020 2020 2020 2020
US$000 US$000 US$000 US$000 US$000
Revenue 24,915 - 2,856 - 27,771
Cost of sales
Depreciation 9,766 - 343 - 10,109
Royalties & production
taxes 4,448 - 728 - 5,176
Well operating costs 15,867 - 623 - 16,490
Administrative expenses 1,859 73 422 2,294 4,648
Segment costs 31,940 73 2,116 2,294 36,423
---------- --------- ------- -------- --------
Segment operating profit/(loss) (7,025) (73) 740 (2,294) (8,652)
========== ========= ======= ======== ========
Segment assets Argentina Paraguay USA UK Total
2021 2021 2021 2021 2021
US$000 US$000 US$000 US$000 US$000
Intangible assets 129 54,175 - - 54,304
Goodwill 705 - - - 705
Investment in associate - - - 25 25
Property, plant and equipment 57,022 - 2,126 - 59,148
---------- --------- ------- ------- --------
57,856 54,175 2,126 25 114,182
Other assets 10,257 1,350 582 1,487 13,676
--------
68,113 55,525 2,708 1,512 127,858
========== ========= ======= ======= ========
Argentina Paraguay USA UK Total
2020 2020 2020 2020 2020
US$000 US$000 US$000 US$000 US$000
Intangible assets 129 52,574 - - 52,703
Goodwill 705 - - - 705
Property, plant and equipment 52,637 - 1,852 - 54,489
---------- --------- ------- ------- --------
53,471 52,574 1,852 - 107,897
Other assets 3,975 1,352 936 296 6,559
--------
57,446 53,926 2,788 296 114,456
========== ========= ======= ======= ========
Segment assets can be reconciled to the Group as follows:
2021 2020
US$000 US$000
Segment assets 127,858 114,456
Group cash 2,014 1,144
Group assets 129,872 115,600
======== ========
Segment liabilities Argentina Paraguay USA UK Total
2021 2021 2021 2021 2021
US$000 US$000 US$000 US$000 US$000
Total liabilities 39,095 4,056 1,963 15,917 61,031
========== ========= ======= ======= =======
Argentina Paraguay USA UK Total
2020 2020 2020 2020 2020
US$000 US$000 US$000 US$000 US$000
Total liabilities 23,870 56 1,675 13,632 39,233
========== ========= ======= ======= =======
Alternative Performance Measures
The Group uses certain measures of performance that are not
specifically defined under IFRS or other generally accepted
accounting principles. These non-IFRS measures include net debt and
well operating and underlying well operating costs per boe and free
cash flow. Where used in the context of segmental disclosure the
metrics are calculated in the same manner.
Net debt
Net debt is a useful indicator of the Group's indebtedness,
financial flexibility, and capital structure because it indicates
the level of cash borrowings after taking account of cash and cash
equivalents within the Group's business. Net debt is defined and
calculated as follows:
2021 2020
Net debt US$000 US$000
Borrowings Current (2,053) (1,539)
Borrowings Non-current (22,250) (16,097)
Cash 2,014 1,144
Net (debt)/ net cash (22,289) (16,492)
--------- ---------
Total operating cost and underlying well operating cost per
boe
Total operating cost per boe is a useful straight forward
indicator of the Group's costs incurred to produce oil and gas
including all relevant expenses. However, since royalty, production
taxes and similar expenses are not controllable these have been
disaggregated to allow well operating costs to be measured.
2021 2020
Total operating cost per boe US$000 US$000
Royalties & production taxes (Note 2) 6,031 5,176
Well operating costs (Note 2) 16,026 16,490
Total operating costs 22,057 21,666
------- -------
Production (mmboe) 902.7 993.2
Total operating costs per boe US$ 24.43 21.81
======= =======
Where one-off or cyclical costs, such as workovers, are material
these have been disclosed and the underlying well cost per boe
referred to show the core performance. These have been defined and
calculated as follows:
2021 2020
Underlying well operating cost per boe US$000 US$000
Well operating costs (Note 2) 16,026 16,490
Less workover costs (per text in Note 2) (751) (86)
15,275 16,404
Production (mmboe) 902.7 993.2
Underlying well operating costs per boe US$ 16.92 16.52
======= =======
A 3% reduction in core operating performance arose in Argentina
and was calculated as follows:
2021 2020
US$000 US$000
Well operating costs (Note 2) 15,538 15,867
Less workover costs (751) (86)
14,787 15,781
Production (mmboe) 868.4 898.7
Underlying well operating costs per boe US$ 17.03 17.56
======= =======
Administrative cost per barrel
Underlying administrative expense excluding non-recurring items
is calculated as follows:
2021 2020
Administrative cost per boe US$000 US$000
Administrative expense (note 3) 5,764 4,648
Attributable to Atome business included above
(note 3) (1,397) -
4,367 4,648
Production (mmboe) 902.7 993.2
Administrative cost per boe 4.84 4.68
======== =======
Adjusted EBITDA
The calculation is detailed on the Income Statement with further
details on the non-recurring items include in Note 10. The Adjusted
EBITDA for Argentina is calculated as follows:
2021 2020
Adjusted EBITDA Argentina US$000 US$000
Operating profit / (loss) (1,528) (7,025)
Depreciation, depletion & amortisation 11,240 9,886
EBITDA excluding share options 9,712 2,861
Non-recurring items 751 68
Adjusted EBITDA 10,463 2,929
-------- --------
Non-recurring items
Where referred to in the calculation of Adjusted EBITDA and in
alternative performance measures these comprise the following:
2021 2020
Non-recurring US$000 US$000
Workover costs (per text in Note 2) 751 86
751 86
------- -------
Workover costs in Argentina in 2020 amounted to US$68,000
Free cash generation from core operations
A measure of cash generation from operations excluding changes
in working capital, administrative expense, and non-recurring
workovers. Used by management as an indication of cash generation
at asset level.
2021 2020
US$000 US$000
Sales 34,147 27,771
Royalties & production taxes (Note 2) (6,031) (5,176)
Well operating costs (Note 2) (16,026) (16,490)
Add back non-recurring workovers 751 86
12,841 6,191
--------- ---------
Including the foreign exchange gains of US$1.5 million (2020:
US$4.4 million) as detailed in Note 9 which largely arise on the
treasury management of cash resources ("treasury income") takes the
cash generation in the period to US$14.3 million (2020: US$10.6
million).
Reconciliation to cash flow from operations
The reported cash flow generated from operating activities can
be reconciled to free cashflows from core operations as
follows:
2021 2020
US$000 US$000
Net cash generated by operating activities 11,078 4,438
Working capital movement (4,303) (2,409)
Add back administrative expense per Note
3 5,764 4,648
Add back non cash depreciation in admin expense
(Note 3) (82) (162)
Add back non cash share based payments in
admin expense (Note 3) (367) (410)
Add back non-recurring workovers 751 86
12,841 6,191
-------- --------
Depreciation per boe
Depreciation per barrel of oil equivalent can change between
accounting periods due to costs incurred, changes in reserves or
changes in future costs and hence is a useful metric for reporting
purposes. Where calculated on at a group or segment level the
calculation is as follows:
-- Reported depreciation charge as reported in Cost of Sales per
Note 2 in accordance with IFRS GAAP reporting
-- Divided by the barrel of oil equivalent of production
reported in the Chairman's Statement in accordance with industry
standards and state reports
Glossary
Boe barrels of oil equivalent
Bopd barrels of oil per day
Boepd barrels of oil equivalent per day
MMscf/d million standard cubic feet of gas production per day
1P proven hydrocarbon reserves
2P proven and probable hydrocarbon reserves
Contingent Resources Quantities of hydrocarbons estimated to be
potentially recoverable from known accumulations
Prospective Resources Quantities of hydrocarbons estimated to be
potentially recoverable from undiscovered accumulations
NPV10 net present value over the life of the
concessions/licences discounted by 10%
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END
FR SEDSIAEESEDM
(END) Dow Jones Newswires
June 28, 2022 02:00 ET (06:00 GMT)
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