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President Energy PLC - Market Update

RNS Number : 8479F
President Energy PLC
12 March 2020
 

12 March 2020

 

PRESIDENT ENERGY PLC

("President" or the "Company")

 

 Market Update

 

President Energy (AIM: PPC), the energy company with a diverse portfolio of production and exploration assets focused primarily in Argentina, provides an update to the market on certain relevant matters pertinent to current conditions.

Oil Prices in Argentina

President is pleased to note the restrictions announced late on 10 March 2020 by the Argentine Government relating to the import of crude and petroleum products.

These restrictions have been introduced to promote continued work and investment in the domestic hydrocarbon industry as a key building block for the economy.

The Company further notes market speculation that pressure is building from Provinces, producers and unions alike to introduce a fixed price for oil sales going forward, in similar manner to that which existed under the Presidency of Christina Kirchner, the current Vice-President and continued under the subsequent administration of President Macri for certain periods until 2018, where in order to provide a solid and less volatile platform for the industry and the economy as a whole, the domestic oil price benchmark was fixed. During that period there were times when the fixed price was higher than the Brent price.

President will provide further updates when and if appropriate.

Net backs

The Company continues to focus on margins and cash preservation.

President guides the market that the current field level breakeven price (after all opex and royalties) from its core assets in Rio Negro Province, Argentina is a realisation price of US$21.5 per barrel. Lousiana breakeven figure is likewise similar with Puesto Guardian fields currently a level some US$10 per barrel higher. All these figures will reduce as and when extra volume is added.

Debt levels reducing

In these times there is quite understandably increased focus on debt levels. Accordingly, it is important to note that President's third party financial debt has reduced considerably recently.

Bank debt is now only US$3.7 million having come down from a peak of US$10.7 million within the last 18 months.

The rest of the debt is owed to significant shareholders both of whose interests importantly are closely aligned with the Company and its other shareholders. Such debts together with the bank debt are all being serviced in accordance with their terms.

Such shareholder creditors are Peter Levine, the Chairman and 29.97% shareholder whose current approximately US$16.5 million loan is unsecured and covenant light and secondly an advance of US$6 million made by Trafigura, President's principal offtaker who holds in excess of 6% of the Company's shares. The advance from Trafigura has reduced from US$10 million some 9 months ago.

Gas production

President reports that gas production from Rio Negro is now in excess of 1,000 boepd (6 MMScft/d) and building. President reiterates that it is on target to achieve 2,000 boepd (12 MMscft/d) of gas production by the end of H1 2020.

All this production is and will be from existing wells without the need for further drilling.

Capex for 2020

Given recent market developments and in line with most energy companies, President's capex budget for 2020 is under review. Whilst awaiting greater visibility for domestic prices going forwards in Argentina, President is nevertheless continuing the planning for drilling wells in its value added areas.

 

Peter Levine, Chairman, commented:

"In unprecedented times and volatile outlook, we continue to focus on key performance indicators, extract maximum value with the minimum of expenditure, optimise our significant asset base and manage our cash and finances in the manner of prudent good housekeeping.

"The golden thread in Argentina is the current alignment of all industry stakeholders in endeavouring to protect and ring fence the strategic hydrocarbon industry for the future good of the country as a whole.

"As such the recent Government initiative is well timed, appropriate and welcomed."

 

Glossary:

Boepd barrels of oil equivalent (oil and gas) per day

MMscft/d million standard cubic feet of gas per day

 

 

 Contact:

 President Energy PLC

Peter Levine, Chairman

Rob Shepherd, Group FD

 

 

+44 (0) 207 016 7950

 

finnCap (Nominated Advisor)

Christopher RaggettScott Mathieson

+44 (0) 207 220 0500

Whitman Howard (Broker)

Hugh RichGrant Barker

 

 +44 (0) 207 659 1234

Tavistock (Financial PR)

Nick ElwesSimon 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, and Angostura exploration contract, all of which are situated in the Rio Negro Province 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 as well as the international commodity trader and logistics company Trafigura, an in-country management team as well as a Board whose interests are aligned to those of its shareholders, President Energy gives UK investors access to the Argentina energy 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 Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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