TIDMPPC
RNS Number : 8157P
President Energy PLC
22 February 2021
22 February 2021
PRESIDENT ENERGY PLC
("President", "the Company" or "the Group")
2020 Trading Update and 2021 Outlook
Investor Presentation
President Energy (AIM: PPC), the energy company with a diverse
portfolio of production and exploration assets currently focused
primarily in South America announces an unaudited 2020 trading
review and a 2021 outlook.
Key points
2020 Trading
-- Turnover of approximately US$28 million, a reduction of 32%
year on year driven primarily by average oil price realisations
falling 33% to US$37 per barrel
-- Average net Group production up 12% year on year to over 2,700 boepd
-- December average net Group production of circa 3,300 boepd
demonstrating the early impact of the new wells drilled in late
Q4
-- Over US$10 million of free cash generation from operations
(after workovers) and treasury income
-- Adjusted EBITDA of approximately US$3 million
-- Well operating (excluding royalties and workovers) and
administrative costs successfully reduced by 19% year on year to
circa US$20 per boe
-- Capex incurred (including capital leases) of over US$11 million
-- Net debt reduced by 25% year on year to approximately US$16
million, including the US$5 million loan secured at the end of the
period to fund development of the new treatment plant in Puesto
Flores
-- Trafigura, one of the largest commodity traders in the world,
and an important offtaker of President, became a major strategic
shareholder
-- Robust Group net 2P reserves of over 24 MMboe as at the year
end with additional 9 MMboe of 2C contingent resources convertible
to reserves on licence extensions
2021 Outlook
-- This year's busy drilling programme is expected to kick off
as scheduled at end of March with four new gas wells in the Las
Bases and Estancia Vieja fields, Rio Negro Province, all due to
come on stream by end May
-- In H2, a further three oil well drilling programme planned at
the Dos Puntitas field, Puesto Guardian Concession, Salta Province,
Argentina, all due to come on stream towards the end of 2021
-- New 3D seismic data acquisition planned over Canada Grande, a
formerly prolific but now non-producing oil field also at Puesto
Guardian
-- New treatment plant and infrastructure set to start first
phase operations in Rio Negro by end June bringing immediate cost
savings
-- Paraguay farm-in discussions ongoing, targeting completion
during H1. Initial well planning to drill the high impact Delray
complex exploration well within next 12 months
-- Full year average production projected to be between 3,600
and 4,000 boepd, based on Group capex spend of circa US$18 million.
This is planned to be funded through own cash generation
complemented by additional non-equity sources as required. The full
benefit of capex will only be fully felt from the start of 2022
when all Salta new wells are expected to be on stream
-- Atome Limited, a new alternative energy subsidiary formed to
focus on developing a hydrogen and ammonia production business
Peter Levine, Chairman, commented
"In an unprecedented year of so much personal tragedy and pain
for the World which we must humbly acknowledge, the President
family pulled together and not only survived but by the end of the
year became stronger. We successfully controlled what we could and
the key performance metrics bear witness to this. We are sincerely
grateful to everyone within the business for their efforts. We have
a lot of work to do this year but we are very much up for it and
relishing the prospects.
The energy landscape has changed even faster and more
dramatically than anticipated. President, as an energy company
focused on long term goals, embraces this. Any action has to be
considered carefully, seriously and be planned with the ultimate
objective of delivery for the Group in key relevant areas. It takes
time. We are pleased to announce the incorporation of Atome
Limited, a first step in respect of one of those actions."
2020 Trading review
Last year, one that no-one could have foreseen, was incredibly
hard for the industry as a whole given the material decline in
commodity prices and demand that ultimately resulted in
significantly reduced revenue and associated financial
performance.
However, notwithstanding the challenging macro environment,
President's average production for the year increased modestly and
operating costs reduced by almost 20% with over US$10 million of
free cash generation being US$6 million from operations after
taking into account workovers and over US$4 million from astutely
managed treasury income, taking advantage of market volatility.
This demonstrates the robustness of President's oil and gas
business and sets the Group up well to benefit from the improving
financial climate in 2021.
The resilience is further highlighted by the fact that the two
new wells drilled in late 2020 were the first for some two years,
increasing the operating challenges of managing production declines
and shut-ins within the existing well stock. Production from the
two new wells came too late to materially impact the full year
results but did in December allow us to register a record peak
daily production figure of over 4,000 boepd; this demonstrates the
potential of the currently producing wells and helps to underpin
the 2021 production guidance. As experience has shown, it is
important not to overwork / overproduce wells for good field
management.
The internal unaudited Group management accounts for the year
2020 suggest the following overarching take-aways:
1. In relative terms, President's performance was robust in the
face of unprecedently harsh, pandemic blighted trading
conditions;
2. The primary elements within the Company's control such as
production, operating costs, administrative costs and net debt
levels have all been managed appropriately.
3. Well operating and administrative costs have been reduced by
19% year on year to circa US$20 per boe
4. Net debt was reduced significantly with Trafigura, one of the
largest commodity traders in the world and a major offtaker of
President coming on board as a major strategic investor
5. The two new wells drilled in Argentina on time and budget at
the end of last year were successful. The successful logging
results at LB-1001 have led to the follow on drilling in H1 of this
year in the Las Bases field, targeting additional production from
the previously unproduced Centenario formation :
a) The well EVN-x1 at the Estancia Vieja field is still
undergoing long term tests to evaluate the reservoir in that
structure and optimise production levels currently having a steady
stable production rate from the lowest identified interval.
b) The successful LB-1001 well having produced significant gas
from the lower section, is in the next 21 days to undergo a testing
of what is considered the main target interval which is the next
section higher up the hole.
6. Significant new infrastructure was completed including laying
some 20km of new pipelines and installing new compressors in
readiness for what has transpired to be the successful push for
increased gas production at the year end.
In summary, for the industry it was a year more to survive than
thrive but in which the stability of President prevailed. Having
gone, as stated before, some two years without drilling new wells,
President was the only company to drill in H2 2020 in Rio Negro,
Argentina, post the start of the pandemic. The foundations were
laid for a significantly more active 2021 where an important
mission is to exploit the assets of the Company, increase
consistent average production and enlarge the well stock to
mitigate the continued effect of production being disrupted by
older wells going down or in need of constant repair.
2021 Outlook
2021 will be a very busy year for the Company with a record
number of wells to be drilled and a return to growth. There are
several things for investors to look out for in 2021.
1. Seven new production wells are projected either side of the
half year. The drilling will kick off with the first four gas wells
scheduled at the end of March in Rio Negro. These will be followed
by three vertical oil wells in the Dos Puntitas field at Puesto
Guardian.
2. Later in H2, there is a planned 3D seismic data acquisition
programme over a formerly prolific Canada Grande field within the
Puesto Guardian Concession, Salta Province to find new well
locations to target and drill the productive A6 sand there. An
initial land survey by potential contractors is currently underway.
The best wells in Canada Grande produced initially as much as 1,000
boepd from the clean A6 sands. If the data indicates commercially
viable well locations, then it would be President's objective to
drill in Canada Grande following on from the H2 drilling in
Salta.
3. The return to activity in Puesto Guardian is significant with
the real beneficial impact on the Company only occurring in all
material effects from the start of 2022 when it is projected all
wells will be on stream. Puesto Guardian is a long term Concession
to 2050 and 100% owned and operated by President. Its current
production is stable and showing good reservoir properties albeit
low in volume due directly to the fact that there has been no new
successful drilled wells there for some 10 years. Unproduced
reserves of scale are unquestionably present and there is
significant potential to grow. The hard lessons that have been
learnt from unsuccessful drilling in the past has given President a
determination to succeed with the Company now having the resource
and a drilling and engineering design team that have proved
themselves able to deliver in action. Moreover with higher oil
prices mitigating the greater discount for Salta oil and all
necessary infrastructure in place to cope with greater volume,
there are potentially materially enhanced margin barrels to be
had.
4. Along with drilling and workover operations, President
continues with the infrastructure projects previously announced
including the treatment plant set to be commissioned by end June
which will result in an estimated $4/boe reduction in operating
costs.
5. As announced on 8 February 2021, President is seeking to
renew its core Puesto Flores/Estancia Vieja Concession by a further
ten years before the end of the year, thereby allowing for the
conversion of some 9 MMboe of contingent oil and gas resources into
reserves in due course.
6. With regards to Paraguay, the farm-in discussions continue
with the previously identified party, a substantial national energy
company from a non-Paraguayan, democratic, economically stable and
technologically advanced country. The Main Board and technical
committee of the proposed partner have approved its participation
in the project, including the main financial and commercial terms.
The parties are now finalising the definitive legal agreements.
Although it was stated in the RNS dated 22nd December 2020 that
President hoped to conclude matters before the end of Q1 2021,
patience is required in these pandemic restricted times which
affect legal due diligence and negotiating final form agreements in
two languages. Nevertheless, the target for both parties is to
complete the farm-in during H1 2021 and in that event, drilling is
expected to commence in the first part of 2022 at the high impact
Delray complex of prospects internally estimated to contain 230
MMbo of unrisked oil in place.
7. As to oil prices, whilst our modest Louisiana operations
approximately track WTI and Lousiana Light prices, Argentina
realisation prices are always subject to a discount from Brent and
also depend on geographic location. In February, in Rio Negro,
President's realisation price is currently estimated at just over
US$52 per barrel whilst in Salta, the realised price for this month
is approximately US$46.
8. Gas prices reflect the current modest supply squeeze which is
expected to exacerbate over the winter. Current spot prices are
US$2.40 per MMBtu with President projecting higher winter prices of
US$3.60 per MMBtu.
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.
Each and every opportunity is carefully considered; however, in
the absence of suitable prospects and terms, the Company continues
to avoid spending acquisition dollars with all the direct and
hidden risks, costs and expenses when much under-utilised existing
production assets in the Company's portfolio, such as Salta, can be
exploited.
Alternative Energy strategic initiative
President is an energy centric company. As such, as a long term
business it has to embrace and develop in energy outside both its
present geographic core area of Argentina and also its oil and gas
business whilst not neglecting the same. So whilst recently forming
President Nuevo Energia SAU, a new renewables company in Argentina
to consider opportunities in that country, President, after careful
research has determined that it is appropriate to step out in a
more concrete and definite direction.
The Company has formed Atome Limited as a UK intermediate
holding company focusing on developing a hydrogen and ammonia
production, marketing and sales business as distinct from an OEM
(original equipment manufacturer). It will leverage on the
international contacts and experience of President's management and
is being seeded out of cash flow. In due course, it will have an
independent board experienced in alternative energy. President is
pleased to announce that the first of such directors has now been
appointed being Mary Rose de Valladares, former long standing
General Manager of the IEA (International Energy Agency) Global
Hydrogen Collaboration Programme. It is too premature to make
further comment save that Atome which has already started detailed
research work represents a serious step for President and updates
on progress will be made as matters develop later in the year.
Glossary:
2P means proven and probable reserves
Adjusted EBITDA is Earnings before interest, tax, depreciation,
amortisation and impairment and adjusted to exclude non-recurring
items
Boepd barrels of oil equivalent (oil and gas) per day
Contingent resources means oil/gas estimated at a given date to
be potentially recoverable but which are at that date not capable
of being commercially recoverable eg because they cannot be
produced within the current term of the contract
MMbo means million barrels of oil
MMBtu Million of standard British thermal units
Oil in place means the total content of an oil reservoir
Metrics:
As defined in half year- and Annual Reports
Investor Presentation
President Energy is pleased to announce that Peter Levine
(Chairman), Rob Shepherd (Group Finance Director) and Jordan
Coleman (COO LatAm) will provide a live presentation relating to
its Trading Update and Outlook via the Investor Meet Company
platform at noon (GMT), today.
The online presentation is open to all existing and potential
shareholders.
Please see the RNS dated 8th February 2021 for further details
on the Investor Meet Presentation.
Investors can sign up to Investor Meet Company for free and add
to meet President Energy PLC via:
https://investormeetcompany.com/president-energy-plc/register-investor
Investor Information
President Energy kindly reminds and, at the same time, strongly
encourages all current and potential investors to keep up to date
with Company news and updates via the following platforms:
President Energy website
https://www.presidentenergyplc.com/
https://www.presidentenergyplc.com/media/ (Media page)
https://www.presidentenergyplc.com/investors/faq/ (FAQ page)
Twitter
https://twitter.com/PresidentPlc
Investor Meet Company
https://investormeetcompany.com/president-energy-plc/register-investor
DirectorsTalk
https://www.directorstalkinterviews.com/president-energy-plc/ppc.l
Should shareholders have any queries, they may contact the
Company using the below email.
info@presidentpc.com
Please note that on condition that shareholders demonstrate
their proof of holdings, President will do its best to address all
shareholder queries in a manner it deems as reasonable.
Contact:
President Energy PLC +44 (0) 207 016 7950
Rob Shepherd, Group FD
Nikita Levine, Investor Relations info@presidentpc.com
finnCap (Nominated Advisor)
Christopher Raggett, Tim Harper +44 (0) 207 220 0500
Shore Capital (Corporate Broker)
Jerry Keen, Antonio Bossi +44 (0) 207 408 4090
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 capable of
delivering positive cash flows and shareholder returns. With a
strong strategic and institutional base of support, including the
international commodity trader and logistics company Trafigura, an
in-country management team as well as the Chairman whose interests
as the largest shareholder are aligned to those of its
shareholders, President Energy gives UK investors access to an
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 rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
TSTTBMJTMTBTTJB
(END) Dow Jones Newswires
February 22, 2021 02:00 ET (07:00 GMT)
Molecular Energies (LSE:MEN)
Historical Stock Chart
From Mar 2024 to Apr 2024
Molecular Energies (LSE:MEN)
Historical Stock Chart
From Apr 2023 to Apr 2024