TIDMPPC
RNS Number : 2608L
President Energy PLC
30 September 2016
30 September 2016
PRESIDENT ENERGY PLC
("President", "the Company" or "the Group")
Interim Results
President (AIM:PPC), the oil and gas exploration and production
company with producing assets in Argentina and Louisiana and an
exploration focus on Argentina and Paraguay announces its interim
results for the six months ended 30 June 2016.
Operation Summary
-- Argentina production in period increased by 39% over H1 2015
-- Current group production for September 2016* approximately
670 boepd, a YOY increase of 23% with the benefit of both the
current Drilling and Coiled Tubing campaign in Argentina and
further Louisiana production still to come on stream
-- Argentina average production for September 2016* of
approximately 500 bopd, a YOY increase of some 66% with realised
prices currently of US$56 per barrel
-- Current level of Louisiana production approximately 170 boepd
and projected to increase in October to over 200 boepd
-- First half average Group daily production increased by 13% to
494 boepd (2015: 439 boepd), with increases in Argentine output
offsetting now resolved production reductions in Louisiana
-- Cost reduction plan sees Group administration costs 24% lower
than in H1 2015 with staff costs declining by 36% over same period
with further reductions projected for H2 2016
-- Strong and expanded Management team now in place in Argentina
to support increased H2 operations
Financial Summary for H1 2016
-- Revenues of US$4.6 million modestly increased versus the same
period in 2015 (H1 2015: US$4.5 million) notwithstanding lower
dollar oil per barrel realisations in both the Company's producing
areas and disruption due to workovers and key wells shut in
-- Average realised price of US$58 per barrel in Argentina (H1
2015: US$70 per barrel) the profit effect of which was offset by
the Peso devaluation of 64% compared to the value at June 2015
-- Average realised oil price of US$35 per barrel in USA (H1
2015: US$52 per barrel), currently US$42 per barrel
-- Gross loss of US$2.3 million (H1 2015: US$0.7 million loss)
after taking into account US$1.5 million spent on workovers, the
benefits of which will be recorded in H2 2016 as well as US$1.4
million of depreciation
-- Total assets of US$161.3 million (H1 2015: US$202.7 million)
principally reflecting exchange rate losses on translating foreign
operations arising from the 64% devaluation of the Argentine Peso
from H1 2015 and not being indicative of any significant impairment
in value
-- Cash balance at period end of US$1.1 million (H1 2015: US$1.8 million)
-- US$9.2 million of US$15 million revolving loan facility drawn
at period end (H1 2015: US$8.1 million) and the maturity of both
that facility and the convertible loan of US$5 million extended
until 30 June 2019
-- H1 Results reflects significant gearing up and preparation for H2 Operational Campaign
-- President has now invested the level of financial commitment
required under the Puesto Guardian Concession, Argentina, Pilot
Plan with no further mandatory investments required until the
expiry of the Concession in 2050
Outlook for H2 2016
-- Group focused on target of achieving production of 1,200 boepd by the year end
-- Drilling of DP1002 S/T and Coiled Tubing Campaign ongoing
Commenting on today's announcement, Peter Levine, Chairman
said:
"The key focus so far this year has been the lead up to the
operations currently underway in Argentina. The post period events
capture more appropriately the direction in which we are seeking to
take President, with a strong focus on building value for all
stakeholders.
The near term strategy for this year is to demonstrate increased
productivity of our proven oil reserves, generating stronger free
cash flow and reducing interest payments and non-operating
administrative expenses thereby increasing the core value of our
Group.
Once achieved, our subsequent objectives are to re-address our
considerable exploration portfolio and grow production through
existing fields and by way of acquisition in our focus
countries."
Miles Biggins, BSc Joint Honours University College London, with
25 years of experience in the oil and gas sector, is a Petroleum
Engineer and member of the Society of Petroleum Engineers who meets
the criteria of qualified persons under the AIM guidance note for
mining and oil and gas companies, has reviewed and approved the
technical information contained in this announcement.
The 2016 Interim Report and Financial Statements will be made
available at www.presidentenergyplc.com. The Report and Accounts
will not be printed and mailed to shareholders though copies will
be available on request.
This announcement is inside information for the porpoises of
article 7 of Regulation 596/2014
Contact:
President Energy PLC
Peter Levine, Chairman +44 (0) 207 016 7950
Miles Biggins, COO +44 (0) 207 016 7950
Peel Hunt LLP (Nominated
Advisor & Joint Broker)
Richard Crichton, Ross Allister +44 (0) 207 418 8900
BMO Capital Markets (Joint
Broker)
Jeremy Low, Neil Haycock +44 (0) 207 236
and Tom Rider 1010
Vigo Communications
Chris McMahon
Patrick D'Ancona +44 (0)20 7830 9700
Chairman's Statement
Summary
We remain firmly focused on our target of achieving Group
production of 1,200 boepd by the year end. Accordingly the figures
for the reporting period belie the material progress made in the
year to date and, are now historic when taking into account the
developments post-period. Such targeted increases in production
will significantly improve the Group's net backs due to the
coverage of fixed costs by the existing levels of production.
The results for H1 2016 reflect the significant work streams and
associated costs preparing for the H2 Operational Campaign in
Argentina. Focus has continued on reducing Group administrative
costs in favour of building in-country expertise in Argentina.
Group production for September 2016* is approximately 670 boepd,
a year on year increase of 23% over same period in 2015 with the
benefit of the current Drilling, Coiled Tubing Campaign and
Louisiana production still to come on stream.
Taking into account the investments made to date at Puesto
Guardian since the grant of the new Concession, the Company has now
invested the level of the mandatory financial commitment required
under the relevant Pilot Plan, meaning that there are no further
mandatory investment requirements under the Concession until its
expiry in 2050.
The macro investment climate in Argentina is also improving and
President is located in an area of increasing interest from both
international investors and oil companies. President has a strong
underlying asset base and core experience and we remain focused on
pursuing future growth potential.
Louisiana continues to provide net cash flow albeit at
significantly reduced levels due to the oil price decline and
shut-in wells. Current progress suggests that production will
recover moving towards the end of the year.
Finally, whilst the Group's exploration assets have not been
forgotten in any way, the focus in the present year has been to
build up production in Argentina and increase cash flows from those
assets.
Operating Report
Argentina
-- Argentine production in period increased by 39% over H1 2015
-- Argentine average production for September 2016* of
approximately 500 bopd, a YOY increase of some 66%
-- Extensive workover campaign of existing wells in H1 2016 now starting to bear fruit in H2
-- Coiled Tubing intervention and stimulation campaign now commenced on old shut in wells
-- Strong and expanded Management team now in place to support expanded H2 operations
-- Average realised price of US$58 per barrel in Argentina (H1
2015: US$70 per barrel) the profit effect of which was offset by
the Peso devaluation of 64% compared to the value at June 2015.
Current realised price US$56
-- Trend of materially reducing administrative cost base and
focusing on building up operational management and expertise in
country
-- President has now invested the level of financial commitment
required under the Puesto Guardian Concession, Argentina, Pilot
Plan with no further mandatory investments required until the
expiry of the Concession in 2050
Paraguay
-- The Group remains committed to its Paraguay exploration
assets and will revisit plans in H1 2017 after the current
Argentine work programme
-- The Group has received environmental license on the Putamayo
Block, adjacent to President's Pirity Concession and has made an
application for prospection, exploration and exploitation of that
area
-- Geological and Geophysical studies continue
-- Taking into account market conditions and pending results of
the current Argentine work programme, consideration of possible
farm-outs deferred
Louisiana
-- Current Level of Louisiana production approximately 170 boepd
and projected to increase in October to over 200 boepd, recovering
from a low H1 2016 average production of 179 boepd (H1 2015: 209
boepd) due to well shut-ins and natural declines
-- Average realised oil price of US$35 per barrel (H1 2015:
US$52 per barrel), currently above US$42 per barrel
Australia
-- PEL 82 Block is still retained by the Company and continues
to remain under review with actions suspended due to the current
market conditions. This Block is written down to zero value in the
books of the Company.
Financial Highlights
-- Revenues of US$4.6 million slightly increased versus the same
period in 2015 (H1 2015: US$4.5 million), notwithstanding lower
dollar oil per barrel realisations in both producing areas and
disruption due to work-overs and key wells shut in
-- Average realised prices US$35 per barrel in USA (H1 2015:
US$52 per barrel) and US$58 per barrel in Argentina (H1 2015: US$70
per barrel) the profit effect of which was offset by the Peso
devaluation of 64% compared to the value at June 2015.
-- Cost of Sales of US$6.9 million (H1 2015: US$5.2 million),
which includes US$1.5 million (H1 2015: US$ nil) on expensed
Argentine well workovers designed to increase flow rates, the
benefit of which is being seen in the second half of 2016
-- Well operating costs, excluding workovers, of US$4.0 million
(H1 2015: US$3.5 million) and DD&A of US$1.4 million (H1 2015:
US$1.8 million) make up the remaining component of Cost of Sales.
On a like for like basis, the well operating costs before DD&A
in H1 2016 are US$43.54 per boe (H1 2015: US$43.44 per boe) but
these will come down as production rises as there is a large
component of fixed costs particularly in Argentina
-- Gross loss of US$2.3 million (H1 2015: US$0.7 million loss)
after taking into account US$1.5 million spent on workovers, the
benefit of which will be recorded in H2 2016, as well as US$ 1.4
million of depreciation
-- Administrative expenses of US$2.0 million, or US$22.41 per
boe, (H1 2015: US$2.7 million, or US$33.57 per boe) reflecting
effects of the Group cost reduction plan lowering staff costs to
US$1.2 million (H1 2015: US$1.9 million), and non-cash share based
payments of US$0.1 million (H1 2015: US$0.7 million).
-- Total assets of US$161.3 million (H1 2015: US$202.7 million)
principally reflecting exchange rate losses on translating foreign
operations arising from 64% devaluation of the Argentine Peso from
H1 2015 and not being indicative of any significant impairment in
value
-- Cash balance at period end of US$1.1 million (H1 2015: US$1.8
million) after cash out flow from operating activities of US$1.9
million (H1 2015: US$0.3m outflow) and investments of US$2.1
million (H1 2015: US$10.8 million)
-- US$15.0 million revolving loan facility extended until 30
June 2019 together with US$5 million Convertible Loan. US$9.2
million of revolving credit facility drawn at period end
Outlook for H2 2016
-- Group focused on target of achieving production of 1,200 boepd by the year end
-- Drilling of DP1002 S/T and Coiled Tubing Campaign ongoing
Glossary of Terms
To 25 September
* 2016
Billion cubic
Bcf. feet ( gas)
Barrels of oil
equivalent per
Boepd day
Barrels of oil
Bopd per day
Million barrels
MMbbls of oil
Million British
Thermal Units
MMBtu (gas)
Trillion cubic
Tcf. feet (gas)
YOY Year on Year
Peter Levine
Chairman
30th September 2016
Condensed Consolidated Statement of Comprehensive Income
Six months ended 30 June 2016
Year
6 months 6 months to
to 30 to 30
June June 31 Dec
2016 2015 2015
(Unaudited) (Unaudited) (Audited)
Note US$000 US$000 US$000
Continuing Operations
Revenue 4,552 4,516 10,092
Cost of sales 3 (6,854) (5,222) (10,254)
------------ ------------ ----------
Gross (loss)/profit (2,302) (706) (162)
Administrative expenses 4 (2,034) (2,670) (6,398)
Operating loss before impairment
charge
------------ ------------ ----------
and non-operating gains (4,336) (3,376) (6,560)
Impairment charge 5 - - (11,394)
Non-operating gains 6 - 31 150
Profit/(loss) after impairment
and non-operating
------------ ------------ ----------
gains (4,336) (3,345) (17,804)
Investment income -
Interest on bank deposits - 2 2
Realised gains/(losses)
on translation of foreign
currencies 45 403 1,346
Loan fees and interest (953) (1,140) (2,241)
Profit / (loss) before
tax (5,244) (4,080) (18,697)
Income tax (charge)/credit 540 228 155
Profit/(loss) for the period
from continuing operations (4,704) (3,852) (18,542)
Other comprehensive income
- Items that may be reclassified
subsequently
to profit or loss
Exchange differences on
translating
foreign operations (5,988) (3,637) (22,896)
Total comprehensive profit/(loss)
for the period
attributable to the equity
holders of the Parent Company (10,692) (7,489) (41,438)
============ ============ ==========
US cents US cents US cents
Earnings/ (loss )per share
from continuing operations
Basic earnings/ (loss)
per share 7 (1.0) (0.9) (3.9)
Diluted earnings / (loss)
per share 7 (1.0) (0.9) (3.9)
============ ============ ==========
Condensed Consolidated Statement of Financial Position
As at 30 June 2016
30 June 30 June 31 Dec
2016 2015 2015
(Unaudited) (Unaudited) (Audited)
US$000 US$000 US$000
Note
ASSETS
Non-current assets
Intangible exploration
and evaluation assets 8 103,292 112,242 103,151
Property, plant and
equipment 8 52,246 81,429 59,534
------------ ------------ ----------
155,538 193,671 162,685
Deferred tax 334 726 260
Other non-current
assets 320 320 319
156,192 194,717 163,264
------------ ------------ ----------
Current assets
Trade and other receivables 9 3,972 6,037 3,554
Stock 58 105 86
Cash and cash equivalents 1,125 1,825 217
5,155 7,967 3,857
------------ ------------ ----------
TOTAL ASSETS 161,347 202,684 167,121
============ ============ ==========
LIABILITIES
Current liabilities
Trade and other payables 4,468 4,441 3,127
Borrowings 10 - 8,100 8,358
4,468 12,541 11,485
------------ ------------ ----------
Non-current liabilities
Long-term provisions 3,119 2,771 3,292
Borrowings 10 13,910 - -
Deferred tax 11,706 20,351 14,023
28,735 23,122 17,315
------------ ------------ ----------
TOTAL LIABILITIES 33,203 35,663 28,800
============ ============ ==========
EQUITY
Share capital 16,754 16,048 16,754
Share premium 201,646 197,676 201,646
Translation reserve (40,199) (14,952) (34,211)
Profit and loss account (57,102) (37,784) (52,462)
Other reserve 7,045 6,033 6,594
TOTAL EQUITY 128,144 167,021 138,321
============ ============ ==========
TOTAL EQUITY AND LIABILITIES 161,347 202,684 167,121
============ ============ ==========
Condensed Consolidated Statement of Changes in Equity
Share Share Translation Profit Other Total
Six months capital premium reserve and reserve
ended 30 June loss
2016 account
US$000 US$000 US$000 US$000 US$000 US$000
Balance at
1 January 2015 14,928 186,566 (11,315) (33,932) 4,142 160,389
--------- --------- ------------ --------- --------- ---------
Placing of
ordinary shares* 1,120 12,883 - - - 14,003
Cost of issue - (589) - - - (589)
Warrants issued
on placing - (1,184) - - 1,184 -
Share-based
payments - - - - 707 707
Transactions
with owners 1,120 11,110 - - 1,891 14,121
Loss for the
period - - - (3,852) - (3,852)
Exchange differences
on
translation - - (3,637) - - (3,637)
Total comprehensive
income/(loss) - - (3,637) (3,852) - (7,489)
Balance at
30 June 2015 16,048 197,676 (14,952) (37,784) 6,033 167,021
Share-based
payments - - - - 469 469
Placing of
ordinary shares* 706 4,280 - - - 4,986
Cost of issue - (368) - - - (368)
Warrants issued
on placing 58 (58) -
Convertible
loan equity - - - - 162 162
Transfer to
P&L account - - - 12 (12) -
Transactions
with owners 706 3,970 - 12 561 5,249
Loss for the
period - - - (14,690) - (14,690)
Exchange differences
on
translation - - (19,259) - - (19,259)
Total comprehensive
income/(loss) - - (19,259) (14,690) - (33,949)
Balance at
1 January 2016 16,754 201,646 (34,211) (52,462) 6,594 138,321
Convertible
loan equity - - - - 415 415
Transfer to
P&L account - - - 64 (64) -
Share-based
payments - - - - 100 100
Transactions
with owners - - - 64 451 515
Loss for the
period - - - (4,704) - (4,704)
Exchange differences
on
translation - - (5,988) - - (5,988)
Total comprehensive
income/(loss) - - (5,988) (4,704) - (10,692)
Balance at
30 June 2016 16,754 201,646 (40,199) (57,102) 7,045 128,144
========= ========= ============ ========= ========= =========
* Share placing was used to fund the Hernandarias
seismic acquisition and Argentine workover programme
Condensed Consolidated Statement of Cash Flows
Six months ended 30 June 2016
Year
6 months 6 months to
to 30 to 30
June June 31 Dec
2016 2015 2015
(Unaudited) (Unaudited) (Audited)
US$000 US$000 US$000
Cash flows from operating
activities - (Note 11)
Cash generated/(consumed)
by operations (1,879) (346) (1,002)
Interest received - 2 2
Taxes paid - (104) -
Taxes refunded - 4 4
------------ ------------ ----------
(1,879) (444) (996)
------------ ------------ ----------
Cash flows from investing
activities
Expenditure on exploration
and evaluation assets (411) (9,491) (11,206)
Expenditure on development
and production assets
(excluding increase in provision
for decommissioning) (1,697) (1,407) (3,196)
Proceeds from asset sales - 128 199
Pirity acquisition - - (756)
USA acquisition - - (121)
(2,108) (10,770) (15,080)
------------ ------------ ----------
Cash flows from financing
activities
Proceeds from issue of shares
(net of expenses) - 13,414 18,032
Loan converted to equity - (1,800) (4,470)
Related party loan 5,967 750 3,895
Repayment of loan capital - (500) (555)
Payment of loan interest and
fees (835) (910) (1,722)
5,132 10,954 15,180
------------ ------------ ----------
Net increase/(decrease) in
cash and cash equivalents 1,145 (260) (896)
Opening cash and cash equivalents
at beginning of year 217 1,527 1,527
Exchange (losses)/gains on
cash and cash equivalents (237) 558 (414)
Closing cash and cash equivalents 1,125 1,825 217
============ ============ ==========
Notes to the Half-Yearly Financial Statements
Six months ended 30 June 2016
1 Nature of operations and general information
President Energy PLC and its subsidiaries' (together "the
Group") principal activities are the exploration for and the
evaluation and production of oil and gas.
President Energy PLC is the Group's ultimate parent company. It
is incorporated and domiciled in England. The Group has onshore oil
and gas production and reserves in Argentina and the USA. The Group
also has onshore exploration assets in Paraguay, Argentina, the USA
and Australia. The address of President Energy PLC's registered
office is 1200 Century Way, Thorpe Park Business Park, Leeds LS15
8ZA. President Energy PLC's shares are listed on the Alternative
Investment Market of the London Stock Exchange.
These condensed consolidated interim financial statements (the
interim financial statements) have been approved for issue by the
Board of Directors on 29th September 2016. The financial
information for the year ended 31 December 2015 set out in this
interim report does not constitute statutory accounts as defined in
Section 434 of the Companies Act 2006. The financial information
for the six months ended 30 June 2016 and 30 June 2015 was neither
audited nor reviewed by the auditor. The Group's statutory
financial statements for the year ended 31 December 2015 have been
filed with the Registrar of Companies. The auditor's report on
those financial statements was unqualified and did not draw
attention to any matters by way of emphasis and did not contain a
statement under section 498(2) or (3) of the Companies Act
2006.
2 Basis of preparation
The interim financial statements do not include all of the
information required for full annual financial statements and
should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 December 2015, which
have been prepared under IFRS as adopted by the European Union.
These financial statements have been prepared under the
historical cost convention, except for any derivative financial
instruments which have been measured at fair value. The interim
financial statements have been prepared in accordance with the
accounting policies adopted in the last annual financial statements
for the year to 31 December 2015.
The accounting policies have been applied consistently
throughout the Group for the purposes of preparation of these
interim financial statements.
Year
6 months 6 months to
to 30 to 30
June June 31 Dec
2016 2015 2015
(Unaudited) (Unaudited) (Audited)
US$000 US$000 US$000
3 Cost of Sales
Depreciation 1,394 1,767 2,742
Well operating costs 5,460 3,455 7,512
6,854 5,222 10,254
============ ============ ==========
4 Administrative expenses
Directors and staff
cost 1,240 1,943 3,746
Share-based payments 100 707 1,176
Depreciation 13 15 88
Other 681 5 1,388
2,034 2,670 6,398
============ ============ ==========
5 Impairment charge
Demattei licence
Paraguay (intangible) - - 10,876
Prospects East Lake
Verret USA (intangible) - - 74
East White Lake (PP&E) - - 444
- - 11,394
============ ============ ==========
6 Non-operating gains
Arising on Argentine
acquisition - - 66
Other gains - 31 84
- 31 150
============ ============ ==========
7 Earnings / (loss) per
share
Net profit / (loss)
for the period attributable
to the equity holders
of the
Parent Company (4,704) (3,852) (18,542)
============ ============ ==========
Number Number Number
'000 '000 '000
Weighted average
number
of shares in issue 471,697 439,696 471,697
============ ============ ==========
Earnings /(loss)
per share US cents US cents US cents
Basic (1.0) (0.9) (3.9)
Diluted (1.0) (0.9) (3.9)
============ ============ ==========
8 Non-current assets
Property
Plant
Intangible and Total
Equipment
US$000 US$000 US$000
Cost
At 1 January 2015 134,003 103,882 237,885
Additions 9,491 1,407 10,898
Disposals (86) (6) (92)
Exchange difference (42) (5,464) (5,506)
----------- ---------- ---------
At 30 June 2015 143,366 99,819 243,185
Additions 1,892 2,561 4,453
Acquisition Paraguay licence 903 - 903
Acquisition USA - 121 121
Disposals - (245) (245)
Exchange difference (936) (23,631) (24,567)
At 1 January 2016 145,225 78,625 223,850
Additions 411 1,697 2,108
Exchange difference (270) (8,024) (8,294)
At 30 June 2016 145,366 72,298 217,664
=========== ========== =========
Depreciation/Impairment
At 1 January 2015 31,124 16,738 47,862
Disposal 36 36
Exchange difference (166) (166)
Charge for the period - 1,782 1,782
----------- ---------- ---------
At 30 June 2015 31,124 18,390 49,514
Exchange difference - (710) (710)
Disposals - (80) (80)
Impairment 443 443
Charge for the period 10,950 1,048 11,998
----------- ---------- ---------
At 1 January 2016 42,074 19,091 61,165
Charge for the period - 1,407 1,407
Exchange difference - (446) (446)
At 30 June 2016 42,074 20,052 62,126
=========== ========== =========
Net Book Value 30 June
2016 103,292 52,246 155,538
=========== ========== =========
Net Book Value 30 June
2015 112,242 81,429 193,671
=========== ========== =========
Net Book Value 31 December
2015 103,151 59,534 162,685
=========== ========== =========
9 Trade and other receivables
30 June 30 June 31 Dec
2016 2015 2015
Trade and other receivables 3,928 6,037 3,481
Prepayments 44 - 73
3,972 6,037 3,554
=========== ========== =========
10 Borrowings
30 June 30 June 31 Dec
2016 2015 2015
IYA Loan 9,166 8,100 4,473
IYA Convertible Loan 4,744 - 3,885
13,910 8,100 8,358
============ ============ ==========
11 Reconciliation of operating profit to
net cash outflow from operating activities
Year
6 months 6 months to
to 30 to 30
June June 31 Dec
2016 2015 2015
(Unaudited) (Unaudited) (Audited)
US$000 US$000 US$000
Loss from operations before
taxation (5,244) (4,080) (18,697)
Interest on bank
deposits - (2) (2)
Interest payable
and loan fees 953 1,140 2,241
Depreciation and
impairment of property,
plant and equipment 1,407 1,782 2,830
Impairment charge - - 11,394
Gain on non-operating
transaction - - (150)
Share-based payments 100 707 1,176
Foreign exchange
difference (45) (403) (1,346)
Operating cash flows before
movements
in working capital (2,829) (856) (2,554)
(Increase)/decrease
in receivables (391) 7,972 10,376
(Decrease)/increase
in payables 1,341 (7,462) (8,824)
Net cash generated by/(used
in)
operating activities (1,879) (346) (1,002)
============ ============ ==========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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