TIDMPPC
RNS Number : 4980R
President Energy PLC
21 September 2017
This announcement replaces RNS number 3930R issued by President
Energy Plc at 7.00am on 21/09/2017 which incorrectly stated the
name of the Seller of the assets that President has acquired. The
announcement should have stated "Chevron Argentina SRL." The
remainder of the announcement remains unchanged and the full text
of the amended announcement is set out below.
21 September 2017
PRESIDENT ENERGY PLC
("President", "the Company" or "President Energy")
Major Acquisition of Producing Assets in Neuquén Basin,
Argentina from Chevron
Puesto Flores / Estancia Vieja Concession - replacement
President Energy (AIM: PPC), the upstream oil and gas company
with a diverse portfolio of production and exploration assets
focused primarily in Argentina, is pleased to announce the
acquisition of Chevron Argentina SRL's 100% operated interest in
its oil producing assets at Puesto Flores and Estancia Vieja (the
"Concession") in the prolific Neuquén Basin situated in the Rio
Negro Province, Argentina.
Acquisition Highlights
-- Adds in excess of 1,200 bopd net current production,
currently selling at $55/barrel with a US$27 netback/barrel, taking
the Company's current production in Argentina alone to over 2,000
bopd
-- Adds 5.46 MMboe of net independently assessed 2P Reserves of
which 3.6 MMboe is 1P proven, taking the Company's independently
assessed Reserves in Argentina to 16 MMboe of 1P and 25 MMboe of
2P
-- Total monies to be paid relating to acquisition, covered by
the extension of President's existing credit facilities, together
with other key terms are:
-- US$400,000 purchase price already paid to Chevron for
remainder of Concession period to mid November 2017
-- US$15m to be paid to the Rio Negro Province following
ratification by the Provincial Legislature of the already signed
Extension Agreement for a 10-year extension of the Concession to
November 2027 with a further US$7m payable through 2018
-- Under the terms of the Extension Agreement, following such
ratification, President is pleased to say it will partner with
Ediphsa, the Energy Company of the Province in the Concession who
will hold 10% with President holding 90% as Operator
-- Under that Agreement the Province has given its approval to
the work programme starting in 2018 and continuing during the
extended period, which includes re-completions/workovers and new
wells, aimed at materially growing production and increasing
reserves
-- Through such work program agreed with the Province there are
multiple opportunities to grow production from the acquired
Concession to over 3,000 boepd
-- Current Concession turnover running at annualised US$25m
-- Concession currently generating $1m monthly positive cash
flow after opex and before capex and G&A
-- Strong platform for further acquisitions in the Neuquén Basin
Peter Levine, Chairman and Chief Executive, commented:
"This acquisition represents a significant step into the world
class Neuquén Basin, which is widely accepted as the most prolific
hydrocarbon region in Argentina and one of the best in South
America.
"It comes with good production pushing the Company's current
Argentine production above 2,000 boepd with significant future
potential growth.
"We are particularly pleased that we will be partnering with
Ediphsa, the Rio Negro Province's own Energy Company, with whom we
look forward to forging a strong, long term and mutually beneficial
relationship.
"President's in-country team includes a number of ex-Chevron
managers, engineers and field and HSE supervisors with extensive
experience of the Concession.
"The acquisition provides significant forward momentum and an
important platform for growth in the Neuquén Basin where, in line
with a committed strategy to expand, we continue to actively
consider other appropriate acquisition opportunities capable of
delivering strong shareholder value.
"Whilst today's news is rightly focused on this acquisition, we
continue to press ahead with our very busy work at Puesto Guardian
in the Salta Province and look forward to updating shareholders at
the end of this month."
Acquisition from Chevron of the Puesto Flores and Estancia Vieja
Concession ("the Concession")
President Energy has agreed to acquire, with an effective date
of 15 September 2017, the entire business and assets ("the
Business") of Chevron at the Concession and become its Operator for
the sum of US$400,000 which has been paid in full. Whilst Closing
date is expressed to be 1 October 2017, up to such time Chevron has
agreed to manage the Concession on behalf of President. The
Provincial Decree authorising the transfer of the Concession to
President was signed and dated 15 September 2017.
The Concession is situated in the prolific Neuquén Basin in
Argentina and has been solely owned and operated by Chevron for
over 15 years. Producing in excess of 1,200 bopd, the Concession
currently sells its oil at US$55/barrel which is transported by
pipeline to where the buyers offtake the product. At this price,
the Business generates a current annualised turnover of
approximately US$25m with positive cash flow presently running at
US$1m per month after field opex but before capex and G&A.
The Business comprises the current production together with the
benefit of fixed assets, stock and materials and a Concession
period currently extending to mid November 2017.
In parallel with the signing of the Acquisition Agreement with
Chevron, after detailed discussions with the Rio Negro Province,
the Company has entered into a Concession Extension Agreement with
the Rio Negro Province under which, subject to ratification by the
Provincial Legislature, the Concession period will be extended for
a further 10 years to November 2027, in consideration of which the
Company will, upon said ratification, pay the sum of US$15m with a
further sum totalling US$7m payable through 2018. In addition,
President is pleased to have agreed to partner with Ediphsa, the
Provincial Energy Company in the Concession which will thenceforth
own a 10% interest, with President operating the Concession and
holding the remaining 90%.
The Province has also approved a work programme to commence in
2018 including re-completions/workovers and drilling of development
and exploration wells aimed at materially increasing production and
reserves at the fields.
President's acquisition transition team has been present in the
field for some time and the Company's Argentine Management has been
significantly strengthened, benefiting from a number ex-Chevron
experienced managers, engineers and field and HSE supervisors, five
of whom were already part of President's team.
The acquisition cost of the purchase and payment to the Province
has been covered by the agreed availability of an extension of to
the existing credit facilities provided by IYA, a company
ultimately beneficially owned by Peter Levine, the Chairman/CEO and
largest shareholder (the "Loan Extension"). Recognising that loans
from shareholders are not the optimum financing medium, and with a
critical and growing mass of production, President is in
discussions with institutional type senior debt providers with a
view to them replacing and/or supplementing the Loan Extension. The
Loan Extension if taken up by the Company would be secured and
would bear interest at 10.5 per cent, repayable on 31 December
2021.
Going forward, President, as indicated above, plans to develop
and expand production from the Concession to 3,000 bopd through the
work program agreed with the Province. Furthermore the Company
views this acquisition as a platform for further growth in the
prolific and internationally renowned Neuquén Basin. Major
companies such as Shell, Exxon, Total, BP, Chevron, Statoil,
Petronas, Wintershall and Dow as well as Argentina's National Oil
company, YPF, already have interests in the Basin. As larger
companies consider selling off their conventional assets to
concentrate on unconventional shale production, President is
actively looking, where appropriate, to acquire such conventional
assets and up-scale the Company into a material mid-size producer
within the short to medium term.
Related Party Transaction
The Loan Extension referred to above in which Peter Levine is
interested constitutes a related party transaction for the purposes
of AIM Rule 13. Miles Biggins, Rob Shepherd and Jorge Dario
Bongiovanni are considered to be independent directors for the
purposes of AIM Rule 13 ("Independent Directors"). As such, the
Independent Directors, having consulted with the Company's
nominated adviser, finnCap Ltd, consider that the terms of the Loan
Extension are fair and reasonable insofar as the Company's
shareholders are concerned.
Contact:
President Energy PLC
Peter Levine, Chairman, Chief
Executive
Bruce Martin, Chief Financial
Officer +44 (0) 207 016 7950
finnCap (Nominated Advisor
& Joint Broker)
Christopher Raggett, Scott
Mathieson, Emily Morris +44 (0) 207 220 0573
BMO Capital Markets (Joint
Broker)
Jeremy Low, Neil Haycock, +44 (0) 207 236
Tom Rider 1010
Camarco Financial PR
Billy Clegg, Georgia Edmonds,
Mercedes Valenzuela-Goldman +44 (0) 203 757 4980
This announcement contains inside information for the purposes
of article 7 of Regulation 596/2014
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 independently assessed 1P
reserves in excess of 16 MMboe and 2P reserves of more than 25
MMboe.
The Company has operated interests in the Puesto Flores and
Estancia Vieja Concession, Rio Negro Province, in the Neuquén Basin
of Argentina and in the Puesto Guardian Concession, in the Noroeste
Basin in NW Argentina. The Company is focused on growing production
in the near term in 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.
President Energy's second largest shareholder is the IFC, part
of the World Bank Group and is 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 and an
in-country management team, President Energy gives UK investors
rare access to the Argentinian growth story combined with world
class standards of corporate governance, environmental and social
responsibility.
Glossary
Bopd:barrels of oil per day
Boepd:barrels of oil equivalent per day
Mmboe: million barrels of oil equivalent
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQPGUUABUPMGQG
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