President Energy, the upstream oil and gas company with a diverse portfolio of production and exploration assets focused primarily in Argentina, has announced its audited results for the year ended 31 December 2020 and a 2021 update and outlook.
In the face of the unprecedented challenges in 2020, including the dramatic drop in the oil price to less than US$20 per barrel, the Company still delivered solid progress and operational profitability, with adjusted EBITDA* of almost US$2.1 million on turnover of approximately US$28 million. This demonstrates the continued strength of the Group and resilience in navigating through the perfect storm of Covid-19 and its tsunami of economically challenging waves which enveloped the whole of the World.
The Company's Annual Report will be posted to shareholders by the end of August.
- Group revenue to 31 December 2020 of US$27.8 million (2019: US$40.8 million) largely due to significantly lower average realised commodity prices, with a reduction of 40% in Argentina to US$30.0 per boe (2019: US$49.9 per boe) and 34% in the US to US$29.9 (2019: US$45.5 per boe)
- Free cash generation from core operations* (excluding workovers) US$6.2 million (2019: US$15.1 million)
- Net cash generated by operating activities US$4.4 million (2019: US$21.5 million)
- Adjusted EBITDA* remained positive in the face of unprecedented adversity at US$2.1 million (2019: US$11.6 million)
- Borrowings at year end significantly reduced year on year by 22% to US$17.6million (2019: US$22.6 million). Of this, only US$6.5 million is third party financial debt with the balance being to IYA, an affiliate company of Peter Levine
- After depreciation, depletion and amortisation of US$10.3 million (2019: US$10.5 million), reflecting the challenging trading conditions, a loss after tax for the year arose of US$11.3 million (2019 loss: US$88.3 million)
- Trafigura, one of the largest commodity traders in the world and a major offtaker of President, became a ca. 16% shareholder
- Atome created as a UK intermediate holding company focusing on developing a hydrogen and ammonia production, marketing and sales business. Work with significant potential is being progressed as is an intended spin off and separate flotation on the London Stock Exchange for later this year
- An increase of 12% in Group net average production to 2,714 boepd (2019: 2,415 boepd)
- Two new wells successfully drilled in Argentina in 2020 on time and budget with follow-on drilling targets identified
- Significant new infrastructure completed in Argentina including laying some 20km of new pipelines and installing new compressors
- Continued improvement in Argentina core operating performance with well operating costs per boe in 2020, excluding royalties and workovers*, reduced by 17% to US$17.6 per boe (2019: US$21.1)
- Group-wide administrative costs per barrel* were further reduced to US$4.7 per boe (2019: US$4.8 per boe)
Production and reserves
- Net 2P (proven and probable) reserves in Argentina at year end, as confirmed by an independent reserves audit, decreased to 24.3 mmboe (2019: 25.9 mmboe)
- Louisiana 1P proven producing reserves estimated at 724 mboe (2019: 540 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, Chairman, commented in the Chairman's Statement:
'When I wrote my statement on 30 June last year, I don't think any of us could have imagined that 14 months on we would still be battling the impact of Covid-19. As I said previously, I spent several months earlier this year travelling around our operations in South America overseeing our exciting work programme and advancing a material investment in our Paraguay assets. During that time, I saw first-hand the devastation wrought by the global pandemic and the significant sacrifices required to keep businesses operational during such difficult times. Having myself been hospitalised for two weeks, although thankfully now well on the way to recovery, I remain eternally grateful for the skill and dedication shown by the medical professionals in Paraguay and across the Globe.
As I said at the time, I have never been one to sit behind a desk to manage my business and I am willing to put myself in harm's way for the benefit of our stakeholders so say none of this to gain sympathy. I make these observations so that people might understand the dedication shown by our hardworking employees in the face of such adversity. It is this dedication that has led to us delivering all the progress noted in the last 20 months.
Day by day our Company gets stronger although always subject to intermittent variables which do throw stones in our path to deflect us. We do all we can to grow President organically and by strategic initiative. I am confident that 2021 will be seen by its end as a year of progress with the Paraguay farmout, new drilling in Salta and the spin off and float of Atome all set to be completed by year end.
We successfully controlled what we could and the key performance metrics through 2020 bear witness to this: - increased average production, reduced operating and administrative costs as well as overall debt. I am 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 and shareholders may have noticed the rapid progress we are making with Atome Limited, the subsidiary we formed earlier this year to focus on hydrogen-related opportunities.'