President Energy Announces Operational Update

Source: www.gulfoilandgas.com 1/13/2022, Location: South America

President Energy (PPC), the international energy company, provides a review of its activities in 2021 and an update on its operations in Salta and Louisiana.

2021 Review

In 2021, the Company made very material progress in both its core business and strategic assets and President expects that this will be reflected in the Company's results for the year ended 31 December 2021 when published; as with previous years, we expect to provide brief preliminary and unaudited highlights to the market in late February.

In addition to its own improved year on year financial performance, President added material value for its shareholders through its corporate activity. The spin off and subsequent IPO of Atome Energy PLC ("Atome") on the AIM market of the London Stock Exchange under the ticker ATOM:LN generated US$23 million of additional and tangible benefit to its shareholders (comprising the shares in Atome distributed directly to President's shareholders and the residual 27.9% interest in Atome retained by the Company itself).

Other highlights of 2021 included:

1- Five new wells drilled in Argentina, in both Rio Negro and Salta, with the Salta drilling programme still ongoing

2- A new oil treatment plant designed, engineered, constructed and completed in Rio Negro now delivering material savings of opex of over US$4 per barrel

3- President continued to export its oil from Argentina and the prices currently being obtained for the Company's oil in Salta have reached levels not previously seen by President

4- Whilst the total Group production showed no growth in the year due to natural declines and the Louisiana wells shut ins for most of year, the financial performance for the year is expected to show a significant improvement on the previous year with materially increased operational profits, adjusted EBITDA and free cash generation. Group oil production in Argentina promises to materially increase in Q1 2022 augmented by the drilling of wells in Salta.

5- The Group's Argentine subsidiary issued a mini dollar corporate bond in Argentina of US$9 million, rated investment grade A- by the Argentine associate of the international rating agency Fitch. Three times oversubscribed, it carried an interest rate of only 1.34% per annum, a rate the Company believes is unmatched by President's peer Group both outside as well as inside Argentina

6- As announced in the year, the long-awaited farm out of the Paraguay exploration asset was both agreed and completed on favourable terms with CPC Corporation, the State owned energy company of Taiwan with President remaining operator and the asset being held jointly 50/50 between the parties. Consequently, shareholders are now able to look forward to a high impact exploration well being drilled later this year targeting management estimates of 230 million barrels of unrisked oil in place

7- As stated above, Atome, President's former green hydrogen and ammonia subsidiary was successfully spun out of Group and was admitted to trading on AIM as a separate independent company with an initial market capital of approximately US$35 million. President qualifying shareholders received a distribution by way of dividend in specie totalling some US$13 million in value being the equivalent yield of some 20% with President still retaining 27.9% of Atome post IPO. It is pertinent to point out that Atome was prudently valued at zero in the Company's accounts as recently as at the end of 2020. The accounts of President for year end 2021 will therefore reflect a substantial benefit to the profit and loss account as a result of this corporate strategy

Operational update

Following the last update there have been certain previously unforeseen operational delays relating to the well DP-2003 including a decision made, now successfully effected despite tough well bore conditions, to drill deeper than previously announced after review of a interesting gas spike shown in the mud logs at the point of the original target depth.

The independent review of the electric logs that the Company has in its hands strongly supports the prognosis that this will be a successful well and capable of producing at least, if not better than, pre-drill expectations of 250 barrels of oil per day.

Casing has now been carefully and successfully run to the new target depth of 3,266 metres and cementing is currently taking place. The well will then be completed after DP-2001.

In the meantime, the workover rig has arrived from Neuquén and is today commencing completion work on DP-2001, being the first well drilled in the sequence. Subject to success, it is currently expected that this well will be flowing oil 14-21 days thereafter. The workover rig will then move to complete DP-2003.

In Louisiana, whilst delays in the workover is frustrating to shareholders and management alike, they are all part of working in deep wells and are no-ones fault. The permission from the State to re-complete the well is hoped to be received soon relating to plugging back and perforating a section higher up the hole. Work is expected to commence as expeditiously as possible thereafter and the Company will give an update at or around the end of this month.

Chairman comments

Peter Levine, Chairman commented

"The achievements of last year were very significant as shown by the brief details in this announcement. Each of the events have had a material and beneficial effect on President's financial and trading position and prospects. It is a testament to the enduring hard work of our employees that we have been able to achieve so much in such a short time.

"The Board shares the frustration of our employees and long-term shareholders that this progress combined with a materially better oil price environment and future prognosis is patently not reflected in the Company's share price performance. The fact that the current share price is even lower than the then low price at the start of 2021, resonates more loudly and clearly than any words I can say.

We will continue to do what we can to generate further success this year in the energy field and transparently promote our successes. Where appropriate and possible, we will implement strategies to close the gap between the performance of the Company and the value given to it by the market.

"In this regard, we continue to assess various opportunities to add to the Company's business with a view to diversifying the geographical focus and nature of our energy asset portfolio in respect of which Atome sets a clear precedent. We are fortunate to have a proven track record and profitable platform from which to achieve this as well as supportive key shareholders.

"We look forward with confidence to a successful 2022 and the expansion in value of our group of energy companies".


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