(Alliance News) - Argentina-focused President Energy PLC has put its capital expenditure plans under review following the collapse in the oil price.
Over the past week there has been a slump in the price of oil, amid the worldwide spread of Covid-19 and a failure by major oil producers to agree on output cuts to arrest the slide.
Brent was quoted at USD33.42 a barrel on Thursday morning, having been at USD70 early in 2019.
"Given recent market developments and in line with most energy companies, President's capex budget for 2020 is under review. Whilst awaiting greater visibility for domestic prices going forwards in Argentina, President is nevertheless continuing the planning for drilling wells in its value-added areas," said President.
President has a number of concessions in Rio Negro province in Argentina, on the Neuquen basin. It also owns a concession in Salta province, as well as producing sites in Louisiana and some exploration blocks in Paraguay.
It noted Thursday gas production from Rio Negro is now over 1,000 barrels of oil equivalent per day and growing, and the firm is on target for 2,000 barrels a day by the end of the first half of 2020.
President said there is "quite understandably" focus on the firm's debt levels in the current circumstances, and it noted debt has fallen significantly recently. Bank debt is USD3.7 million, down from above USD10 million over the last 18 months.
The rest of President's debt is owed to major shareholders. They include Chair Peter Levine, who owns 30% of the company, and commodity trader and offtake partner Trafigura, which holds "in excess" of 6% of shares.
President said it is "pleased" with recent restrictions announced on Tuesday by the Argentinian government on the import of crude and petroleum products. These, it said, have been introduced to promote investment in the Argentinian hydrocarbon industry.
"The company further notes market speculation that pressure is building from provinces, producers and unions alike to introduce a fixed price for oil sales going forward, in similar manner to that which existed under the presidency of Christina Kirchner, the current vice-president and continued under the subsequent administration of President [Mauricio] Macri for certain periods until 2018, where in order to provide a solid and less volatile platform for the industry and the economy as a whole, the domestic oil price benchmark was fixed," the company said.
"During that period there were times when the fixed price was higher than the Brent price."
Chair Levine said the recent government initiative is "well-timed, appropriate, and welcomed".
Shares were 5.7% lower on Thursday morning in London at 2.31 pence each. A year ago, they were worth nearly 8p.
By George Collard; georgecollard@alliancenews.com
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