LONDON (Alliance News) - President Energy PLC Monday said its operations in the US and in Argentina continue to remain profitable at current oil and gas prices, and said overall trading is currently in line with management expectations.
President's US onshore operations are located over two gas fields in Louisiana whilst its operations in Argentina are focused around the onshore Puesto Guardian licence in Salta Province.
The company said it is selling its production from Argentina at an average price of around USD58 per barrel, considerably higher than current spot prices for Brent, and the company is also benefiting from favourable foreign exchange movements in the country that is keeping the company's margins "robust".
Brent was trading at USD39 a barrel on Monday, but the current price being achieved by President is still considerably lower than the average USD70 a barrel it was receiving in the first half of 2015.
The company added it expects its Argentine operation to become a net cash contributor in the second half of this year as it can now transfer more US dollars out of the country. In December, the new Argentine government said it would increase the amount of US dollars that could be transferred out of the country to repay foreign originated loans held by companies working in the country.
The government increased the monthly allowance to USD2.0 million from the previous USD50,000 limit.
In its last set of financial results, which covered the first half of 2015, President reported a pretax loss of USD3.3 million, which was wider than the pretax loss of USD824,000 the year before, as revenue fell thanks to lower prices whilst costs also rose.
President said it plans to start a new set of workovers on its wells in Argentina by the end of this month, and the company has signed purchase orders for an initial workover on four wells. Workovers aim to improve production from existing wells, and President will fund that work from cash generated from the Argentine operations, meaning it does not need to use its credit facilities.
President said it still plans to drill new wells in Argentina to "materially increase production" sometime in the second half of 2016, and it is currently carrying out negotiations with contractors to carry out that multi-well drill programme.
"At this stage it is prudent not to make a definite commitment in relation to such programme, however the company is cautiously optimistic that such a work programme will be implemented in the second half of 2016," said President.
"With the improving investment environment in Argentina, it is anticipated that the funding of the drilling programme will be sourced out of existing and/or new facilities and therefore on that basis the company does not believe it will be necessary to raise additional equity," the company added.
President said it has continued to rationalise its central general and administrative costs whilst focusing expenditure on existing operations.
As a result, President's Finance Director Ben Wilkinson, who is based in London, has agreed to step down. His responsibilities will be shared between the company's financial controller and an interim, part-time chief financial officer, who will appointed "as soon as practical".
President also plans to appoint a second non-executive director within the next three months.
The other assets in President's portfolio include the Pirity and Demattei blocks in Paraguay and an onshore licence in Australia. President did not provide an update on these assets on Monday, but the assets in Paraguay are not producing whilst operations in Australia have been suspended due to current market conditions.
President shares were trading down 0.9% to 6.51 pence per share on Monday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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