20 Aug 2012 07:00
20 August 2012
PRESIDENT PETROLEUM COMPANY PLC
("President" or "the Company")
Argentina Licence Awards and Assignment Agreement
President is pleased to announce that the Government of Salta, Argentina has awarded to the Company and its partner in Puesto Guardian two exploration licence areas surrounding Puesto Guardian, namely Matorras and Ocultar. President will be the operator of the two licences. The bid for Pizzaro was not successful due to a higher work programme bid of some US$43 million by a company, backed by a large Chinese industrial conglomerate.
Concurrently with these licence awards, President has signed an agreement with its Partner in Puesto Guardian to acquire for nominal value 100% of the equity in Matorras and Ocultar. The transfer is subject to prior consent and approval of the regulatory authorities in the Province of Salta.
The combined area of these new licences covers 2,203sq km surrounding the 633sq km Puesto Guardian Licence. Matorras (1469 sq km), which was President's highest priority of the three licence areas, is on the same structural trend as the palaeozoic prospect under Martinez del Tineo that was the subject of the Gaffney Cline & Associates (GCA) audited resource report announced on 23 January 2012. GCA assessed the gross unrisked mid case prospective gas and condensate resource of 570 bcf and 14.5 million barrels of condensate. The Ocultar licence area covers the previously open area to the east of Puesto Guardian.
Should a paleazoic discovery be made under Martinez del Tineo, management believe this new acreage holds significant follow on potential with further identified leads that will be the subject of further study now the licences have been awarded.
The licences have a modest seismic re-processing and new seismic acquisition commitment of US$2 million each with a drill or drop decision after three years.
President notes and welcomes the statements made by the President of Argentina, Cristina Fernandez de Kirchner, on 9th August in which a significant increase in the natural gas prices paid to producers from the original average of US$ 1/mmbtu to US$ 3.70/mmbtu was announced, as well as the recent decree on federal planning in the hydrocarbon industry on which she declared private capital was critical to the development of the hydrocarbon industry.
Peter Levine, Chairman of President, commented:
"The award of these new blocks, which President will own 100% and solely operate, is very significant in a number of ways. It marks an eight fold increase in the company's net acreage position in Salta Province and protects the Company's potential major deep gas exploration play, which has the possibility of significant value generation should the first palaeozoic well on Puesto Guardian, currently scheduled for 2013, be successful.
"It is furthermore indicative that the Company is in good standing with the relevant authorities and the successful Chinese bid for Pizzaro demonstrates the attractiveness and value placed in the region by others. The statements made last week by the President of Argentina clearly shows the country is open for business.
"Finally, it is a signpost to Presidents commitment to expeditiously build a critical mass in the region using the Company's existing infrastructure and skill set with the intent of materially increasing shareholder value in the foreseeable future."
For further information contact:
PPC Petroleum Company
John Hamilton, Director +44 (0) 207 811 0140
Ben Wilkinson, Finance Director +44 (0) 207 811 0140
RBC Capital Markets
Jeremy Low, Stephen Foss, Matthew Coakes +44 (0) 207 653 4000
Jefferies Hoare Govett
Simon Hardy, Max Jones +44 (0) 207 029 8316
Pelham Bell Pottinger +44 (0) 207 861 3232
James Henderson, Mark Antelme