15 Sep 2015 07:00
15 September 2015
PRESIDENT ENERGY PLC
("President" or "the Company")
PUESTO GUARDIAN CONCESSION
SALTA PROVINCE, ARGENTINA
New Unconventional Concession Puesto Guardian Concession extends Concession term to 2050
President is pleased to announce the conversion of its former Puesto Guardian Concession which was due to expire in 2026 to a new Unconventional Concession for a term of 35 years expiring 2050.
Highlights
· New Concession granted for a new 35 year term expiring August 2050
· Replaces former Concession which was due to expire 2026
· Concession area remains the same and now covers both unconventional and conventional exploration and production
· New Concession provides an extra 24 years of life and with all operations carrying on as normal
· First time such a Concession has been granted in Salta Province
· Updated CPR by Gaffney Cline & Associates to be published shortly to reflect the extended Concession
· President's Argentine oil sales continue at approximately US$70 per barrel together with an additional $3 per barrel currently receivable for 2015 increased production
Peter Levine, Chairman, commented
"The effective renewal and extension of the Puesto Guardian Concession to 2050 is both a demonstration of President's commitment to Argentina and our Argentine Assets and a vote of confidence from the relevant authorities. We are grateful and appreciative to them and look forward to another 35 years in Salta.
The new 35 year term provides the solid foundation and long term security necessary for the future unlocking of the full potential of Puesto Guardian including, importantly, the funding for field development.
We look forward to the publication of the updated CPR shortly."
A new 35 year Unconventional Concession covering Puesto Guardian, expiring August 2050, has been granted to President replacing the former Concession which was due to expire in 2026. The new Concession permits both conventional and unconventional exploration and production. The relevant law defines unconventional as including not only shale but also tight and low permeability rocks.
This extends the Concession 24 years beyond the previous term allowing President to produce its current reserves, add new reserves and make discoveries in this period. It is a significant incentive for President to fully exploit the full potential of the Concession knowing it has the flexibility and time to do so.
The new Concession, one of only a few granted in Argentina to date pursuant to a new law introduced in 2014 to increase oil and gas investment, is the first one to be granted in the Salta Province.
The principal terms of the new Concession include:
a) Term 35 years from now expiring in 2050
b) Covers both unconventional and conventional
c) No initial upfront payments
d) An increase in royalties paid by President commencing 2026 from 15% to 18%
e) A work programme spend of US$11.5m within the next three years which expenditure in any event forms part of the Company's plans and budgeting over that period
f) A reconversion payment of US$2m payable after the said work programme period of three years, such monies anticipated to be made out of cash flows
The new law for Unconventional Concessions also provides for the possibility of obtaining multiple consecutive 10 year extensions to the Concession after 2050, in contrast to the previous law where only one ten year period was permitted.
The current CPR over Puesto Guardian produced by Gaffney, Cline & Associates in December 2014, based on the previous Concession expiring in 2026, gave President 2P Proven and Probable Conventional Oil Reserves of 14.1 MMBbls and 3C Contingent Conventional Resources of 16.5 MMBbl, with the 2P Oil Reserves valued at NPV 10 (net present value discounted by 10%, pre corporation tax) of US$297 million. In light of the changes announced today, an updated CPR is anticipated to be issued shortly.
President continues to benefit from sale prices of its oil at a level of approximately US$70 per barrel together with an additional $3 per barrel for 2015 increased production.
Miles Biggins, Bsc Joint Honours University College London, with 25 years of experience in the oil and gas sector, is a Petroleum Engineer and member of the Society of Petroleum Engineers who meets the criteria of qualified persons under the AIM guidance note for mining and oil and gas companies, has reviewed and approved the technical information contained in this announcement.
Contact:
President Energy PLC
Peter Levine, Chairman +44 (0) 207 016 7950
Miles Biggins, COO +44 (0) 207 016 7950
Ben Wilkinson, Finance Director +44 (0) 207 016 7950
RBC Capital Markets
Jeremy Low, Matthew Coakes, Daniel Conti +44 (0) 207 653 4000
Canaccord Genuity Limited
Henry Fitzgerald-O'Connor +44 (0) 207 523 8000
Bell Pottinger
Gavin Davis, Henry Lerwill +44 (0) 203 772 2500