PPC.L Regulatory News (PPC)

27 September 2022

PRESIDENT ENERGY PLC

("President", "the Company" or "the Group")

Unaudited Half Year Results for H1 2022

Current trading

President (AIM:PPC), the oil and gas upstream company with a diverse portfolio of production and exploration assets focused primarily in Latin America, announces its unaudited half year results for the six months ended 30 June 2022.

Selected Results Summary

Corporate and Financial Summary

· Profit after tax before non-cash items* of US$5.6 million (H1 2021 loss of US$2.1 million)

· Group turnover of US$17.7 million (H1 2021 US$17.1 million)

· Free cash flow from core operations of US$6.8 million up 10% over the same period in 2021 (H1 2021 US$6.2 million)

· Adjusted EBITDA of US$5.7 million up 25% over the same period in 2021 

· Third party financial borrowings in Argentina non-recourse to Group of US$22.9 million (H1 2021 US$5.9 million) with such increased borrowings arising from material new capex spending, including drilling and investments made in Argentina. All debt in Argentina being serviced in accordance with terms. Group debt of US$11.3 million (H1 2021 US$11.4 million) to the UK parent is covenant lite, long-term debt from IYA, an affiliate of the largest shareholder and Chairman under an open line of credit

· Mark to market value of holding in Atome Energy PLC as at 20 September 2022 of £9.8m (2021: nil) all of which is not shown in the accounts due to the vagaries of accounting reporting standards

· Due to currency exchange restrictions in Argentina, the amount paid back to the UK by its Argentina subsidiary was, and still is, limited to servicing interest for part of the intercompany loan with no capital repayments currently permitted by law. By way of illustration, currently this monthly interest payment back to Group amounts to some US$ 115k

Operational Summary

· Average Group net daily production in the period of 1,969 boepd, down 26% on the previous year, impacted by production outages in Argentina, delay in new wells coming on-stream and Louisiana being offline for more than half of the period

· Group production split 69% oil and 31% gas (H1 2021: 64% oil and 36% gas)

· Group well operating costs per boe in the core Argentine business increased by 27% over same period last year due to lower production

· In Louisiana, disappointing issues with workovers and procuring of equipment resulted in no material contribution to results in the period with wells shut-in for more than half the period and sub-optimal flow levels for a longer period. Accordingly, during that period of inactivity, no monies were repaid to the Group and in fact, over US$ 1 million was paid by the Group out of central resources in connection with workover activities

· In Paraguay, work continued in relation to preparation for drilling of the exploration well with our partner CPC, the State Energy Company of Taiwan

· Green House Capital has been created with the purpose of becoming the alternative energy division of President. That division has taken first steps with potential Lithium investment

· Average price per barrel received during the Period was US$ 64.75 in Argentina and US$104.44 in Louisiana

Current trading and developments

· Further to the recent fire in our Puesto Flores Facility in Rio Negro Argentina as announced on 11 August, the disruption has impacted on production from the Puesto Flores oil field in August and September with full and normal production there expected in the first part of October. The Company has insurance coverage and there were no injuries to personnel

· All other of the Company's fields in Rio Negro, including gas production, and Puesto Guardian have continued to produce normally without disruption, with Salta, Argentina, production for August showing an increase of over 70% compared to the level of production as at 1 January 2022

· Sales price for oil in Argentina improving with current price receivable in Rio Negro approximately US$65 per barrel and in Salta US$68. The recent reduction in international oil prices has to date not affected these levels

· At the current time, the Company has no visibility as to when principal loan repayments can start to be made to the Group from Argentina with timing completely out of the hands of President

· In Louisiana full production is now expected to resume in October after final installation of the necessary gas lift equipment with the wells having being offline for approximately 90% of the time since the start of H2 2022 due to complications in finalising agreements for the gas buyback and sourcing available barges. Once online, profits can start to be repatriated to the Group

· In September new management in Louisiana have been installed at operational level which has started to have a noticeable effect in moving things forward. Until such a time as full production is re-started it is imprudent to project steady state levels of flow as this will be the first time that gas lift will be utilised in the Triche well albeit, in theory, this is designed to stabilise and enhance production levels and mitigate the annoying stop start of recent periods. 

· In Paraguay, preparations for the new exploration well have continued satisfactorily with all contractual payments by the partner being paid on time and good relations enjoyed. The position with the Rig contract remains to be fully resolved due to internal complications with the current owner although this is expected to be resolved by the end of November. At that stage, a spud date will be determined

· Green House Capital having taken first steps in relation to Lithium in Argentina and is now seeking to expand its interests in alternative energies and related technologies outside of that country . This is an ongoing process.

· The name of the Company is proposed to be changed to Molecular Energies PLC together with consolidation of shares and increase in authorities. General Meeting of shareholders due to be held on 29 September 2022.

Commenting on today's announcement, Peter Levine, Chairman said:

"President has delivered a period of solid profits but we recognise the difficulties of the Group's current reliance on cashflow from its Argentine centric main business when it is not possible to repatriate such profits to Group level. The formation of Green House Capital, which intends to replicate the success of the Atome transaction for the benefit of President shareholders, is the first step in a diversification programme that is subject to active internal debate.

"The disruption in hydrocarbon production in Argentina and Louisiana has not in any event been helpful to our existing business the effect of which is being felt in the second part of this year. I have ordered action and change at country, field and local management level to get us back on a consistent growth path which is a necessity in any event. Notwithstanding my continuing financial support for what will soon be Molecular Energies through my private investment group, reducing the Group debt level including at parent level is a priority over the next months. This will place the Group in a stronger position whilst supporting its evolution into more fertile fields of business where the prospects are re-invigorating and exciting after the frustrating and unrewarding battles of the last years.

"The change of name, image and related matters including the creation of Green House Capital are evidence of our determination to carry out the evolution as soon as possible. The appreciation of approximately 30% in the Atome Energy share price since the start of the year achieved with the right management team we put in place is beneficial to our investment assets and is a precedent pointing to our capability to enhance shareholder value by our evolved strategy.

"The Group has a solid base, is profitable on a post-tax basis excluding non-cash items and is operationally cash-flow positive. As the board continues to implement its new strategy we look forward to our future as Molecular Energies PLC capitalising and repeating the success of Atome with a significant originated value generation for shareholders".

Peter Levine

Chairman

27 September 2022

* Adjusted EBITDA means Operating Profit before depreciation, depletion and amortisation, adjusted for non-cash share-based expenses and certain non-recurring items. Non-recurring items include where relevant workovers.

* Profit after tax after non-cash items which comprise depletion, depreciation, amortisation, impairment, non-operating gains/losses and deferred tax.

* Cost per boe metrics are adjusted for costs management consider are exceptional and non-recurring in nature

* Free cash flow from core operations is defined in the 2021 Annual Report. The treasury income which has been included is the exchange (losses)/gains on cash and cash equivalents as detailed in the Consolidated Statement of Cashflows

This announcement contains inside information for the purposes of article 7 of Regulation 596/2014.

Notes to Editors

President Energy is an oil and gas company listed on the AIM market of the London Stock Exchange (PPC.L) primarily focused in Argentina, with a diverse portfolio of operated onshore producing and exploration assets.

The Company has operated interests in the Puesto Flores, Estancia Vieja, Puesto Prado and Las Bases Concessions, and the Angostura exploration contract, all of which are situated in the Río Negro Province in the Neuquén Basin of Argentina and in the Puesto Guardian Concession, in the Noroeste Basin in NW Argentina. Alongside this, President Energy has cash generative production assets in Louisiana, USA and further significant exploration and development opportunities through its acreage in Paraguay and Argentina.

It has also a 27.9% investment interest in Atome Energy PLC a green hydrogen and ammonia producer whose shares are traded on AIM of the London Stock Exchange.

With a strong strategic and institutional base of support, including the international commodity trader and logistics company Trafigura, an in-country management team as well as the Chairman whose interests as the largest shareholder are aligned to those of its shareholders, President Energy gives UK investors access to an energy growth story combined with world class standards of corporate governance, environmental and social responsibility.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR"). The person who arranged for the release of this announcement on behalf of the Company was Peter Levine, Chairman.

For further information, please visit www.presidentenergy.com or contact:

Glossary of terms

Boe(pd) Barrels of oil equivalent (per day)

Bopd Barrels of oil per day

DDA Depletion, depreciation and. amortisation

EV Enterprise value meaning market capitalisation plus debt

MMbbls Million barrels of oil

MMboe Million barrels of oil equivalent

MMBtu Million British Thermal Units (gas)

M3/d Cubic metres of production of gas or oil per day (as the case may be)

Condensed Consolidated Statement of Comprehensive Income

Six months ended 30 June 2022

Condensed Consolidated Statement of Financial Position

As at 30 June 2022

Condensed Consolidated Statement of Changes in Equity

Condensed Consolidated Statement of Cash Flows

Six months ended 30 June 2022

Notes to the Half-Yearly Financial Statements

Six months ended 30 June 2022

1 Nature of operations and general information

President Energy PLC and its subsidiaries' (together, "the Group") principal activities are the exploration for and the evaluation and production of oil and gas.

President Energy PLC is the Group's ultimate parent company. It is incorporated and domiciled in England. The Group has onshore oil and gas production and reserves in Argentina and the USA. The Group also has onshore exploration assets in Paraguay and Argentina. The address of President Energy PLC's registered office is Carrwood Park, Selby Road, Leeds, LS15 4LG. President Energy PLC's shares are listed on the Alternative Investment Market of the London Stock Exchange.

These condensed consolidated interim financial statements (the interim financial statements) have been approved for issue by the Board of Directors on 26th September 2022. The financial information for the year ended 31 December 2021 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information for the six months ended 30 June 2022 and 30 June 2021 was neither audited nor reviewed by the auditor. The Group's statutory financial statements for the year ended 31 December 2021 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006

2 Basis of preparation

The interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2021, which have been prepared under IFRS.

These financial statements have been prepared under the historical cost convention, except for any derivative financial instruments which have been measured at fair value. The accounting policies adopted in the 2022 interim financial statements are the same as those adopted in the 2021 Annual report and accounts.