PPC.L Regulatory News (PPC)

27 September 2012

PRESIDENT PETROLEUM COMPANY PLC

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

Interim Results

President Petroleum (AIM:PPC) the Latin American focussed exploration and production company, announces its interim results for the six months ending June 30, 2012.

Highlights

Corporate

·; Successfully identified opportunities to diversify the Company's asset base

·; Announced post period end, and due to complete shortly, a transformational farm in of two contiguous blocks in Paraguay which are an extension of the proven Olmedo basin that exists on the Argentine side of the border, and are potential company makers

·; In Argentina, post period end, President was awarded two new licences adjacent to our Puesto Guardian concession

Operational

·; First half 2012 average daily production of 312 boepd, split evenly between Argentina and Louisiana

·; June average production of 430 boepd, reflecting production rises in both Argentina and Louisiana

Paraguay (subject to completion of transaction announced 12 September)

·; New country entry, securing operatorship over 16,000 km2 Cretaceous rift basin

·; Will Build critical mass in region

·; The combined blocks have a gross risked recoverable resource potential estimated by President of greater than 150 million barrels, with a net success case NPV10 estimated by President at over US$25 per barrel (thus giving over net US$2 billion of value on that estimated success basis, if PPC earns its full working interests) 

·; Key focus area for President going forward

Argentina

·; First half net production of 155 bopd, with a June average of 235 bopd

·; Average realised prices of US$72 per barrel

·; Drilled 3 wells at Puesto Guardian, with DP 1001 successfully brought onstream, and PEE 1001 and DP 1002 awaiting a frac campaign and side track respectively

·; Preparations for a frac campaign have commenced

·; The results of the wells and other studies have led to a preliminary assessment of additional oil in place in the Cretaceous limestone reservoirs prevalent throughout the concession.

·; Reservoir remodelling and seismic reprocessing continue, which will provide the foundation for further operational activity

Louisiana

·; Continues to provide the company with solid production and cash flow

·; Average production in the period was 157 boepd, predominately oil

·; Average realised prices of US$109 per barrel

·; Incremental opportunities within portfolio to be pursued

Financial

·; Revenue increased by 189% to US$5.0 mln (H1 2011: US$1.7 mln) reflecting the inclusion of Argentina in the asset base from July 2011

• Gross Profit of US$0.3 mln (H1 2011: US$0.5 mln) - gross profit at the Argentine subsidiary is expected to improve as production increases

• Operating loss prior to impairments increased to US$4.0 mln (H1 2011: US$2.5 mln) reflecting the increased size, diversity, and development of the business, and the scaling up of President's technical capability

• Operating loss reduced to US$4 mln (H1 2011: US$15.5 mln), as 2011 included a one-off impairment charge on the Kafoury 3 well in Louisiana

• Capital raising of £6.2 million in February and provision of loan facility enabled President to continue investing in business development and the on-going operational programme at Puesto Guardian

• Cash balance as at 30 June of US$ 2.1 mln (2011 H1: US$23.2 mln)

• On 12 September 2012, the Company announced a proposed fundraising of £30.9 million (approximately US$49.5 million), assuming full take up under the open offer (due to complete 1 October)

·; Levine Capital Management has additionally made available a US$15.0 mln revolving loan facility to President for a further 24 months

Outlook

·; The acquisition of the two blocks in Paraguay has allowed President to realise its strategic ambition of gaining critical mass in one area. It has also provided President with a diversified asset base of high impact exploration in Paraguay complemented by increasing production rates in Argentina through re-development activities and solid production from Louisiana 

Peter Levine, Chairman of President, said:

"The entry into Paraguay, which is a direct result of our activity in Argentina, is in line with our stated strategy of building materiality in a core region and leveraging off our existing knowledge and geological understanding of its producing basin in Argentina. President will diversify its asset base, through high impact exploration in Paraguay, complemented by the re-development activities in Argentina and supported by the high margins achieved in our Louisiana operations. The entry into Paraguay has company making potential and will be the primary focus for the Company. Following completion of the fundraising, President will be funded to complete the seismic campaign on the two new Paraguay blocks and drill the first exploration well to test the high impact prospects identified. President also looks forward to increasing its production in its two core producing areas of Argentina and Louisiana."

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, Matthew Coakes, Daniel Conti +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

Chairman's Statement

Summary

The first half of 2012 was a period of consolidation for President that saw us grow our in-house technical capability and highlight the potential of the Puesto Guardian concession in Argentina through the evaluation of deep gas resources and increased oil in place in carbonate reservoirs. Louisiana continued to provide the company with valuable cash flow. And, as recently announced, President has also leveraged its knowledge of the Argentine Olmedo basin by securing two contiguous exploration blocks in Paraguay which are a direct extension of the proven basin that has produced over 150 mmboe on the Argentine side of the border. This transaction is expected to close in the second half of 2012. Following this acquisition in Paraguay, the company has realised its stated objective of gaining critical mass in one area, and now has an asset with the potential of being transformational for President, with a solid foundation around the reserves and production in Argentina and Louisiana.

Paraguay

Post period end, and subject to completion, President has farmed in to two contiguous blocks in Paraguay which are an extension of the proven Olmedo basin that exists on the Argentine side of the border. The Farm-In Agreement provides for President to earn up to a 59 per cent interest in the Pirity Block from Pirity Hidrocarburos (a subsidiary of PetroVictory); and up to a 60 per cent interest in the Demattei Block from Crescent Global Oil Paraguay S.A. (a subsidiary of Crescent Oil LLC) in the Chaco region of Paraguay. The combined blocks have a gross risked recoverable resource potential of greater than 150 million barrels, with a net success case NPV10 estimated at over US$25 per barrel (President estimates).

This is a significant transaction and the primary focus area for the Company, targeting an enormous Cretaceous rift basin, in a country which is receptive to foreign investment. The transaction is a strategic fit for President, as the petroleum system is well known to the Company through its operations across the border in Argentina. The transaction builds critical mass in the region while providing entry into a new country, and utilises President's expanding technical and operational team.

Paraguay is a constitutional republic, is open for business and has an attractive hydrocarbon law, with a sliding scale royalty with a maximum of 14 per cent. and a 10 per cent corporate tax rate. Paraguay is enjoying strong economic growth and inward investment such as a Rio Tinto aluminium smelter.

Argentina

President and it partner in Puesto Guardian have continued with the field development work that began in 2011 with the announcement of drilling results on PEE-1001, DP-1001 and DP-1002. Production rates have been lifted by successfully bringing the DP-1001 well on-stream, while the PEE-1001 well and DP-1002 well are part of a future frac, sidetrack and work over programme. First half net production of 155 bopd was achieved, with a June average of 235 bopd. Realised prices averaged US$72 per barrel.

Reservoir remodelling and seismic reprocessing continue which will provide the foundation for the development of drilling activity in 2013. Preparations for a work over and frac programme have commenced, with the first frac currently timed for Q4, which will target the bypassed potential reserves that we have identified in the Pozo Escondido and Dos Puntitas fields.

Post period end President has been awarded two new licences adjacent to the Puesto Guardian concession. This expands President's asset base in the Salta region, protecting the potential upside from the significant deep Palaeozoic gas prospective resources identified at Puesto Guardian as highlighted in the January 2012 Gaffney Cline report. President continues to make progress in this country and continues to have a its strong working relationship with the government of Salta Province.

Louisiana

Louisiana continues to provide the Group with solid production and cash flow. Average production in the period was 157 boepd (predominately oil), with June production at almost 200 boepd, reflecting successful workover activity in the period. Average realised prices were US$109 per barrel.

Australia

President's two blocks in Australia are considered legacy assets, albeit with some potential for further work, which the Company is evaluating with ongoing studies and initiatives. As the Australian assets are not core to the central strategy of the Company, President will seek to manage its exposure to future capital expenditure.

Financials

• Revenue increased by 189% to US$5.03 mln (H1 2011: US$1.74 mln) reflecting the inclusion of Argentina in the asset base from July 2011

• Gross Profit US$0.3 mln (H1 2011: US$0.5 mln). In Argentina, average production in the period of 160 bopd was insufficient to cover the fixed cost element of field operations. Gross profit in the Argentine subsidiary is expected to improve as production increases.

• Operating loss prior to impairments increased to US$4 mln (H1 2011: US$2.5 mln) reflecting the increased size and diversity of the business, business development and the scaling up of President's technical capability

• Operating loss reduced to US$4 mln (H1 2011: US$15.5 mln), as 2011 included a one-off impairment charge on the Kafoury 3 well in Louisiana

• Capital raising of GBP 6.2 million in February and provision of loan facility enabled President to continue investing in business development and the on-going operational programme at Puesto Guardian

• On 12 September 2012, the Company announced a proposed fundraising comprising a firm placing of 28,962,500 New Ordinary Shares, a conditional placing of 86,887,500 New Ordinary Shares, an open offer of up to 19,998,541 New Ordinary Shares and a subscription of 18,750,000 New Ordinary Shares, in each case at 20 pence per share to raise £30.92 million (approximately US$49.47 million), assuming full take up under the open offer.

• Levine Capital Management has additionally made available a US$15 mln revolving loan facility available to President for a further 24 months.

Outlook

The entry into Paraguay, which is a direct result of our activity in Argentina, is in line with our stated strategy of building materiality in a core region and leveraging off our existing knowledge and geological understanding of its producing basin in Argentina. President will diversify its asset base, through high impact exploration in Paraguay, complemented by the re-development activities in Argentina and supported by the high margins achieved in our Louisiana operations. The entry into Paraguay has company making potential and will be the primary focus for the Company. Following completion of the fundraising, President will be funded to complete the seismic campaign on the two new Paraguay blocks and drill the first exploration well to test the high impact prospects identified. President also looks forward to increasing its production in its two core producing areas of Argentina and Louisiana.

Peter Levine

Chairman

26 September 2012

Notes to the Consolidated Accounts

Six months ended 30 June 2012

1 Nature of operations and general information

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

President Petroleum Company 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 the USA and Argentina. The Group also has onshore exploration assets in the USA and Australia. The address of President Petroleum Company PLC's registered office is 13 Regent Street, London, United Kingdom. President Petroleum Company 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 25 September 2012. The financial information for the year ended 31 December 2011 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 2012 and 30 June 2011 was neither audited nor reviewed by the auditor. The Group's statutory financial statements for the year ended 31 December 2011 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified.

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 2011, which have been prepared under IFRS as adopted by the European Union. These financial statements have been prepared under the historical cost convention, except for derivative financial instruments which have been measured at fair value. The interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2011. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these interim financial statements.