8 Jan 2015 07:00
08 January 2015
PRESIDENT ENERGY PLC
("President" or "the Company")
LOUISIANA UPDATE
Highlights
· In 2014 President's Louisiana operations generated an estimated operating profit of approximately US$5m (subject to audit) with an average net production level of 225 boepd and a 2014 exit rate of 230 boepd
· Production and revenue remained robust in 2014, with effect of lower oil prices mitigated by new producing wells and low operating expenses
· Non-operated carried producing well Eagle Crest is performing strongly, with current gross production of approximately 1,000 boepd generating solid revenue
· Prospects for 2015 are encouraging, with increased revenue from existing carried producing wells coming into play during the year
2014 was another solid year for President's Louisiana operations with an estimated operating profit, subject to audit, of approximately US$5m, with an average production level of 225 boepd and a 2014 exit rate of 230 boepd. The effect of lower oil prices is being mitigated by reduced operating expenses, the continued utilisation of tax losses and new producing wells.
Despite the lower oil price environment, prospects for 2015 are encouraging. The resilience of our operations is largely due to the present and forthcoming contributions from two existing non-operated carried producing wells, one at East White Lake field and the other at East Lake Verret, which are expected to off-set the decrease in revenue due to lower oil prices.
In particular, the Eagle Crest well at East Lake Verret is performing strongly, with gross production of approximately 1,000 boepd generating solid revenue. This revenue is set to increase further as a result of the favourable terms agreed as part of the farm-out announced in the September 2014 Production Update. The farm-out terms provided for President to be fully carried for all drilling expenses, to receive a 3% gross royalty override ("GRO"), a further 12% working interest on pay out of a capped level of drilling costs, and fees from an underlying Production Handling Agreement. Currently, President benefits from the GRO and receives a net contribution of USD 18,000 per month for processing facility fees. At current production levels it is expected that President will become entitled to its further 12% working interest, in addition to the GRO, in mid 2015. This is set to increase President's share of production, providing the levels remain the same, by approximately 120 boepd, taking the effective total to over 150 boepd, including the GRO, from a well which the Company was fully carried on.
President continues to benefit from the accrued tax losses on its Louisiana Operations which means the effective Federal and State corporate tax rate remains zero. This position is expected to be maintained for approximately three years, thereby ensuring cash-back to President is maximised. Return from the Louisiana operations has been further enhanced through the rationalisation and streamlining of management expenses in 2014, adding US$200,000 per annum to the bottom line.
An update on the Company's Argentina operations, giving a review of 2014 and the outlook for 2015, is expected to be issued in February 2015. Realised prices in Argentina remain at present robust at over USD77 per barrel.
Peter Levine, Chairman, commented:
"Louisiana continues to be a solid cash generator for the Group. Whilst these assets are non-strategic compared to President's primary focus in Paraguay and Argentina, they generate useful revenue for the Company, further enhanced by various beneficial factors including farm-out agreements and the Company's tax position.
With additional production on the horizon, and having made in country management cost savings, 2015 will be a year of looking to actively manage and develop further organic opportunities within the Louisiana portfolio without taking concomitant risks."
Miles Biggins, BSc Joint Honours, University College London, with 22 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
John Hamilton, CEO +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
Tim Redfern, Henry Fitzgerald-O'Connor +44 (0) 207 523 8000
Bell Pottinger
Gavin Davis, Henry Lerwill +44 (0) 203 772 2500