PPC.L Regulatory News (PPC)

30 April 2014

PRESIDENT ENERGY PLC

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

Results for the year ended 31 December 2013

President (AIM: PPC), the oil and gas exploration and production company focused on Paraguay with producing assets in Argentina and Louisiana, and exploration assets in South Australia, announces its full year audited results for the year ended 31 December 2013.

Highlights

· First 3D seismic in Paraguay completed along with extensive 2D - new potential Paleozoic play system identified

· Three RPS independently reviewed 2014 drilling target prospect areas in Paraguay estimated to have gross mean unrisked Prospective Resources of 1,093 mmboe, which net to President equates to 647mmboe of mean unrisked Prospective Resources and mean risked of 130 mmboe*

· RPS mean success case outcomes for each prospect net to President of US$11.7 billion NPV10 unrisked value; risked US$2.4 billion for the 2014 drilling target prospect areas*

· Conditional farm in to Hernandarias block in Paraguay

· Schlumberger Integrated Project Management contracted to manage 3 well drilling campaign

· International Finance Corporation, part of the World Bank Group, becomes strategic investor

· Total hydrocarbon production up 18% year-on-year, net revenue up 19% and gross profit up 63%

· Cash balances of US$10 million at the year end with US$50 million fund raise subsequently completed in February 2014

· Board strengthened by appointments of Dr. Richard Hubbard (Chief Operating Officer), Miles Biggins (Commercial Director), and Dr. David Jenkins (Non-Executive Deputy Chairman)

Operations

Paraguay

· 791 km2 of 3D and 1,054 km of 2D seismic data acquired across 3 Concession areas

· Over 25 structural prospects and leads identified

· RPS reviewed results of seismic over 5 high graded prospects

· Schlumberger Integrated Project Management contracted to manage 3 well drilling campaign

· Preparation now almost complete for commencement of three well drilling campaign

· QGOG hired as drilling contractor (2014). Rig has mobilised and spud of first well expected in May

· Development of in country team and resources to execute operational plans

· Building strong relations with Paraguayan authorities, service providers, and other stakeholders

· Conditional farm in to Hernandarias block

Argentina

· Oil production up 7% to 192 bopd (2012: 178 bopd) and average realised prices have been stable at US$74 per barrel (year-end US$77 per barrel)

· Fracking programme completed, designed to test the flow rates from carbonate reservoirs. The well performance data, now observed, demonstrate that the stimulation campaign has proven successful

· Two exploration concessions won at auction in 2012 subject of continued G&G work

· Tentative signs of improvement in the oil and gas investment climate

Louisiana

· Louisiana continues to provide solid profits and cash flow

· Production increased 29% to 236 boepd (2012: 183 boepd), resulting in an 18% decrease in well operating costs per barrel

· Current production over 200 boepd

· Oil ratio in Louisiana still at 88% with premium to WTI still being obtained

· Average realised oil price during the year of US$106 per barrel

· Exploration leads identified

Corporate & Financial Highlights

· Net revenue for the year increased by 19% to US$13.4 million (2012: US$11.3 million)

· Gross profit increased by 63% to US$5.3 million (2012: US$3.2 million)

· 2013 placing to the IFC followed by 2014 wider share placing and open offer providing a combined US$65.0 million

· Year-end cash of US$10.0 million (2012: US$17.5 million). Existing US$15.0 million loan facility remains undrawn

Outlook

· 3 well drilling campaign in Paraguay to commence in May 2014

· Argentina and Louisiana continue contribution to cash flow

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

"Presidentis looking forward to the exploration drilling in Paraguay this year as we target the significant resources identified by last year's successful seismic programme. Argentina and Louisiana continue to contribute to the Group production and cashflow while Argentina has the potential to deliver future production and reserve growth.

 I would like to express my gratitude to my colleagues, management and staff who, from a standing start 18 months ago, have helped bring the Paraguay programme to the point of first well spud. Furthermore I would like to thank all of our shareholders and assure them that we remain fully focused in this critical year."

* President has right to earn up to 59% in Pirity Concession which will be attained part way through its 2014 drilling campaign. President also has right to earn up to 60% of Demattei Concession. All figures assume full earn in on farm-ins to Pirity and Demattei. The total NPV10 numbers shown above reflect success case standalone economics for each prospect, which are then aggregated.

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 +44 (0) 207 861 3232

Gavin Davis, Henry Lerwill

The following financial statements are extracted from the Company's audited consolidated accounts for the year ended 31 December 2013. These accounts will be included in full in the Company's Annual Report which will be posted to shareholders in May 2014 and will be made available on the Company's website www.presidentenergyplc.com at the same time.

Chairman's Statement

Summary

2013 was an operationally critical and ultimately successful period for President, largely focused on Paraguay. Since the 2012 farm‑ins to the Pirity and Demattei concessions in Paraguay, President has completed an extensive seismic campaign to evaluate the basin potential and define high graded drilling prospects. Preparation of drilling sites commenced at the end of 2013, and we are now at the point of commencing the 2014 drilling campaign.Argentina and Louisiana continue to provide a core foundation of reserves and production for the Company, with the potential for further production growth, particularly in Argentina.

Paraguay

The Paraguayan concessions combine to cover a substantial portion of the prospective Pirity Basin (16,000 km2) in the Chaco, which is virtually undrilled and believed to be a direct extension of the proven Olmedo basin on the Argentine side of the country border. Since the 2012 farm‑ins, President has completed an extensive seismic campaign to evaluate the basin potential and define high graded drilling prospects. Specifically, President, as operator, has acquired 791 km2 of 3D and 1,054 km of 2D seismic. Geological and geophysical studies were also completed. Preparation of drilling sites commenced at the end of 2013, ahead of the commencement of the three exploration well drilling campaign in 2014.

In January 2014, President announced it has been granted an option at no cost to a staged farm‑in (as operator) of up to an 80 percent participating interest in the Hernandarias Block in the Chaco Region of Paraguay. A provisional concession contract in respect to the Hernandarias Block has been approved by the relevant Senate Commissions in Paraguay and is currently subject to Paraguayan Government and other approvals. The Hernandarias Block covers a very large area (18,507 km2) and is located immediately to the north of President's existing Paraguayan concessions. Together with the other Paraguayan concessions, on completion of the Hernandarias Farm‑In Agreement, President would operate a contiguous land block of 34,507 km2 covering almost the entire prospective Pirity Rift Basin thereby securing a basin controlling position in the Chaco region of Paraguay.

The new seismic data identified two structural play fairways each containing two petroleum systems. The first is the Cretaceous petroleum system, known from old 2D data and an extension of the Palmar Largo trend in Argentina. The second is a newly identified underlying Paleozoic petroleum system that has charged the large condensate producing fields in neighbouring southern Bolivia and north‑western Argentina. Several of the Pirity Rift Basin prospects benefit from the possibility of receiving a double charge from both play systems, thereby reducing source risk. This double play system makes it possible for President's Pirity Rift Basin to develop into a large scale petroleum province.

President has made extensive preparation for the 2014 campaign. It has entered into a contract with Schlumberger for the provision of project management and integrated drilling and completion services, including well site supervision and engineering. President has also signed a contract for a rig to drill the 2014 exploration programme. The contractor is Queiroz Galvão Óleo e Gás S.A., one of the largest drilling contractors and production services providers in Brazil. The top drive rig is capable of drilling down to depths of 5,000 metres which is adequate to explore the deeper Paleozoic play identified in President's seismic survey. The first well is scheduled to spud, weather permitting, by the end of May 2014.

In January 2014, President announced the results of an independent review of its Prospective Resources carried out by the international consultancy RPS over three prospect areas. The RPS assessment is based on the results of the extensive 2013 3D and 2D seismic campaigns conducted by President. Specifically, RPS audited the volumetric and economic modelling of three prospect areas which contain five culminations with potential for targeting multiple ('stacked') reservoirs in two of these culminations, Jacaranda and Tapir, as currently mapped. The volumetric and economic models have been developed as standalone cases and have no inter‑dependence (including economies of scale or timing of discovery and development). These three areas are estimated to have gross mean unrisked Prospective Resources of 1,093 mmboe, which net to President equates to mean net unrisked Prospective Resources of 647 mmboe and mean net risked Prospective Resources of 130 mmboe (both assuming full earn‑in on farm‑in). All volumes quoted represent the aggregated mean outcome assuming all eight prospect targets become discoveries and should not be taken as the mean expectation from the drilling campaign which will most likely contain some success and some failure in individual prospect targets.

Argentina

Consistent with other operators in Argentina, President's activities were characterised by restrained capital expenditure, reflecting a cautious view of the political and economic environment regarding investment. However, recently there are certain signs that the environment may be changing for the better. During the year a proof of concept well stimulation campaign was concluded, targeting two old shut in wells and one current producer. The programme was designed to test the flow rates from carbonate reservoirs which has historically not been targeted for production or indeed reserve attribution. The well performance data now observed, demonstrate that the stimulation campaign has proven successful. With a year-end realised oil price of US$77 per barrel and work over and stimulation costs at approximately US$1 million per well, the initial production rates and normal well declines observed on both the carbonate and A6 intervals in Dos Puntitas and Pozo Escondido are commercial. Furthermore, beam pumps will be installed to increase production as the wells decline. Average daily production for the year increased by 7% against the previous year and oil prices held firm at an average of US$74 per barrel.

Louisiana

Operations in East White Lake and East Lake Verret continue to provide President with solid cash flow which covers the majority of the group overhead. Production is up 29% to 236 boepd (2012: 183 boepd) for the year. Current production is 204 boepd. Oil prices have remained strong, and the bias towards oil production continues at 88% (2012: 88%). New exploration leads have also been identified.

Australia

As we have grown our presence in South America the Australian assets have taken lesser priority; nevertheless work continues to explore the potential of our PEL 82 licence and President has commissioned AusGeos Pty, an experienced Australian independent geological and geophysical consultancy, to undertake seismic reprocessing of the existing 3D data. A report on their findings has indicated a new unconventional play in the block with significant prospective resource of 904 bcf (P50, best estimate). Notwithstanding this, President is taking a conservative step by step view of the acreage and discussions are ongoing to find industry participation for possible further activity on PEL 82. During the year, President requested and was granted a one year suspension of the PEL 82 licence thus extending its expiry to September 2015.

Corporate

During 2013 we were very pleased to have brought the International Finance Corporation ("IFC") in as a strategic investor. IFC have invested approximately US$24 million into President shares (approximately US$15 million in 2013 and approximately US$9 million as part of a 2014 fund raising), and have the right to nominate a non-executive director. The IFC funds are to be used for the 2014 Paraguayan drilling campaign, and to finance environmental and socially responsible operations.

Post year end, President raised £31.2 million (of which £5.625 million came from IFC) to fund the upcoming drilling programme in Paraguay.

Financial Review

2013 has been a positive year for the Company with production increases of 18% leading to revenue increases of 19% and gross profit of US$5.3 million (2012: US$3.2 million). Capital spend in Paraguay has been the main focus of the year with US$24.7 million being spent across the Group on exploration and evaluation assets

Production and reserves

Reserve movements in the USA have been triggered by an independent reserve report.

Peter Levine

Chairman

29 April 2014

Detailed Financial Review

Revenue increased 19% to US$13.4 million (2012: US$11.3 million) reflecting the 29% increase in USA production and a 7% increase in production in Argentina. Production in the USA increased to 86,300 mboe (2012: 66,800 mboe) with the more valuable oil component remaining constant at 88% of production (2012: 88%). The increase in USA production is attributable to the continued programme on the East White Lake field of workovers, plugbacks and drilling proved undeveloped locations. Production at the Puesto Guardian concession in Argentina increased 7% on the prior year as a consequence of the workover and frac programme undertaken on three wells leading to an increase in Argentine revenue of US$5.2 million (2012: US$4.8 million).

Cost of sales remained flat at US$8.1 million (2012: US$8.1 million) despite the 18% increase in Group production primarily due to a reduction in workover activity in Argentina which resulted in lower well operating costs, down 12%. Gross Profit increased 63% to US$5.3 million (2012: US$3.2 million).

Administrative expenses have reduced by 11% to US$7.6 million (2012: US$8.5 million) partly because of the capitalisation of overhead costs that are directly attributable to the concessions, following the greater focus of activity in Paraguay in particular. The costs of the business have increased in line with the level of activity in Paraguay where, as operator, we have undertaken a significant seismic campaign and are now gearing up to the drilling phase. The main components of administrative expenses are staff costs of US$4.4 million (2012: US$3.6 million) and share-based payments of US$1.3 million (2012: US$0.6 million).

Operating loss of US$2.8 million (2012: US$5.3 million) reflects the improvement in gross profit and a US$0.5 million impairment charge for the period relating to the carried costs for the PEL 132 licence that was relinquished in the year. Finance costs of US$0.8 million (2012: US$1.6 million) relate to interest and facility fees on a US$15.0 million loan facility, provided by IYA Global Limited (IYA). The loan facility was undrawn at the year-end but was utilised during the period to allow the Company to extend its Paraguay seismic programme, the results of which can be seen in the RPS Prospective Resource report published in January.

In December 2013 the Company announced an initial equity subscription by the International Finance Corporation (IFC) of US$15 million. The equity raise coupled with the ongoing seismic and pre-drilling payments are reflected in the year-end cash balances of US$10.0 million (2012: US$17.5 million). Non-current assets increased to US$95.9 million (2012: US$75.6 million) as a consequence of US$28 million of additions, which mostly relate to Paraguay, but reflecting also a US$6.6 million non-cash exchange rate adjustment because of the devaluation of the Argentine Peso and Australian Dollar against the United States Dollar in the year. Net assets increased to US$95.7 million (2012: US$86.9 million)

 Consolidated Statement of Comprehensive Income

Year ended 31 December 2013

Consolidated Statement of Financial Position

31 December 2013

Consolidated Statement of Changes in Equity

Year ended 31 December 2013

Attributable to the owners of the Company

Consolidated Statement of Cash Flows

Year ended 31 December 2013

Notes

1 Accounting policies and basis of preparation

The financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 31 December 2013 or 2012 but is derived from the 2013 accounts.

A copy of the statutory accounts for the year to 31 December 2012 has been delivered to the Registrar of Companies, and is also available on the Company's web site. Statutory accounts for 2013 will be delivered in due course. The auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 2012 nor 2013.

Whilst the financial statements from which this preliminary announcement is derived have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted for use in the EU, this announcement does not itself contain sufficient information to comply with IFRS. The Annual Report, containing full financial statements that comply with IFRS, will be sent out to shareholders in May 2014.

The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Therefore, in the preparation of the 2013 financial statements they continue to adopt the going concern basis.

At 31 December 2013, 15,833,098 (2012: 8,388,023) weighted potential ordinary shares in the Company which underlie the Company's share option and share warrant awards, and which may dilute earnings per share in the future, have not been included in the calculation of diluted earnings per share because they are anti-dilutive for the years to 31 December 2012 and 2013.

6  Segment reporting

Segment assets can be reconciled to the Group as follows:

An amount of US$12.5 million (2012: US$14.6 million) is carried in relation to the Group's interests in Australia. An impairment charge of US$0.45 million has been taken for the historical expenditure on PEL 132 which was relinquished in the year. The remaining 2013 intangible asset relates to the cost of exploration expenditure on the PEL 82 licence area. President has reprocessed the existing 3D seismic and extended the expiry date of the licence in the year, following which efforts have recently recommenced to find industry participation for further activity on the exploration licence. Early stage discussions are ongoing, the results of which will be a key factor in determining further activity. Should ongoing efforts and discussion lead to no further activity on the licence the carrying amount will be written off in the future periods under the Group's accounting policies.

7 Going concern

The Group's cash position at the year-end is US$10.0 million (2012: US$17.5 million). A further US$50.8 million was raised in February 2014 to fund the drilling campaign in Paraguay. Additionally, a loan facility of up to US$15.0 million has been made available to the Group, which is currently undrawn. The principal uncertainty in the Group's forecasts and projections relates to the level of future production and consequent revenues and the estimates of future drilling costs. The Group consults with industry specialists to ensure operational projections are accurate.

The Directors believe that the Group will be able to operate within its existing committed funding and to meet all commitments as they fall due. The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

8 Subsequent events

On 10 January 2014, the Company announced that, subject to Governmental and regulatory approvals, it has been granted an option at no cost to the staged farm-in of up to an 80% participating interest in the Hernandarias Block in the Chaco Region of Paraguay as operator. Subject to exercise of the option, on completion of the Agreement, President will fund the first US$17 million of a work programme, including one well drilled to test the Devonian at any time within the three year exploration phase of the Concession Contract (the period starts upon the award of the Concession Law). No additional consideration or back costs are payable by President. The Hernandarias Block covers a very large area (18,507 km²) and is located immediately north of President's existing Pirity and Demattei Concessions.

In January 2014, the Company published the outcome of an independent audit of Prospective Resources carried out by the international consultancy, RPS, over its 2014 drilling target prospect areas in Paraguay. The report demonstrates the opportunity to open up a significant new hydrocarbon province.

On 24 February 2014, the Company announced the approval of all resolutions at the General Meeting held that day sanctioning the allotment of new shares under the Placing and Open Offer made earlier in the month. The Company successfully raised US$50.8 million in cash which resulted in 89,031,876 new shares being admitted on AIM pursuant to the Placing and Open Offer. Details of the dealings by directors are provided in the Directors' Remuneration Report. The funds raised will be used to fund the 2014 exploration drilling campaign in Paraguay.

On 24 March 2014, the Company announced that it had entered into a firm drilling contract with Queiroz Galvão Óleo e Gás, one of the largest drilling contractors and production services providers in Brazil, for its 2014 drilling campaign in Paraguay. The well is scheduled to spud by the end of May 2014.

Glossary