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President Energy PLC (PPC)

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Wednesday 26 September, 2018

President Energy PLC

Interim Results for H1 2018

RNS Number : 9353B
President Energy PLC
26 September 2018
 

 

 

26 September 2018

PRESIDENT ENERGY PLC

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

Interim Results for H1 2018

President (AIM:PPC), the oil and gas upstream company, announces its unaudited interim results for the six months ended 30 June 2018.

 

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

"The successful results for H1 2018 clearly demonstrate major advances in all key performance indicators, emphasising the substantial and rapid progress being made by President.  

The first three months of H2 2018 already demonstrate a substantial improvement on H1 with turnover, operating profit as well as EBITDA all showing material increases from the first six months as we incrementally benefit from consistently higher average production levels, improving operational efficiencies and economies of scale.

We further look forward to the completion of our acquisition of the Puesto Prado and Las Bases Concessions in Rio Negro Province, Argentina which is projected to take place before the year end. These would provide President not only with additional production from the start of 2019 together with sub-surface potential upside but also and importantly over 60km of gas pipeline infrastructure to deliver gas direct to market from those Concessions from the new year as well as commencing to unlock the gas potential of our Estancia Vieja field from that time.

Whilst there has been recent turbulence in the macro-economic environment in Argentina, President is not experiencing any material adverse cash impact as a dollar denominated business and as a strong producing strongly supported player in the Argentine market is alert to any opportunities that may arise in our sector.  

Accordingly, we view the future with growing confidence focusing on an aggressive growth model, expanding organically and by way of the right accretive acquisitions founded on the key tenets of profitable production barrels, cash flow and concentration on margins whilst at the same time progressing our high impact exploration prospects."

Group Summary

HI 2018 Highlights

·      Group turnover in H1 2018 increased by over 275% against the same period in 2017 to US$21.9 million, exceeding the Group turnover for the entire 12 months of 2017 by some 20%

·      Adjusted EBITDA for the period (after Group G&A) increased by US$7.5 million to a positive US$6.1 million moving from a H1 2017 loss of US$1.4 million

·      Group operating profit of US$5.3 million after all administration expenses and workovers but before depreciation, depletion and amortisation

·      Strong financial and trading position enabling President to self-fund its aggressive capex programme, all fields making profitable contributions to Group, sales prices stable and no material negative cash impact from Argentine currency fluctuations with debt serviced and the modest bank debt being repaid at a rate equivalent to US$2.4 million per year

·      Average Group production in period increased by 199% over same period last year to 2,064 boepd (H1 2017: 691 boepd) notwithstanding some disruption to production throughout the period affecting averages caused by the extensive workover programme in Argentina and also prolonged flooding in Louisiana at the start of the year

·      The successful 12 well workover programme boosted gross production in June from the Company's Rio Negro assets alone, to over 2,000 boepd and, in management's estimation, increased the already substantial Group 2P (proven and probable) oil reserves of 27 MMboe by an additional 1 million barrels of oil

·      Production at Puesto Guardian Concession, Argentina stable at approximately 500 bopd, successfully contributing to Group with margin improvements

·      Louisiana continues to contribute solid and stable profits, production and cash to President, returning between US$200-250k cash per month to Group

·      Successful testing of four existing gas wells at Estancia Vieja demonstrated the ability for commercial gas production from the field

·      USA average realised oil prices materially increased in period by 38% to US$65 per barrel (H1 2017: US$47) and having increased further to currently US$71 per barrel

·      Argentina average realised oil prices in the period increased to US$65 per barrel in respect of Puesto Flores and US$56 in respect of Puesto Guardian (H1 2017: US$50 for the latter) with current prices being achieved of the equivalent of US$65 and US$56 respectively

·      Group well operating costs in period reduced by 14% over same period last year to US$33.50 boe (H1 2017: US$39.10) on a like for like basis, continuing to reduce in H2 2018 with the Group average for the first two months being US$24.66 and expected to reduce further as production from new wells and the synergy benefits from the forthcoming expected acquisitions come on line through 2019

·      Notwithstanding more than a 275% jump in the turnover of H1 2018, G&A costs only increased by 19% and Group administration costs per barrel were reduced by in excess of 50% over the same period for the previous year, illustrating the Group's continued focus on margins at both administrative as well as operative levels with the benefits expected to continue to be enhanced as production rises and costs are kept under control

·      In respect of exploration, farm out processes continue in connection with both Argentina and Paraguay with drilling in the latter slated to commence in the second half of next year

 

Post period Highlights

·      Current Group production approximately 2,700 boepd

·      A fully funded three well drilling programme is underway at the Puesto Flores field aimed at increasing field production by a further 600 bopd

·      With three months of H2 2018 already gone, turnover, operating profit and EBITDA for the full year are projected to increase significantly over H1 as President benefits from higher average production, improving operating efficiencies and economies of scale

·      The expected acquisitions before year end of the Puesto Prado and Las Bases Concessions in Rio Negro Province, Argentina (subject to Provincial approval) should provide early incremental production of both oil and gas commencing from around January 2019, exploration upside and an extensive established and owned gas pipeline network of over 60km in aggregate length permitting an outlet from early 2019 to the national Argentine gas market, thereby unlocking all existing shut in gas wells in President's Neuquen Basin assets, as well as acting as a catalyst for the development of additional gas potential

·      Extensive 2019 drilling programme now in planning stages, comprising new production and exploration wells, workovers, re-activations, facilities and infrastructure work in each of the present and soon to be acquired Argentine fields, in addition, to an exploration well in Paraguay anticipated to be financed out of cash flows and if appropriate and expedient the extension of existing financial resources

·      Negotiations underway to contract a drilling rig and workover rig for the full six-month period of H2 2019

·      The work to power President´s Puesto Flores and Estancia Vieja fields using Estancia Vieja gas is in hand and is due to be completed by end January 2019 producing significant opex savings with Puesto Prado likewise to be powered later in 2019   

 

* Production means the production of hydrocarbons that a Concession owner has the legal and contractual right to retain inter alia subject to payment of all landowner and royalty payments

Victor Linari, Master in Geology and Geophysics and Member of the Society of Exploration Geophysicists, with 35 years of experience in the oil and gas sector, 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.

The 2018 Interim Report and Financial Statements will be made available at www.presidentenergyplc.comThe Report and Accounts will not be printed and mailed to shareholders though copies will be available on request.

In addition, a summary presentation is available at www.presidentenergyplc.com; management will be hosting an analyst conference call at 2.30 p.m. UK time on 26 September 2018. For details, please call Violet Wilson at Camarco, or email her at [email protected].

This announcement is 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 independently assessed 1P reserves in excess of 15 MMboe and 2P reserves of more than 27 MMboe.

 The Company has operated interests in the Puesto Flores and Estancia Vieja Concession, Rio Negro Province, in the Neuquén Basin of Argentina and in the Puesto Guardian Concession, in the Noroeste Basin in NW Argentina. The Company is focused on growing production in the near term in 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.

The Company is actively pursuing value accretive acquisitions of high-quality production and development assets in Argentina capable of delivering positive cash flows and shareholder returns. With a strong institutional base of support including the IFC, part of the World Bank, and an in-country management team, President Energy gives UK investors rare access to the Argentinian growth story combined with world class standards of corporate governance, environmental and social responsibility.

Contact:

President Energy PLC

Peter Levine, Chairman, Chief Executive

Rob Shepherd, Chief Financial Director

 

+44 (0) 207 016 7950

 

finnCap (Nominated Advisor & Joint Broker)

Christopher Raggett, Scott Mathieson

Tim Redfern

 

 

+44 (0) 207 220 0500

BMO Capital Markets (Joint Broker)

Jeremy Low, Tom Rider

 

 

 +44 (0) 207 236 1010

 

Camarco Financial PR

Billy Clegg, Owen Roberts, Violet Wilson

 

+44 (0) 203 757 4983

 

Chairman and Chief Executive Statement

Summary

The first half of 2018 saw a dramatic improvement in all key performance indicators of the Group and points the way to an even better second half of the year.

It was a productive six-month period with a successful 12 well workover programme completed at the Puesto Flores field, Argentina combining with infrastructure work to provide a significant uplift in both production and margins for the Group.

Current Group production is approximately 2,700 boepd with all of President's fields in Argentina and Louisiana contributing profitably. The rapid growth has seen turnover in the first six months increase over the same period last year by over 275% to US$21.9 million, an adjusted EBITDA of over US$6million with Group G&A only increasing by 19% at the same time as bringing the average opex per barrel down by 14%.

In addition, successful testing of shut in gas wells at the Estancia Vieja field was completed, planning took place for the now ongoing three well drilling programme at Puesto Flores and infrastructure work was carried out at all our fields to support production. In respect of exploration, the farm-out process continued in relation to our exploration projects in Argentina and Paraguay with further supporting geoscience work being carried out for both areas.

Accordingly, the results for the first six months speak for themselves and half way into the second period of 2018, the material improvement continues with turnover, operating profit and Adjusted EBITDA all substantially higher as the benefits from higher average production, improving operational efficiencies and economies of scale come through.

As said above a fully funded three well drilling programme is underway the results of which are expected by year end. In addition, two new Concessions are slated to be added to the portfolio before the end of the year bringing added production, sub-surface upside and a significant gas pipeline network connected to the regional pipeline system, providing the route to market for excess gas that can be produced from President's currently shut-in Estancia Vieja gas field.

Quite understandably there has in the recent past been media attention surrounding Argentina's current macro-economic issues. With President's emphasis on Argentina it is important to note that to date there is no material adverse cash effect and President is carefully monitoring its cash management as the Company receives pesos at the dollar equivalent rate in pesos on the date payment for its production is made. We remain robustly supportive of this G20 Western facing country.

It remains to extend my appreciation to our management and staff, our shareholders, our partners, Edhipsa and all the Government, Provincial and Regulatory authorities wherever we conduct business for their support.

Peter Levine

Chairman and Chief Executive

 

Financial

·      Group turnover in H1 2018 increased by over 275% to US$21.9 million over the same period in 2017 and exceeding by some 20% the Group turnover for the entire 12 months of 2017

·      Adjusted EBITDA for the period (after Group G&A) increased by US$7.5 million to a positive US$6.1 million moving from a H1 2017 loss of US$1.4 million

·      With three months of H2 already gone, turnover, operating profit and EBITDA for the full year are all projected to increase significantly over H1 as President benefits from higher average production, improving operational efficiencies and economies of scale

·      Group operating profit of US$5.3 million after all administration expenses and workovers but before depreciation, depletion and amortisation

·      Strong financial and trading position, all fields making profitable contributions to Group, sales prices stable and no material negative cash impact from currency fluctuations

·      Average Group production in period increased by 199% over same period last year to 2,064 boepd (H1 2017: 691 boepd) notwithstanding disruption to production throughout the period caused by the extensive workover programme and also prolonged flooding in Louisiana at the start of the year

·      Current Group production approximately 2,700 boepd

·      USA average realised oil prices materially increased in period to US$65 per barrel (H1 2017: US$47) and having increased further to currently US$71 per barrel

·      Argentina average realised oil prices in the period increased to US$65 per barrel in respect of Puesto Flores and US$56 in respect of Puesto Guardian (H1 2017 US$50 for the latter) with current prices being achieved of the equivalent of US$65 and US$56 respectively

·      Group well operating costs in period reduced by 14% over same period last year to US$33.50 boe (H1 2017: US$39.10), continuing to reduce in H2 2018 with the Group average for the first two months being US$24.66 and expected to lower further as production from new wells and the synergy benefits from the forthcoming expected acquisitions come on line through 2019

·      Notwithstanding the over 275% turnover jump in H1 2018, G&A costs only increased by 19% and Group administration costs per barrel reduced by in excess of 50% over the same period for the previous year, illustrating the Group's continued focus on margins at both administrative as well as operative levels with the benefits expected to continue to be enhanced as production rises and costs kept under control

 

Argentina

·      The successful 12 well workover programme boosted gross production in June from the Company's Rio Negro assets to over 2,000 boepd and, in Management's estimation, increased the already substantial Group 2P (proven and probable) hydrocarbon reserves of 27 MMboe by an additional 1 million barrels of oil

·      Three fully funded well drilling programme underway at the Puesto Flores field aimed at increasing field production by a further 600 bopd

·      Production at Puesto Guardian Concession, Argentina stable at approximately 500 bopd, successfully contributing to Group with margin improvements

·      Successful testing of four existing gas wells at Estancia Vieja demonstrated commercial gas production from the field

·      The expected acquisitions before year end of the Puesto Prado and Las Bases Concessions in Rio Negro Province, Argentina (subject to Provincial approval) should provide early incremental production of both oil and gas commencing from around January 2019, exploration upside and an extensive established and owned gas pipeline network of over 60km in aggregate length permitting an outlet from early 2019 to the national Argentine gas market, thereby unlocking all existing shut in gas wells in President's Neuquen Basin assets, as well as acting as a catalyst for the development of additional gas potential gas

·      Extensive 2019 drilling programme now in planning stages, comprising new production and exploration wells, workovers, re-activations, facilities and infrastructure work in each of the present and soon to be acquired Argentine fields in addition to an exploration well in Paraguay

·      Negotiations underway to contract a drilling rig and workover rig for the full six month period of H2 2019

·      The Farmout process in relation to President's exploration areas is continuing. Moyes & Co, the international advisory and consultancy are handling the process for President

 

Paraguay

·      The farm-out process in Paraguay also continues, now led by Moyes & Co as it was deemed more efficient to have one entity handling both the processes underway

·      President is in any event commencing the preparatory work to be able to drill a well in 2019 to explore the potentially oil-bearing Cretaceous targets in the Pirity Blocks

·      At this stage it is anticipated that the well will address a prospect in the Imperial Complex of prospect and leads, some 30km across the border from the prolific Palmar Largo oilfield in Argentina, as further studies of the 3D seismic have demonstrated clear and directly defined analogues to the anomalies shown in Palmar Largo.  The Complex is estimated by management to contain nearly 200 MMBO of prospective resources. If no farm out on terms satisfactory to President is achieved, President intends to drill the well in H2 2019, the cost of which it is currently anticipated will be met out of its own financial resources and facilities, with planning commencing in the latter part of 2018 so as to ensure this timeline is met. Costs of the well are estimated to be very substantially lower than the previously drilled wells in Paraguay, benefiting from learnings from those wells, President's experienced management resources, service provider relationships and in country operational expertise from across the border in Argentina

·      The Pirity Block licence has been continued for another two years now expiring September 2020

 

Louisiana

·      Louisiana continues to contribute solid and stable production, profits and cash to President, returning between US$200-250k cash per month to Group

·      USA average realised oil prices increased in period by 38% to US$65 per barrel (H1 2017: US$47) and currently US$71 per barrel

·      The Pacific Enterprise non-core well, previously a producer that had watered out and been shut-in, was re-opened and worked over as a future water disposal well to support President's producing wells. The costs of the work were paid in full by Alpha Imperial Corp., who in consideration thereof acquired a 75% stake in the well leaving President with 24% with a non-related party holding the balance minority interest. Alpha Imperial Corp. is a company whose ultimate beneficial owner is Peter Levine

·      Prior to conversion, a zone higher up in the well was perforated as a last opportunity to identify any moveable hydrocarbons. A short test gave a positive result which may lead to gas production. It is too early to identify what sustained production may be generated but this is a cost and risk-free option for President as it was in the Company's books at zero value

 

Outlook

·      The prospects for President bode well with the Group continuing the mantra of marrying   profitable barrels, margin focus and cash generation with strategic acquisitions of the right fit and accretive value

·      After the productive activity this year with 12 workovers, three new wells now being drilled and with the contemplated acquisition of the two Concessions on the cards between now and December, the period H1 2019 will see reduction in major capital spend in order to build up cash strength in anticipation of a concentrated wide scale drilling and infrastructure development programme in the second half of the year

·      We look forward to continuing to deliver real shareholder value during this very dynamic period for the Group

Peter Levine

Chairman & Chief Executive

26 September 2018

 

Glossary of terms

MMboe             Million barrels of oil equivalent

Boepd               Barrels of oil equivalent per day

Bopd                 Barrels of oil per day

MMbbls             Million barrels of oil

MMBtu              Million British Therman Units (gas)

Tfc                    Trillion cubic feet (gas)

 

*Production means the production that a Concession owner has the legal and contractual right to retain 

 

 

Condensed Consolidated Statement of Comprehensive Income

Six months ended 30 June 2018

 

 

 

 

6 months

 

6 months

 

Year to

 

 

 

 

to 30 June

 

to 30 June

 

31 Dec

 

 

 

 

2018

 

2017

 

2017

 

 

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

Note

US$000

 

US$000

 

US$000

Continuing Operations

 

 

 

 

 

 

 

 

Revenue

 

 

 

21,907

 

5,626

 

17,945

Cost of sales

 

 

 

 

 

 

 

 

Depletion, depreciation & amortisation

 

 

 

(3,511)

 

(1,470)

 

(4,495)

Other cost of sales

 

 

 

(13,821)

 

(6,035)

 

(16,907)

Total cost of sales

 

3

 

(17,332)

 

(7,505)

 

(21,402)

 

 

 

 

 

 

 

 

 

Gross profit/(loss)

 

 

 

4,575

 

(1,879)

 

(3,457)

Administrative expenses

 

4

 

(2,752)

 

(2,319)

 

(5,295)

Operating profit / (loss) before impairment charge

 

 

 

 

 

 

 

 

   and non-operating gains / (losses)

 

 

 

1,823

 

(4,198)

 

(8,752)

Presented as:

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

6,128

 

(1,413)

 

(1,439)

Non-recurring items

 

 

 

(634)

 

(1,147)

 

(2,566)

EBITDA excluding share options

 

 

 

5,494

 

(2,560)

 

(4,005)

Depreciation, depletion & amortisation

 

 

 

(3,526)

 

(1,483)

 

(4,491)

Share based payment expense

 

 

 

(145)

 

(155)

 

(256)

Operating profit / (loss)

 

1,823

(4,198)

(8,752)

 

 

 

 

 

 

 

 

 

Impairment charge

 

5

 

  -  

 

  -  

 

(1,337)

Non-operating gains /(losses)

 

6

 

(79)

 

3

 

1

Profit/(loss) after impairment and non-operating

 

 

 

 

 

 

 

 

   gains and (losses)

 

 

 

1,744

 

(4,195)

 

(10,088)

 

 

 

 

 

 

 

 

 

Finance income

 

7

 

215

 

229

 

251

Finance costs

 

7

 

(2,386)

 

(635)

 

(3,405)

 

 

 

 

 

 

 

 

 

Profit / (loss) before tax

 

 

 

(427)

 

(4,601)

 

(13,242)

 

 

 

 

 

 

 

 

 

Income tax (charge)/credit

 

 

 

 

 

 

 

 

Current tax income tax (charge)/credit

 

 

 

  -  

 

  -  

 

(62)

Deferred tax being a provision for future taxes

 

 

 

(4,164)

 

(136)

 

4,506

Total income tax (charge)/credit

 

 

 

(4,164)

 

(136)

 

4,444

 

 

 

 

 

 

 

 

 

Profit/(loss) for the period from continuing operations

 

 

 

(4,591)

 

(4,737)

 

(8,798)

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 - Items that may be reclassified subsequently

 

 

 

 

 

 

 

 

   to profit or loss

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

 

 

 

  -  

 

(2,592)

 

(8,495)

Total comprehensive profit/(loss) for the period

 

 

 

 

 

 

 

 

   attributable to the equity holders of the Parent Company

 

 

 

(4,591)

 

(7,329)

 

(17,293)

 

 

 

 

 

 

 

 

 

Earnings/ (loss)per share from continuing operations

 

 

 

US cents

 

US cents

 

US cents

Basic earnings/ (loss) per share

 

8

 

(0.5)

 

(0.9)

 

(0.9)

Diluted earnings / (loss) per share

 

8

 

(0.5)

 

(0.9)

 

(0.9)

 

Condensed Consolidated Statement of Financial Position

As at 30 June 2018

 

 

 

 

30 June

 

30 June

 

31 Dec

 

 

 

 

2018

 

2017

 

2017

 

 

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

 

 

US$000

 

US$000

 

US$000

 

Note

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

Intangible exploration and evaluation assets

 

9

 

103,470

 

103,466

 

103,299

Goodwill

 

 

 

705

 

  -  

 

705

Property, plant and equipment

 

9

 

72,197

 

57,251

 

72,016

 

 

 

 

176,372

 

160,717

 

176,020

 

 

 

 

 

 

 

 

 

Deferred tax

 

 

 

950

 

727

 

1,190

Other non-current assets

 

 

 

351

 

502

 

352

 

 

 

 

177,673

 

161,946

 

177,562

Current assets

 

 

 

 

 

 

 

 

Trade and other receivables

 

10

 

10,643

 

6,502

 

8,310

Asset held for resale

 

 

 

  -  

 

  -  

 

1,313

Stock

 

 

 

82

 

87

 

77

Cash and cash equivalents

 

 

 

2,054

 

4,687

 

4,026

 

 

 

 

12,779

 

11,276

 

13,726

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

 

190,452

 

173,222

 

191,288

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Trade and other payables

 

 

 

18,294

 

11,507

 

18,043

Asset held for resale

 

 

 

  -  

 

  -  

 

788

Borrowings

 

11

 

2,460

 

10,753

 

1,846

 

 

 

 

20,754

 

22,260

 

20,677

Non-current liabilities

 

 

 

 

 

 

 

 

Long-term provisions

 

 

 

5,239

 

4,791

 

5,015

Borrowings

 

11

 

18,698

 

  -  

 

19,313

Deferred tax

 

 

 

4,230

 

5,384

 

306

 

 

 

 

28,167

 

10,175

 

24,634

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

 

48,921

 

32,435

 

45,311

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

Share capital

 

 

 

23,642

 

22,086

 

23,642

Share premium

 

 

 

240,822

 

227,325

 

240,822

Translation reserve

 

 

 

(5,624)

 

(44,337)

 

(50,240)

Profit and loss account

 

 

 

(124,396)

 

(71,128)

 

(75,189)

Other reserve

 

 

 

7,087

 

6,841

 

6,942

 

 

 

 

 

 

 

 

 

TOTAL EQUITY

 

 

 

141,531

 

140,787

 

145,977

 

 

 

 

 

 

 

 

 

TOTAL EQUITY AND LIABILITIES

 

 

 

190,452

 

173,222

 

191,288

 

Condensed Consolidated Statement of Changes in Equity

 

 

 

Share capital

 

Share premium

 

Translation reserve

 

Profit and loss account

 

Other reserve

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 January 2017

 

22,086

 

227,325

 

(41,745)

 

(66,391)

 

6,686

 

147,961

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible loan equity

 

-

 

-

 

-

 

-

 

-

 

-

Transfer to P&L account

 

-

 

-

 

-

 

-

 

-

 

-

Share-based payments

 

-

 

-

 

-

 

-

 

155

 

155

Transactions with owners

 

-

 

-

 

-

 

-

 

155

 

155

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

 

-

 

-

 

-

 

(4,737)

 

-

 

(4,737)

Exchange differences on translation

 

-

 

-

 

(2,592)

 

-

 

-

 

(2,592)

Total comprehensive income/(loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

-

 

(2,592)

 

(4,737)

 

-

 

(7,329)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2017

 

22,086

 

227,325

 

(44,337)

 

(71,128)

 

6,841

 

140,787

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based payments

 

-

 

-

 

-

 

-

 

101

 

101

Issue of ordinary shares

 

1,534

 

13,809

 

-

 

-

 

-

 

15,343

Cost of issue

 

-

 

(507)

 

-

 

-

 

-

 

(507)

Convertible loan equity

 

-

 

-

 

-

 

-

 

-

 

-

Issue to service provider

 

22

 

195

 

-

 

-

 

-

 

217

Transaction with owners

 

1,556

 

13,497

 

-

 

-

 

101

 

15,154

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

 

-

 

-

 

-

 

(4,061)

 

-

 

(4,061)

Exchange differences on translation

 

-

 

-

 

(5,903)

 

-

 

-

 

(5,903)

Total comprehensive income/(loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

-

 

(5,903)

 

(4,061)

 

-

 

(9,964)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1January 2018

 

23,642

 

240,822

 

(50,240)

 

(75,189)

 

6,942

 

145,977

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible loan equity

 

-

 

-

 

-

 

-

 

-

 

-

Transfer to P&L account

 

-

 

-

 

44,616

 

(44,616)

 

-

 

-

Share-based payments

 

-

 

-

 

-

 

-

 

145

 

145

Transactions with owners

 

-

 

-

 

44,616

 

(44,616)

 

145

 

145

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

 

-

 

-

 

-

 

(4,591)

 

-

 

(4,591)

Exchange differences on translation

 

-

 

-

 

-

 

-

 

-

 

-

Total comprehensive income/(loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

-

 

-

 

(4,591)

 

-

 

(4,591)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2018

 

23,642

 

240,822

 

(5,624)

 

(124,396)

 

7,087

 

141,531

 

 

Condensed Consolidated Statement of Cash Flows

Six months ended 30 June 2018

 

 

6 months

 

6 months

 

Year to

 

 

to 30 June

 

to 30 June

 

31 Dec

 

 

2018

 

2017

 

2017

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

US$000

 

US$000

 

US$000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities - (Note 12)

 

 

 

 

 

 

Cash generated/(consumed) by operations

 

2,639

 

(4,019)

 

(7,438)

Interest received

 

215

 

229

 

251

Taxes paid

 

 -  

 

 -  

 

(82)

 

 

2,854

 

(3,790)

 

(7,269)

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Expenditure on exploration and evaluation assets

 

(171)

 

(183)

 

(655)

Expenditure on development and production assets

 

 

 

 

 

 

    (excluding increase in provision for decommissioning)

 

(4,359)

 

(9,846)

 

(11,746)

Payments in advance of future decommissioning costs

 

1

 

(184)

 

(184)

Proceeds from asset sales

 

1,098

 

 -  

 

475

Acquisition & licence extension in Argentina

 

 -  

 

 -  

 

(15,618)

USA acquisition

 

 -  

 

 -  

 

(2,218)

 

 

 

 

 

 

 

 

 

(3,431)

 

(10,213)

 

(29,946)

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issue of shares (net of expenses)

 

 -  

 

 -  

 

14,836

Loan converted to equity

 

 -  

 

 -  

 

(2,205)

Shares issued to service provider

 

 -  

 

 -  

 

217

Loan drawdown

 

615

 

1,677

 

15,495

Repayment of loan capital

 

(616)

 

 -  

 

(1,207)

Payment of loan interest and fees

 

(1,195)

 

(457)

 

(1,971)

 

 

 

 

 

 

 

 

 

(1,196)

 

1,220

 

25,165

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

(1,773)

 

(12,783)

 

(12,050)

Opening cash and cash equivalents at beginning of year

 

4,026

 

17,586

 

17,586

Exchange (losses)/gains on cash and cash equivalents

 

(199)

 

(116)

 

(1,510)

Closing cash and cash equivalents

 

2,054

 

4,687

 

4,026

 

 

 

 

Notes to the Half-Yearly Financial Statements

Six months ended 30 June 2018

 

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 1200 Century Way, Thorpe Park Business Park, Leeds LS15 8ZA. 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 2018. The financial information for the year ended 31 December 2017 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 2018 and 30 June 2017 was neither audited nor reviewed by the auditor. The Group's statutory financial statements for the year ended 31 December 2017 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 2017, which have been prepared under IFRS as adopted by the European Union. The Group implemented IFRS 15 on Revenue recognition and IFRS 9 financial Instruments effective 1 January 2018. The adoption of these standards did not have any material impact upon the financial statements of the Group.

 

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 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 2017.

 

While reviewing the potential impact of IFRS15 the Group changed its revenue recognition approach for certain royalty interests in the USA. This has resulted in additional revenue being recognised with a corresponding increase in cost of sales in 2018 of US$0.7 million. There is no impact on the reported gross profit/ (loss) but aligns the presentation with similar royalty interest in Argentina and USA. The comparatives for 30 June 2017 and 31 December have not been adjusted as the change constitutes a non-material adjustment.  Had the comparatives for 30 June 2017 and 31 December 2017 been adjusted the change would be to increase revenue and cost of sales by US$0.3 million and US$0.9 million respectively in those periods.

 

 

 

Notes to the Half-Yearly Financial Statements

Six months ended 30 June 2018 - continued

 

 

 

 

6 months

 

6 months

 

Year to

 

 

 

to 30 June

 

to 30 June

 

31 Dec

 

 

 

2018

 

2017

 

2017

 

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

 

US$000

 

US$000

 

US$000

3 Cost of Sales

 

 

 

 

 

 

 

 

Depreciation

 

3,511

 

1,470

 

4,495

 

Well operating costs

 

13,821

 

6,035

 

16,907

 

 

 

17,332

 

7,505

 

21,402

4 Administrative expenses

 

 

 

 

 

 

 

Directors and staff cost

 

1,904

 

1,739

 

4,048

 

Share-based payments

 

145

 

155

 

256

 

Depreciation

 

15

 

13

 

(4)

 

Other

 

688

 

412

 

995

 

 

 

2,752

 

2,319

 

5,295

5  Impairment charge

 

 

 

 

 

 

 

East White Lake (PP&E)

 

   -  

 

   -  

 

1,337

 

 

 

   -  

 

   -  

 

1,337

6  Non-operating gains

 

 

 

 

 

 

 

Insurance proceeds

 

   -  

 

   -  

 

   -  

 

Other gains / (losses)

 

(79)

 

3

 

1

 

 

 

(79)

 

3

 

1

7 Finance income & costs

 

 

 

 

 

 

 

Interest income

 

215

 

61

 

251

 

Exchange gains

 

  -  

 

168

 

   -  

 

Finance income

 

215

 

229

 

251

 

 

 

 

 

 

 

 

 

Interest & similar charges

 

1,419

 

635

 

2,326

 

Exchange losses

 

967

 

   -  

 

1,079

 

Finance costs

 

2,386

 

635

 

3,405

8 Earnings / (loss) per share

 

 

 

 

 

 

 

Net profit / (loss) for the period attributable

 

 

 

 

 

 

 

   to the equity holders of the

 

 

 

 

 

 

 

   Parent Company

 

(4,591)

 

(4,737)

 

(8,798)

 

 

 

 

 

 

 

 

 

 

 

Number

 

Number

 

Number

 

 

 

'000

 

'000

 

'000

 

Weighted average number

 

 

 

 

 

 

 

of shares in issue

 

971,173

 

554,655

 

971,173

 

 

 

 

 

 

 

 

 

Earnings /(loss) per share

 

US cents

 

US cents

 

US cents

 

Basic

 

(0.5)

 

(0.9)

 

(0.9)

 

Diluted

 

(0.5)

 

(0.9)

 

(0.9)

 

 

 

 

Notes to the Half-Yearly Financial Statements

Six months ended 30 June 2018 - continued

9 Non-current assets

 

 

 

 

 

 

 

 

 

 

 

Property

 

 

 

 

 

Intangible

 

Plant and

 

Total

 

 

 

 

 

Equipment

 

 

 

 

 

US$000

 

US$000

 

US$000

 

Cost

 

 

 

 

 

 

 

At 1 January 2017

 

145,446

 

83,277

 

233,596

 

Additions

 

183

 

9,846

 

2,108

 

Exchange difference

 

(89)

 

(3,429)

 

(8,294)

 

At 30 June 2017

 

145,540

 

89,694

 

227,410

 

Additions

 

472

 

467

 

939

 

Acquisition & licence extension in Argentina

 

  -  

 

24,263

 

24,263

 

Acquisition USA

 

  -  

 

2,328

 

2,328

 

Disposals

 

(469)

 

(5)

 

(474)

 

Asset held for resale

 

 

 

(11,132)

 

(11,132)

 

Exchange difference

 

(170)

 

(8,351)

 

(8,521)

 

At 1 January 2018

 

145,373

 

97,264

 

242,637

 

Additions

 

171

 

4,359

 

4,530

 

Disposals

 

   -  

 

(662)

 

(662)

 

Exchange difference

 

   -  

 

   -  

 

   -  

 

At 30 June 2018

 

145,544

 

100,961

 

246,505

 

 

 

 

 

 

 

 

 

Depreciation/Impairment

 

 

 

 

 

 

 

At 1 January 2017

 

42,074

 

31,785

 

73,859

 

Exchange difference

 

  -  

 

(825)

 

(825)

 

Charge for the period

 

  -  

 

1,483

 

1,483

 

At 30 June 2017

 

42,074

 

32,443

 

74,517

 

Exchange difference

 

  -  

 

(1,571)

 

(1,571)

 

Disposals

 

  -  

 

  -  

 

  -  

 

Impairment

 

  -  

 

1,337

 

1,337

 

Asset held for resale

 

  -  

 

(9,969)

 

(9,969)

 

Charge for the period

 

  -  

 

3,008

 

3,008

 

At 1 January 2018

 

42,074

 

25,248

 

67,322

 

Charge for the period

 

   -  

 

3,526

 

3,526

 

Disposals

 

   -  

 

(10)

 

(10)

 

Exchange difference

 

   -  

 

  -  

 

  -  

 

At 30 June 2018

 

42,074

 

28,764

 

70,838

 

 

 

 

 

 

 

 

 

Net Book Value 30 June 2018

 

103,470

 

72,197

 

175,667

 

 

 

 

 

 

 

 

 

Net Book Value 30 June 2017

 

103,466

 

57,251

 

152,893

 

 

 

 

 

 

 

 

 

Net Book Value 31 December 2017

 

103,299

 

72,016

 

175,315

 

 

 

 

 

 

 

 

10 Trade and other receivables

 

 

 

 

 

 

 

 

 

30 June

 

30 June

 

31 Dec

 

 

 

2018

 

2017

 

2017

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

10,594

 

6,385

 

8,265

 

Prepayments

 

49

 

117

 

45

 

 

 

10,643

 

6,502

 

8,310

Notes to the Half-Yearly Financial Statements

Six months ended 30 June 2018 - continued

11 Borrowings

 

 

 

 

 

 

 

 

 

 

30 June

 

30 June

 

31 Dec

 

 

 

2018

 

2017

 

2017

 

Current

 

 

 

 

 

 

 

IYA Loan

 

  -  

 

10,753

 

  -  

 

Bank loan

 

2,460

 

  -  

 

1,846

 

 

 

2,460

 

10,753

 

1,846

 

Non-Current

 

 

 

 

 

 

 

IYA Loan

 

13,735

 

  -  

 

13,120

 

Bank loan

 

4,963

 

  -  

 

6,193

 

 

 

18,698

 

  -  

 

19,313

 

Total carrying value of borrowings

 

21,158

 

10,753

 

21,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12 Reconciliation of operating profit to net cash outflow from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

6 months

 

6 months

 

Year to

 

 

 

to 30 June

 

to 30 June

 

31 Dec

 

 

 

2017

 

2016

 

2016

 

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

 

US$000

 

US$000

 

US$000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations before taxation

 

(427)

 

(4,601)

 

(13,242)

 

Interest on bank deposits

 

(215)

 

(229)

 

(251)

 

Interest payable and loan fees

 

1,419

 

635

 

2,326

 

Depreciation and impairment of property,

 

 

 

 

 

 

 

   plant and equipment

 

3,526

 

1,483

 

4,491

 

Impairment charge

 

  -  

 

  -  

 

1,337

 

Gain on non-operating transaction

 

79

 

(3)

 

(1)

 

Share-based payments

 

145

 

155

 

256

 

Foreign exchange difference

 

967

 

(168)

 

1,079

 

 

 

 

 

 

 

 

Operating cash flows before movements

 

 

 

 

 

 

 

in working capital

 

5,494

 

(2,728)

 

(4,005)

 

 

 

 

 

 

 

 

 

(Increase)/decrease in receivables

 

(4,070)

 

(2,005)

 

(3,677)

 

(Increase)/decrease in stock

 

(5)

 

  -  

 

  -  

 

(Decrease)/increase in payables

 

1,220

 

714

 

244

 

 

 

 

 

 

 

 

Net cash generated by/(used in)

 

 

 

 

 

 

   operating activities

 

2,639

 

(4,019)

 

(7,438)

 

 


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