Oil and gas company President Energy (LSE:PPC) saw its shares rise this morning after reporting record profits at its Argentinian assets in January. The business rose 2.6pc, or 0.2p, to 9.5p after reporting that its Puesto Flores and Puesto Guardian fields generated $1.3m after all opex, general & administrative expenses and finance costs. Due to the continued use of tax credits, which are expected to continue throughout the rest of the year, positive cash generation from Argentina came in at more than $1.8m. President expects to pay no corporation tax this year due to the utilisation of tax losses carried forward.
The business achieved an average sales price of $63.50 per barrel of oil in Puesto Flores and $53.70 per barrel for Puesto Guardian. Both prices are estimated to be at approximately the same level for February. President added that Puesto Guardian is now making a significant contribution to the overall profitable results in Argentina, which should increase as further work is carried out throughout the first quarter.
It believes it can get production from the site up to 1,200boepd from its current level of around 600boepd, and has a licence in the area lasting until 2050. The company has also commenced testing of the long shut-in Estancia Vieja field, which it purchased alongside Puesto Flores last year. President recently completed a fully-funded, four well workover programme at Puesto Flores, which it is planning to extend later in the year. It believes production across Puesto Flores/Estancia Vieja could reach 3000boepd within three years.
Chairman and chief executive Peter Levine said:
“We are making excellent progress and 2018 has started really well. Every concession in Argentina is contributing to these results and combined with the $200,000 per month free cash generation from Louisiana, the company is in its strongest ever position.”
“Whilst the Puesto Flores field has performed substantially better than expected and Puesto Guardian is making good money, we believe we can achieve more in all our areas of interest and we are continuing to apply ourselves in that regard.”
As reported in ValueTheMarket.com’s exclusive interview with Levine earlier this week, President is well positioned to take advantage of the booming domestic Argentinian oil market. The company plans to boost its presence in the country by consolidating the Argentinian assets that many major oilers are now disposing of as they focus on shale production.
Levine told us:
’The firms already producing and operating here have got an advantage over those coming in from the cold. We have significant management here, the tax environment is getting better, and the opportunities are increasing as more companies are drawn in. This opens up the possibility for us to invest in conventional items being offloaded by others before using synergies and critical mass to extract more profits. President’s future definitely lies in Argentina.’
He added that the company is in ‘the best position it has ever been in’ financially and said that its future lies in Argentina.
Author: Daniel Flynn
The author does not own shares in the company mentioned in this article