After surviving the worst of last February's oil price rout, President Energy (PPC) sailed through the rest of 2016 in fine fettle with its share price rebounding from a low of 5p to 13p. But then a drilling failure precipitated a funding crisis and November's unexpected $20m (£16m) equity fundraising at 6p and loan restructuring. Executive chairman Peter Levine, who funded the debt-for-equity part of the transaction, believes that his company has been unduly set back by third-party service providers, and is now proceeding with legal action. We feel President - which boasts low-cost production in the US, high-growth assets in Argentina, experienced management and now a reinforced balance sheet which is expected to show $8m net cash at the year-end date - should be trading much higher than 7p a share.
- Low-cost US production
- Experienced management
- Improved balance sheet
- High-growth drilling programme
- Litigation distraction
- Operational execution risks
Getting back on track involves risks befitting an Aim-traded oil producer, but the signs are positive. The core focus remains the current work-over programme at President's Puesto Guardian asset, a mature field in North West Argentina that has suffered from years of under-investment. Unlike 2016, when a cost overrun led to a major delay, things are going much better this year, and if all goes to plan the company should be producing 1,200 barrels of oil equivalent a day (boepd) by the end of September. Beyond that, President is targeting 4,000boepd within five years.