President Energy (PPC) is mainly focused on exploration, so these numbers aren't particularly meaningful. Still, after talking with management about new exploration licences in Paraguay, we've spotted a few red flags.
Chairman Peter Levine told Investors Chronicle he was confident President will soon discover enough new resources to make Paraguay self-sufficient in oil in as little as three years. Indeed, he believes the country could actually become an oil exporter shortly after. True, Mr Levine has a track record of making money for investors; chiefly, when he sold Russian oil explorer Imperial Energy for $2.1bn (£1.3bn) in 2009. But this looks far too bullish to us given the early stage of the project and the fact that Paraguay currently produces no oil at all.
In reality, President has no idea yet if its licences contain a significant oilfield or not - only drilling will determine that. Until then, it is merely an exploration target on a licence where previous drilling failed to find hydrocarbons. Mr Levine wouldn't disclose independently calculated odds of success, either, but global energy consultant Wood Mackenzie calculates the historical odds of a company making a commercial discovery from a frontier exploration well at less than one in 10.
PRESIDENT ENERGY (PPC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 20p | MARKET VALUE: | £53.7m | |
| TOUCH: | 19.75-21p | 12-MONTH HIGH: | 41p | LOW: 18.25p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 32¢* | NET CASH: | $17.5m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 18.1 | 2.78 | 14.9 | nil |
| 2009 | 3.93 | -4.19 | -23.5 | nil |
| 2010 | 3.44 | -6.63 | -11.6 | nil |
| 2011 | 7.05 | -21.4 | -19.1 | nil |
| 2012 | 11.3 | -6.34 | -3.40 | nil |
| % change | +60 | - | - | - |
*Includes intangible assets of $51.3m, or 19¢ a share £1=$1.55 | ||||
