Management at President Petroleum (PPC) have a record of building oil companies within challenging jurisdictions. And, with a big deal having been signed subsequent to the company’s half-year mark, President’s management is pushing the company through a transitional phase that should significantly bolster its production profile and growth prospects - leaving the shares looking attractive.
Significantly, a farm-in agreement was signed earlier this month for two blocks in Paraguay - Demattei and Pirity - which are contiguous to the productive Argentine Olmedo basin. On finalisation, President will hold 60 per cent and 59 per cent interests, respectively, in these blocks - which are an extension of a proven basin that has already produced over 150m barrels of oil equivalent on the Argentine side of the border. That will be funded by a £30.9m placing and open offer.
Operationally, meanwhile, daily production from existing assets in Argentina and Louisiana rose 24 per cent year-on-year to 312 barrels of oil equivalent (boe), hitting a peak of 430 boe through June. The increased production and higher realised prices drove revenues and enabled President to reduce its operating loss significantly. President’s future production should also benefit from two new licenses - adjacent to Puesto Guardian in Argentina - awarded after the period ended.
| PRESIDENT PETROLEUM (PPC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 20p | MARKET VALUE: | £32m | |
| TOUCH: | 19-21p | 12-MONTH HIGH: | 61p | LOW: 20p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 28¢* | NET DEBT: | 6% | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 1.74 | -15.7 | -14.4 | nil |
| 2012 | 5.03 | -4.00 | -1.40 | nil |
| % change | +189 | - | - | - |
*Includes intangible assets of $37m, or 24¢ a share £1=$1.62 | ||||
