Higher production at its wells in Argentina and Louisiana drove revenues up by a fifth at President Energy (PPC) last year. But investors will be eagerly awaiting the results of upcoming exploration drilling in Paraguay, which is targeting a potential unrisked resource of 647m barrels.
Daily oil production from President's assets in Argentina was up by 7 per cent to 192 barrels, while average output from Louisiana was up by 29 per cent to 236 barrels of oil equivalent. Realised prices were broadly stable on the previous year, while production costs in Louisiana were down by nearly a fifth. The end result was that gross profit for the driller rose 63 per cent to $5.3m (£3.1m).
But now all eyes are on the frontier prospects in Paraguay. Since the year-end, President has bolstered its cash position through a $51m (£32m) institutional share placing, enabling the company to enter into a drilling contract with Queiroz Galvão Óleo e Gás, a large Brazilian oil services contractor, for its 2014 drilling campaign. In addition, Schlumberger Integrated Project Management has been hired to manage the initial three-well programme in Paraguay.
The prospective size of this resource has the potential to transform President. But investors should be circumspect: there is only a slim statistical chance that President will encounter commercial flow-rates.
| PRESIDENT ENERGY (PPC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 33p | MARKET VALUE: | £130m | |
| TOUCH: | 33-34p | 12-MONTH HIGH: | 50p | LOW: 15p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 24¢* | NET CASH: | $10m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 3.9 | -4.2 | -23.5 | nil |
| 2010 | 3.4 | -6.6 | -11.6 | nil |
| 2011 | 7.1 | -21.4 | -19.1 | nil |
| 2012 | 11.3 | -6.3 | -3.4 | nil |
| 2013 | 13.4 | -4.5 | -0.6 | nil |
| % change | +19 | - | - | - |
*Includes intangible assets of $58.7m, or 15¢ a share £1=$1.69 | ||||
