President Energy’s (PPC) foray into Argentina’s oil and gas industry could be viewed as counter-intuitive, or even heroic, given the country’s unenviable track record of expropriating foreign investments, which Repsol found out to its cost in 2012 when Buenos Aires helped itself to the Spanish oil major’s stake in YPF. Not only that, but President Energy is essentially feeding off scraps, targeting investments in conventional plays overlooked or discarded by the majors. With the industry top-tier clamouring over massive shale plays such as the Vaca Muerta field, the Aim-traded stock was able to acquire the Puesto Flores/Estancia Vieja concessions from Chevron in 2017.
The deal, somewhat tiresomely deemed “transformational” by management, does indeed promise to alter the scale of operations, while a net back of $36 a barrel from Puesto Flores should bolster unit profitability. These benefits will become increasingly apparent as we progress through 2018, although it should be noted that President exited 2017 having quadrupled production from the previous year-end, with the average daily rate more than doubling to 1,121 barrels of oil equivalent (boepd). Even with an ongoing work-over programme at Puesto Flores/Estancia Vieja in progress, current output stands at 2,400 boepd.
Broker FinnCap expects revenue of $64.5m this year, rising to $82.1m in 2019, and a free-cash-outflow of $1m moving to a positive $6.1m during the same period.
| PRESIDENT ENERGY (PPC) | ||||
| ORD PRICE: | 9.2p | MARKET VALUE: | £99m | |
| TOUCH: | 9-9.4p | 12-MONTH HIGH: | 12.5p | LOW: 5.7p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 13.6¢* | NET DEBT: | 12% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2013 | 13.4 | -4.5 | -0.6 | nil |
| 2014 | 12.6 | 14.3 | 3.7 | nil |
| 2015 | 10.1 | -18.7 | -3.9 | nil |
| 2016 | 9.9 | -20.5 | -2.5 | nil |
| 2017 | 17.9 | -13.2 | -0.9 | nil |
| % change | +81 | - | - | - |
| Ex-div: | - | |||
| Payment: | - | |||
| £1=$1.34. *Includes intangible assets of $104m, or 10¢ a share | ||||
