TIDMPPC
RNS Number : 0119Z
President Energy PLC
15 September 2015
15 September 2015
PRESIDENT ENERGY PLC
("President" or "the Company")
PUESTO GUARDIAN CONCESSION
SALTA PROVINCE, ARGENTINA
New Unconventional Concession Puesto Guardian Concession extends
Concession term to 2050
President is pleased to announce the conversion of its former
Puesto Guardian Concession which was due to expire in 2026 to a new
Unconventional Concession for a term of 35 years expiring 2050.
Highlights
-- New Concession granted for a new 35 year term expiring August 2050
-- Replaces former Concession which was due to expire 2026
-- Concession area remains the same and now covers both
unconventional and conventional exploration and production
-- New Concession provides an extra 24 years of life and with
all operations carrying on as normal
-- First time such a Concession has been granted in Salta Province
-- Updated CPR by Gaffney Cline & Associates to be published
shortly to reflect the extended Concession
-- President's Argentine oil sales continue at approximately
US$70 per barrel together with an additional $3 per barrel
currently receivable for 2015 increased production
Peter Levine, Chairman, commented
"The effective renewal and extension of the Puesto Guardian
Concession to 2050 is both a demonstration of President's
commitment to Argentina and our Argentine Assets and a vote of
confidence from the relevant authorities. We are grateful and
appreciative to them and look forward to another 35 years in
Salta.
The new 35 year term provides the solid foundation and long term
security necessary for the future unlocking of the full potential
of Puesto Guardian including, importantly, the funding for field
development.
We look forward to the publication of the updated CPR
shortly."
A new 35 year Unconventional Concession covering Puesto
Guardian, expiring August 2050, has been granted to President
replacing the former Concession which was due to expire in 2026.
The new Concession permits both conventional and unconventional
exploration and production. The relevant law defines unconventional
as including not only shale but also tight and low permeability
rocks.
This extends the Concession 24 years beyond the previous term
allowing President to produce its current reserves, add new
reserves and make discoveries in this period. It is a significant
incentive for President to fully exploit the full potential of the
Concession knowing it has the flexibility and time to do so.
The new Concession, one of only a few granted in Argentina to
date pursuant to a new law introduced in 2014 to increase oil and
gas investment, is the first one to be granted in the Salta
Province.
The principal terms of the new Concession include:
a) Term 35 years from now expiring in 2050
b) Covers both unconventional and conventional
c) No initial upfront payments
d) An increase in royalties paid by President commencing 2026 from 15% to 18%
e) A work programme spend of US$11.5m within the next three
years which expenditure in any event forms part of the Company's
plans and budgeting over that period
f) A reconversion payment of US$2m payable after the said work
programme period of three years, such monies anticipated to be made
out of cash flows
The new law for Unconventional Concessions also provides for the
possibility of obtaining multiple consecutive 10 year extensions to
the Concession after 2050, in contrast to the previous law where
only one ten year period was permitted.
The current CPR over Puesto Guardian produced by Gaffney, Cline
& Associates in December 2014, based on the previous Concession
expiring in 2026, gave President 2P Proven and Probable
Conventional Oil Reserves of 14.1 MMBbls and 3C Contingent
Conventional Resources of 16.5 MMBbl, with the 2P Oil Reserves
valued at NPV 10 (net present value discounted by 10%, pre
corporation tax) of US$297 million. In light of the changes
announced today, an updated CPR is anticipated to be issued
shortly.
President continues to benefit from sale prices of its oil at a
level of approximately US$70 per barrel together with an additional
$3 per barrel for 2015 increased production.
Miles Biggins, Bsc Joint Honours University College London, with
25 years of experience in the oil and gas sector, is a Petroleum
Engineer and member of the Society of Petroleum Engineers who meets
the criteria of qualified persons under the AIM guidance note for
mining and oil and gas companies, has reviewed and approved the
technical information contained in this announcement.
Contact:
President Energy PLC
Peter Levine, Chairman +44 (0) 207 016 7950
Miles Biggins, COO +44 (0) 207 016 7950
Ben Wilkinson, Finance Director +44 (0) 207 016 7950
RBC Capital Markets
Jeremy Low, Matthew Coakes, Daniel Conti +44 (0) 207 653
4000
Canaccord Genuity Limited
Henry Fitzgerald-O'Connor +44 (0) 207 523 8000
Bell Pottinger
Gavin Davis, Henry Lerwill +44 (0) 203 772 2500
This information is provided by RNS
The company news service from the London Stock Exchange
END
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