15th Sep 2015 08:49
LONDON (Alliance News) - President Energy PLC Tuesday said its Puesto Guardian concession in Argentina has been extended by a further 24 years by authorities.
The concession was originally due to expire in 2026, but has now been replaced by an unconventional concession for 35 years, meaning it will now expire in 2050. The concession area remains the same as before and now covers both conventional and unconventional exploration and production.
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, where Puesta Guardian is located.
In return for the extension, President will not be required to make an upfront payment but will increase the royalty it pays from its current 15% level to 18% in 2026. President will also spend USD11.5 million on the concession over the next three years, USD2.0 million of which it will receive back once the work is completed.
"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," said Chairman Peter Levine.
"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," he added.
Beyond 2050, President will be able to extend the concession in further ten year period blocks. Previously, only one ten-year extension would have been allowed, it said.
Importantly, the company will now update its competent persons report for the project to take into account the extended life of the project.
Currently, the competent persons report states the concession has 2P proven and probable reserves of 14.1 million barrels and contingent resources of 16.5 million barrels.
President said its oil production in Argentina continues to sell for around USD70 per barrel, together with an "additional USD3 per barrel for 2015 increased production," it said. That compares favourably to Brent and WTI prices, which were trading at USD48 and USD44 per barrel respectively on Tuesday.
President shares were untraded on Tuesday morning, last trading at 9.80 pence per share.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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