30th Jul 2014 10:23
LONDON (Alliance News) - President Energy PLC Wednesday said it has decided to take full ownership of the Puesto Guardian Field in Argentina, after buying the 50% it doesn't own for an initial cash payment of USD5 million, to be followed by a further USD1.9 million in cash payments over two years.
The oil and gas exploration and development company said it saw the opportunity to takeover the site after its partners at the site, Tripetrol Petroleum SA and Petrolera San Jose SRL began looking for finance for their ongoing activities outside of Latin America.
Under the terms of the deal, President will pay an initial USD5 million, before two separate payments of USD880,000 and USD1 million at the end of 2015 and 2016, respectively.
It will also waive long standing debt worth USD1.6 million owed by the sellers and will provide a royalty of 5% on the proceeds of production whenever production reaches 1,000 barrels per day from Puesto Guardian capped at USD11 million, bringing the total possible consideration to USD20 million.
President said that it will take over operations of the field and the USD84,000 it currently pays to the sellers to operate the Puesto Guardian site will be stopped.
The Puesto Guardian concession holds five fields and is currently producing at 300 barrels of oil per day at a realised price of USD77.2 per barrel but during production in the 1980's the site reached maximum production of 9,000 barrels per day.
The company has carried out positive fracking tests at the site showing the proper work overs can add to production at the fields and further testing has shown a deep gas Paleozoic play in the Martinez del Tineo field where gross best un-risked prospective resources have been independently estimated at 570 billion cubic feet and 14.5 million barrels of condensate.
President Energy said it will take the next few months to manage its acquisition and carefully consider its next steps, focusing on minimising costs and maximising profit, with a new independent report being commissioned to provide analysis before the end of 2014.
"President has taken the opportunity, unexpectedly presented, to consolidate its Puesto Guardian interest and take full ownership and operatorship. The price and terms of payment reflect good value to shareholders," Executive Chairman Peter Levine said in a statement. "We now have the control to put us in the best position to unlock the potential of this asset."
President Energy shares were up 6.7% to 34.00 pence putting it amongst the top ten AIM All-Share risers on Wednesday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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