Half Yearly Report

Thursday 30 September 2010

PRESIDENT PETROLEUM COMPANY PLC

("President Petroleum" or "the Company")

Interim Results for the six months to 30 June 2010

President Petroleum (AIM: PPC), the oil and gas exploration and production company with onshore producing and exploration assets in Louisiana, USA and onshore exploration licences in South Australia, announces it interim results for the six months ending 30 June 2010. Separately, the Company will also announce today the conditional placing of 63,291,140 new Ordinary Shares with institutional investors to raise gross proceeds of £31.6 million

Highlights

Development

·; Acquisition of 25% working interest in the East White Lake ("EWL") field in Louisiana, USA for up to US$3.9 million adds 1.3 mmboe of proven and possible reserves

·; Successful development drilling at EWL increases net production from the field to 100 boe/d from 22 boe/d in January

·; Location for Northumberland 2, the first exploration well on PEL 82 in South Australia confirmed

Financial

·; Revenue of US$1.8 million (2009 H1: US$3.1 million)

·; Investment of US$5 million in acquisition and development activity (2009 H1: US$3 million)

·; Operating cash flow before movements in working capital of US$0.4 million (2009 H1: US$1.1 million)

·; Operating loss of US$0.9 million (2009 H1 : loss US$1.9 million)

·; Adjusted EBITDA1 of US$0.1 million (2009 H1: US$1.75 million)

Operational

·; Average net production of 205 barrels of oil equivalent per day (boepd) from onshore Louisiana (2009 H1: 430 boepd). 2009 production included production from the Orion well in Michigan which was disposed of in June 2009

Post-Period

·; Conditional Placing of 63,291,140 new Ordinary Shares with major institutions to raise gross proceeds of £31.6 million (approximately US$50.0 million and £30.2 million net of expenses)

·; Low cost acquisition of additional leases in Louisiana secures deep rights to 10.8 mmboe of possible reserves

·; Drilling rig secured for Kafoury 3 well, the first well targeting these new reserves with spud date in early November 2010

·; Drilling rig secured for Northumberland 2 well in South Australia with spud date in Q1 2011

Stephen Gutteridge, Chairman of President Petroleum, said:

"President Petroleum has moved forward strongly in the first half of 2010, adding reserves and production, and bringing 2 high impact wells to drill ready status. The increased level of activity is a direct result of the restructuring undertaken in November 2009 and the access to the substantial support provided by our largest shareholder, Levine Capital Management.

"That support has now enabled us to announce today that we are raising US$50.0 million through a conditional placing and in the process adding further large institutional shareholders to our register. Our potential multi-well drilling programmes in both Louisiana and South Australia are now fully funded and we remain well-positioned to acquire further attractive assets as they become available."

For further information contact:

Ed Childers, the Company's Chief Operating Officer, and Dr Michael Cochran, the Company's Exploration Director, who meet the criteria of qualified persons under the AIM guidance note for mining and oil and gas companies, have reviewed and approved the technical information contained in this announcement.

Note 1: Adjusted EBITDA: EBITDA is adjusted to exclude IFRS charges for share options and include US$0.26 million of hedging gains realised in the six months ending 30 June 2010 (2009 H1 : US$1.23 million).

The following financial statements are extracted from the Company's unaudited interim financial statements for the six months ending 30 June 2010. These statements will be posted to shareholders on the register and will be made available on the Company's website www.presidentpc.com.

Chairman's statement

The first half of 2010 has been a very active period for President Petroleum with over US$5 million invested in acquisition and development activity. This commitment has continued into the second half of the year with further acreage acquisitions in Louisiana, and the confirmation of at least 2 significant wells to be spudded within the next few months.

This increased activity has created significant prospects for the Group and is a direct result of the restructuring of the group in November 2009, and the substantial financial and resource support provided by the Group's largest shareholder, Levine Capital Management.

US Operations

Average daily production in the first half of 2010 was 205 boepd. This represents an increase of 36% on the second half of 2009, although it is below the levels achieved prior to the disposal of the Orion field in June 2009.

In January, President Petroleum acquired a 25% working interest in the East White Lake field in Louisiana, USA, adding proved and possible reserves totalling 1.3 million barrels of oil equivalent (boe). Drilling and well work-overs at the field have quickly brought more of those reserves into production with net production increasing from 22 boe per day (boepd) in January 2010 to over 100 boepd in June 2010.

Additional investment in the Group's existing operated field at East Lake Verret has also resulted in higher levels of production, and across both fields the proportion of oil production has increased from 24% in Q4 2009 to 45% in Q2 2010, further enhancing revenues.

As a consequence of the disposal of Orion, first half revenues of US$1.78 million are lower than the US$3.1 million reported last year. However, with the low operating costs of the Louisiana fields, the Group recorded a significantly lower operating loss of US$0.9 million compared to a loss of US$1.9 million in 2009. Adjusted EBITDA fell to US$0.1 million from US$1.75 million in H1 2009, primarily as a result of lower receipts from hedging contracts

Post period-end, a further acreage acquisition was announced, adding an additional 10.6 million boe of possible reserves at East Lake Verret. The first well to evaluate these reserves, the Kafoury 3 well, is expected to commence in the first week of November 2010.

Australian Operations

On the PEL 82 licence, the location for Northumberland 2, the first exploration well, has been selected and will target prospective resources of 40 million barrels in the Waarre and Flaxman sands. Locating a suitable drilling rig has been challenging but a contract has now been signed with Ensign International Energy and the rig is expected on location in early 2011.

PEL 82 remains a highly exciting exploration play with prospective resources estimated at 430 mmbbls. A number of additional target reservoirs have already been identified, and, depending on the results of Northumberland 2, a multi-well drilling programme remains a possibility. There are major multi-million bbl structures requiring further 3D seismic work in the north of the licence.

In contrast, the Group's PEL 132 licence is very much a frontier exploration area and is not a high priority at present. With limited information on the licence and with renewal or relinquishment in 2 years' time, a revised work programme was agreed with the South Australian authorities and an aerial gravity and magnetic survey was undertaken in March 2009. The results of this are being analysed in conjunction with all other available data, including the results of geo-thermal drilling on the licence, in order to provide the most informed view possible. PEL 132 is currently in suspension whilst this analysis is carried out.

Outlook

With a strongly supportive major shareholder and improved production levels, President Petroleum will continue to seek growth from its existing assets through drilling and development and through acquisitions of both a bolt-on and transformational nature.

The group enters the second half of 2010 with a strong and stable foundation, access to equity and debt finance, and with the prospect of at least 2 significant wells spudding within the next few months. Either of these wells has the potential to transform President Petroleum's reserve and production outlook, but in addition, the Group will continue to search out additional assets to acquire and build its US business, and to identify and deliver a sizeable acquisition to scale up the Group towards its objective of mid-cap status.

Note : Adjusted EBITDA: EBITDA is adjusted to exclude IFRS charges for share options and include US$0.26 million of hedging gains realised in the six months ending 30 June 2010 (2009 H1 : US$1.23 million).

Notes to the Consolidated Accounts

1. Nature of operations and general information

President Petroleum Company PLC and subsidiaries' (together 'the Group') principal activities are the exploration for and the evaluation and production of oil and gas. 

President Petroleum Company PLC is the Group's ultimate parent company. It is incorporated and domiciled in England. The Group has onshore oil and gas production and reserves in the USA. The Group also has onshore exploration assets in the USA and Australia. The address of President Petroleum Company PLC's registered office is 13 Regent Street, London, United Kingdom. President Petroleum Company PLC's shares are listed on the Alternative Investment Market of the London Stock Exchange.

These condensed consolidated interim financial statements (the interim financial statements) have been approved for issue by the Board of Directors on 29 September 2010.

The financial information set out in this interim report does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The financial information for the six months ended 30 June 2010 and 30 June 2009 was neither audited nor reviewed by the auditors The Group's statutory financial statements for the year ended 31 December 2009 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified.

2. Basis of preparation

The interim financial statements for the six months ended 30 June 2010 and 30 June 2009 do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2009.

These financial statements have been prepared under the historical cost convention, except for derivative financial instruments which have been measured at fair value. The interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2009.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.