President Energy sees decent uptick in Argentina reserves

South America-focussed upstream oil and gas company President Energy announced its new independently certified hydrocarbon reserves report on its assets in Argentina on Friday, reporting that as at 31 December its net 1P and 2P reserves in the Neuquén Basin increased over the previous year by 82% and 41% respectively, to 8.1MMboe and 11.4MMboe.

The AIM-traded firm said overall group net 1P reserves in Argentina increased by 6% to 15.4MMboe.

Its overall net 2P reserves in Argentina, however, showed a decrease to 24.9MMboe from 26.5MMboe year-on-year.

The board said the 2P differences were due to the reserves in the Salta Province being prudently adjusted due to deliberately reduced capital expenditure activity, as it focussed on the higher value, value added Rio Negro fields.

President's net Argentina 3P reserves increased by 14% to 30.5MMboe.

The company explained that the Neuquen Basin 1P and 2P reserves comprised 81% oil, with the balance being gas, but with gas representing only around 3% of President's current production.

Only a limited amount of reserves were currently attributed to the Las Bases and Puesto Prado Concessions acquired in December.

The reserves in those areas were expected to grow in 2019, as President implemented its capital expenditure plans and “significantly increase” gas production.

President Energy said the beneficial effect of such emphasis was demonstrated by the NPV10 value of its net 1P and 2P Neuquen Basin reserves increasing by 44% and 22% respectively, to $133m and $192m.

The group's entire Argentina 2P reserves NPV10 value increased 15% to $291m, and its 3P Argentina reserves value increased 40% to $361m.

Combined with Management estimates of value for Louisiana reserves, the group's net 2P reserves value calculated on an NPV10 basis - ignoring all exploration resources - was now nearly $300m as at 31 December, representing an approximate 200% premium to its total enterprise value, taking into account its current market capitalisation and total gross debt of approximately $30m.

“The increases in key producing reserves and value in the Neuquén Basin in Argentina and its higher contribution to entire group reserves reflect our successful and continued focus on that area,” said President Energy chairman and chief executive officer Peter Levine.

“The report and our continued cash generation is a clear vindication of our philosophy of value over volume underpinned by the success of President's acquisitions policy in the last 18 months and our concentration on margins.”

As a result, Levine said the board remained focussed on materially increasing profitable hydrocarbon production, combined with reserves growth.

“With the benefit of the latest acquisitions made in December, including the strategic gas pipeline and infrastructure, we are working diligently towards significantly growing our gas production this year as well as oil, thereby providing a more balanced energy portfolio.”