President Energy (AIM: PPC), the upstream oil and gas company with a diverse portfolio of production and exploration assets focused primarily in Argentina, provides details on the completion of the acquisition of its interests in the Las Bases and Puesto Prado Concessions, Rio Negro Province, Argentina (President Operator and 90%, EDHIPSA 10%) (together "the New Concessions").


• Acquisition of the New Concessions completed, and purchase price paid

• Incremental production to commence in December and continue to increase in the new year

• Strategic pipeline unlocks President's gas assets and provides third party transport revenue

• Existing hydrocarbon reserves acquired and targeted to grow further in 2019

Las Bases and Puesto Prado

The acquisition of the New Concessions from the Rio Negro Province (the "Province") has now been completed and paid for with the relevant Provincial decrees having been issued formally awarding the New Concessions to President.  The Province has granted President 90% operating interests over the New Concessions, which have a 10-year term. President is pleased to partner with EDHIPSA, the Provincial energy company, who will hold a 10% interest. The 10 year terms are renewable.

The purchase price of the New Concessions is US$9,904,000 in aggregate of which US$8,704,000 was paid to the Province yesterday (the "Initial Consideration") and the balance will be paid in 12 months' time utilising operational cash flow. The Initial Consideration has been partly financed through an additional US$4 million of secured term loan bank facility (the "Bank Facility") and an additional US$4 million unsecured loan made to the Company by the Company's existing lender IYA Limited ("IYA") under the terms of President's current line of credit facility with IYA. The balance of the Initial Consideration was paid out of the Company's own cash flow.

IYA is a company whose ultimate beneficial owner is Peter Levine, the Chairman and Chief Executive Officer of President and as such, the facility extension is a Related Party Transaction pursuant to AIM Rule 13 in respect of which further reference is made below. The additional bank facility is repayable by quarterly instalments of principal and interest in line with the Company's existing bank facility with both being fully paid off by mid-2021. The additional unsecured loan made by IYA is not repayable until 31 December 2021 and bears interest at the same rate as the extra tranche of US$4 million bank facility  being 12.5% over three month US Dollar Libor per annum.

Las Bases and Puesto Prado have historically audited proven reserves estimated at approximately one million barrels of 1P category hydrocarbon reserves being proven developed producing reserves which management believes can in the right circumstances be expanded by end 2019 to four million barrels of 2P (proven and probable hydrocarbon reserves).

The New Concessions have extensive infrastructure facilities as well as a strategic pipeline of some 60 kms in aggregate  with its own valuable tie and metering facility at the main regional pipeline. President's pipelines now stretch from the Company's Estancia Vieja Concession, through Puesto Prado and then Las Bases to the tie in.  President is immediately benefiting from pipeline income currently being generated from the transport of gas produced by Compania General de Combustiles S.A. ("CGC"), from its neighbouring concession in Rio Negro. President will seek in the future to capitalise on its infrastructure by offering capacity to its other neighbours, particularly through the 38 kms 8-inch steel section of pipeline from Las Bases to the tie in.

President is now working expeditiously to bring into production certain wells that are currently shut in on the New Concessions. Whilst at this early stage it is inappropriate to be specific as to expected production levels, it is targeted that both oil production from Puesto Prado and some gas production from Las Bases will contribute to year end production figures. The process of bringing wells on will continue into Q1 2019, which will help the Company understand the capabilities of the New Concessions. Further information on progress will be provided in December once known.

Testing of the pipeline between Estancia Vieja and Puesto Prado is taking place shortly with a view to initially using the Estancia Vieja's gas to generate electricity to power the Puesto Prado facilities and wells by the end of the year. It is expected that the Company will commence commercial sales of Estancia Vieja gas to the local market during Q1 2019.

The Company is in the course of sub-surface reviews and is provisionally targeting, subject to sub-surface conditions and our partners approval, to drill at least one gas well at Las Bases in H1 2019 with work there and in Puesto Prado continuing into H2.

Related Party Transaction

As stated above the additional unsecured US$4 million loan from IYA constitutes a related party transaction for the purposes of AIM Rule 13. Rob Shepherd, Jorge Dario Bongiovanni and Alex Moody-Stuart are considered to be independent directors for the purposes of AIM Rule 13 ("Independent Directors"). As such, the Independent Directors, having consulted with the Company's nominated adviser, finnCap Ltd, consider that the terms of the additional loan are fair and reasonable insofar as the Company's shareholders are concerned.

Peter Levine, Chairman and Chief Executive commented:

"The acquisition of Las Bases and Puesto Prado is an important strategic move. It gives the Company consolidated critical mass in the important Neuquén Basin, additional production and proven reserves together with a valuable owned and operated pan-provincial gas pipeline and tie-in providing a key infrastructure footprint within the region, which can be utilised to deliver significant growth.

"This installed and valuable infrastructure in addition to potentially producing but shut-in wells allow President to begin generating revenues from these assets immediately as well as unlocking a route to market for President's Estancia Vieja gas. As such we expect to see early benefits from these New Concessions with expansion continuing next year.

"We pleased to again be working with the Provincial energy company EDHIPSA as our partner in the New Concessions and look forward to expanding on our excellent and respectful relationship to successfully develop these areas."

Victor Linari, Master in Geology and Member of the Society of Exploration Geophysicists, who meets the criteria for qualified persons under the AIM guidance note for mining and gas companies, has reviewed and approved the technical information contained in this announcement.