Latest Questions (January 2020)
(click on the question to view answer)
Can we expect an RNS on unaudited 2019 performance?
Yes, we expect this within the first two months of 2020.
Will there be drilling in H1 2020?
Yes, starting with Rio Negro and Jefferson Island, Louisiana and our plan is to commence with Salta and Paraguay in H2.
Is the gas pipeline construction on track?
Plus or minus. There are external factors such as weather that affect matters. We still aim to be operational by or about end of February after testing and commissioning.
What are your plans to expand production this year?
We have the new drilling programmes and the commencement of the material gas production. We continue to look for the right acquisition opportunities but these take time to identify and mature.
Will you get debt down in 2020?
Yes. This is one of our core objectives in 2020. We are actively working on it.
Why are you always tight for cash?
Since late 2017 we have spent over $33 USD million in cash for the purchases of our Rio Negro assets, with capex to date, the figure grows to some $60 USD million. That’s both a tribute to and a big bite out of our free cash flow which will pay back, increasing as step by step our debt reduces and economies of scale efficiencies improve.
There is a new government in Argentina...
Yes and it needs to control costs. However, whilst there will inevitably be measures to control costs and thereby inflation, there is no chance in our view of the draconian Decree 566 returning. Well managed businesses such as ourselves continue to generate operational profits and good margins.
Will we suffer, like last year, some wells going down and electricity outages and floods?
It’s inevitable that some of these will occur as these are day to day challenges in our industry. There’s a limit to what we can do to mitigate factors out of our control. We learn, we plan, we progress – step by step.
Paraguay drilling/ farm out
After the drilling failures in 2014, is there any prospectivity left in Paraguay?
Yes, significant and the more work we do the more we appreciate how compelling the exploration opportunity is. But this is exploration, it is inherently risky. It has to be remembered that this is a new frontier. It is not unusual in such cases that there is initial failure from which one learns and we have learnt a lot both operationally and sub surface. On the former with our successful Argentine management handling the operations and with the experience gained in all areas, significant savings and efficiencies will be achieved
Whilst elements of the 2014 drilling program were indeed disappointing, it was by no means a failure. In fact, two logged discoveries in the deeper more expensive Paleozoic formations were made in the second well but structural issues down hole prevented testing
Since then, President has focused on de-risking a number of Cretaceous opportunities that have certain characteristics in common with the prolific producing fields across the border in Argentina
Taking into account the previous events we have carried out extensive work to proof test the concept continuing right up to now
Recent remapping, geophysical re-interpretation, analogue comparisons with data from the Argentine side, geochemical and AVO studies over highgraded prospects provide support for charge/migration of hydrocarbons into what there are undoubtedly structures with what shows as successful sealing
One well is planned, targeting one such prospect to commence operations at or around the third quarter 2020 which will mean that the major expense will fall into 2021 and accordingly will not affect in any way our plans for growth in our producing areas this year
In parallel a farm out process is continuing with parties signed to NDA’s. You will appreciate when we say that there can be however no guarantee that any farm out will happen. The farm out process does not affect the plans of President in this regard.
Will you be able to provide a tabular schedule of monthly bopd, including $/bbl and ‘net backs’?
President is always looking at ways to clarify and refine the best way to report its figures and will bear this in mind when drafting results in future. However, we will not be issuing monthly figures as they give an unrepresentative and misleading view of field production which can ebb and flow, particularly as extensive work continues in the fields with wells shut in and then restarted to facilitate this.
What is the timeline?
At the moment it remains on hold but is not forgotten
Will the company start to pay dividends, if so when?
The Company has made significant progress over the last year. Whilst the topic of payment of dividends is anticipated to be considered during 2020, at the present time it is sensible to apply our free cash flow in continuing to grow the company to a stage where meaningful, stable dividends can be paid without affecting our growth and proportionate to our financial resources and facilities at the relevant time. The cash flow is targeted to have meaningful growth rates with a progressive pay down of debt; the continuance of this will lead to a sustainable dividend policy in the not too distant future.