TIDMPPC
RNS Number : 5312J
President Energy PLC
24 August 2021
24 August 2021
PRESIDENT ENERGY PLC
("President", "the Company", or "the Group")
Audited Results for the year ended 31 December 2020
2021 update and outlook
AGM date and Investor Presentation
President (AIM: PPC), the upstream oil and gas company with a
diverse portfolio of production and exploration assets focused
primarily in Argentina, is pleased to announce its audited results
for the year ended 31 December 2020 and a 2021 update and
outlook.
In the face of the unprecedented challenges in 2020, including
the dramatic drop in the oil price to less than US$20 per barrel,
the Company still delivered solid progress and operational
profitability, with adjusted EBITDA* of almost US$2.1 million on
turnover of approximately US$28 million. This demonstrates the
continued strength of the Group and resilience in navigating
through the perfect storm of Covid-19 and its tsunami of
economically challenging waves which enveloped the whole of the
World.
The Company's Annual Report will be posted to shareholders by
the end of August.
Highlights FY2020
Financial
-- Group revenue to 31 December 2020 of US$27.8 million (2019: US$40.8 million) largely due to significantly lower average realised commodity prices, with a reduction of 40% in Argentina to US$30.0 per boe (2019: US$49.9 per boe) and 34% in the US to US$29.9 (2019: US$45.5 per boe)
-- Free cash generation from core operations* (excluding
workovers) US$6.2 million (2019: US$15.1 million)
-- Net cash generated by operating activities US$4.4 million (2019: US$21.5 million)
-- Adjusted EBITDA* remained positive in the face of
unprecedented adversity at US$2.1 million (2019: US$11.6
million)
-- Borrowings at year end significantly reduced year on year by
22% to US$17.6million (2019: US$22.6 million). Of this, only US$6.5
million is third party financial debt with the balance being to
IYA, an affiliate company of Peter Levine
-- After depreciation, depletion and amortisation of US$10.3
million (2019: US$10.5 million), reflecting the challenging trading
conditions, a loss after tax for the year arose of US$11.3 million
(2019 loss: US$88.3 million)
Corporate
-- Trafigura, one of the largest commodity traders in the world
and a major offtaker of President, became a ca. 16% shareholder
-- Atome created as a UK intermediate holding company focusing
on developing a hydrogen and ammonia production, marketing and
sales business. Work with significant potential is being progressed
as is an intended spin off and separate flotation on the London
Stock Exchange for later this year
Operations
-- An increase of 12% in Group net average production to 2,714 boepd (2019: 2,415 boepd)
-- Two new wells successfully drilled in Argentina in 2020 on
time and budget with follow-on drilling targets identified
-- Significant new infrastructure completed in Argentina
including laying some 20km of new pipelines and installing new
compressors
-- Continued improvement in Argentina core operating performance
with well operating costs per boe in 2020, excluding royalties and
workovers*, reduced by 17% to US$17.6 per boe (2019: US$21.1)
-- Group-wide administrative costs per barrel* were further
reduced to US$4.7 per boe (2019: US$4.8 per boe)
Production and reserves
-- Net 2P (proven and probable) reserves in Argentina at year
end, as confirmed by an independent reserves audit, decreased to
24.3 mmboe (2019: 25.9 mmboe)
-- Louisiana 1P proven producing reserves estimated at 724 mboe (2019: 540 mboe)
* calculation of all quoted metrics not directly corresponding
to GAAP measures are detailed in the Alternative Performance
Measure glossary and cross referenced to the Notes where
applicable
Peter Levine, Chairman, commented in the Chairman's
Statement:
"When I wrote my statement on 30 June last year, I don't think
any of us could have imagined that 14 months on we would still be
battling the impact of Covid-19. As I said previously, I spent
several months earlier this year travelling around our operations
in South America overseeing our exciting work programme and
advancing a material investment in our Paraguay assets. During that
time, I saw first-hand the devastation wrought by the global
pandemic and the significant sacrifices required to keep businesses
operational during such difficult times. Having myself been
hospitalised for two weeks, although thankfully now well on the way
to recovery, I remain eternally grateful for the skill and
dedication shown by the medical professionals in Paraguay and
across the Globe.
As I said at the time, I have never been one to sit behind a
desk to manage my business and I am willing to put myself in harm's
way for the benefit of our stakeholders so say none of this to gain
sympathy. I make these observations so that people might understand
the dedication shown by our hardworking employees in the face of
such adversity. It is this dedication that has led to us delivering
all the progress noted in the last 20 months.
Day by day our Company gets stronger although always subject to
intermittent variables which do throw stones in our path to deflect
us. We do all we can to grow President organically and by strategic
initiative. I am confident that 2021 will be seen by its end as a
year of progress with the Paraguay farmout, new drilling in Salta
and the spin off and float of Atome all set to be completed by year
end.
We successfully controlled what we could and the key performance
metrics through 2020 bear witness to this: - increased average
production, reduced operating and administrative costs as well as
overall debt. I am sincerely grateful to everyone within the
business for their efforts. We have a lot of work to do this year,
but we are very much up for it and relishing the prospects.
The energy landscape has changed even faster and more
dramatically than anticipated. President, as an energy company
focused on long term goals, embraces this and shareholders may have
noticed the rapid progress we are making with Atome Limited, the
subsidiary we formed earlier this year to focus on hydrogen-related
opportunities."
Production
Natural Gas
Oil (bbls) (mmcf) Total (mmboe)
Country 2020 2019 2020 2019 2020 2019
Argentina 623,946 768,594 1,648.5 334.1 898.7 824.3
USA 50,582 32,798 263.3 145.7 94.5 57.1
674,528 801,392 1,911.8 479.8 993.2 881.4
-------- -------- -------- ------ --------------- ------
Net Reserves (mboe) Argentina USA Total
As at 31 December
2019 25,929.1 539.7 26,468.8
Revisions in reserves (729.3) 248.2 (481.1)
Acquisition USA 0.0 30.4 30.4
Production (898.7) (94.5) (993.2)
As at 31 December
2020 24,301.1 723.8 25,024.9
---------- ------- ---------
Reserve revisions in Argentina reflect the results of production
performance and workovers in the year and the subsequent
independent auditor's reserve report by J@R Consultora. It is
important to note that the reserves as at 31 December 2020 do not
represent the total of what is present and/or recoverable in the
respective fields in Rio Negro but only rather what are present
and/or recoverable over the term of President's current licenses as
at the audit date.
Impact of COVID-19 on our operations
The first priority is the welfare and health of our employees
and families as well as our contractors working in the field.
President monitors and checks on the health of all its employees
and follows strict guidelines. Measures include restricting numbers
travelling to fields in vehicles, monitoring health of operatives
daily and social distancing. These necessary extra precautions have
had no impact on production levels.
The Company successfully transitioned in the year to staggered
office / home working for all our administration and office staff
in Argentina, with everyone equipped with all necessary IT
infrastructure when working remotely. Moral is excellent with a
strong sense of togetherness throughout and there has been no
decrease in efficiency although there have been delays in
administration, particularly in relation to the annual audit that
led to the delay in the release of these annual results. At the
time of this statement, office working is making a partial
carefully planned and implemented comeback. President has no
offices in the UK or Louisiana, so the Company is well used to
working remotely and economically.
Production from operations has not been affected and there have
been no shut-in wells or choke back of our wells.
Climate Change
President, acknowledges and takes due regard to the increasing
emphasis on climate change around the World as evidenced by the
activities regarding Atome. With regards to our core non renewables
business, we acknowledge climate change as a risk facing President
that will continue to be considered regularly by the Board.
Outlook
2021 will be a very busy year for the Company with a record
number of wells to be drilled and a return to growth. There are
several things for investors to look out for in the full year
results of 2021.
1. Three new wells have been drilled in Rio Negro in the first
half of 2021, with a further 3 to be drilled in Salta in the second
half of the year.
2. The return to activity in Puesto Guardian is significant with
the real beneficial impact on the Company only occurring in all
material effects from the start of 2022 when it is projected all
wells will be on stream. Puesto Guardian is a long-term concession
to 2050 and 100% owned and operated by President. Current
production is stable and showing good reservoir properties albeit
low in volume due directly to the fact that there have been no new
successful drilled wells there for some 10 years. Unproduced
reserves of scale are unquestionably present and there is
significant potential to grow. The hard lessons that have been
learnt from unsuccessful drilling in the past has given President a
determination to succeed with the Company now having the resource
and a drilling and engineering design team that have proved
themselves able to deliver in action. Moreover, with higher oil
prices mitigating the greater discount for Salta oil and all
necessary infrastructure in place to cope with greater volume,
there are potentially materially enhanced margin barrels to be
had.
3. Along with drilling and workover operations, President
continues with the infrastructure projects previously announced
including the treatment plant commissioned at the date of this
report fully operational resulting in an estimated $4/boe reduction
in operating costs.
4. The much-awaited Paraguay farm-out is now only awaiting
regulatory approvals, currently expected before the end of
September, and in the meantime, negotiations regarding long lead
items and the drilling rig are in progress with various site visits
having taken place. Drilling is expected to commence in the first
half of 2022 at the high impact Delray complex of prospects
internally estimated to contain 230 MMbo of unrisked oil in
place.
5. As to oil prices, whilst our modest Louisiana operations
approximately track WTI and Louisiana Light prices, Argentina
realisation prices are always based on the price of Medanito crude
and, in Rio Negro and Salta, President's realisation price is
currently estimated approximately US$55 per barrel.
6. Gas prices in Argentina reflect the current modest supply
squeeze which is expected to exacerbate over the winter with
current spot prices of approximately US$4 per MMBtu.
7. The unaudited results for the first half of the current year
will be announced in due course. Two of the key unaudited metrics
are that Group turnover was up 24.8% over the same period in 2020
at US$17.1 million on average Group production approximately the
same as for the previous full year at 2,648 boepd.
8. Whilst more information will be given in the half year
results, our production in Louisiana is reduced due to our main
Triche well requiring a workover for which we have long awaited a
suitable rig, hopefully due now in or around October. Group
production remains stable with gas production, albeit higher year
on year, still not achieving our expectation due to initial
declines in our new gas wells that we are currently working to
address
Oil and gas business acquisition strategy
President remains committed to growing its oil and gas business
by acquisition where appropriate and material efforts continue to
be made in this regard, including considering opportunities outside
of its present areas.
Each and every opportunity is carefully considered; however, in
the absence of suitable prospects and terms, the Company continues
to avoid spending acquisition dollars with all the direct and
hidden risks, costs and expenses when much under-utilised existing
production assets in the Company's portfolio, such as Salta, can be
exploited.
Atome
President is progressing high impact work with potential major
long-term upside.
The Directors consider that there is present and potential
future material shareholder value in Atome which we expect the
projected forthcoming flotation to realise and unlock for
President's own shareholders as well as providing those coming in
on the listing with significant upside in a sector of increasing
importance in the drive towards a carbon neutral future.
Annual General Meeting and Investor Q&A
The Annual General Meeting will be held on Thursday 23 September
2021 at 11 a.m. BST at Field Fisher, Riverbank House, 2 Swan Ln,
London EC4R 3TT and President is pleased to announce that Peter
Levine (Chairman) and Rob Shepherd (Finance Director) will provide
a live presentation relating to Annual General Meeting via the
Investor Meet Company platform on the same day, 23rd Sep 2021, at
1:00pm BST.
The presentation is open to all existing and potential
shareholders. Questions can be submitted pre-event via your
Investor Meet Company dashboard up until 9am the day before the
meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add
to meet PRESIDENT ENERGY PLC via:
https://www.investormeetcompany.com/president-energy-plc/register-investor
.
Investors who already follow PRESIDENT ENERGY PLC on the
Investor Meet Company platform will automatically be invited.
Contact:
President Energy PLC
Peter Levine, Chairman
Rob Shepherd, Group FD +44 (0) 207 016 7950
finnCap (Nominated Advisor and Broker)
Christopher Raggett, Tim Harper +44 (0) 207 220 0500
Detailed financial review
In 2020, we faced unprecedented challenges with the Covid-19
pandemic and resulting economic turbulence that led, amongst other
things, to a collapse in oil prices. Our continued focus on
financial discipline throughout the business has allowed the Group
to continue to make progress in our core business through
investment in new wells and development of gas assets in
Argentina.
Revenue fell by 32% to US$27.8 million (2019: US$40.8 million),
depressed by lower oil prices in both Argentina and the USA despite
higher overall sales volume. Overall Group production rose by 12%
reaching 2,714 boepd (2019: 2,415 boepd). Lower average product
prices for the year of US$30.0/boe (2019: US$49.6/boe) in part
reflected the growth in gas sales but mainly lower oil prices
through a turbulent year. Cost of sales of US$31.8 million (2019:
US$37.3 million) decreased due to lower well operating costs and
lower product price related royalty and production tax
expenses.
After depreciation, depletion and amortisation of US$10.3
million (2019: US$10.5 million) and administrative expenses of
US$4.6 million (2019: US$4.4 million), the Group recorded an
operating loss of US$8.7 million (2019: loss US$0.9 million)
After an impairment of US$1.9 million (2019: US$88.2 million)
related principally to intangible exploration assets in Argentina,
the loss for the year before tax was US$10.3 million (2019: loss
US$93.6 million) and, after tax, a loss for the year arose of
US$11.3 million (2019 loss: US$88.3 million).
Argentine operating performance
Production in Argentina increased by 9% to 898,704 boe (2019:
824,272 boe) or 2,455 boepd (2019: 2,258 boepd). Oil production
fell by 19% more than offset by a near fourfold increase in gas
production for the second year running. Average realised sales
prices in Argentina fell 40% to US$30.0 per boe (2019: US$49.9 per
boe) in line with the decline in world prices during the year.
Well operating costs in Argentina before non-recurring items*
fell by 17% to US$17.6/boe (2019: US$21.1/boe) as the focus
remained on cost control. Depreciation fell during the year to
US$10.9/boe (2019: US$12.3/boe)* following the impairment of Puesto
Guardian at the end of 2019.
Overall, following the annual independent review, proved and
probable reserves in Argentina fell by 3%. An impairment review was
conducted on Puesto Guardian following on from the write down in
2019 and on Rio Negro following a reduction in reserves recognised
at 31 December 2020. With respect to Rio Negro, President intends
to exercise its legal right to renew and extend its core Puesto
Flores/Estancia Vieja concession, currently due to expire in
November 2027, for a further ten years until November 2037 in
accordance with Argentine legislation, and consequently concrete
discussions with the Province of Rio Negro are progressing. Such an
extension will have a positive effect on reserves and on future
cash flow generation but was not considered in the impairment
review. No impairment was considered in relation to either asset
nor were the conditions considered sufficient to reverse the
impairment on Puesto Guardian recognised in 2019.
Over the past few years, the Group has been considering future
steps relating to the Matorras & Ocultar licences in Argentina;
in light of the uncertainty of future activity on the licence, the
Directors have now prudently decided to impair the intangible asset
in line with IFRS6 impairment indicators.
USA operating performance
Production from the Group's working interest in US operations
rose by 65% to 258 boepd (2019: 156 boepd). Production levels
recovered in 2020 following extensive flooding in Louisiana and a
workover of the Triche well in 2019 which had resulted in the
shutdown of the wells and facilities for four months.
Average realised prices in the US fell 34% on the prior year to
US$29.9/boe (2019: US$45.6/boe). Well operating costs excluding
royalty related expenses and non-recurring workovers* fell by 33%
to US$6.6 /boe (2019: US$9.8 /boe). Depreciation fell during the
year to US$3.6/boe (2019: US$4.9/boe)* following an increase in
reserves.
Following the completion of the technical review of the
Jefferson Island licence in the USA, and in light of the
macroeconomic conditions, it was decided to impair the asset
(US$0.1 million). The licence has been relinquished.
Corporate
Group administrative expense remained stable at US$4.6 million
(2019: US$4.4 million). While operations in Argentina and the USA
progressed, the price environment proved challenging, generating an
operating loss of US$8.7m (2019 loss US$0.9 million).
At the end of 2019, the Directors made the judgement that a
partial impairment of US$48.5 million was appropriate on the Pirity
licence reflecting indications arising during the farm out process.
When considering the fair valuation of the Paraguay asset, the
Directors have considered both the output of discussions from the
farm down process and internal assessments. Discussions with a
state-owned energy partner resumed in 2020 with an agreement
subject to regulatory approval announced in June 2021. It is
anticipated that the drilling in Paraguay will take place in 2022
after the farm down process has been completed later in 2021.
Accordingly, management considered that in light of the commitment
to drill and that the potential economic value remains unchanged,
it is appropriate to continue to capitalise the balance of US$53
million at 31 December 2020 (2019: US$54 million).
The Group's primary investment focus during 2020 was on
maintaining growth in core areas, increasing production in
Argentina whist maintaining a tight control on costs and cash flow
margins. In response to the challenging environment, the Group took
action to maintain financial stability.
In the first six months of 2020, the international commodity
trading and logistics group Trafigura agreed to subscribe for new
ordinary shares in the Company for a total sum of US$10 million at
an average share price of 2.4 pence per share, thereby becoming a
16.7 per cent shareholder in President. During the same period,
IYA, a Peter Levine group company, converted US$7.2 million of
monies owed to it from the Company into new ordinary shares at the
same average price. The net effect of the above has been to reduce
liabilities by some US$17 million.
On 4 June 2020, the Company announced that it had raised GBP4.73
million before expenses by way of placing ordinary shares,
including certain shares issued in settlement under direction
agreements. During 2020, US$0.83 million was received from Compañia
General De Combustibles S.A under a subscription agreement.
Investment in the Oil & Gas Assets component of Property,
Plant and Equipment in the year amounted to US$8.9 million (2019:
US$ 10.3 million) with the drilling and completion of two wells on
Las Bases and Estancia Vieja concessions, completion of gas
infrastructure projects and capital workovers. In the USA,
President acquired additional licence interests in the Triche well.
Lease additions of US$2.5 million (2019: US$ 1.4 million) largely
comprise the recognition of new contracts on a compressor and
generators in support of the increase in gas production. Contract
modifications during the initial phase of the Covid-19 pandemic and
the termination of drilling equipment contracts resulted in net
disposals in the year.
Overall, Trade and Other Payables decreased to US$13.8 million
(2019: US$26.5 million) largely due to early repayment of the
US$10.0 million contract liability with Trafigura S.A under an
offtake agreement and lower drilling related accruals.
Trade and Other Receivables decreased to US$4.6 million (2019:
US$6.5 million) in connection with the settlements made. The
Group's net current liability of US$4.8 million (2019: US$19.8
million) has decreased during the year due to early repayment of
the advance under the offtake arrangement with Trafigura S.A.
Furthermore, stripping out the liabilities on drilling and
acquisition investment activity, as detailed in Note 19, which are
periodic in nature, shows that the underlying net current liability
from ongoing operations is significantly lower at US$0.8 million
(2019: US$3.2 million). Year-end cash balances were US$1.1 million
(2019: US$0.9 million).
Key Performance Indicators
Key Performance Indicators are used to measure the extent to
which Directors and management are reaching key objectives. The
principal methods by which the Directors monitor the Group's
performance are volumes of net production, well operating costs and
the extent of exploration success. The Directors also carry out a
regular review of cash available for exploration and development
and review actual capital expenditure and operating expenses
against forecasts and budgets.
Increase/
2020 2019 (Decrease)
Production mboe
USA 94.5 57.1 65.5%
Argentina 898.7 824.3 9.0%
Total net hydrocarbons 993.2 881.4 12.7%
------- ------- ------------
Well operating costs US$000*
USA 623 982 -36.6%
Argentina 15,867 18,429 -13.9%
Total operating costs 16,490 19,411 -15.0%
------- ------- ------------
Well operating costs per boe
US$*
USA 6.6 17.2 -61.7%
Argentina 17.7 22.4 -21.0%
Total well operating costs per
boe US$ 16.6 22.0 -24.6%
------- ------- ------------
* calculation of all quoted metrics not directly corresponding
to GAAP measures are detailed in the Alternative Performance
Measure glossary and cross referenced to the Notes where
applicable
Consolidated Statement of Comprehensive Income
Year ended 31 December 2020
2020 2019
Note US$000 US$000
Continuing Operations
Revenue 27,771 40,812
Cost of sales 2 (31,775) (37,304)
--------- ---------
Gross profit/(loss) (4,004) 3,508
Administrative expenses 3 (4,648) (4,367)
--------- ---------
Operating profit /(loss) before impairment and non-operating
gains/(losses) (8,652) (859)
Presented as:
Adjusted EBITDA 2,115 11,552
Non-recurring items (86) (1,649)
EBITDA excluding share options 2,029 9,903
Depreciation, depletion & amortisation (10,271) (10,529)
Share based payment expense (410) (233)
Operating profit / (loss) (8,652) (859)
---------------------------------------------------------- ----- ---------
Non-operating gains / (losses) 4 (137) (337)
Impairment credit / (charge) 5 (1,884) (88,160)
--------- ---------
Profit / (loss) after impairment and non-operating
gains/(losses) (10,673) (89,356)
Finance income 4,506 641
Finance costs (4,084) (4,847)
--------- ---------
Profit / (loss) before tax (10,251) (93,562)
Income tax (charge)/credit comprises:
Current tax income tax (charge)/credit (2) 4
Deferred tax: foreign exchange arising on provision
for future taxes (3,530) (4,496)
Deferred tax: released on impairment - 10,078
Deferred tax being underlying provision for
future taxes 2,498 (301)
---------------------------------------------------------- ----- --------- ---------
Total income tax (charge)/credit (1,034) 5,285
Profit / (loss) for the year from continuing
operations (11,285) (88,277)
Other comprehensive income, net of tax
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translation of foreign
operations - -
Total comprehensive profit /(loss) for the
year attributable
--------- ---------
to the equity holders of the parent (11,285) (88,277)
========= =========
Earnings / loss per share 6 US cents US cents
Basic profit/(loss) per share from continuing
operations (0.69) (7.90)
========= =========
Diluted profit(loss) per share from continuing
operations (0.69) (7.90)
========= =========
Consolidated Statement of Financial Position
31 December 2020
2020 2019
ASSETS Note US$000 US$000
Non-current assets
Intangible exploration & evaluation
assets 52,703 55,750
Goodwill 705 705
Property, plant and equipment 54,489 54,092
Deferred tax 567 1,248
Other non-current assets 102 351
108,566 112,146
---------- ----------
Current assets
Trade and other receivables 4,554 6,498
Stock 1,336 28
Cash and cash equivalents 1,144 895
7,034 7,421
---------- ----------
TOTAL ASSETS 115,600 119,567
========== ==========
LIABILITIES
Current liabilities
Trade and other payables 10,287 24,770
Borrowings 1,539 2,462
11,826 27,232
---------- ----------
Non-current liabilities
Trade and other payables 3,536 1,697
Long-term provisions 6,399 5,520
Borrowings 16,097 20,107
Deferred tax 1,375 1,024
27,407 28,348
---------- ----------
TOTAL LIABILITIES 39,233 55,580
========== ==========
EQUITY
Share capital 35,708 24,465
Share premium 257,992 245,692
Translation reserve (50,240) (50,240)
Profit and loss account (174,631) (163,346)
Reserve for share-based payments 7,538 7,416
TOTAL EQUITY 76,367 63,987
---------- ----------
TOTAL EQUITY AND LIABILITIES 115,600 119,567
========== ==========
Consolidated Statement of Changes in Equity
Year ended 31 December 2020
Reserve
for
Profit share-
and
Share Share Translation loss based
capital premium reserve account payments Total
US$000 US$000 US$000 US$000 US$000 US$000
Balance at 1 January
2019 23,654 240,904 (50,240) (75,069) 7,183 146,432
Share-based payments - - - - 233 233
Issue of ordinary
shares 569 3,986 - - - 4,555
Costs of issue - (492) - - - (492)
Debt conversion 130 906 - - - 1,036
Subscription 112 388 - - - 500
Transactions with
the owners 811 4,788 - - 233 5,832
-------- -------- ------------ ---------- --------- ---------
Profit for the year - - - (88,277) - (88,277)
Total comprehensive
income for
the year - - - (88,277) - (88,277)
-------- -------- ------------ ---------- --------- ---------
Balance at 1 January
2020 24,465 245,692 (50,240) (163,346) 7,416 63,987
Share-based payments - - - - 122 122
Issue of ordinary
shares 2,604 2,213 - - - 4,817
Costs of issue - (434) - - - (434)
Debt conversion 3,344 3,869 - - - 7,213
Subscription 4,691 6,139 - - - 10,830
Issued in settlement 604 513 - - - 1,117
Transactions with
the owners 11,243 12,300 - - 122 23,665
-------- -------- ------------ ---------- --------- ---------
Profit for the year - - - (11,285) - (11,285)
Total comprehensive
income for
the year - - - (11,285) - (11,285)
-------- -------- ------------ ---------- --------- ---------
Balance at 31 December
2020 35,708 257,992 (50,240) (174,631) 7,538 76,367
======== ======== ============ ========== ========= =========
Consolidated Statement of Cash Flows
Year ended 31 December 2020
2020 2019
US$000 US$000
Cash flows from operating activities
Cash generated by operating activities
(note 26) 4,438 21,487
Interest received 105 184
Taxes refunded - 4
4,543 21,675
--------- ---------
Cash flows from investing activities
Expenditure on exploration and evaluation
assets (173) (263)
Expenditure on development and production
assets (11,395) (12,628)
Proceeds from asset sales 78 52
Acquisition & licence extension in Argentina (678) (2,395)
USA acquisition (158) -
Deposits with state authorities 249 -
Expenditure on abandonment - (283)
(12,077) (15,517)
--------- ---------
Cash flows from financing activities
Loan drawn 4,954 3,407
Proceeds from issue of shares (net of
expenses) 5,213 4,563
Loan converted to equity - -
Repayment of obligations under leases (868) (719)
Repayment of borrowings (5,076) (9,900)
Payment of interest and loan fees (696) (4,036)
3,527 (6,685)
--------- ---------
Net decrease in cash and cash equivalents (4,007) (527)
Opening cash and cash equivalents at
beginning of year 895 1,970
Exchange gains/(losses) on cash and cash
equivalents 4,256 (548)
Closing cash and cash equivalents 1,144 895
========= =========
Notes
1. Accounting policies and preparation
The financial information set out in this announcement does not
constitute the Company's statutory accounts for the years ended 31
December 2020 or 2019 but is derived from the 2020 accounts.
A copy of the statutory accounts for the year to 31 December
2019 has been delivered to the Registrar of Companies and is also
available on the Company's website. Statutory accounts for 2020
will be delivered in due course. The auditors have reported on
those accounts; their report was (i) unqualified, (ii) did not
include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006 in respect of the accounts for 2019 nor
2020.
Whilst the financial statements from which this preliminary
announcement is derived have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and applicable
law, this announcement does not itself contain sufficient
information to comply with IFRS. The Annual Report, containing full
financial statements that comply with IFRS, will be sent out to
shareholders later in August 2021.
The Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future. Therefore, in the preparation of the
20120financial statements they continue to adopt the going concern
basis.
2020 2019
2 Cost of sales US$000 US$000
Depreciation 10,109 10,412
Royalties & production taxes 5,176 7,481
Well operating costs 16,490 19,411
31,775 37,304
======= =======
Well operating costs include US$86,000 (2019: US$1,163,000) in
non-recurring workover costs expensed in the period. During 2019,
an exceptional bonus of US$305,000 was paid to field personnel and
hence included in well operating costs in Argentina.
2020 2019
3 Administrative expenses US$000 US$000
Directors and staff costs (including
non-executive Directors) 2,391 3,655
Share-based payments 410 233
Depreciation 162 117
Other 1,685 362
4,648 4,367
======= =======
To allow for meaningful comparison, staff costs, share based
payments and depreciation expenses are reflected gross before the
effect of allocations to operating costs or balance sheet assets.
Other expenses are shown net of the effect of allocations US$1.5
million (2019: US$1.6 million). During 2019, an exceptional bonus
of US$609,000 was included in director and staff costs. This was
partly offset by a one-off credit of US$428,000 arising on change
in bank transaction taxes in Argentina.
4 Other non-operating (gains)/losses 2020 2019
US$000 US$000
Reverse of provision for recoverable
taxes 19 236
Movement on estimated credit loss on
trade debtors 6 56
(Gain)/ loss on termination of leases (86) -
Other (gains)/losses arising on asset
disposals 198 45
137 337
======= =======
2020 2019
5 Impairment (credit) / charge US$000 US$000
DP1002 well in Argentina (PP&E) - (216)
Puesto Guardian in Argentina (PP&E) - 39,913
Pirity licence in Paraguay (Intangible) - 48,463
Matorras & Ocultar in Argentina (intangible) 1,759 -
Jefferson Island (intangible) 125 -
1,884 88,160
======= =======
6. Earnings / (Loss) per share 2020 2019
US$000 US$000
Net profit / (loss) for the period attributable
to
the equity holders of the Parent Company (11,285) (88,277)
========== ==========
Number Number
'000 '000
Weighted average number of shares in issue 1,641,684 1,116,944
========== ==========
US cents US cents
Earnings /(loss) per share
Basic earnings / (loss) per share from
continuing operations (0.69) (7.90)
========== ==========
Diluted earnings / (loss) per share from
continuing operations (0.69) (7.90)
========== ==========
At 31 December 2020, 32,146,921 (2019: 42,126,694) share option
and share warrant awards were in issue that, if exercised, would
dilute earnings per share in the future. No dilution per share was
calculated for 2020 and 2019 as with the reported loss they are
anti-dilutive.
7. Notes to the consolidated statement
cash flows 2020 2019
US$000 US$000
Profit / (loss) from operations before
taxation (10,251) (93,562)
Interest on bank deposits (105) (184)
Interest payable and loan fees 4,084 4,847
Depreciation of property, plant and equipment 10,271 10,529
Impairment (credit)/charge 1,884 88,160
(Gain) / loss on non-operating transaction 137 337
Share-based payments 410 233
Foreign exchange difference (4,401) (457)
--------- ---------
Operating cash flows before movements
in working capital 2,029 9,903
Decrease / (increase) in receivables 1,421 3,592
Movement in stock 28 56
Increase / (decrease) in payables 960 7,936
--------- ---------
Net cash generated by operating activities 4,438 21,487
========= =========
8 Segment reporting
Argentina Paraguay USA UK Total
2020 2020 2020 2020 2020
US$000 US$000 US$000 US$000 US$000
Revenue 24,915 - 2,856 - 27,771
Cost of sales
Depreciation 9,766 - 343 - 10,109
Royalties & production
taxes 4,448 - 728 - 5,176
Well operating costs 15,867 - 623 - 16,490
Administrative expenses 1,859 73 422 2,294 4,648
Segment costs 31,940 73 2,116 2,294 36,423
---------- --------- ------- -------- --------
Segment operating profit/(loss) (7,025) (73) 740 (2,294) (8,652)
========== ========= ======= ======== ========
Argentina Paraguay USA UK Total
2019 2019 2019 2019 2019
US$000 US$000 US$000 US$000 US$000
Revenue 38,220 - 2,592 - 40,812
Cost of sales
Depreciation 10,133 - 279 - 10,412
Release of abandonment
provision - - - - -
Royalties & production
taxes 6,801 - 680 - 7,481
Well operating costs 18,429 - 982 - 19,411
Administrative expenses 1,374 94 425 2,474 4,367
Segment costs 36,737 94 2,366 2,474 41,671
---------- --------- ------- -------- --------
Segment operating profit/(loss) 1,483 (94) 226 (2,474) (859)
========== ========= ======= ======== ========
Segment assets Argentina Paraguay USA UK Total
2020 2020 2020 2020 2020
US$000 US$000 US$000 US$000 US$000
Intangible assets 129 52,574 - - 52,703
Goodwill 705 - - - 705
Property, plant and equipment 52,637 - 1,852 - 54,489
---------- --------- ------- ------- --------
53,471 52,574 1,852 - 107,897
Other assets 3,975 1,352 936 296 6,559
--------
57,446 53,926 2,788 296 114,456
========== ========= ======= ======= ========
Argentina Paraguay USA UK Total
2019 2019 2019 2019 2019
US$000 US$000 US$000 US$000 US$000
Intangible assets 1,859 53,766 125 - 55,750
Goodwill 705 - - - 705
Property, plant and equipment 52,344 42 1,706 - 54,092
---------- --------- ------- ------- --------
54,908 53,808 1,831 - 110,547
Other assets 5,685 16 2,130 294 8,125
--------
60,593 53,824 3,961 294 118,672
========== ========= ======= ======= ========
Segment assets can be reconciled to the Group as follows:
2020 2019
US$000 US$000
Segment assets 114,456 118,672
Group cash 1,144 895
Group assets 115,600 119,567
======== ========
Segment liabilities Argentina Paraguay USA UK Total
2020 2020 2020 2020 2020
US$000 US$000 US$000 US$000 US$000
Total liabilities 23,870 56 1,675 13,632 39,233
========== ========= ======= ======= =======
Argentina Paraguay USA UK Total
2019 2019 2019 2019 2019
US$000 US$000 US$000 US$000 US$000
Total liabilities 32,455 275 1,869 20,981 55,580
========== ========= ======= ======= =======
Alternative Performance Measures
The Group uses certain measures of performance that are not
specifically defined under IFRS or other generally accepted
accounting principles. These non-IFRS measures include net debt and
well operating and underlying well operating costs per boe and free
cash flow. Where used in the context of segmental disclosure the
metrics are calculated in the same manner.
Total operating cost and underlying well operating cost per
boe
Total operating cost per boe is a useful straight forward
indicator of the Group's costs incurred to produce oil and gas
including all relevant expenses. However, since royalty, production
taxes and similar expenses are not controllable these have been
disaggregated to allow well operating costs to be measured.
2020 2019
Total operating cost per boe US$000 US$000
Royalties & production taxes (Note 2) 5,176 7,481
Well operating costs (Note 2) 16,490 19,411
Total operating costs 21,666 26,892
------- -------
Production (mmboe) 993.2 881.4
Total operating costs per boe US$ 21.81 30.51
======= =======
Where one-off or cyclical costs, such as workovers, are material
these have been disclosed and the underlying well cost per boe
referred to show the core performance. These have been defined and
calculated as follows:
2020 2019
Underlying well operating cost per boe US$000 US$000
Well operating costs (Note 2) 16,490 19,411
Less workover costs (per text in Note 2) (86) (1,163)
Less Exceptional staff bonus in Operating
expense (text in Note 2) - (305)
16,404 17,943
Production (mmboe) 993.2 881.4
Underlying well operating costs per boe US$ 16.52 20.36
======= ========
A 17% reduction in core operating performance arose in Argentina
and was calculated as follows:
2020 2019
US$000 US$000
Well operating costs (Note 2) 15,867 18,429
Less workover costs (86) (739)
Less Exceptional staff bonus in Operating
expense (text in Note 2) 0 (305)
15,781 17,385
Production (mmboe) 898.7 824.3
Underlying well operating costs per boe US$ 17.56 21.09
======= =======
Administrative cost per barrel
Underlying administrative expense excluding non-recurring items
is calculated as follows:
2020 2019
Administrative cost per boe US$000 US$000
Administrative expense (Note 3) 4,648 4,367
Arising on change in bank transaction taxes
in Argentina - 428
Exceptional staff bonus in Admin expense
(text in Note 3) - (609)
4,648 4,186
Production (mmboe) 993.2 881.4
Administrative cost per boe 4.68 4.75
======= =======
Adjusted EBITDA
The calculation is detailed on the Income Statement with further
details on the non-recurring items below.
Non-recurring items
Where referred to in the calculation of Adjusted EBITDA and in
alternative performance measures these comprise the following:
2020 2019
Non-recurring US$000 US$000
Workover costs (per text in Note 2) 86 1,163
Arising on change in bank transaction taxes
in Argentina - (428)
Exceptional staff bonus in Admin expense
(per text in Note 3) - 609
Exceptional staff bonus in Operating expense
(per text in Note 2) - 305
86 1,649
------- -------
Free cash generation from core operations
A measure of cash generation from operations excluding changes
in working capital, administrative expense and non-recurring
workovers. Used by management as an indication of cash generation
at asset level.
2020 2019
US$000 US$000
Sales 27,771 40,812
Royalties & production taxes (Note2) (5,176) (7,481)
Well operating costs (Note 2) (16,490) (19,411)
Add back non-recurring workovers 86 1,163
6,191 15,083
--------- ---------
Including the foreign exchange gains of US$4.4 million which
largely arise on the treasury management of cash resources
("treasury income") takes the cash generation in the period to
US$10.6 million (2019: US$15.5 million).
Reconciliation to cash flow from operations
The reported cash flow generated from operating activities can
be reconciled to free cashflows from core operations as
follows:
2020 2019
US$000 US$000
Net cash generated by operating activities 4,438 21,487
Working capital movement per Note 7 (2,409) (11,584)
Add back administrative expense per Note
3 4,648 4,367
Add back non cash depreciation in admin expense
(Note 3) (162) (117)
Add back non cash share based payments in
admin expense (Note 3) (410) (233)
Add back non-recurring workovers 86 1,163
6,191 15,083
-------- ---------
Deprecation per boe
Depreciation per barrel of oil equivalent can change between
accounting periods due to costs incurred, changes in reserves or
changes in future costs and hence is a useful metric for reporting
purposes. Where calculated on at a group or segment level the
calculation is as follows:
-- Reported depreciation charge as reported in Cost of Sales per
Note 2 in accordance with IFRS GAAP reporting
-- Divided by the barrel of oil equivalent of production
reported in the Chairman's Statement in accordance with industry
standards and state reports
Glossary
Boe barrels of oil equivalent
Bopd barrels of oil per day
Boepd barrels of oil equivalent per day
MMscf/d million standard cubic feet of gas production per day
1P proven hydrocarbon reserves
2P proven and probable hydrocarbon reserves
Contingent Resources Quantities of hydrocarbons estimated to be
potentially recoverable from known accumulations
Prospective Resources Quantities of hydrocarbons estimated to be
potentially recoverable from undiscovered accumulations
NPV10 net present value over the life of the
concessions/licences discounted by 10%
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