TIDMPGR
RNS Number : 1704S
Phoenix Global Resources PLC
29 September 2017
29 September 2017
Phoenix Global Resources plc
("Phoenix", the "Company" or, together with its subsidiaries,
the "Group")
TRADING AND OPERATIONS UPDATE
Phoenix Global Resources plc (AIM: PGR; BCBA: PGR), the
independent Argentina-focused oil and gas exploration and
production company, provides an update on recent corporate and
operational activities. This update should be read in conjunction
with the financial reports for the six months ended 30 June 2017 of
Andes Energia Plc ("Andes") and Trefoil Holdings B.V. ("Trefoil"),
both published separately today.
Corporate Highlights
-- Phoenix was formed on 10 August 2017 through the combination of Andes with Trefoil
-- The enlarged Group was renamed Phoenix Global Resources plc,
and a new Board was put in place at completion with Sir Michael
Rake as Chairman and four independent non-executive Directors
-- Phoenix is now an Argentina-focused oil and gas company with
established conventional onshore production and significant
exposure to the world class Vaca Muerta shale play
Operational Highlights
-- Combined(1) average production of 11,537 working interest
boepd over the first six months of 2017 (10,571 boepd in
Argentina)
-- Realised average oil prices in Argentina of US$50.32 per bbl
-- Realised average gas prices in Argentina of US$3.87 per mmbtu
-- The Group continued its appraisal work on the Vaca Muerta
shale formation in the Puesto Rojas block and made an application
to the Province of Mendoza for an unconventional exploitation
concession for the area
-- Three wells were drilled during the H1 2017 period in the
Puesto Rojas block, two of which reached Vaca Muerta in addition to
the conventional horizons
-- During the period, one conventional well (CP1014 ST) was
completed in the Puesto Rojas area with initial production from the
Chachao formation of 785 bpd (30-day average) on a working interest
basis
-- Following the period end, five further wells were drilled in
the Puesto Rojas area, three of which have appraised unconventional
potential in the Vaca Muerta
-- The Company recompleted a well at Cerro Del Medio which was
previously producing 40 bopd and is producing post recompletion
more than 300 bopd, which provides good initial indications of
expanding our existing Agrio play with significant development
potential, including with horizontal wells, in this prolific
horizon.
-- 41 development wells drilled on the Chachahuén licence, in
partnership with YPF, all successfully brought into production
-- Combined(1) average total production in Argentina has
increased to 11,591 working interest boepd as of September
-- On 26 September, the Argentina Government announced it will
suspend price controls on domestic crude oil effective 1 October
2017
Financial Highlights
-- Combined(1) revenues of US$88.0 million in H1 2017 compared to US$102.4 million in H1 2016.
o The decrease in revenue in H1 2017 as compared to H1 2016 is
primarily driven by lower realised prices in the period as the
Government continued to allow the domestic regulated price to move
toward parity with international benchmark prices
o Gas prices increased compared to H1 2016, offsetting the
decrease in oil revenues, albeit on modest gas volumes
o Sales volumes were also lower compared to H1 2016 as the
development and production programme for Puesto Rojas was rephased
to the second half of the year while the Group focused on Vaca
Muerta appraisal in the first half
-- Combined(1) adjusted EBITDA(2) of US$15.6 million in H1 2017
compared to US$34.8 million in H1 2016
-- Combined(1) net debt of US$93.3 million at 30 June 2017
-- At 29 September 2017, the enlarged Group's net debt position
was approximately US$132.4 million based on: (i) the drawdown of
US$87 million of a new US$160 million bridging and working capital
facility from Mercuria Energy Trading S.A. that was used to repay
all outstanding Andes debt; (ii) a further drawdown of US$45
million of the remaining US$73 million under the bridging and
working capital facility to make working capital payments and fund
operations; and (iii) other bank debt in Argentina and unrestricted
cash balances.
Outlook
-- The Group continues to evaluate its planned exploration and
appraisal programme related to the Vaca Muerta shale and other
formations for unconventional and conventional development
-- The Group will make further updates in Q4 2017 as the
technical evaluation and administrative processes progress
(1) Combined figures represent the simple aggregation of
reported amounts for Phoenix Global Resources plc and Trefoil
Holdings B.V. unless described otherwise, and are unaudited
(2) EBITDA is adjusted to exclude the impact of the US$13.6
million gain recognised by Phoenix Global Resources plc on the
deconsolidation of Interoil Exploration ASA and to also exclude the
combined net impairment loss of US$8.3 million related to the
relinquishment of the Puesto Pozo Cercado licence. This adjusted
EBITDA includes a provision of US$2.8 million for a doubtful
corporate receivable.
Anuj Sharma, CEO, commented:
"I am very proud to be providing our first operational and
financial update for Phoenix since our successful combination in
August of this year. We have been busy with continued appraisal
activity in Vaca Muerta, and finalisation of our drilling programme
and the development plan for our assets.
We continue to work on the integration process and expect to
complete much of this in 2017. The hard work and dedication of our
people has been critical, and, on behalf of the Board, I would like
to thank everyone who has helped us reach this point.
We know Argentina well and are excited to see increasing
political stability in the country translating into a positive
economic environment with debt yields reducing and the relaxation
of currency controls. Taken together, these positive developments
increase the attractiveness of Argentina for investment both
locally and internationally.
In the oil market specifically, the recent suspension of price
controls shows increasing confidence in the energy sector overall.
Argentina is blessed with significant natural resouces and, in
particular, the world class Vaca Muerta shale formation, which is
the only shale formation outside North America that is consistently
producing economically successful wells, producing in excess of
67,000 boepd. Vaca Muerta has been the subject of significant
activity by YPF for a number of years and increasing interest and
involvement from other domestic exploration players as well as a
number of significant IOCs and international independents.
Phoenix has a long track record in Argentina, operating in an
environmentally responsible manner and to the highest industry
standards. The Group has accumulated significant working interest
acreage - much of which has exposure to the Vaca Muerta formation.
Our initial appraisal work on Vaca Muerta has been undertaken in
the Group's Puesto Rojas licence area in the Malargüe region of the
Mendoza province. Following the encouraging results of the initial
appraisal work, the Company has applied to the Province for an
unconventional exploitation licence for the area. We are awaiting
the finalisation of the Province of Mendoza's unconventional oil
& gas regulations and their decision on our application before
we proceed further with our appraisal and development
programme.
Vaca Muerta and other unconventional development represents
significant growth potential for Phoenix, and, together with the
Board, I look forward to providing further updates on our progress
as both the operational and administrative activity related to our
exploration and appraisal work continues."
For further information, please contact:
Phoenix Global Anuj Sharma, T: +54 11 5258
Resources plc CEO 7500
Philip Wolfe, T: +44 20 7839
CFO 4974
Stockdale Securities Antonio Bossi T: +44 20 7601
David Coaten 6100
Panmure Gordon Adam James T: +44 20 7886
Atholl Tweedie 2500
Camarco Billy Clegg T: +44 20 3757
Gordon Poole 4980
James Crothers
Qualified Person Review
In accordance with AIM guidance for mining, oil and gas
companies, Mr. Javier Vallesi and Mr. Greg Easley have reviewed the
information contained in this announcement. Mr. Vallesi, Chief
Operating Officer of the Group, is a petroleum engineer with over
22 years of experience in the oil and gas industry and is a member
of the Argentinian Institute of Oil and Gas. Mr. Easley, Senior
Manager Reservoir and Engineering, is a petroleum engineer with
over 10 years of experience in the oil and gas industry, is a
licenced Professional Engineer in the State of Texas and is a
member of the Society of Petroleum Engineers.
About Phoenix:
Phoenix Global Resources is a London Stock Exchange (AIM: PGR)
and Buenos Aires Stock Exchange (BCBA: PGR) listed independent
Argentina focused oil and gas exploration and production company.
The Company has over 6.3 million licensed working interest acres in
Argentina (of which over 5 million are operated), 61.7 million boe
of working interest 2P reserves and average production of
approximately 11,300 working interest boepd in 2016. Phoenix has
significant exposure to the unconventional opportunity in Argentina
through its 400,000 working interest acres with Vaca Muerta
potential.
The Company's website is www.phoenixglobalresources.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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