PRESIDENT ENERGY PLC

("President", "the Company", or "the Group")

 

Audited Results for the year ended 31 December 2021

2022 update and outlook

Green House Capital, a new Alternative Energy Vehicle

AGM date

 

President (AIM: PPC), the upstream oil and gas company with a diverse portfolio of production and exploration assets focused primarily on Argentina, is pleased to announce its audited results for the year ended 31 December 2021 and a 2022 update and outlook.

 

Peter Levine, Chairman, commented:

 

"The year under report was very significant for President and has resulted in a welcome return to net profit after tax after considering all depreciation and impairments as well as the spin-out of Atome Energy from the Group.

 

"Excluding depreciation, the core business in Argentina delivered significantly increased operational profits year on year with adjusted EBITDA multiplying nearly four-fold together with materially increased Group free and net cash generation.

 

"Strategically major events occurred in the year. The farm-out of our Paraguay exploration asset to the State energy Company of Taiwan was closed and we will be drilling the first high impact exploration well there later in the year. The spin out and IPO of Atome Energy, our green energy company was successfully completed at the very end of the year with some £20 million of added value generated for our shareholders from both a dividend in specie and the subsequent healthy rise in Atome's share price where its market capitalisation is more than President's despite the latter still owning approximately 28% of Atome.

 

"With the benefit of new drilling in Argentina just starting to be felt, oil prices rising in our core activity areas and the prospect of continued new strategic initiatives in both our core hydrocarbon businesses and new alternative energies through our new subsidiary, Green House Capital, we view the future with quiet confidence".

 

The Company's Annual Report will be posted to shareholders by the end of June. 

 

Highlights FY2021

 

Financial

·    Profit after tax of US$4.6 million (2020 loss US$11.3 million), after depreciation, depletion, and amortisation of US$11.5 million (2020: US$10.3 million)

·    Group revenue increased by 23% to US$34.1 million (2020: US$27.8 million) due to recovery in realised commodity prices in Argentina to US$40.6 per boe (2020: US$30.0 per boe 2020) and US$43.1 (2020: US$29.9 per boe) in the US

·    Adjusted EBITDA* increased by 257% to US$7.5 million (2020: US$2.1 million) with the Adjusted EBITDA contribution from Argentina US$10.5 million (2020: US$2.9 million)

·    Free cash generation from core operations* (excluding workovers) increased by 106% to US$12.8 million (2020: US$6.2 million)

·    Net cash generated by operating activities increased by 250% to US$11.1 million (2020: US$4.4 million)

·    Borrowings at year end increased to US$29.3 million (2020: US$17.7 million). Of this, US$18 million is third party financial debt with the balance owed to IYA, an affiliate company of Peter Levine. The increase in third party debt relates to the heavy capex programme last year totalling just over US$ 14.8 million.

 

Corporate

·    Argentina bond issue of US$8.95 million at interest rate of only 1.24% with credit rating of A- investment grade (included in third party debt above)

·    Atome Energy PLC spin off with an IPO on the AIM market in late December 2021 with an initial market capitalisation of £26 million                  

·    Paraguay farm-out to CPC the State Energy Company of Taiwan successfully completed

·    Matorras and Ocultar licences in Salta relinquished

 

Operations

·    Group net average production 2,473 boepd (2020: 2,714 boepd)

·    Three new wells drilled in Rio Negro, Argentina in H1 2021. Three new well drilling programme in Salta, Argentina commenced late 2021 and now successfully completed

·    Continued improvement in Argentina core operating performance with well operating costs per boe in 2021, excluding royalties and workovers*, reduced by 3% to US$17.0 per boe (2020: US$17.6)

·    Group-wide administrative costs per barrel* US$4.8 per boe (2020: US$4.7 per boe) excluding directly attributable Atome expenses.

 

Production and reserves

·    Net 2P (proven and probable) reserves in Argentina at year end, as confirmed by an independent reserves audit, increased to 24.4 mmboe (2020: 24.3 mmboe)

·    Louisiana 1P current proven producing reserves estimated at 724 mboe (2020: 724 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's full Chairman's Statement in the Annual Accounts and Report is set out below:

 

The year under report was very significant for President and has resulted in a welcome return to net profit after tax after considering all depreciation and impairments as well as the spin-out of Atome Energy from the Group.

 

Excluding depreciation, the core business in Argentina delivered significantly increased operational profits year on year.  Three wells were drilled in Rio Negro Province, Argentina in the first part of the year. The three well drilling campaign in Salta, Argentina commenced late in Q4 for which we now are starting to see the beneficial impact.

 

The new oil treatment plant in Rio Negro was completed delivering a US$4 per barrel in savings and meaning we were no longer dependent on a third-party pipeline to deliver oil. 

 

Louisiana was unfortunately shut-in and under reduced production for much of 2021 but following the successful workover at the start of 2022, the US assets should overall show a creditable contribution to profits.

 

On the strategic front, the long-mooted farm-out of our Paraguay exploration asset was completed in favour of CPC, the State Energy Company of Taiwan, a reputable and strong international partner, with President remaining operator and retaining 50% interest. We are due to commence drilling of the first exploration well later this year.

 

Atome Energy, President's green energy business, was spun out and successfully completed its Initial Public Offering at the end of 2021. This resulted in a very significant dividend in specie being declared in favour of President's shareholders, whilst the Company retained some 28% of Atome whose share price has increased over 40% in value since the IPO. The result is that, on a mark to market basis, President has within the space of 12 months generated for its shareholders as at current prices, approximately £20 million of value in and/or through Atome (on basis that the dividend shares in Atome are still held).

 

It is regrettable, that President, due to the location of its main operations, has not been able to really benefit significantly from the highly inflated current hydrocarbon prices. However, prices in Argentina are slowly increasing and with our ability to periodically export oil, as well as production in Louisiana recommenced, it does mean that this year will show benefits to us from the current oil price boom.

 

 Production

	Oil (bbls)			Natural Gas (mmcf)			Total (mmboe)
Country	2021	2020		2021	2020		2021	2020
Argentina	561,947	623,946		1,838.9	1,648.5		868.4	898.7
USA	19,831	50,582		87.0	263.3		34.3	94.5
	581,778	674,528		1,925.9	1,911.8		902.7	993.2

 

 

Net Reserves (mboe)	Argentina	USA	Total
As at 31 December 2020	24,301.1	723.8	25,024.9
Revisions in reserves	966.8	34.3	1,001.1
Production	(868.4)	(34.3)	(902.7)
As at 31 December 2021	24,399.5	723.8	25,123.3

 

  

Reserve revisions in Argentina reflect the results of production performance, drilling and workovers in the year and the subsequent independent auditor's reserve report by Claudio N. Larriestra. It is important to note that the reserves as at 31 December 2021 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 throughout 2021 remained the welfare and health of our employees and families as well as our contractors working in the field. Throughout the year, President continued to monitor and check on the health of all its employees and follow strict guidelines. Measures included restricting numbers travelling to fields in vehicles, monitoring health of operatives daily and social distancing. Production from operations has not been affected and there have been no shut-in wells or choke back of our wells.

 

The Company continued with social distancing measures, both in the office and in the fields, and maintained a "flexible" work schedule for the BA office, with employees still not back 100% in the office but equipped with all necessary IT infrastructure when working remotely. Morale remains excellent with a strong sense of togetherness throughout and there has been no decrease in efficiency. President has no offices in the UK or Louisiana so the Company is well used to working remotely and economically.  

 

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 Limited, an entity we created to focus on green hydrogen and ammonia. 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.

            

Current Trading 

 

In relation to trading in the year to date

 

•     Current realised oil prices in Argentina are showing a small month by month increase. Prices in Salta province are up 12% since the start of the year with July realisations expected at US$66 per barrel. The average Rio Negro oil price for the first five months of this year to date, considering quantities we have been able to export during the period has been US$63 per barrel

•     Oil prices received in Louisiana for May production were approximately US$109 per barrel

•     Of the new wells drilled in Salta, all three are successful oil producers. The two in Dos Puntitas Field are slowly increasing towards optimum production levels, targeting after a final acid treatment and increase in pump capacity, some 190 bopd each. The third new well has come on strongly from the outset and already without need of fine tuning or stimulation is achieving over 200 bopd. Whilst capex was over budget due to unforeseen issues, the programme has demonstrated it has been economically worthwhile

•     Daniel Musri, our new CEO, has started to implement a rigid ground up review of well, field and infrastructure management to mitigate the downtime and declines we have suffered in the past. This is accompanied by an internal management realignment

•     In Louisiana, considering the volume of oil we have been advised is still to be recovered in the Triche well, it has been decided to install a form of artificial lift to maximise and stabilise production levels, which to date have flowed naturally without any support. This should enable the wells to be produced consistently over a prolonged period and capitalise on the prevailing oil prices. The installation of the new system is now proceeding but in the view of the Louisiana management is necessary to optimise the Triche well potential and take advantage of current high oil prices  

•     In Paraguay, work continues in preparation for spudding later this year. Our partner is fully compliant with its obligations and the main focus is not only agreeing with service segment providers costs and timing which is ongoing but finalising agreement with the rig contractor, who is undergoing an internal reorganisation. Whilst this is out of our hands as to timing, we are assured that we will be able to move forward with them in a concrete manner within the next three months which would still be in line with targeting commencement of drilling in the latter part of this year. I remind all actual or potential investors of the risks involved in exploration in such a context as we are in Paraguay and to measure expectations both as to timing and results accordingly

•     As announced previously, we have within the Puesto Guardian licence a significant gas exploration project at the Martinez del Tineo field. We are launching a farm out process in Q3 2022, and whilst this may well roll over into 2023 the size of the prize and the increase in value in gas has made in our view the prospect more enticing, with initial interest already being shown. Further announcements will be made in due course.

 

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. 

 

Atome 

As I have stated, those shareholders who have stayed with their dividend in specie shares in Atome have seen a very healthy benefit. To date, assuming all shareholders would have held their shares, the benefit would have been some £20 million to members as a whole.

 

The full market value of the Group's share in Atome is not shown in the balance sheet for reasons relating to accounting standards for investments in associates. Currently the holding of the Company in Atome is considered an investment and will be reviewed as such at all relevant times. President is very encouraged by Atome's progress and remains supportive of its green objectives and exciting business case.

 

Alternative Energies - Green House Capital

Following the successful creation, spin off and IPO of Atome, bringing material value creation for shareholders of President, the Company views similar steps as a fertile way of demonstrating to the market its value as a company.

 

As part of the stated object of diversification of the Company's interests and/or migration to businesses seemingly more appreciated by the stock market, President has become a 75% beneficial shareholder in the UK registered private limited company, Green House Capital ("Green House") joining Alpha Oil Invest GmbH of Zug, Switzerland, an investment fund beneficially owned by myself, also a shareholder in Atome.

 

Green House is intended to become an incubator/ investor in alternative energy related businesses capitalising, as with Atome, on the capacity to identify and develop business opportunities through, inter alia, the value creating experience of President and Alpha as well as the formers' status as a public company.   For the avoidance of doubt to avoid conflict, Green House will not be involved in any business that directly or indirectly competes with Atome now, or in the future. 

 

Further announcements in relation to Green House will be made at the appropriate time.

 

President Energy is to become a 75% beneficial shareholder in the UK registered private limited company, Green House Capital ("Green House") joining Alpha Oil Invest GmbH of Zug ("Alpha"), Switzerland, an investment fund beneficially owned by Peter Levine, CEO of President Energy.

 

President Energy is to pay nil consideration for its interest.

 

The issuance of the shares in Green House to President is considered a related party transaction pursuant to Rule 13 of the AIM Rules for Companies. The Independent Directors of the Company, being Alex Moody-Stuart, Rob Shepherd, and Jorge Dario Bongiovanni, having consulted with the Company's nominated adviser, finnCap, consider that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.

 

Annual General Meeting and Investor Q&A

The Annual General Meeting will be held on Friday 22 July 2022 at 11 a.m. BST at The Army and Navy Club, 36-39 Pall Mall, London, SW1Y 5JN.

 

Contact:

President Energy PLC Peter Levine, Chairman  Rob Shepherd, Group FD Nikita Levine, Investor Relations	+44 (0) 207 016 7950
finnCap (Nominated Advisor and Broker) Christopher Raggett, Tim Harper	+44 (0) 207 220 0500

 

 

Detailed financial review

2021 saw the recovery from the economic shock of the Covid-19 pandemic progress and attention shift back onto the challenges arising from climate change. The need to develop new environmentally friendly energy solutions was reflected in the rapid and noteworthy emergence of Atome Energy. Under the stewardship of President, Atome Energy has become an independent AIM listed international green energy business. It has also had a significant impact on President financial results at both Group and Company level in 2021.

 

As a result of the dividend in specie of Atome Energy shares in December 2021, a gain of US$13.1 million has been recognised at Group and Company level which represents the market value returned to shareholders by way of that dividend. In addition, the market value of the investment retained by President is now shown on the Company Balance Sheet resulting in a US$10.2 million gain in the Company financial statements, although this is not reflected in the Group Balance Sheet. With the accounting rules governing consolidation of investments in associate undertakings with significant influence, shareholders will need to look to the Company Balance Sheet going forward to see the changes in the market value of the investment. We have introduced a new note to the Group accounts to highlight and explain the impact of Atome Energy on the financial statements of the Group and Company (Note 33).

 

Revenue rose by 23% to US$34.1 million (2020: US$27.8 million) due to higher realised prices in both Argentina and the USA; the average Group product price was US$40.7/boe (2020: US$30.0/boe) due to the recovery in market prices in the year. Overall Group production fell by 9% to 2,473 boepd (2020: 2,714 boepd). Cost of sales increased to US$33.4 million (2020: US$31.8 million) due to higher depreciation and product price related royalty and tax expenses.

 

Free cash generation from core operations excluding changes in working capital, administrative expense, and non-recurring workovers more than doubled to US$12.8 million (2020: US$6.2 million).

After depreciation, depletion, and amortisation of US$11.5 million (2020: US$10.3 million) and administrative expenses of US$5.8 million (2020: US$4.6 million), the Group recorded an operating loss of US$5.0 million (2020: loss US$8.7 million).

 

Included within administrative expenses are US$1.4 million of directly attributable Atome Energy expenses largely offset by the US$1.3 million non-operating gain arising on migration to an associate investment, and directly linked to the US$1.3 million receivable ultimately recovered in 2022. The overall impact of Atome related expenses is essentially neutral in 2021.

 

A small impairment of US$0.1 million (2020: US$1.9 million) is related to intangible exploration assets in Argentina and the accounts show the impact of higher interest on Argentina borrowings and lower foreign exchanged related treasury income.

Profit before tax for the year was US$5.7 million (2020: loss US$10.3 million) with profit after tax totalling US$4.6 million (2020 loss: US$11.3 million).

 

Argentine operating performance

Production in Argentina decreased by 3% to 868,427 boe (2020: 898,704 boe) or 2,379 boepd (2020: 2,455 boepd). Average realised sales prices in Argentina rose by 35% to US$40.6 per boe (2020: US$30.0 per boe) in line with the recovery in world prices during the year.

 

Well operating costs in Argentina before non-recurring items* fell by 3% to US$17.0/boe (2020: US$17.6/boe) as the focus remained on cost control. Depreciation rose during the year to US$12.9/boe (2020: US$10.9/boe)* following higher future development cost estimates. The extension of the Rio Negro licence period and/or the secondary recovery project which are both under discussion with the Neuquén Province would lead to a significant reduction in depreciation rates.

 

Overall, following the annual independent review, proved and probable reserves in Argentina increased by 4%. There were no impairment indicators in relation to Argentine assets in the year.

 

USA operating performance

Production from the Group's working interest in US operations fell by 64% to 94 boepd (2020: 258 boepd) following a four-month outage of the Triche well and dislocation in production either side of the outage. A successful capital workover commenced in late 2021 perforating different reservoir zones and production resumed in 2022.

 

Average realised prices in the US rose by 44% on the prior year to US$43.1/boe (2020: US$29.9/boe). Well operating costs excluding royalty related expenses and non-recurring workovers* rose to US$14.3 /boe (2020: US$6.6 /boe) due to the production outage. Depreciation rose during the year to US$6.3/boe (2020: US$3.6/boe)* due to the higher capital cost while reserves remained unchanged. 

 

Corporate

Much of the focus in 2021 was on the value creation in bringing Atome Energy to the market, development drilling in Argentina and concluding the farm out of the Pirity Concession in Paraguay. To that end, shareholder and High Court approval was obtained for a capital reduction of Share Premium balance to facilitate the dividend in specie to shareholders at the end of December 2021. Following the reduction, there remains over US$90.0 million of distributable reserves at the end of the year.

 

Development drilling and working capital in Argentina was funded primarily through finance raised on the local market via the issue of a bond and a number of promissory notes. This is the first time that any member of the Group has issued a corporate bond and is notable due to it being given the credit rating of A- local investment grade by the Argentine affiliate of the worldwide credit rating agency Fitch, Fix SCR. The covenant lite Bond is secured solely on 60% of the sales proceeds from oil sales of the Puesto Flores Concession, Río Negro Province, Argentina. Production from all other Río Negro fields and the Puesto Guardian field in Salta as well as all gas production in Argentina is not subject to nor affected by this security. 

 

The Group completed the farmout of part of its interest in the Pirity Concession to CPC Corporation, Taiwan ("CPC"), the state-owned energy company of Taiwan in November 2021. CPC and President, through their subsidiary companies, now have an equal 50/50 interest in the Pirity Concession, Paraguay with President continuing as operator under an international form of Joint Operating Agreement. The Pirity licence was extended until September 2023 and the Hernadarias licence until November 2023. The successful conclusion of the farmout process, US$4.0 million proceeds and licence extensions clear the way for a well to be drilled to determine the potential economic value of the intangible asset. Accordingly, management consider that it is appropriate to continue to capitalise the balance of US$54 million at 31 December 2021 (2020: US$53 million).

 

Investment in the Oil & Gas Assets component of Property, Plant and Equipment in the year amounted to US$14.7 million (2020: US$8.9 million) with a three well development drilling campaign on the Puesto Guardian licence in the northern Salta province in Argentina started in early November 2021. Drilling of the third well extended in to 2022. Investment in Rio Negro continued with the drilling and completion of a further two wells on the Las Bases and Estancia Vieja concessions in April 2021. A new oil treatment plant designed, engineered, constructed, and completed in Rio Negro is now delivering material savings of operating costs.

 

Overall, Trade and Other Payables increased to US$22.0 million (2020: US$13.8 million) due to US$4.0 million Paraguay drilling obligation, pre-IPO financial support for Atome (repaid post period end as detailed below) and higher period end activity levels reflected in trade creditor, accruals, and other payables. The Group has a constructive obligation to use the US$4.0 million proceeds received to drill the exploration well as defined in the farm-out agreements.

Trade and Other Receivables increased to US$11.9 million (2020: US$4.6 million). In financing Argentine drilling activity in 2021, the Group managed currency exposure by prepaying for US$3.2 million of drilling costs to be discharged on settlement in 2022. Under new borrowing arrangements, proceeds are received net of interest earned in future periods resulting in a prepayment of interest. Following the flotation of Atome Energy at the end of December 2021, the Group had a receivable of US$1.3 million in relation to the funding support provided to the Atome businesses. This amount was settled in full in 2022.

At the end of the year, the Group had a net current liability of US$9.2 million (2020: US$4.8 million). However, after deducting the liabilities on drilling and acquisition investment activity, which are periodic in nature as detailed in Note 19, the underlying net current liability from ongoing operations is significantly lower at US$3.2 million (2020: US$0.8 million). Year-end cash balances were US$2.0 million (2020: US$1.1 million).

 

Key Performance Indicators

Key Performance Indicators are used to measure the extent to which Directors and management are reaching key business objectives for the Group. 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.

	2021		2020		Increase/ (Decrease)
Production mboe
USA	34.3		94.5		-63.7%
Argentina	868.4		898.7		-3.4%
Total net hydrocarbons	902.7		993.2		-9.1%
Well operating costs US$000*
USA	488		623		-21.7%
Argentina	15,538		15,867		-2.1%
Total operating costs	16,026		16,490		-2.8%
Well operating costs per boe US$*
USA	14.2		6.6		115.8%
Argentina	17.9		17.7		1.3%
Total well operating costs per boe US$	17.8		16.6		6.9%

 

 

* 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 2021

		Note		2021 US$000		2020 US$000
Continuing Operations
Revenue				34,147		27,771
Cost of sales		2		(33,431)		(31,775)
Gross profit/(loss)				716		(4,004)
Administrative expenses		3		(5,764)		(4,648)
Operating profit /(loss) before impairment and non-operating gains/(losses)				(5,048)		(8,652)
Presented as:
Adjusted EBITDA				7,526		2,115
Non-recurring items				(751)		(86)
EBITDA excluding share options				6,775		2,029
Depreciation, depletion & amortisation				(11,456)		(10,271)
Share based payment expense				(367)		(410)
Operating profit / (loss)				(5,048)		(8,652)
Non-operating gains / (losses)		4		14,494		(137)
Impairment credit / (charge)		5		(51)		(1,884)
Profit / (loss) after impairment and non-operating gains/(losses)				9,395		(10,673)
Finance income				1,633		4,506
Finance costs				(5,324)		(4,084)
Profit / (loss) before tax				5,704		(10,251)
Income tax (charge)/credit comprises:
Current tax income tax (charge)/credit				-		(2)
Deferred tax: foreign exchange arising on provision for future taxes				(1,341)		(3,530)
Deferred tax being underlying provision for future taxes				216		2,498
Total income tax (charge)/credit				(1,125)		(1,034)
Profit / (loss) for the year from continuing operations				4,579		(11,285)
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				4,579		(11,285)
Earnings / loss per share		6		US cents		US cents
Basic profit/(loss) per share from continuing operations				0.23		(0.69)
Diluted profit(loss) per share from continuing operations				0.22		(0.69)

 

 

The accompanying accounting policies and notes form an integral part of these financial statements.

 

Consolidated Statement of Financial Position 

31 December 2021

 

ASSETS				2021 US$000		2020 US$000
Non-current assets
Intangible exploration & evaluation assets				54,304		52,703
Goodwill				705		705
Property, plant and equipment				59,148		54,489
Investment in associate				25		-
Deferred tax				350		567
Other non-current assets				103		102
				114,635		108,566
Current assets
Trade and other receivables				11,887		4,554
Stock				1,336		1,336
Cash and cash equivalents				2,014		1,144
				15,237		7,034
TOTAL ASSETS				129,872		115,600
LIABILITIES
Current liabilities
Trade and other payables				17,424		10,287
Borrowings				7,014		1,539
				24,438		11,826
Non-current liabilities
Trade and other payables				4,580		3,536
Long-term provisions				7,480		6,399
Borrowings				22,250		16,097
Deferred tax				2,283		1,375
				36,593		27,407
TOTAL LIABILITIES				61,031		39,233
EQUITY
Share capital				36,179		35,708
Share premium				48		257,992
Translation reserve				(50,240)		(50,240)
Profit and loss account				75,145		(174,631)
Reserve for share-based payments				7,709		7,538
TOTAL EQUITY				68,841		76,367
TOTAL EQUITY AND LIABILITIES				129,872		115,600

 

 

 

Consolidated Statement of Changes in Equity

Year ended 31 December 2021

 

 

									Reserve
							Profit		for share-
	Share		Share		Translation		and loss		based
	capital		premium		reserve		account		payments		Total
	US$000		US$000		US$000		US$000		US$000		US$000
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
Loss for the year	-		-		-		(11,285)		-		(11,285)
Total comprehensive income for
the year	-		-		-		(11,285)		-		(11,285)
Balance at 1 January 2021	35,708		257,992		(50,240)		(174,631)		7,538		76,367
Share-based payments	-		-		-		-		367		367
Debt conversion	82		58		-		-		-		140
Subscription	241		254		-		-		-		495
Exercise of options	148		48		-		-		(196)		-
Capital reduction	-		(258,304)		-		258,304		-		-
Dividend in specie	-		-		-		(13,130)		-		(13,130)
Transactions with the owners	471		(257,944)		-		245,174		171		(12,128)
Profit for the year	-		-		-		4,579		-		4,579
Other comprehensive income
Exchange differences on
translation	-		-		23		-		-		23
Reclassified to profit and loss	-		-		(23)		23		-		-
Total comprehensive income for
the year	-		-		-		4,602		-		4,602
Balance at 31 December 2021	36,179		48		(50,240)		75,145		7,709		68,841

 

 

Attributable to the owners of the Company

 

 

 

 

 

 

 

 

Consolidated Statement of Cash Flows

Year ended 31 December 2021

 

 

	2021 US$000		2020 US$000
Cash flows from operating activities
Cash generated by operating activities (note 7)	11,078		4,438
Interest received	145		105
Taxes paid	-		-
Taxes refunded	-		-
	11,223		4,543
Cash flows from investing activities
Expenditure on exploration and evaluation assets	(1,652)		(173)
Expenditure on development and production assets	(19,431)		(11,395)
Proceeds from asset sales	29		78
Proceeds from Paraguay farm out	4,000		-
Acquisition & licence extension in Argentina	(284)		(678)
USA acquisition	-		(158)
Deposits with state authorities	(1)		249
Expenditure on abandonment	-		-
	(17,339)		(12,077)
Cash flows from financing activities
Loan drawn	11,731		4,954
Proceeds from issue of shares (net of expenses)	495		5,213
Loan converted to equity	-		-
Repayment of obligations under leases	(1,332)		(868)
Repayment of borrowings	(3,130)		(5,076)
Payment of interest and loan fees	(1,338)		(696)
	6,426		3,527
Net increase/(decrease) in cash and cash equivalents	310		(4,007)
Opening cash and cash equivalents at beginning of year	1,144		895
Exchange gains/(losses) on cash and cash equivalents	560		4,256
Closing cash and cash equivalents	2,014		1,144

 

 

The accompanying accounting policies and notes form an integral part of these financial statements.

 

 

 

 

 

 

 

 

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 2021 or 2020 but is derived from the 2021 accounts.

 

A copy of the statutory accounts for the year to 31 December 2020 has been delivered to the Registrar of Companies and is also available on the Company's website. Statutory accounts for 2021 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 2020 nor 2021.

 

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 by the end of June.

 

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. 

 

			2021		2020
2	Cost of sales		US$000		US$000
	Depreciation		11,374		10,109
	Royalties & production taxes		6,031		5,176
	Well operating costs		16,026		16,490
			33,431		31,775

 

Well operating costs include US$751,000 (2020: US$86,000) in non-recurring workover costs expensed in the period.

 

			2021		2020
3	Administrative expenses		US$000		US$000
	Directors and staff costs (including non-executive Directors)		2,530		2,391
	Share-based payments		367		410
	Depreciation		82		162
	Other		2,785		1,685
			5,764		4,648
	Attributable to Atome business included above		(1,397)		-
			4,367		4,648

 

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$1.3 million (2020: US$1.5 million). 

Included with administrative expenses are US$1.4 million directly attributable to the Atome Energy businesses which are no longer part of the President Group following the flotation at the end of December 2021.

 

 

4	Other non-operating (gains)/losses		2021		2020
			US$000		US$000
	Gain on dividend in specie of Atome shares		(13,130)		-
	Reverse of provision for recoverable taxes		-		19
	Movement on estimated credit loss on trade debtors		-		6
	Gain on termination of leases		(18)		(86)
	Other (gains)/losses arising on asset disposals		(29)		198
	Gain on Atome transition to an associate investment		(1,317)		-
			(14,494)		137

 

 

			2021		2020
5	Impairment (credit) / charge		US$000		US$000
	Matorras & Ocultar in Argentina (intangible)		51		1,759
	Jefferson Island (intangible)		-		125
			51		1,884

 

Further details on the impairments are provided in Note 14 for Intangible assets.

 

6. Earnings / (Loss) per share	2021		2020
	US$000		US$000
Net profit / (loss) for the period attributable to
the equity holders of the Parent Company	4,579		(11,285)
	Number		Number
	'000		'000
Weighted average number of shares in issue	2,031,855		1,641,684
	US cents		US cents
Earnings /(loss) per share
Basic earnings / (loss) per share from continuing operations	0.23		(0.69)
Diluted earnings / (loss) per share from continuing operations	0.22		(0.69)

 

At 31 December 2021, 41,508,838 (2020: 32,146,921) 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 as with the reported loss they are anti-dilutive. 

 

7. Notes to the consolidated statement cash flows	2021		2020
	US$000		US$000
Profit / (loss) from operations before taxation	5,704		(10,251)
Interest on bank deposits	(145)		(105)
Interest payable and loan fees	5,324		4,084
Depreciation of property, plant and equipment	11,456		10,271
Impairment (credit)/charge	51		1,884
(Gain) / loss on non-operating transaction	(14,494)		137
Share-based payments	367		410
Foreign exchange difference	(1,488)		(4,401)
Operating cash flows before movements in working capital	6,775		2,029
Decrease / (increase) in receivables	(2,430)		1,421
Movement in stock	-		28
Increase / (decrease) in payables	6,733		960
Net cash generated by operating activities	11,078		4,438

 

8   Segment reporting

 

	Argentina		Paraguay		USA		UK		Total
	2021		2021		2021		2021		2021
	US$000		US$000		US$000		US$000		US$000
Revenue	32,669		-		1,478		-		34,147
Cost of sales
Depreciation	11,158		-		216		-		11,374
Royalties & production taxes	5,612		-		419		-		6,031
Well operating costs	15,538		-		488		-		16,026
Administrative expenses	1,889		64		389		3,422		5,764
Segment costs	34,197		64		1,512		3,422		39,195
Segment operating profit/(loss)	(1,528)		(64)		(34)		(3,422)		(5,048)
	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)

 

 

Segment assets	Argentina		Paraguay		USA		UK		Total
	2021		2021		2021		2021		2021
	US$000		US$000		US$000		US$000		US$000
Intangible assets	129		54,175		-		-		54,304
Goodwill	705		-		-		-		705
Investment in associate	-		-		-		25		25
Property, plant and equipment	57,022		-		2,126		-		59,148
	57,856		54,175		2,126		25		114,182
Other assets	10,257		1,350		582		1,487		13,676
	68,113		55,525		2,708		1,512		127,858
	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

 

 Segment assets can be reconciled to the Group as follows:

					2021		2020
					US$000		US$000
Segment assets					127,858		114,456
Group cash					2,014		1,144
Group assets					129,872		115,600

 

Segment liabilities	Argentina		Paraguay		USA		UK		Total
	2021		2021		2021		2021		2021
	US$000		US$000		US$000		US$000		US$000
Total liabilities	39,095		4,056		1,963		15,917		61,031
	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

 

 

 

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.

 

Net debt

Net debt is a useful indicator of the Group's indebtedness, financial flexibility, and capital structure because it indicates the level of cash borrowings after taking account of cash and cash equivalents within the Group's business. Net debt is defined and calculated as follows:

	2021		2020
Net debt	US$000		US$000
Borrowings Current	(2,053)		(1,539)
Borrowings Non-current	(22,250)		(16,097)
Cash	2,014		1,144
Net (debt)/ net cash	(22,289)		(16,492)

 

 

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.

	2021		2020
Total operating cost per boe	US$000		US$000
Royalties & production taxes (Note 2)	6,031		5,176
Well operating costs (Note 2)	16,026		16,490
Total operating costs	22,057		21,666
Production (mmboe)	902.7		993.2
Total operating costs per boe US$	24.43		21.81

 

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:

	2021		2020
Underlying well operating cost per boe	US$000		US$000
Well operating costs (Note 2)	16,026		16,490
Less workover costs (per text in Note 2)	(751)		(86)
	15,275		16,404
Production (mmboe)	902.7		993.2
Underlying well operating costs per boe US$	16.92		16.52

 

A 3% reduction in core operating performance arose in Argentina and was calculated as follows:

 

	2021		2020
	US$000		US$000
Well operating costs (Note 2)	15,538		15,867
Less workover costs	(751)		(86)
	14,787		15,781
Production (mmboe)	868.4		898.7
Underlying well operating costs per boe US$	17.03		17.56

 

Administrative cost per barrel

Underlying administrative expense excluding non-recurring items is calculated as follows:

 

	2021		2020
Administrative cost per boe	US$000		US$000
Administrative expense (note 3)	5,764		4,648
Attributable to Atome business included above (note 3)	(1,397)		-
	4,367		4,648
Production (mmboe)	902.7		993.2
Administrative cost per boe	4.84		4.68

 

Adjusted EBITDA

The calculation is detailed on the Income Statement with further details on the non-recurring items include in Note 10. The Adjusted EBITDA for Argentina is calculated as follows:

 

	2021		2020
Adjusted EBITDA Argentina	US$000		US$000
Operating profit / (loss)	(1,528)		(7,025)
Depreciation, depletion & amortisation	11,240		9,886
EBITDA excluding share options	9,712		2,861
Non-recurring items	751		68
Adjusted EBITDA	10,463		2,929

 

Non-recurring items

Where referred to in the calculation of Adjusted EBITDA and in alternative performance measures these comprise the following:

	2021		2020
Non-recurring	US$000		US$000
Workover costs (per text in Note 2)	751		86
	751		86

 

Workover costs in Argentina in 2020 amounted to US$68,000

 

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.

 

	2021		2020
	US$000		US$000
Sales	34,147		27,771
Royalties & production taxes (Note 2)	(6,031)		(5,176)
Well operating costs (Note 2)	(16,026)		(16,490)
Add back non-recurring workovers	751		86
	12,841		6,191

 

Including the foreign exchange gains of US$1.5 million (2020: US$4.4 million) as detailed in Note 9 which largely arise on the treasury management of cash resources ("treasury income") takes the cash generation in the period to US$14.3 million (2020: US$10.6 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:

	2021		2020
	US$000		US$000
Net cash generated by operating activities	11,078		4,438
Working capital movement	(4,303)		(2,409)
Add back administrative expense per Note 3	5,764		4,648
Add back non cash depreciation in admin expense (Note 3)	(82)		(162)
Add back non cash share based payments in admin expense (Note 3)	(367)		(410)
Add back non-recurring workovers	751		86
	12,841		6,191

 

Depreciation 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%