Final Results
28/06/2022 07:00
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RNS Number : 4267Q President Energy PLC 28 June 2022
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 +44 (0) 207 016 7950
Peter Levine, Chairman
Rob Shepherd, Group FD
Nikita Levine, Investor Relations
finnCap (Nominated Advisor and Broker) +44 (0) 207 220 0500
Christopher Raggett, Tim Harper
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 2020
US$000
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 2020
US$000
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 2020
US$000
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%
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