REG - Molecular Energies - Operations and Strategic Update

Molecular EnergiesAnnouncement

09/01/2023 07:00

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RNS Number : 9772L  Molecular Energies PLC  09 January 2023

9 January 2023

 

Molecular Energies PLC

("MEN" or the "Company")

Operations and Strategic Update

 

Molecular Energies PLC (AIM: MEN), the international energy company provides
an operations and strategic update.

Hydrocarbon operations

Argentina

On 14 November, the Company issued a brief summary of the auditor reviewed
financial results for Q3 2022 ("the November announcement"). The November
announcement stated that the turnover for the first 9 months for the year was
in excess of US$ 26 million with profit before tax, subject to and as strictly
defined in the November announcement, of US$ 16.9 million. The Argentine
auditor reviewed results for Q4 2022 are due to be released by mid-March 2023
and are expected to show continued operational profitability, at which stage
an operational review will be released for the full year 2022.

In Rio Negro, a programme of well interventions is due to commence shortly in
the next two months to boost production. In Salta, a like programme is getting
underway as well as opening up a number of old shut-in wells to identify any
residual oil left where possible artificial lift may sweep hydrocarbons to the
surface due to insufficient energy in the wells to produce oil to surface
naturally. In both areas, further sub-surface analysis is currently ongoing
with potential new drilling prospects highlighted which will be matured in H1
2023.

The drilling of a high impact gas exploration well at the Martinez del Tineo
field in Salta is on the programme for H2 2023 which will also target proven
oil reserves in that field. An appropriate drilling rig has been identified
and, to maximise economies of scale with regard to future drilling in Salta,
advanced negotiations are in progress with regard to the drilling rig being
based at the Puesto Guardian Concession on a medium to long-term basis from
mid-2023.

Steps are being taken to further reduce opex in both operational areas
including the investigation of replacing diesel power generation with own
generated solar, a project which is intended will be further developed this
year subject to the results of a promising preliminary feasibility study
already undertaken being confirmed.

Corporate bonds in Argentina

President Argentina has successfully converted the corporate bonds, due to
mature in 2023, to a new issue of bonds in the total amount of US$ 10.8
million in aggregate at an interest rate of 4 % per annum with a final
maturity date now extending over 36 months to December 2025. These bonds have
been awarded investment grade credit rating of A- by Fix SCR, the Argentine
affiliate of the international credit agency Fitch.

Paraguay

MEN has been informed that the designated drilling contractor expects to
complete the procurement of the drilling rig in Paraguay in the middle of next
week and the drilling contract is being signed in anticipation subject to
completion of formalities.

The necessary repairs and inspections referred to in the Company announcement
on 7 December 2022, are expected to commence next week with the objective of
the spudding of the well by the end of Q1 2023. The Company will advise the
market as to progress at the end of January 2023.

Louisiana

Both the Triche and Simmons wells are producing. Gross aggregate December
sales delivered to the refinery was 4,300 barrels of oil. Production in
January has started materially slower than in December and is expected to
continue at lower levels with further natural declines due to the
characteristics of the newly perforated reservoir now becoming evident.

It is therefore inappropriate, whilst still profitable, that such a
small-scale production asset remains in the Group. Contingent liabilities
relating to the future plug and abandonment of wells and facility will
nevertheless have a cash-flow negative effect in the fullness of time.
Accordingly, this asset, together with the contingent liabilities, is intended
to be dispensed with in Q1 2023 so that MEN can concentrate its resource and
direction in other areas.

 

Green House Capital, MEN's alternative energies division ("GHC")

GHC is pursuing an increasing number of opportunities in the sphere of
alternative energies.

Lithium

Further to the announcement made by MEN on 25 July 2022, discussions remain
ongoing with the Argentina State-owned company for managing the energy and
mining resources of the Salta Province. At the same time, GHC is considering
other areas in connection with Lithium. Notwithstanding the ongoing work, this
is expected to be a relatively slow burner.

Dual Fuel

Reference is made to the announcement of MEN made on 5 January 2023 in this
regard.

MEN regard this active opportunity as very prospective and synergetic with
that of Atome Energy PLC, in whom MEN has currently a 25.2% shareholding.

Shareholders can expect further announcements in this regard during H1 2023.

Other opportunities

MEN is currently pursuing a number of other opportunities under GHC and
expects to be able to advise the market positively in regard to certain of
these also during H1 2023. The objective is to mix near term income generative
business with those with excellent prospects but on a longer lead time.

Strategic

The Company is taking decisive actions to reposition and transition the Group
whilst not neglecting its hydrocarbon business. The forthcoming intended
disposal of non-core Louisiana assets is indicative of this and will be the
first of other housekeeping actions to be taken during the course of this
year.

In Q1 2023, MEN will be taking steps to meaningfully reduce and right-size
both the interest burden on the Company as well as capital monies due under of
the shareholder loan provided to MEN by IYA, a company beneficially owned by
MEN's largest shareholder and Chairman, Peter Levine. IYA has indicated that
it is both sympathetic and supportive of the desirability to significantly
reduce the interest and debt at the parent company level in the interests of
the Company as a whole and its future expansion.

Discussions are underway between the Company and IYA with a view to such
reduction whilst retaining the benefit of an underpinned, robust, and time
extended line of credit from IYA in favour of the Company supporting working
capital for the repositioned group.

Whilst no guarantee as to the outcome can be given, the parties are working
towards finalising these discussions with a view to implementing a strategy
beneficial to the Company before the end of Q1 2023 and expect to be able to
inform shareholders of the plans during that timeframe.

 

Contact:

Molecular Energies
PLC
+44 (0)20 7016 7950

Nikita Levine, Investor
Relations
info@molecularenergiesplc.com (mailto:info@molecularenergiesplc.com)

 

finnCap (Nominated Advisor and
broker)                      +44 (0)20 7220 0500

Christopher Raggett, George Dollemore

 

Tavistock (Financial PR & IR)
                                      +44
(0)20 7920 3150

Simon Hudson, Nick Elwes, Charles Baister

 

Notes to Editors

Molecular Energies PLC is an AIM listed company at the forefront of energy
development and has interests across the energy spectrum, from oil and gas
projects to subdivisions in the green and alternative energy sub-sectors.

The Company has oil and gas production in two geographical markets: Argentina
and the United States, as well as exploration assets in both Argentina and
Paraguay. The Company also has two separate subdivisions which are focused on
early-stage opportunities in the green and/or alternative energy sub-sector.

Activities in the green and alternative energy space are being carried out
under the Green House Capital brand and through AIM listed ATOME Energy PLC
operating in Paraguay and Iceland, producing green hydrogen and ammonia for
use in fuels.

With a strong strategic and institutional base of support, an in-country
management team as well as the Chairman whose interests as the largest
shareholder are aligned to those of its shareholders, Molecular gives UK
investors access to an energy growth story combined with world class standards
of corporate governance, environmental and social responsibility.

 

[The information contained within this announcement is deemed by the Company
to constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of
the European Union (Withdrawal) Act 2018 ("UK MAR"). The person who arranged
for the release of this announcement on behalf of the Company was Peter
Levine, Chairman.]

 

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