LONDON (Alliance News) - President Energy PLC Wednesday announced a proposed placing of a total of 72.8 million new shares to raise GBP9.1 million, funds it said it will use to develop its assets in Paraguay and Argentina.
The oil and gas exploration and production company said the placing consists of a firm placing of 29.7 million new shares and a proposed placing of a further 43.1 million new shares, both at a price of 12.50 pence per share. It said one warrant will be issued for every one new share, and the warrants will have an exercise price of 18.75 pence per share and a three-year exercise period.
President Energy shares were trading 2.7% higher Wednesday morning at 12.84 pence.
As part of the fundraising, President Energy said it has agreed to extend the terms of its USD15 million IYA Global Ltd loan facility for a further 12 months, until end-December 2016.
The company said the proceeds raised in the placing will be used to fund the commissioning of a 600 kilometre 2D seismic survey across the company's Hernandarias concession in Paraguay for drilling ahead of a potential farm-out, and commence a multi-aspect work programme on the Puesto Guardian concession in Argentina to increase production. It said the funds will also support the group's working capital position through to 2016.
The Hernandarias seismic survey is being targeted to commence in Spring, and will focus on three significant leads identified by previous surveys and the information gained from the Jacaranda and Lapacho wells, the company said.
In a separate statement Wednesday, President Energy said it has received "encouraging levels" of interest in its Paraguay assets from major industry players following the discovery of contingent resources at Lapacho and significantly de-risked neighbouring prospects, although the company said that no formal process has begun.
The company said that the multi aspect work programme on the Puesto Guardian concession in Argentina will include a combination of up to 10 well work-overs and some 17 new wells.
It also said it will start the farm-out process in March of its large deep Palaeozoic Gas Prospect at the Martinez Del Tineo field in the Puesto Guardian concession. The prospect has recoverable best estimate prospective resources of 570 billion cubic feet of gas, and 14.5 million barrels of condensate.
"With the natural focus on Paraguay in 2014, we see Argentina being an important driver of value in 2015. The planned work programme on the Salta region Puesto Guardian Concession is expected to increase production and demonstrate the upside potential of the field," said Chairman Peter Levine in a statement.
"In addition, the Palaeozoic Gas Prospect offers significant upside which has been reflected by the level of interest received from major industry players who also recognise the potential," he added.
Late Tuesday, President Energy had said it was not informed about court action allegedly taken by its partner on the Pirity concession in Paraguay, Petro-Victory Energy Corp, which on Monday said it had sent a letter to President Energy about cash demands from President.
In a statement released by Petro-Victory, which holds a 36% interest in the Pirity concession, said it had "delivered a notice of audit to President for the years 2013 and 2014 amidst concerns over the alleged continuing cash demands from the operator in excess of the approved work programme and budget," it said.
Further, Petro-Victory said President is responsible for "over-expenditures and inadequate logging and well testing" on the concession.
President said the claims are without foundation, and said that Petro-Victory has defaulted on their agreement. As such, President said believes it has the right to acquire Petro-Victory's interest in the concession at a discounted value as per the terms of the agreement.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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