President completes purchase of new concessions in Rio Negro

Upstream oil and gas company President Energy updated the market on the completion of the acquisition of its interests in the Las Bases and Puesto Prado concessions in Argentina’s Rio Negro province on Wednesday.

The AIM-traded firm is the operator at the concessions and holds a 90% interest, with EDHIPSA holding the remaining 10%.

It said the acquisition of the new concessions from the Rio Negro Province had now been completed and paid for, with the relevant provincial decrees having been issued.

The province granted President 90% operating interests over the new concessions, which had a 10-year term, alongside provincial energy company EDHIPSA.

It said the purchase price of the new concessions was $9.9m in aggregate, of which $8.7m was paid to the province on Tuesday, with the balance to be paid in one year utilising operational cash flow.

The initial consideration was partly financed through an additional $4m of a secured term loan bank facility, and an additional $4m unsecured loan made to the company by its existing lender IYA, under the terms of President's current line of credit facility with them.

President said the balance of the initial consideration was paid out of its own cash flow.

“The acquisition of Las Bases and Puesto Prado is an important strategic move,” said President Energy chairman and chief executive officer Peter Levine.

“It gives the company consolidated critical mass in the important Neuquén Basin, additional production and proven reserves together with a valuable owned and operated pan-provincial gas pipeline and tie-in providing a key infrastructure footprint within the region, which can be utilised to deliver significant growth.”

Levine said the “installed and valuable” infrastructure, in addition to potentially producing shut-in wells, would allow President to begin generating revenues from those assets immediately as well as unlocking a route-to-market for its Estancia Vieja gas.

“As such we expect to see early benefits from these new concessions with expansion continuing next year.

“We are pleased to again be working with the Provincial energy company EDHIPSA as our partner in the new concessions, and look forward to expanding on our excellent and respectful relationship to successfully develop these areas.”