President Energy continues treatment plant development

The AIM-traded firm said the development of the plant in Puesto Flores was on time and on budget thus far, with the first stage to see oil able to be delivered by truck to refineries direct from the core Puesto Flores and Estancia Vieja fields, without going through third-party pipelines, treatment and water disposal facilities.

On completion of the first stage, savings and value-added benefits were estimated for oil so delivered to be about $4 per barrel, representing a reduction of some 20% of operational expenditure and sales cost per barrel.

While Trafigura remained President's largest offtaker, the completion of the first stage would also allow for the flexibility to supply certain quantities of oil to smaller, more local refineries.

The proximity to the fields of such mini refineries would result in lower transport costs.

President Energy said the second stage of the project, involving an updated pipeline delivery system, was currently projected for the end of August.

Discussions with the relevant third party currently treating President's oil were continuing with regard to tie-in facilities circumventing their plant, thus giving the company the option to deliver oil by truck or through its pipeline system on completion of the second stage.

As the company announced on 22 December, the project was being funded by an Argentine peso-denominated loan of $5m, meaning that it was repayable in pesos in total using the exchange rate applicable when the loan was taken out.

Due to changes in the peso-dollar exchange rate, the amount of the outstanding loan in dollar equivalent if it was repaid as at close of business on Tuesday showed a reduction of $0.27m, resulting in $4.73m dollar equivalent as the outstanding principal sum.

Interest paid and accrued to such date on the loan was approximately $0.16m, giving a positive differential of more than $0.1m, since the loan was taken out in late December.

Market consensus was that a similar progression in exchange rates would continue though the year, the board said.

“With concentration this year in Argentina on expanding production of gas in Rio Negro and oil in Salta it is very important that we get the best value out of our existing oil production in Rio Negro,” said chairman Peter Levine.

At 1608 GMT, shares in President Energy were down 5.84% at 1.81p.