President Energy Announce Corporate Update
President is pleased to announce that following the recent acquisition of operatorship and 100% ownership of the Puesto Guardian Concession, the Company has agreed to modify the monies payable under the sale and purchase contract following a request from the seller to accommodate its immediate capital needs. Previously it had been agreed that a deferred consideration of US$ 1.88 million would be paid to the seller over two years, plus a contingent 5% overriding royalty on production capped at US$11 million. It has now been agreed that President will make a payment of US$800,000 to the seller with both the deferred compensation and contingent overriding royalty being cancelled.
Therefore the resulting total purchase price for the outstanding 50% of the Concession and operatorship is US$5.80 million compared to the previously agreed actual and contingent sum of US$17.88 million.
President has now completed an initial review of the Puesto Guardian Concession which has further supported the Company’s view that there is strong potential for significant production and proven reserves upside. As part of this review and in preparation for the work programme commencing in Q1 2015, President recently opened up an old shut in well which produced 130 bopd on a light swab test with good pressure support. This well has now been shut in ahead of a pump being installed as part of the upcoming work programme. As previously announced, a new CPR will also be published before the end of 2014.
President also announces that it has agreed to renew its US$15 million unsecured revolving loan facility until 31 December 2015 from IYA Global Limited, a company within the PLLG Investments Limited Group, which is beneficially owned by Peter Levine. The Company’s independent directors, having consulted with its nominated advisor, RBC Europe Limited,consider that the terms of the transaction are fair and reasonable in so far as the Company’s shareholders are concerned. The loan pays a 2.5% facility fee and carries a drawn interest rate of 12.5% (5% commitment fee if undrawn).
Peter Levine, Chairman commented;
“We are delighted to have taken operatorship and 100% ownership of Puesto Guardian at these revised terms. This opportunist transaction relieves President of actual and contingent liabilities arising from the acquisition totalling US$12.88 million in consideration of an accelerated discounted sum of US$800,000. We believe the Puesto Guardian Concession offers considerable untapped potential and are greatly encouraged by the strong recent well test performance.
The extension of the loan facility will continue to provide President with operational flexibility” Miles Biggins, Bsc Joint Honours University College London, with 22 years of experience in the oil and gas sector, a Petroleum Engineer and member of the Society of Petroleum Engineers who meets the criteria of qualified persons under the AIM guidance note formining and oil and gas companies, has reviewed and approved the technical information contained in this announcement.
Source: President Energy