Posted by Malcolm Graham-Wood - Malcy's Blog
President has announced the completion of the acquisition of interests in the Rio Negro Province in Argentina. The purchase price is $9.9m of which $8.7m was paid yesterday the rest to be paid in 12 months time from operational cash flow. This has been financed partly through an additional $4m bank facility and $4m additional loan from IYA, owned by Peter Levine.
The interests in Las Bases and Puesto Prado have P1 reserves of 1m barrels which the management believe can be ‘in the right circumstances' be expanded by end 2019 to 4m barrels of 2P reserves. But the prize of this acquisition is not only the hydrocarbons but the extensive infrastructure facilities which include a 60km pipeline as well as its own tie and metering at the main regional pipeline. Not only does this open up PPC's own Estancia Vieja concession but gives income from CGC and in due course third party capacity from other neighbours.
Back to the hydrocarbons, the company is already working ‘expeditiously ‘ to bring into production certain wells that are currently shut in on the new concessions. This should, without being specific, add to both oil and gas production by the year end and will continue into Q1 2019. In addition to this, following testing, the gas from Estancia Vieja should be able to power the Puesto Prado facilities and wells by the end of the year and be followed by commercial sales in Q12019.
This deal is yet another smart deal for PPC, it provides upside for production and reserves whilst giving valuable infrastructure creating value from areas where there was little or none. What is more this is all happening virtually immediately and will create more value for shareholders in very short order. It is indeed ‘ an important strategic move' and should be rewarded by long term value accrual in the share price.
Better late than never Pantheon has brought on stream it's VOS#1 well in Tyler County, onshore East Texas. Only 2,000 mcfpd but it will bring much needed but modest cash flow to the company.
The company has completed the farm-out to Total and we can now expect activity in short order on the block. Maybe tomorrow's Tullow Capital Markets Day might be worth a listen on this front… Regret that I don't get an invite to this but will be watching for news.
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