President Energy

PPC has announced record results in January with each of their concessions making good returns and contributing profits. In the month the Argentine assets generated $1.3m after opex, G&A and finance costs. Positive cash generation was higher at $1.8m due to continued utilisation of tax credits which I alluded to here  a few weeks ago. This is likely to continue and PPC expects to pay no CT this year due to utilisation of tax losses carried forward.

Sales prices were $63.50 pb for Puesto Flores and $53.70 for Puesto Guardian last month and are running at around the same level this month. At PG the concession is now making a significant contribution to overall profits in Argentina which should increase through Q1. At the Neuquen Basin work has commenced to test the long shut-in Estancia Vieja field which if it came in would be a massive bonus for the company.

It is worth noting that Vista Oil & Gas in its recent deal was struck at a significant premium to that paid by PPC. Reports indicate that Vista paid $12.57 for 1P boe compared to PPC’s $6.22 price in the Puesto Flores/Estancia Vieja and on a production basis Vista paid $25,480 per flowing barrel whereas PPC paid only $18,667, a healthy discount.

PPC continues to act as a consolidator of assets in Argentina and I wouldn’t rule out another deal after this recent success which would provide more production growth with excellent net backs currently $33 per barrel. Peter Levine says that the company is ‘making excellent progress in every concession in Argentina and also has free cash flow of $200/- per month from Louisiana’ accordingly President is in ‘its strongest ever position’. With change from 10p a share this is another share that is criminally undervalued and I’m sure patience will be rewarded by wise investors at this level.

Range Resources

Blogs at the moment by iPad as I am travelling but whilst on the move I noticed with interest an operational update on Trinidad operations from Range Resources. The most striking is the average net oil production for January of 777 b/d which is up 23% up on the last quarter of 2017. But this is likely to be just the start as the work programme for 2018 is very extensive.

This will include integration of the oilfield business and securing third party contracts and completing work to increase the water injection rate at the SE waterflood project to a rate of at least 1,500 barrels of water a day. In addition the company intends to drill a minimum of two new development wells at the Beach Marcelle and Morne Diablo fields and up to 30 heavy workovers whilst obtaining approvals for the next waterflood projects.

It is Range’s intention to achieve continued production growth ‘mainly through the waterflood programme which accounts for the majority of our reserves’. In addition the two waterflood projects brought on to date  make Range see significant potential in expanding the programme to other areas of their fields.

It is also worth noting that the company has appointed Lubing Liu as COO and country General Manager as he has extensive international experience in Waterflood  projects and shows the determination of the senior management to address the key areas for longer term.

Finally it must not be forgotten that with the acquisition of RRDSL last year the intention is to focus on securing third party work in order to bring in additional revenues. So far in addition to doing in-house work, RRDSL is currently providing oilfield services to one other operator in Trinidad which it hopes to expand.

I am visiting Trinidad shortly and hope to visit all the assets and meet with all the key local management so will report back in a couple of weeks but they do seem to be getting to grips with the situation so patient investors may eventually be rewarded.