Amid a big fall in the oil price linked to China’s coronavirus and widespread weakness in the resources sector, President Energy’s (PPC:AIM) 0.5% advance to 4.07p stands out.
The small cap Latin America-focused oil firm has had a couple of encouraging updates in recent days. Last week (20 Jan) the company announced that global commodities trader Trafigura will take a 6% stake in the company in return for a £7.7m cash injection which will help trim net debt.
The group reckons it can now be free of all third-party net debt (the company owes money to a vehicle owned by its chairman Peter Levine) by the second half of 2021.
Today the company said proven reserves for its producing assets in Argentina had slipped back, though reserves had increased at the less-certain ‘proven and probable’ level.
Proven, or 1P, reserves at the end of 2019 amounted to 15.1m barrels of oil equivalent (boe), down from 15.4m at the end of 2018.
Proven and probable, or 2P, reserves rose to 25.9m boe from 25m boe; while proven, probable and possible, or 3P, reserves rose to 43.0m boe from 30.5m boe.
President Energy said 2P reserves at its higher-value Neuquen Basin assets rose 20% to 13.4m boe and now comprised 53% of the total.
Broker Whitman Howard says: ‘The reserve upgrade follows quickly after the new investment by Trafigura and we see this as indicative of the potential offered by President.
‘With the Trafigura investment validating the strategy and portfolio, the reserve upgrade adds further to the investment case.’
FinnCap analyst Jonathan Wright says: ‘A return to development drilling and exploration later this year should help extend President’s reserves growth while the potential for further acquisitions could provide another step change to its resource base.’