President Energy PLC’s Shares Nearly Double After Oil Discovery

President Energy PLC (LON: PPC) shares jump massively following the discovery of oil.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Small-cap ooilil explorer President Energy (LSE: PPC) share price has jumped this morning, rising as much 90% in early trading, after the company revealed that it had made its first oil discovery at the Lapacho well in Paraguay.

The company announced that it had found conventional light oil and condensate at its Lapacho prospect. Management expects this oil to be of commercial quality, although further tests and drilling activities need to be carried out, before President can officially claim to have made a commercial oil discovery.

Nevertheless, what’s really exciting about the discovery of oil at the Lapacho project was the fact that the oil was discovered before the well reached its target depth. This indicates that the prospect could yield more oil than initially believed. Additionally, the presence of oil at the Lapacho prospect implies that liquid hydrocarbons may be present in the deeper sandstone reservoirs at the company’s nearby,but currently abandoned, Jacaranda prospect. President says it plans to re-commence drilling of the Jacaranda prospect in the hope of finding yet more oil at a deeper depth.  

All in all, this discovery represents a significant milestone for President Energy, as the company now has proof that oil does exist in the Paraguayan Chaco. The discovery puts in place the foundations for further drilling and exploration activities in the future.

Busy Year

Today’s news marks the latest development in what is shaping up to be an extremely busy year for President. Indeed, the company’s US operations, which are located in Louisiana, produced 218 barrels of oil equivalent per day (boepd) during the first half of this year, generating revenue for the company of $22,200 per day. Record US production yielded much needed cash for President to pursue international drilling and growth opportunities. 

Specifically, during the past few months, as well as drilling activities within Paraguay, President also acquired the additional 50% of its Argentinian subsidiary, Puesto Guardian, over the summer. Thanks to this transaction, President’s oil production should rise by 36% during the second half of the year to 530 boepd.

And, unlike many junior oil explorers, President has plenty of cash on its balance sheet to support exploration activities without the need to ask investors for cash injections.

At the end of June, President had a net cash balance of $23m and City analysts currently expect the company to break even by 2016. However, after today’s announcement and discovery of oil within Paraguay, it’s possible that City analysts will start to upgrade the company’s earning s forecasts.

Indeed, President plans to begin the first stage of production at its new Lapacho project during 2015, depending upon test results. So, now President has all of the building blocks in place to support rapid growth.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »