President announces the acquisition of the entire issued share capital of LCH SA (“LCH”), a Paraguayan company which has a carried 5% Participating Interest in the Pirity Concession, where President holds a 59% beneficial working interest. As a result of the acquisition, President will, through its Group of Companies, own 64% of the Pirity Concession. The 5% interest is being carried by Pirity Hidrocarburos (President’s partner in the Concession) as part of a 2012 written agreement prior to President’s entry into the Concession.
Consideration for the acquisition comprises the issue of 10,206,858 President ordinary shares calculated at the rate of 35 pence per share plus US$250,000 in cash, which amount shall be recovered from Pirity Hidrocarburos (“PH”) through the existing carry arrangements under which PH has agreed to pay LCH upon spudding of the first exploration well. The shares are subject to a lock-up arrangement preventing LCH shareholders from disposing those shares prior to 31 January 2015.
In addition, in the event of a commercial discovery, the following contingent deferred consideration is applicable:
– Further new ordinary shares in President with an aggregate value of US$ 5 million calculated at the rate of 35 pence per share (and using an exchange rate prevailing at the time of issue)
– Warrants over 4,252,858 President shares with an aggregate value of US $2.5 million calculated at the rate of 35 pence per share, with such warrants being exercisable during the exploration term of the Pirity Concession (which is due to expire on 12 September 2016 but also includes any extension to such term) at an exercise price of 47 pence
LCH is fully carried by PH through the minimum exploration work obligations of the Pirity Concession, which includes seismic and the total drilling of 15,000 metres of vertical depth. Following the satisfaction of the minimum work obligations, LCH becomes responsible for its pro rata share of joint venture expenses and capital costs. The current three well drilling programme at Pirity extends to approximately 13,500 metres in aggregate.
Additionally LCH has a potential right to a 5% working interest in the Demattei Concession. In the event such a right is granted, the shareholders of LCH will be entitled to receive further new President ordinary shares with an aggregate value of US$4 million (using an exchange rate at the time of issue).
Peter Levine, Executive Chairman, commented:
“I am pleased that we have been able to increase President’s interest in the significant potential of the Pirity rift basin. We have made this acquisition without incurring any additional capital cost for the exploration campaign which will commence shortly, with the first well spudding in a few days.”