President Petroluem agrees farm-in and placing to raise funds

President Petroleum, an oil and gas group, has signed a farm-in agreement for two contiguous blocks in Paraguay and has proposed the placing, open-offer and subscription of shares to raise the necessary funds.

President has proposed the firm placement of 28.96m shares, the conditional placement of 86.89m shares, an open offer of up to 20m shares, and a subscription of 18.75m shares, all at 20p per share to raise £30.92m.

115.85m shares have been placed with investors, which following shareholder approval will be listed on September 17th.

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The farm-in agreement would allow the firm to earn up to a 59% operating interest in the Pirity Block from Pirity Hidrocarburos, a subsidiary of PetroVictory, and up to a 60% operating interest in the Demattei Block from Crescent Global Oil Paraguay, a subsidiary of Crescent Oil, in the Chaco region of Paraguay.

The combined blocks have a gross risked recoverable resource potential of more than 150m barrels, with a net success case NPV10 (the net present value at a 10% discount rate) estimated at over $25 per barrel, according to President's own estimates.

Peter Levine, Chairman of President, said: "This transaction is a transformational step for President which will allow it to achieve substantial growth and reflects our determination to transform President into a mid-cap company. The high impact exploration potential in these large blocks in Paraguay is a company making opportunity [and] we are pursuing an on-trend play across the Argentine border into Paraguay where we have secured control over the Paraguayan side of the basin.

"The ability to solely operate and control almost an entire under-drilled Cretaceous rift basin is a unique opportunity for President to leverage our extensive knowledge of the play systems from our nearby Argentine operations. Combining President's expertise, with the knowledge of our experienced partners' who enjoy significant support in Paraguay, will allow us to play a major role at this exciting time for the oil industry in Paraguay."

The share price fell 12% to 22p by 09:30.

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