President has announced new, independent certified Argentine reserves with the Neuquen Basin 2P number increased by 66% to 8 MMboe giving total in country net reserves of 26.6 MMboe. 1P net reserves are up over 30% to 4.5 MMboe, Given that at the time of acquisition the Puesto Flores/Estancia Vieja 1P reserves were an equivalent 3.2 MMboe this is indeed a success story in the making. Net Argentine aggregate 2P reserves are up to 26.6 MMboe with the Neuquen Basin reserves now 30% of the total up from less than 15% previously.

I would expect that the forthcoming fully funded capex  programme will lead to a further upgrade in reserves as suggested by the announcement. The key point here is that the acquisition has pushed the highly valued Neuquen Basin reserves to the front of the queue with regards to the 2018 capex programme. Whilst the Puesto Guardian assets remain of significant importance, with its 35 year licence it can afford to wait until the NB assets are worked on. Indeed, these reserves are of higher value with higher net backs and increasing production giving good, positive cash flow and spending the 2018 budget here is clearly wise given that is where the best value short term rewards are.

This report gives PPC every chance to increase reserves, cash flow, margins and therefore earnings and makes the shares a compelling story at this market valuation.

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