TIDMPPC
RNS Number : 7200I
President Energy PLC
20 April 2022
20 April 2022
PRESIDENT ENERGY PLC
("President" or the "Company")
Operational and Strategy Update
President Energy (AIM: PPC), the international energy company
provides an update on operational and strategy matters.
Key Highlights
-- Salta Province, Argentina
o Testing at wells DP2001/2003 continues to progress, with both
already having demonstrated commercial production
o Side-track from the formerly producing well PG 13-1 has been
successfully drilled to a target depth of 3,512 meters. Management
is confident in its ability to bring this to production before the
end of May
o Well PE-8 has now been worked over and cleaned of accumulated
sand with Swab results showing oil and gas production
-- Preparatory work for the drilling of the Paraguayan
exploration well continues with President's partner, OPIC, the
subsidiary of CPC Corporation of Taiwan, both having now confirmed
a location known as Tapir 1
-- The macro environment continues to support higher global oil
prices, with a US$2 per barrel increase in prices receivable for
Argentinian April production with a projected upward trend later in
year
-- Pursuant to increasing pricing and gas demand in Argentina,
President is re-evaluating a Paleozoic deep gas prospect in the
Martinex del Tineo field within the Puesto Guardian Concession with
a farm out process to start by end Q3
-- In Louisiana, the Triche well is producing in-line with
expectations in the range of 180 barrels of oil plus gas with high
value remaining recoverable reserves internally assessed. Simmons
well is also producing in line with the expected 50 barrels of oil
a day
-- Increasing value of President's holding the recently spun-off AIM company Atome Energy PLC
SALTA PROVINCE, ARGENTINA
Drilling
Wells DP2001/2003
The new wells DP2001 and 2003 remain in the process of various
stages of testing. As has been stated previously both oil wells
have demonstrated they produce commercially. With long life wells
such as in the Puesto Guardian Concession, time is being
necessarily spent to understand downhole conditions and reservoir
characteristics in order to optimise production. This process
remains ongoing.
The wells have carbonate reservoirs which over time can inhibit
flow through accumulation of residues of these same carbonates
caused by pressure changes in the reservoir. Therefore, it is
important to run laboratory tests to determine the right type of
treatment and/or acid stimulation as well as pump size in order to
ensure optimum steady state well-flow. During this time both these
wells will be in sequence flowed and shut in as part of this
process.
Accordingly, whilst this is taking more time than originally
considered, the fundamental point is that both wells are oil
producers and are already making solid contributions to Salta oil
production.
Wells PG 13-1
This well is a side-track of the old, formerly producing well,
shut-in due to an irretrievable fish (packer) in the well. The
original well has been shut-in for at least 11 years. The
side-track coming out of the original casing through a whip stock
has been successfully drilled to a target depth of 3,513 metres,
landing in the same reservoir level approximately 30 metres from
the original well position. It was then cemented.
Logging while drilling and mud-logs showed similar positive
hydrocarbon bearing characteristics to those in the original PG13
well which was drilled in the 1980's. The target producing
reservoir is very good quality sandstone having proved to have good
porosity and permeability. PG13-1 is being completed with a casing
liner to protect the formation and eventually may be stimulated
depending on circumstances.
The drilling rig is now being released and the work of clean out
and completion will be made by the workover rig. It is anticipated
that this will take some 3 weeks before results from the well can
be identified. For the reasons stated above, there is a level of
confidence running through from management to the long serving
field operatives that PG13-1 will prove to be a sound commercially
producing oil well which will, all being well, be on stream before
the end of May. By that time all three new wells should be
optimally producing.
Well PE-8
This old well in the Pozo Escondido field in the Puesto Guardian
Concession and adjacent to the producing PE-7 well was shut-in many
years ago following an unsuccessful frac stimulation which screened
out prior to President taking over the field operation. Since the
frac, the Company has bled off oil to surface from time to time
with pressure at the wellhead.
Taking advantage of the workover rig being in the Concession,
the well has now been worked over and cleaned of accumulated sand,
Swab results showed oil and gas production. The well is now being
placed on production also for May.
WATER FLOODING PROJECT RIO NEGRO
This important project has been planned in detail and
discussions with the relevant province are expected shortly
whereupon, subject to the Province of Rio Negro approval,
commencement of the initial work can be programmed. At the same
time the management team, has implemented cost saving initiatives
to improve margins in parallel with a fresh look at the principal
fields in Rio Negro through external consultants. Whilst this work,
as with the water flooding secondary recovery programme will take
time for the effects seen, it is believed that all of these efforts
will be rewarded in the future and are in the medium to long term
interests of the Rio Negro Concessions.
OIL PRICES IN ARGENTINA
The much-awaited increase in domestic oil sales prices in
Argentina in part reflecting the global market has commenced with a
US$2 per barrel increase in prices receivable for April production
and a projection for further step by step increases during the
year.
MARTINEZ DEL TINEO EXPLORATION, ARGENTINA
In the years between 2012 and 2016, President considered a
Paleozoic deep gas prospect in the Martinez del Tineo field within
the Puesto Guardian Concession.
In 2016, steps were taken to farm-out the prospect which with a
background of the prevailing hydrocarbon market at the time
ultimately proved to be unsuccessful.
Similar to President's Paraguay acreage which has now been
successfully farmed-out to the Taiwanese State Energy Company (see
below), events including macro pricing and gas demand in Argentina,
has led President to re-evaluate the prospect including the risk
reward matrix which has materially benefitted from better
economics. Since 2016, domestic realisable gas prices have
increased by 50% in dollar terms to nearly US$4 per Million BTU
which taking into account the potential size of the prize is a
significant change.
The prospect is situated within the long term Puesto Guardian
Concession expiring in 2050 and has significant infrastructure
already in place due to President's existing oil production
operations. In terms of size, an independent Gaffney Cline and
Associates report in 2012 best estimated Unrisked Recoverable
Resources at 570 Bcf of gas and 14.5 MMbls of condensate with an
updated Company internal estimate in 2016 after further geological
and geophysical work upgrading those figures to approximately 2.8
Tcf of gas and 69 MMbbls of condensate from two independent
formations.
The deep prospect, considered to have a target depth of 4,200
metres which is covered and clearly delineated by reprocessed 3D
and 2D seismic, offers the highest structural position on a
plunging anticline in the presence of an up-dip fault/saddle break,
close to the Santa Barbara Mountains in Salta where source shales
and reservoir sandstones are proven.
The potential location for a deep exploration well allows that
well to penetrate a shallower Yacoraite potentially oil bearing
interval approximately 1,000 metres higher up thus providing a
default potential for hydrocarbon production in the event of
failure in the main target. In effect the exploration could be
interpreted as the deepending of an appraisal well at the Martinez
del Tineo Field.
Monetising options in the case of success include delivery of
gas through a constructed pipeline, or gas to power.
Accordingly, the Martinez del Tineo gas farm out process is now
being re-activated with steps to be taken to update the offering
and data room and promote the same to the market with such
marketing both domestically and internationally likely to commence
before the end of Q3 2022.
PARAGUAY EXPLORATION
Preparatory work for the drilling of the exploration well
continues with President's partner, OPIC, the subsidiary of CPC
Corporation of Taiwan. The drilling location has now been confirmed
as Tapir 1, within the Delray Complex of prospects to the southwest
of the previously considered locations of Delray Main.
Tapir has a Company internal estimated PMean unrisked
recoverable oil in place of 96 MMbbls, with the Delray Complex
having a total of 306 MMbbls PMean unrisked recoverable oil in
place.
The well targets mainly the Lecho and Volcanic reservoirs and is
located on a central structural high with a clear four-way dip
structure shown by 3D seismic acquired by President as part of its
original exploration campaign. Tapir is considered to have a more
favourable location than the original Delray Main site relative to
the source rock generative area and charge migration pathway. The
principal exploration risks being migration from source and thus
charge.
A further independent sub-surface study commissioned by
President in March 2022 placed a 17% chance of success on the Tapir
prospect. Of course this means also a high chance of failure and
this correctly reflects the grounded attitude which investors must
adopt in relation to exploration.
The updated projected time to spud the well is now beginning of
Q4 2022. The delay to the original timetable has been the result of
needing to coordinate all logistics, consents and approvals and the
projected time to repair and recondition the preferred drilling rig
required.
On the positive side, with macro events materially affecting the
cost of hydrocarbon fuel in Paraguay, a country currently totally
reliant for its liquid fuel on imports of finished product by barge
through 1,000km of river system from the River Plate, the economics
in the event of success have significantly improved the value of
the prize and concomitantly the risk/reward ratio.
LOUISIANA
Whilst there have been sporadic interruptions of production due
to technical issues in the facility, the Triche well is producing
in-line with expectations in the range of 180 barrels of oil plus
gas. Simmons is also producing in line with the expected 50 barrels
of oil a day. An average sales price of US$109 was achieved for the
oil sold in March with gas prices robust.
An internal estimate of proven recoverable oil in the Triche has
identified a total of 300,000 barrels of oil yet to be produced
giving a total realisable gross undiscounted sales value from that
well at US$100 per barrel oil of US$30 million (President 70 per
cent working interest) with as previously observed an excellent net
back level with low opex and adequate tax losses to cover
profits.
Peter Levine, Chairman, commented:
"We should now see benefit from positive results from our
drilling campaign in Salta, the increases in oil prices in
Argentina and consistent contribution from Louisiana wells with
excellent oil prices.
"At the same time, the high impact exploration Paraguay project
is in progress with results expected by the end of the year.
President is also re-invigorating the farm-out project at Martinez
del Tineo with a significant potential prize having now been
brought into greater focus and attraction due to the increase in
hydrocarbon prices.
"The waterflood, secondary recovery project for the main Puesto
Flores field previously announced is in the final stage of planning
and approvals for the commencement of implementation is this half
year.
"Finally, it is pleasing to note the progress of the green
hydrogen and ammonia production AIM company, Atome Energy
(President: 28% holding) and the improvement in its share
value".
Glossary
Bcf means billion cubic feet of gas
Bopd means barrels of oil per day
Boepd means barrels of oil equivalent per day (oil and gas)
MMBTU means million British thermal units of gas
MMbbls means million barrels of oil
Tcf means trillion cubic feet of gas
Contact:
President Energy PLC +44 (0) 207 016 7950
Nikita Levine, Investor Relations info@presidentpc.com
finnCap (Nominated Advisor and broker)
Christopher Raggett, Tim Harper +44 (0) 207 220 0500
Notes to Editors
President Energy is an oil and gas company listed on the AIM
market of the London Stock Exchange (PPC.L) primarily focused in
Argentina, with a diverse portfolio of operated onshore producing
and exploration assets.
The Company has operated interests in the Puesto Flores,
Estancia Vieja, Puesto Prado and Las Bases Concessions, and
Angostura exploration contract, all of which are situated in the
Río Negro Province in the Neuquén Basin of Argentina and in the
Puesto Guardian Concession, in the Noroeste Basin in NW Argentina.
Alongside this, President Energy has cash generative production
assets in Louisiana, USA and further significant exploration and
development opportunities through its acreage in Paraguay and
Argentina.
It has also a 27.9% investment interest in Atome Energy PLC a
green hydrogen and ammonia producer whose shares are traded on AIM
of the London Stock Exchange.
With a strong strategic and institutional base of support,
including the international commodity trader and logistics company
Trafigura, an in-country management team as well as the Chairman
whose interests as the largest shareholder are aligned to those of
its shareholders, President Energy gives UK investors access to an
energy growth story combined with world class standards of
corporate governance, environmental and social responsibility.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR"). The person who arranged for the release of this
announcement on behalf of the Company was Peter Levine,
Chairman.
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END
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