President Energy pleased with progress in Rio Negro

(Sharecast News) - America-focussed exploration and production company President Energy updated the market on its activities in Argentina's Rio Negro province on Wednesday, reporting that well LB-1001 in the Las Bases field had been placed on stream following its workover.

The AIM-traded firm said its initial production results demonstrated a better than expected level of gas production with no associated water, and good pressure.

That gave the company confidence that levels higher than the previously-stated 61,000 cubic metres of gas per day, or around 350 barrels of oil equivalent per day, could be achieved with "careful" well management.

Gas prices in Argentina were now showing marked signs of increase, the board said, now that the southern hemisphere summer was coming to an end.

In expectation of "robust" production of gas from the Rio Negro fields as a result of the current drilling campaign, President said it had hedged part of its production to effect a baseline of steady income over the last month, maintaining the flexibility to sell the balance either at spot or "opportunistic" rates should they arise.

President said it agreed at the start of April to sell a fixed volume of 100,000 cubic metres per day for a 13-month period from 1 April 2021 to 30 April 2022, at a fixed flat price equivalent to about $3 per million British thermal units, taking into account all relevant factors.

The board said the period covered this month, as well as the whole of the southern hemisphere winter 2021 and summer 2022.

Taking advantage of higher prices, President said it had also agreed to sell 35,000 cubic metres per day for 12 months from the start of May, at a fixed flat price of $3.40 per million British thermal units.

President said it had also received permission to export 5,000 cubic metres, or 31,500 barrels, as part of its oil production in the second part of April.

Current realised domestic oil prices were running at about $51.50 in Rio Negro and $49 in Salta.

The realisable prices for export after relative tax were estimated to be $55, with the firm set to provide average production for the first half with its half-year results.

In Paraguay, President said final draft documentation was nearing its conclusion, as it worked on logistics and the availability of signing authorities.

Given the ongoing pandemic affecting the country, while working towards the target signing date around the end of April, the board said the finalisation of agreements would extend to early May.

It still, however, remained confident that there would be a successful conclusion.

President said it was solely focussed on delivering a farm-out package to provide appropriate financial support for drilling the exploration well in the first half of 2022.

"So far the results of LB-1001 are both pleasing and encouraging and we are moving on to the next stage of managing the well with confidence," said chairman Peter Levine.

"As to gas prices and our export of oil in May, one can only say every little helps.

"Finally, we turn to focus on the logistics of the farm out and look forward to finalising the transaction in the coming weeks."

At 1449 BST, shares in President Energy were flat at 2.35p.