Malcy's take22 Nov 2018 11:28
It seems like I am writing about President almost weekly at the moment, but the news from Argentina is coming thick and fast and today’s announcement is incredibly positive. Even by their own high standards the news from PFO 1001, the first well in the three well programme, is way in excess of expectations, so much so that management have had to be somewhat reserved about production over the three wells. The well has been tied in flowing 600 b/d from the primary target formation which is amazing as it flowed 1,000 b/d at initial peak and has been choked back for reservoir management purposes. It should be remembered that the last announcement suggested that the secondary target would be produced but now there is an abundance of riches in the well this 240 b/d has been temporarily isolated and will produce at a later date.
As for PFE 1001, the second well in the programme it has been successfully cased and has noted 43m of oil pay in two target formations which again bodes well for potential production. This well will be tested next week and following that the rig will move to PFO 1005 to drill the third well in the campaign.
What does this mean for President? Clearly the initial target of 600 b/d from all three wells has already been exceeded but the management are correctly being extremely cautious about guidance as the second well has yet to be tested and the third well to be spudded. Having said that, I am prepared to hazard a guess that if you add up the new 600 b/d plus the potential 240 b/d getting you to 840 b/d then add only the 200 b/d each expected from wells two and three you get to an additional number of well over 1,000 b/d which could itself be a cautious number. A read through of increased, highly profitable cash flow, meaningful raise in earnings and inevitable upping of proved resources make these wells some of the most high margin in the industry. President has a real winner on its hands here and the shares are already bucking the recent trend of oil sector under-performance, there is much more to come.
Sign In
Follow the stocks
