RE: 2016 Annual Report7 Jun 2017 11:43
Argentina
The first part of the year was spent conducting workovers of certain wells in our Puesto Guardian Concession with solid progress in production rates, albeit not spectacular. However, the workovers did reaffirm and confirm certain productive zones which helped underpin a 10% increase in independently audited 2P reserves at the Puesto Guardian Concession to 19.9 mmboe
The decision was then taken in the second part of the year to drill new horizontal wells, the first of these
being at the DP-1002 S/T at the Dos Puntitas field in the Concession. As previously announced this well,
whilst eventually horizontally drilled to the reservoir ready for the production leg, suffered throughout from
various mechanical and service quality issues, which ultimately rendered the well incapable of completion
for production and drew the specific drilling programme to its current halt. As a result, the Board
has determined that the costs of the DP-1002 well as at the balance sheet date should be impaired giving rise
to a one-off charge of US$10.9 million. President announced last month that it is pursuing claims against
certain service providers in connection with that well.
Since the period end, the Company successfully worked-over the DP-1001 well which initially returned
to production at approximately 300 bopd from a vertical section. Additionally, on-going subsurface and geochemical studies at the Puesto Guardian Concession have yielded encouraging results indicative of the potential for structures and reservoir targets on the Concession that have not to date been targeted and in certain cases ignored totally. This, combined with the workovers performed in 2016 and during 2017 to date, reinforces our view that there exist multiple development and appraisal drilling opportunities as well as workover opportunities in the Puesto Guardian Concession that could yield material upside, particularly should oil prices recover from their present levels. The current workover programme is continuing.
On a macro basis we are noticing a significant increase in interest from outside parties in doing business in
Argentina and we certainly feel that President is well placed to expand by way of suitable acquisition opportunities as and when they arise.
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