8 May 2012 07:00
8 May 2012
PRESIDENT PETROLEUM COMPANY PLC
("President" or "the Company")
Drilling Update Well DP 1001 Argentina
Successful Flow Test
First New Argentine well on Commercial Production
President is pleased to announce the successful testing and immediate placement on commercial production of Well DP 1001 at the Dos Puntitas field, Puesto Guardian concession, Argentina (President 50% working interest). This is the first new well of President to be commissioned as a producer since its July 2011 purchase of its interest at Puesto Guardian. The oil will be sold through existing arrangements, where President and its partner are receiving approximately US$ 72 per barrel, as compared to the US$ 56 per barrel received in July 2011.
These drilling and test results support President's group production target of 1300-1500 bopd around end Q3 2012.
As previously announced, Well DP 1001 identified, through cores and electric logs, 3 productive reservoirs with 33 meters of net pay. Respectively, these are the carbonate interval, and the A6 and A5 sands.
Carbonate Interval
An extended production test on the carbonate interval has now been completed, achieving a stabilised flow rate of in excess of 300 bopd, without any stimulation or pumping, and a flowing pressure of 30 Kg/cm2. The oil is very light and high quality.
The test has successfully confirmed that the carbonate interval is at original oil saturations and conditions, and contrary to pre drill estimates, is capable of sustaining a significant oil rate without stimulation.
The well is now being commissioned as a producer through the Dos Puntitas facility. The well data will continue to be analysed to assess the full potential from this zone, which will be considered as a frac candidate for the upcoming summer campaign.
A6 Sands
A production test was carried out on the A6 sand at a swab rate of approx. 100 bopd whilst still cleaning up with approx. 10% completion fluid and mud filtrate. The test has confirmed that the A6 is at original oil saturations. The zone will be fracced in the summer and President believes the A6 will flow at similar rates to the carbonates, at which time it will be commingled with production from the carbonate interval.
A5 Sands
The lower A5 interval will not be initially produced commingled due to different pressures but will produced in this well in the future and will also be targeted in a follow up wells. Due to the unavailability of the required isolation production packer, the sands were not included in this test program. However, based upon the quality of the sands, the 12m of oil column above the Dos Puntitas original oil water contact, and the production test rates in offset wells (150bopd in Pozo Escondido), new reserves have been discovered in the A5 with preliminary in-place volumes of some 3-5 million barrels. The A5 sands have similar production potential to those in Pozo Escondido.
Commenting on today's announcement, Peter Levine, Chairman of President Petroleum Company Holdings BV said:
"The test results of DP-1001 are extremely encouraging and we are now looking forward to increased production revenue as a result of this new well.
The well results of DP-1001 are significant on a number of grounds. Firstly, it has demonstrated that President's pre-drill guidance for a post-frac well initial of 380 bopd can be exceeded. To obtain these test results from just one of three intervals without stimulation is clearly satisfying however President believes that with further improvements to the drilling and completion techniques as well as with fraccing, considerably more can be realised from both existing and new wells and we look forward to the upcoming fraccing campaign.
Secondly, the well has confirmed that the southern part of the Dos Puntitas field is undeveloped. The Dos Puntitas field has a historical recovery factor of approx. 10%, which is low for a reservoir of this type with a good water drive. DP-1001 has confirmed the further development potential of the field, which is also being targeted with the DP-1002 well and new locations that will be firmed up once reservoir models have been updated in the near future.
Thirdly, the well has discovered new oil reserves in the A5 sand.
Lastly, the results in the carbonate interval in particular provide further affirmation of potential of the carbonate reservoir across the concession, where, as previously announced, President has preliminarily identified approximately 66 million new barrels of oil in place on three fields."
For further information contact:
President Petroleum Company
John Hamilton, Director +44 (0) 207 811 0140
Ben Wilkinson, Finance Director +44 (0) 207 811 0140
RBC Capital Markets
Jeremy Low, Stephen Foss, Matthew Coakes +44 (0) 207 653 4000
Jefferies Hoare Govett
Simon Hardy, Max Jones +44 (0) 207 029 8316
Pelham Bell Pottinger +44 (0) 207 861 3232
James Henderson, Mark Antelme
Dr Jonathan M Cohen, FGS, C Geol, Executive Vice President Exploration, meets the criteria of
qualified persons under the AIM guidance note for mining and oil and gas companies, has reviewed
and approved the technical information contained in this announcement.