13 Aug 2014 07:00
13 August 2014
PRESIDENT ENERGY PLC
("President" or "the Company")
Jacaranda Well Update
Proof of Concept Achieved
Major Source Rock Discovery
President Energy, as Operator, is pleased to announce that the PE-PY-J x1 (Jacaranda) well has been successfully drilled and has confirmed that the prolific Devonian petroleum system of SE Bolivia and NW Argentina extends into the Pirity Basin of Paraguay. The Jacaranda well has proven the first live Devonian source rock to be discovered in the Pirity Basin, and significantly de-risks the remaining two wells in the drilling campaign. Management's proof of concept for this well has been validated.
Highlights
· First of three well programme has encountered over 800 metres of live Devonian source rock in oil and gas condensate window; proof of concept confirmed
· Inflows of gas into the wellbore, with background gas of 5%, trip gas of 50% recorded, hydrocarbon shows C1 (methane) to C5 (pentane) indicating liquid generation
· High quality (20% porosity) reservoir sands encountered above source rock, however no seal at primary target at this location
· First time the Paleozoic play system has ever been proved to exist in the Pirity Basin, Paraguay
· Source rock de-risks the next well and multiple targets across President's concessions
· Potential gas condensate reservoir identified below target depth; the well has been suspended for future re-entry
· Well drilled ahead of schedule and under budget
· Jacaranda results support Lapacho and Tapir prospects
· Due to positive results, Lapacho elected as next prospect in sequence
Peter Levine, Executive Chairman, commented:
"Jacaranda is an excellent result for President, being the first basin opening well in Paraguay's recent history. Despite not having found conventional pay, this discovery has favourably impacted the potential for success at the Company's Lapacho prospect, which will now be moved up in the drilling sequence. The establishment of a live oil generative source rock is the key success factor for the prospectivity of President's concessions, and we very much look forward to continued drilling success at Lapacho and Tapir."
There will be a conference call for analysts and investors at 0830am UK time today (13th August 2014). A copy of the presentation that will be used for this call is available on the company's website at www.presidentenergyplc.com
Jacaranda Well (President Operator, 64% Participating Interest)
Having drilled the PE-PY-J x-1 (Jacaranda) well to a depth of 4500 metres, it has been suspended for re-entry at a later date. The drilling operation was extremely efficient and the well was drilled ahead of schedule, 300 metres deeper than planned, under budget, and without incident. This is a commendable result for the first deep well to be drilled in Paraguay for 30 years, in a remote location lacking any in-country oil field infrastructure.
The well has confirmed that the prolific Devonian petroleum system of SE Bolivia and NW Argentina extends into the Pirity Rift Basin of Paraguay. Over 800 metres thickness of live Devonian source rock was penetrated (and was still present at TD), which is at the high end of pre-drill estimates. This positive result has materially de-risked a large and prospective structural play fairway for President's oil and gas-condensate prospects in Paraguay. This is the first time a live source rock has been discovered in the Pirity Basin. The immediate follow on will be to drill the largest single target in the basin, which is the Lapacho prospect just south of Jacaranda.
The Devonian source rock (Los Monos and Icla formations) comprises a thick sequence (over 1000 metres in total) of marine black shales and geochemical analysis has confirmed good source rock quality (Total Organic Carbon, average >1%). Maturity levels are in the oil window and extend down to the gas-condensate window below (4200m). Background gas levels of 5% were recorded during drilling and trip gas exceeded 50%. The hydrocarbon shows comprised C1 (methane) to C5 (pentane) indicating liquid hydrocarbons throughout. With input from external unconventional experts, President is conducting an evaluation to determine whether the Devonian also represents an unconventional shale gas resource in addition to its obvious qualities as an excellent conventional source rock. Results of the unconventional analysis will be released in due course but the immediate priority is to pursue high graded conventional prospects charged by the now proven Devonian petroleum system.
The primary reservoir target of the Jacaranda well was predicted to be a Carboniferous sandstone lying directly above the Devonian source rock. The well confirmed that a very well developed reservoir quality sand is present (high average porosity, 20% and 90m thick), however the Carboniferous sandstone (Tupambi formation) was not sealed at this location and hydrocarbons migrated away. The Cretaceous Pirgua target contained low levels of migrated Devonian gas but no effective trap geometry. The presence of Devonian gas demonstrates the ability for hydrocarbon migration in the basin.
The lack of an effective Carboniferous target at this location has been tempered by discovery of a thick, live Devonian source rock immediately below. The exploration objective is to find the first conventional reservoir sand developed within or just below the Devonian source rock sequence. Jacaranda did not drill deep enough to encounter the conventional Devonian reservoirs and seismic evidence suggests that the first reservoir sand will occur some 150 metres below current TD. For this reason the well has been suspended to allow deepening to reach these conventional reservoir targets at a later date.
Lapacho and Tapir (President Operator, 64% Participating Interest)
Due to the positive result at Jacaranda, the immediate priority is to move the rig directly to the Lapacho prospect where seismic indicates the presence of a 400 metre section predicted to contain thick reservoir sands (Santa Rosa Formation) lying at a drill depth of 4300 metres, immediately below the Devonian source rock. The Lapacho x-1 well will target a discrete well defined fault block trap within the greater prospect area, which Management estimates could contain gross mean unrisked prospective resources of 1 tcf gas and 30 mmb condensate. The QG 1 rig will now be mobilised 17km from Jacaranda to the Lapacho location, with a view to spudding before mid-September. The Lapacho prospect has been described in the RPS report published on 16 June, 2014. The greater Lapacho prospect area has gross mean unrisked prospective resources of 5.2 tcf gas plus 157 mmb condensate.
The Tapir prospect will now be drilled after Lapacho as well three in the Pirity Basin drilling campaign. Tapir is an optimum test of the Cretaceous petroleum system on the Palmar Largo trend extending from Argentina into Paraguay as described in the RPS report published on 24 January, 2014. Drilling results at Jacaranda have not changed our positive view of Tapir despite the fact that the shallow Cretaceous targets at Jacaranda having been shown to contain no hydrocarbons at this location. The Cretaceous Lecho Sand target was penetrated at Jacaranda as predicted and had excellent reservoir properties (80 metres thick, 25% average porosity). The test failed due to the critical risk as identified pre-drill, the lack of fault seal at this location, and any hydrocarbons present will have leaked further up-dip beyond the current prospect area. Tapir also contains a possible Santa Rosa target of the same size as the Cretaceous; any successful test of the Santa Rosa at Lapacho will have a derisking of the deeper Tapir play.
Dr. Richard Hubbard, PhD Geology Stanford University, with 35 years of experience in the oil and gas sector, as President Chief Operating Officer, who 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.
Contact:
President Energy PLC
Peter Levine, Chairman +44 (0) 207 016 7950
John Hamilton, CEO +44 (0) 207 016 7950
Ben Wilkinson, Finance Director +44 (0) 207 016 7950
RBC Capital Markets
Jeremy Low, Matthew Coakes, Daniel Conti +44 (0) 207 653 4000
Canaccord Genuity Limited
Tim Redfern, Henry Fitzgerald-O'Connor +44 (0) 207 523 8000
Bell Pottinger
Gavin Davis, Henry Lerwill +44 (0) 207 861 3232