24 Sep 2013 07:00
24 September 2013
PRESIDENT ENERGY PLC
("President" or "the Company")
OPERATIONS UPDATE
Highlights
Paraguay
· Seismic shows undrilled giant* field potential
· Two proven play systems identified on seismic, Cretaceous and Paleozoic
· Identification of at least 20 structural prospects and leads
· Some individual structures could be in excess of 100 million barrels
· Full interpretation of seismic to be announced in December
· Drilling of three wells in Q2 2014 on track
Argentina
· Stimulation campaign deemed commercially successful
· Production generating solid operating profit
· New well stimulation programme being considered for 2014
Production
· Record group net oil production currently at over 540 bopd (575 boepd total production), excluding PE 8 well due shortly back on stream
Paraguay
President's Pirity Rift Basin- Undrilled Giant* Field Potential in Paraguay
President has almost completed the acquisition of 800 km of 2D seismic in addition to the 793 km2 of 3D seismic acquired earlier this year in its two very large Concessions (16,000 km2) in the Pirity Rift Basin of the Paraguayan Chaco. Early seismic processing and interpretation results are very positive and show the possibility for a significantly expanded resource potential compared to the basin estimate of 159 mmb of oil risked published in the CPR last year. At least two major structural play fairways have now been identified and although early in the interpretation, management believes the total resource potential of greater than 500 mmb oil risked could be a realistic possibility.
The new data show that both structural play fairways contain two proven petroleum systems. The first is the Cretaceous petroleum system, known from old 2D data and an extension of the Palmar Largo trend in Argentina. The second is a newly identified underlying Paleozoic petroleum system that has charged the giant* producing fields in neighbouring southern Bolivia and NW Argentina. Several of the Pirity Rift Basin prospects benefit from the possibility of receiving a double charge from both play systems, thereby reducing source risk. This double play system makes it possible for President's Pirity Rift Basin to develop into a large scale petroleum province.
Based on the new data, the Company has now identified more than 20 large structural prospects and leads. The largest prospects have closures greater than 50 km2 and several more are in the 30-40 km2 size range. This should be compared to the nearby Palmar Largo Field in Argentina which contains some 40 mmb of oil in a closure of less than 10 km2. In addition, it can already be seen from the seismic that both petroleum systems will offer significant additional unconventional resource potential, which supports the conclusions of the recent EIA unconventional report (May 2013) which quotes technically recoverable resources for just the unstructured Paleozoic areas of the Paraguayan Chaco as 67 tcf of gas and 3.2 billion barrels of oil. This could be considerably exceeded in a large scale conventional structural play fairway. In summary, the new data shows undrilled giant* field potential in the Company's Pirity Rift Basin of Paraguay.
President is working in partnership with our contractor Global Geophysical and will spend the next two months progressing the technical evaluation of the new data. President expects to release fully interpreted information in December, detailing both the expanded scope of basin potential and evaluation of prospects to be tested by the drill bit in 2014. No further announcements on prospectivity are expected before that time. Following the release of the fully interpreted seismic, a new CPR from DeGolyer & MacNaughton will be commissioned.
The Company is making preparations to drill a three well back to back campaign due to spud in Q2 2014. Negotiations are at advanced stages with rig providers and major international oil services companies for the provision of integrated project management services for the drilling operations. Further announcements on this will be made during Q4 2013. The intent is to drill and test three independent high impact prospects to evaluate the overall scale of the basin potential and establish the potential for commercial production.
Argentina
Summary of Well Stimulation Results at Puesto Guardian (PPC 50% Working Interest)
Dos Puntitas1001
After hydraulic stimulation of the carbonate and A6 intervals, an inflow test commenced on 22nd June with a Well Initial ("WI") of approximately 480-500 gross barrels of fluid per day and after five days of clean-up reached 70% oil.
After three months of production, the well has stabilised and is free flowing into the facility on a 9/16 inch choke with an average month three WI of 220 gross barrels of fluid per day, with 80% oil.
Pozo Escondido 7
After hydraulic stimulation of the carbonate interval, an inflow test was commenced on 19th July with a WI of approximately 230 gross barrels of fluid per day and after five days of clean-up reached 30% oil.
A workover was then carried out to open the A6 interval and a commingled inflow test commenced on 25th August with a WI of approximately 440-500 gross barrels of fluid per day and after three days of clean-up reached 50% oil.
After one month of production, the well is free flowing into the facility on a 45/64 inch choke with an average month one WI of 325 gross barrels of fluid per day, with 67% oil.
Pozo Escondido 8
After hydraulic stimulation of the carbonate interval, an inflow test was commenced with a WI of approximately 340 gross barrels of fluid per day and after three days of clean-up reached 15% oil.
A workover is now being carried out to open the A6 interval and a commingled inflow test will be commenced shortly. President expects results to be at least in line with Pozo Escondido 7.
Conclusions
As a result of the well stimulation campaign the gross field production has to date been increased from approximately 300 bopd to 600bopd with a further increase anticipated as contribution from Pozo Escondido 8 is added. These production levels have not been seen in the field for 5-6 years.
With the well performance data now observed, President is confident that the stimulation campaign has proven successful. With a current realised oil price of US$74/bbl and workover and stimulation costs at approximately US$1mln per well, the well initials and normal well declines observed on both the carbonate and A6 intervals in Dos Puntitas and Pozo Escondido are commercial. Furthermore, beam pumps will be installed to increase production as the wells decline.
Although more production history will be required before reserves can be booked, as a result of this campaign, President's preliminary estimate is that a gross 3-5 million barrels of new reserves can be converted from contingent resources.
President and its partner will now evaluate the twenty six additional shut in wells in the Concession for a new three to six well workover and stimulation campaign in 2014.
Louisiana
Production in Louisiana remains at recent highs at approximately 275 boepd net to President. Oil prices remain firm at approximately US$ 105 per barrel. Total current monthly net operating cash flow after tax to President is approximately US$ 750,000.
Peter Levine, Executive Chairman, President Energy said:
"I am extremely pleased with our positive and expeditious progress so far this year, with our three assets firing on all cylinders. Paraguay is potentially turning into a large scale hydrocarbon area, with a newly identified possible double play system emerging from our analysis to date. In Argentina, our proof of concept stimulation campaign has validated our technical assumptions, and opened up further opportunities for production and reserves in the carbonates which are prevalent on the Concession. Louisiana continues to grow steadily and is yielding strong operating cash flow to support our activities. Group oil production is at record levels. The balance of 2013 will be a very busy period for President, as we continue to analyse the expanding potential in Paraguay and prepare ourselves for the 2014 drilling campaign."
*[*]President defines Giant as greater than 100 million barrels of oil equivalent
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
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
Jefferies Hoare Govett
Simon Hardy, Max Jones +44 (0) 207 029 8316
Pelham Bell Pottinger +44 (0) 207 861 3232
Gavin Davis, Henry Lerwill