14 Aug 2014 07:00
14 August 2014
PRESIDENT ENERGY PLC
("President" or "the Company")
President Farms into Hernandarias Block, Paraguay
President announces an update on the Hernandarias Block, Chaco Region, Paraguay, and the conditional farm-in previously announced on 10 January, 2014.
Highlights
· Hernandarias Concession enacted into law
· Farm in option exercised, with 40% interest acquired and a further 40% to be earned
· Discovery of a live petroleum system in the Jacaranda well gives significant encouragement for leads and prospects in Hernandarias
· 17 large Devonian structural prospects and leads identified within Concession
· Farm in materially enhances the value of President's Paraguay interests, and the optionality and flexibility for their development
Hernandarias Concession
The Hernandarias Concession has successfully passed through both the Senate and House of Deputies and has been signed into law No. 5259/14, by the President of Paraguay, Horacio Cartes.
As previously announced, the Concession covers 18,507 km2 and is immediately to the north of the Pirity Concession where President has recently drilled the Jacaranda prospect. The completion of the Hernandarias award, together with the Pirity and Demattei Concessions, gives President control and operatorship of the entire Pirity Rift Basin.
The Concession is believed to contain the same Paleozoic play system that President has confirmed at Jacaranda, with numerous large rotated fault blocks developed along the northern flank of the Pirity Rift Basin. To date, 32 large Devonian structural leads and prospects have been identified by President across the entirety of the Paleozoic structural play fairway extending across the three Concessions (Pirity, Demattei and Hernandarias), with 17 of these large structures identified in the Hernandarias Concession alone.
The discovery of a live petroleum system in the Jacaranda well gives significant encouragement to the promise of the plays in the Concession.
Three high graded prospect areas have been identified from recently acquired and historic 2D seismic. The geological structures range in size from 30 km2 to 150km2 and are developed at drill depths from 2000 meters downwards. Well costs will be correspondingly lower in the Hernandarias Concession than those in the Pirity Concession, and multiple Devonian reservoir targets appear to be present (Huamampampa, Icla and Santa Rosa formations). The relatively shallow depth of burial suggests a majority of prospects will lie in the oil generating window with deeper structures extending down to gas-condensate levels.
Farm-in
As a consequence of the Concession passing into law, President has exercised its option under the Conditional Farm-in Agreement ("CFA") to farm in up to a maximum of 80% participating interest in the Concession and to become the Operator of the Concession.
Pursuant to the terms of the CFA, President has acquired a 40% interest in the Concession and will earn a further 40% upon fulfilment of the remaining commitment under a US$17 million work programme, which is defined to include seismic acquisition and one well over the next three years. Of this US$17 million, US$1.6 million has already been spent during the 2013 seismic programme, with US$15.4 million remaining to be spent over three years. President's sole partner in the Concession is Hidrocarburos Chaco S.A., a locally owned company, the director and president of which is Dr. Fernando Wiens, an eminent Paraguayan geologist.
Peter Levine, Chairman, commented:
"We are very pleased to have farmed-in to the Hernandarias Concession, which undoubtedly enhances the value of President's Paraguay interests and the optionality and flexibility for their development.
The discovery by President of a substantial, thick, live source rock in the Pirity Concession, just across the Hernandarias Concession border, is very encouraging for the potential prospectivity of this play. We look forward to working with our partner to progress exploration."
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