3 Aug 2012 07:00
3 August 2012
PRESIDENT PETROLEUM COMPANY PLC
("President" or "the Company")
Trading and Operations Update
President Petroleum (AIM: PPC) announces an update on its operations as it commences a high impact appraisal and development programme. This signals the start of a period of intensive activity in Puesto Guardian concession with workover and fraccing campaigns running through to the end of the year.
Highlights:
·; Preparation for fraccing campaigns underway - injectivity and pressure tests on 8 shut-in wells at the Pozo Escondido Field to provide data to optimise the frac designs- very encouraging indications from pressure tests on first three wells
·; Production uplift expected in Q4 2012/13 - first 6 shut-in wells selected for workover programme
·; Awaiting notification from the Salta Province of the preliminary award of exploration licence areas surrounding Puesto Guardian
·; Argentina production in June averaged net 235 bopd, with H1 2012 production averaging approximately net 160 bopd.
·; Realisations from sales of oil in Argentina remain stable at US$72 per barrel - a 28% increase year on year
·; Louisiana production continues to provide solid cash flow having averaged net 195 boepd in June, with a H1 2012 average of net 160 boepd, reflecting successful workover activity in the period.
·; Net debt position as at 30 June 2012 of US$ 3.5 million
Peter Levine, Chairman of President, commented:
"The start of the fraccing campaign is a significant milestone and will provide additional data on the potential of the limestone reservoir across the concession, where President has preliminarily identified an additional 66 mmboe of oil in place over the three fields.
"This we believe will be the first time that an Operator has carried out modern day fraccing operations in the Yacoraite formation in Argentina and has the potential to materially transform the production levels at Puesto Guardian.
"We continue to enjoy the full support of the appropriate hydrocarbon authorities of Argentina and remain extremely positive about the opportunities open to President in the country. To that end, we look forward to providing further positive operating updates over the coming weeks and months."
Fraccing Programme
Field work has commenced for the fraccing program with pressure surveys in 8 shut-in wells at the Pozo Escondido Field including injectivity tests in key wells to provide data to optimise the frac designs. Initial results from the first 3 pressure surveys indicate excellent pressure build up. Frac modelling in the limestones has already been carried out for the preliminary frac designs with a single vertical frac projecting good contributions to overall production from wells previously shut-in.
The programme will begin with a second workover rig being mobilised to the field within the next two months to prepare the wells selected to be fracced in the first phase campaign with first results expected in October. Once this has been completed, the campaign will roll into a second phase which will be sized based on the results of the initial wells with potentially up to 8 wells fracced in total.
Gustavo Henderson, a recognised frac expert in Argentina, is leading the frac campaign for President.
Workover Program
The first six shut-in wells at the Dos Puntitas and Pozo Escondido fields have been identified as candidates for recompletion, including possible new perforations, or beam pump repairs which will form the additional workover campaign to be carried out during the course of the year.
Development Planning for 2013 Drilling Campaign
Reservoir and development planning continues as President prepares the drilling sequence to commence in H1 2013. The drilling programme will initially focus on high impact wells in Dos Puntitas, to achieve significant production enhancement.
Argentina Preliminary New License Awards
A Resolution of the final awards is expected from the Salta Province by or around mid-August and a further announcement will be made at that stage. President would operate the new areas.
Argentina H1 2012 Production and Oil Prices
June production averaged net 235 bopd, with H1 2012 production averaging approximately net 160 bopd. Oil prices remain at approximately US$72 per barrel (an increase over the last 12 months of 28% demonstrating an increased convergence with WTI). Production from well DP 1001 remains strong at over 260 bopd gross.
Louisiana
Production in Louisiana averaged net 195 boepd in June, with a H1 2012 average of net 160 boepd, reflecting successful workover activity in the period. Average realised price for oil over H1 2012 was approximately US$109 per barrel. Incremental opportunities are being pursued at both East White Lake ("EWL") and East Lake Verrett ("ELV"); as an example, a simple wireline plugback at EWL this week has yielded incremental 20 boepd net to PPC. A new well at EWL is planned in Q3.
Corporate
The loan provided by Levine Capital Management was drawn to US$ 4.6 million as at 30 June, 2012 (net debt as at 30th June was US$3.5 million). Given the potential additional acreage awards, ongoing operational activities, and business development efforts, Levine Capital Management has increased and extended its loan facility available to the Company to US$ 9 million. The loan may not be fully drawn but provides the Company with the flexibility to expand its business. Apart from the extension of the quantum of the facility, no other terms of the existing loan facility have changed. The Company's directors, having consulted with its nominated adviser, RBC Europe Limited, consider that the terms of the transaction are fair and reasonable in so far as the Company's shareholders are concerned.
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.