Operational and Strategy Update
20/04/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220420:nRST7200Ia&default-theme=true
RNS Number : 7200I President Energy PLC 20 April 2022
20 April 2022
PRESIDENT ENERGY PLC
("President" or the "Company")
Operational and Strategy Update
President Energy (AIM: PPC), the international energy company provides an
update on operational and strategy matters.
Key Highlights
· Salta Province, Argentina
o Testing at wells DP2001/2003 continues to progress, with both already
having demonstrated commercial production
o Side-track from the formerly producing well PG 13-1 has been successfully
drilled to a target depth of 3,512 meters. Management is confident in its
ability to bring this to production before the end of May
o Well PE-8 has now been worked over and cleaned of accumulated sand with
Swab results showing oil and gas production
· Preparatory work for the drilling of the Paraguayan exploration
well continues with President's partner, OPIC, the subsidiary of CPC
Corporation of Taiwan, both having now confirmed a location known as Tapir 1
· The macro environment continues to support higher global oil
prices, with a US$2 per barrel increase in prices receivable for Argentinian
April production with a projected upward trend later in year
· Pursuant to increasing pricing and gas demand in Argentina,
President is re-evaluating a Paleozoic deep gas prospect in the Martinex del
Tineo field within the Puesto Guardian Concession with a farm out process to
start by end Q3
· In Louisiana, the Triche well is producing in-line with
expectations in the range of 180 barrels of oil plus gas with high value
remaining recoverable reserves internally assessed. Simmons well is also
producing in line with the expected 50 barrels of oil a day
· Increasing value of President's holding the recently spun-off AIM
company Atome Energy PLC
SALTA PROVINCE, ARGENTINA
Drilling
Wells DP2001/2003
The new wells DP2001 and 2003 remain in the process of various stages of
testing. As has been stated previously both oil wells have demonstrated they
produce commercially. With long life wells such as in the Puesto Guardian
Concession, time is being necessarily spent to understand downhole conditions
and reservoir characteristics in order to optimise production. This process
remains ongoing.
The wells have carbonate reservoirs which over time can inhibit flow through
accumulation of residues of these same carbonates caused by pressure changes
in the reservoir. Therefore, it is important to run laboratory tests to
determine the right type of treatment and/or acid stimulation as well as pump
size in order to ensure optimum steady state well-flow. During this time both
these wells will be in sequence flowed and shut in as part of this process.
Accordingly, whilst this is taking more time than originally considered, the
fundamental point is that both wells are oil producers and are already making
solid contributions to Salta oil production.
Wells PG 13-1
This well is a side-track of the old, formerly producing well, shut-in due to
an irretrievable fish (packer) in the well. The original well has been shut-in
for at least 11 years. The side-track coming out of the original casing
through a whip stock has been successfully drilled to a target depth of 3,513
metres, landing in the same reservoir level approximately 30 metres from the
original well position. It was then cemented.
Logging while drilling and mud-logs showed similar positive hydrocarbon
bearing characteristics to those in the original PG13 well which was drilled
in the 1980's. The target producing reservoir is very good quality sandstone
having proved to have good porosity and permeability. PG13-1 is being
completed with a casing liner to protect the formation and eventually may be
stimulated depending on circumstances.
The drilling rig is now being released and the work of clean out and
completion will be made by the workover rig. It is anticipated that this will
take some 3 weeks before results from the well can be identified. For the
reasons stated above, there is a level of confidence running through from
management to the long serving field operatives that PG13-1 will prove to be a
sound commercially producing oil well which will, all being well, be on stream
before the end of May. By that time all three new wells should be optimally
producing.
Well PE-8
This old well in the Pozo Escondido field in the Puesto Guardian Concession
and adjacent to the producing PE-7 well was shut-in many years ago following
an unsuccessful frac stimulation which screened out prior to President taking
over the field operation. Since the frac, the Company has bled off oil to
surface from time to time with pressure at the wellhead.
Taking advantage of the workover rig being in the Concession, the well has now
been worked over and cleaned of accumulated sand, Swab results showed oil and
gas production. The well is now being placed on production also for May.
WATER FLOODING PROJECT RIO NEGRO
This important project has been planned in detail and discussions with the
relevant province are expected shortly whereupon, subject to the Province of
Rio Negro approval, commencement of the initial work can be programmed. At the
same time the management team, has implemented cost saving initiatives to
improve margins in parallel with a fresh look at the principal fields in Rio
Negro through external consultants. Whilst this work, as with the water
flooding secondary recovery programme will take time for the effects seen, it
is believed that all of these efforts will be rewarded in the future and are
in the medium to long term interests of the Rio Negro Concessions.
OIL PRICES IN ARGENTINA
The much-awaited increase in domestic oil sales prices in Argentina in part
reflecting the global market has commenced with a US$2 per barrel increase in
prices receivable for April production and a projection for further step by
step increases during the year.
MARTINEZ DEL TINEO EXPLORATION, ARGENTINA
In the years between 2012 and 2016, President considered a Paleozoic deep gas
prospect in the Martinez del Tineo field within the Puesto Guardian
Concession.
In 2016, steps were taken to farm-out the prospect which with a background of
the prevailing hydrocarbon market at the time ultimately proved to be
unsuccessful.
Similar to President's Paraguay acreage which has now been successfully
farmed-out to the Taiwanese State Energy Company (see below), events including
macro pricing and gas demand in Argentina, has led President to re-evaluate
the prospect including the risk reward matrix which has materially benefitted
from better economics. Since 2016, domestic realisable gas prices have
increased by 50% in dollar terms to nearly US$4 per Million BTU which taking
into account the potential size of the prize is a significant change.
The prospect is situated within the long term Puesto Guardian Concession
expiring in 2050 and has significant infrastructure already in place due to
President's existing oil production operations. In terms of size, an
independent Gaffney Cline and Associates report in 2012 best estimated
Unrisked Recoverable Resources at 570 Bcf of gas and 14.5 MMbls of condensate
with an updated Company internal estimate in 2016 after further geological and
geophysical work upgrading those figures to approximately 2.8 Tcf of gas and
69 MMbbls of condensate from two independent formations.
The deep prospect, considered to have a target depth of 4,200 metres which is
covered and clearly delineated by reprocessed 3D and 2D seismic, offers the
highest structural position on a plunging anticline in the presence of an
up-dip fault/saddle break, close to the Santa Barbara Mountains in Salta where
source shales and reservoir sandstones are proven.
The potential location for a deep exploration well allows that well to
penetrate a shallower Yacoraite potentially oil bearing interval approximately
1,000 metres higher up thus providing a default potential for hydrocarbon
production in the event of failure in the main target. In effect the
exploration could be interpreted as the deepending of an appraisal well at the
Martinez del Tineo Field.
Monetising options in the case of success include delivery of gas through a
constructed pipeline, or gas to power.
Accordingly, the Martinez del Tineo gas farm out process is now being
re-activated with steps to be taken to update the offering and data room and
promote the same to the market with such marketing both domestically and
internationally likely to commence before the end of Q3 2022.
PARAGUAY EXPLORATION
Preparatory work for the drilling of the exploration well continues with
President's partner, OPIC, the subsidiary of CPC Corporation of Taiwan. The
drilling location has now been confirmed as Tapir 1, within the Delray Complex
of prospects to the southwest of the previously considered locations of Delray
Main.
Tapir has a Company internal estimated PMean unrisked recoverable oil in place
of 96 MMbbls, with the Delray Complex having a total of 306 MMbbls PMean
unrisked recoverable oil in place.
The well targets mainly the Lecho and Volcanic reservoirs and is located on a
central structural high with a clear four-way dip structure shown by 3D
seismic acquired by President as part of its original exploration campaign.
Tapir is considered to have a more favourable location than the original
Delray Main site relative to the source rock generative area and charge
migration pathway. The principal exploration risks being migration from source
and thus charge.
A further independent sub-surface study commissioned by President in March
2022 placed a 17% chance of success on the Tapir prospect. Of course this
means also a high chance of failure and this correctly reflects the grounded
attitude which investors must adopt in relation to exploration.
The updated projected time to spud the well is now beginning of Q4 2022. The
delay to the original timetable has been the result of needing to coordinate
all logistics, consents and approvals and the projected time to repair and
recondition the preferred drilling rig required.
On the positive side, with macro events materially affecting the cost of
hydrocarbon fuel in Paraguay, a country currently totally reliant for its
liquid fuel on imports of finished product by barge through 1,000km of river
system from the River Plate, the economics in the event of success have
significantly improved the value of the prize and concomitantly the
risk/reward ratio.
LOUISIANA
Whilst there have been sporadic interruptions of production due to technical
issues in the facility, the Triche well is producing in-line with expectations
in the range of 180 barrels of oil plus gas. Simmons is also producing in line
with the expected 50 barrels of oil a day. An average sales price of US$109
was achieved for the oil sold in March with gas prices robust.
An internal estimate of proven recoverable oil in the Triche has identified a
total of 300,000 barrels of oil yet to be produced giving a total realisable
gross undiscounted sales value from that well at US$100 per barrel oil of
US$30 million (President 70 per cent working interest) with as previously
observed an excellent net back level with low opex and adequate tax losses to
cover profits.
Peter Levine, Chairman, commented:
"We should now see benefit from positive results from our drilling campaign in
Salta, the increases in oil prices in Argentina and consistent contribution
from Louisiana wells with excellent oil prices.
"At the same time, the high impact exploration Paraguay project is in progress
with results expected by the end of the year. President is also
re-invigorating the farm-out project at Martinez del Tineo with a significant
potential prize having now been brought into greater focus and attraction due
to the increase in hydrocarbon prices.
"The waterflood, secondary recovery project for the main Puesto Flores field
previously announced is in the final stage of planning and approvals for the
commencement of implementation is this half year.
"Finally, it is pleasing to note the progress of the green hydrogen and
ammonia production AIM company, Atome Energy (President: 28% holding) and the
improvement in its share value".
Glossary
Bcf means billion cubic feet of gas
Bopd means barrels of oil per day
Boepd means barrels of oil equivalent per day (oil and gas)
MMBTU means million British thermal units of gas
MMbbls means million barrels of oil
Tcf means trillion cubic feet of gas
Contact:
President Energy PLC +44 (0) 207 016 7950
Nikita Levine, Investor Relations info@presidentpc.com
finnCap (Nominated Advisor and broker) +44 (0) 207 220 0500
Christopher Raggett, Tim Harper
Notes to Editors
President Energy is an oil and gas company listed on the AIM market of
the London Stock Exchange (PPC.L) primarily focused in Argentina, with a
diverse portfolio of operated onshore producing and exploration assets.
The Company has operated interests in the Puesto Flores, Estancia Vieja,
Puesto Prado and Las Bases Concessions, and Angostura exploration contract,
all of which are situated in the Río Negro Province in the Neuquén Basin
of Argentina and in the Puesto Guardian Concession, in the Noroeste
Basin in NW Argentina. Alongside this, President Energy has cash
generative production assets in Louisiana, USA and further significant
exploration and development opportunities through its acreage
in Paraguay and Argentina.
It has also a 27.9% investment interest in Atome Energy PLC a green hydrogen
and ammonia producer whose shares are traded on AIM of the London Stock
Exchange.
With a strong strategic and institutional base of support, including the
international commodity trader and logistics company Trafigura, an in-country
management team as well as the Chairman whose interests as the largest
shareholder are aligned to those of its shareholders, President Energy gives
UK investors access to an energy growth story combined with world class
standards of corporate governance, environmental and social responsibility.
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018 ("UK MAR"). The person who arranged for
the release of this announcement on behalf of the Company was Peter Levine,
Chairman.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END UPDBKKBQPBKKQQB