Operational and Corporate Update
26 August 2020
PRESIDENT ENERGY PLC
("President" or the "Company")
Operational and Corporate Update
President Energy (AIM: PPC), the energy company with a diverse portfolio of production and exploration assets focused primarily in Argentina provides an operational and corporate update.
· Workover programme now commenced
· Water flood pilot now forms part of the workover programme
· Drilling rig contract signed and all on track for spudding by end September
· Paraguay farm-out discussions ongoing
· President forms new renewables division
H2 2020 Drilling and Workovers
The workover programme referred to in the Company's announcements of 15 June and 13 July 2020 has now commenced.
The programme now comprises 6 wells of which two target generating an additional 100,000 m3/day of gas. Of the next three, one is the pulling of a defective pump, one is replacing a beam pump with a more efficient electric submersible pump ("ESP") and one is to repair a leaking packer.
The final one in the sequence is a pilot project for secondary recovery (water flood) at the Puesto Flores field. Whilst waterflooding is one of the most common pressure maintenance techniques for enhanced recovery in mature oil fields, this is the first time such has been tried in this field and the decision has been made after detailed sub-surface analysis. It will take time to evaluate the results of this project and accordingly a further announcement in this regard will be made before the end of the year.
With regards to the drilling of the two new wells this year, President has now entered into the drilling contract, long lead items have been ordered, other service providers identified and the site locations are currently being prepared. The programme remains on budget and on schedule to commence drilling the first well before the end of September. This will be one of the first conventional wells to be drilled in Argentina since the start of the pandemic.
As previously announced, the first well in the drilling sequence is the Las Bases 1001 development well targeting 6 bcf of recoverable attic gas in the Las Bases structure with a high chance of success. P50 (probable) well rate is 100,000 m3/day (605 boepd), target depth is 1,700 metres and estimated costs completed are some US$1.9 million.
The second well in the sequence is the Estancia Vieja EVN-1 exploration well. This well will target a new structure with potential for both gas and oil reservoirs to the north of the producing Estancia Vieja field, with the P50 case oil production of 40 m3/day (252 bopd) and 60,000 m3/day of gas (350 boepd) and a target depth of 2,000 metres. The chance of success is estimated at over 50% and estimated costs of the well completed are US$2.5 million. In a success case, the whole of the Estancia Vieja north structure is opened up with a potential follow-on drilling programme of an additional 6 wells targeting up to 14 mmbbls and 26 Bcf.
On 15 June 2020 the Company announced that, prior to the Covid-19 crisis, following detailed due diligence, substantive discussions had commenced with a National Oil Company regarding a farm-in to President's Pirity Concession (the "Concession"), including the drilling of a well on the Delray complex. The announcement further stated that due to the crisis, those discussions had been suspended.
Discussions have now recommenced including as to financial and other terms, with President remaining as operator of the Concession. There is of course no guarantee that such discussions will result in mutually agreeable definitive agreements being signed but, in the event they do so proceed positively, it is currently anticipated that definitive agreements would be concluded before the end of this current year with commencement of drilling during 2021. The current Concession term extends to Q1 2022. Unless otherwise required from a regulatory aspect, no further announcements will be made until such discussions howsoever come to a conclusion.
In the Concession as a whole, President after detailed further sub-surface work has identified over 500 mmboe of prospective resources. Reference is once again made to the sub-surface presentation on the Concession that can be found at www.presidentenergyplc.com
Whilst President's primary focus remains on its oil and gas business, the Company recognises the need for society to adapt and evolve to a more balanced energy offering. Given the Company's core skills of managing complex projects and production operations and its gravitas in Argentina, President is currently considering investments in that country in the field of renewable energy and related technology businesses which have no material oil or gas component. To this end the Company is forming a new alternative energy subsidiary for such purpose.
President makes it clear to the market that, whilst there is a serious and committed intent to consider such investments given the changing times, projects will only be pursued if they deliver long-term, sustainable, value for shareholders and thus, whilst the Company is participating in several data rooms under terms of confidentiality, there is no guarantee that entry into suitable projects will be effected. Accordingly, it is urged that appropriate patience is required in relation to this live and ongoing initiative. Further announcements will be made in this regard when there is something substantive and material to relay.
Peter Levine, Chairman, commented
"In our traditional business, progress continues on a multi layered basis to achieve growth and long term profitability.
"The new energy initiative is reflective of our times and it is a responsible direction to take with a view to future energy.
"Let us see what develops without making any promises at this stage, all the time remaining focused on our core hydrocarbon businesses and delivery of the ongoing workover and drilling projects
"As a result of the increased levels of activity in both the current and next quarters on a number of fronts, President expects a more intensive level of news flow during the rest of this year"
Bcf means billions of cubic feet of gas
Bopd means barrels of oil per day
Boepd means barrels of oil equivalent (oil and gas) per day
Mmbbls means millions of barrels of oil
Mmboe means millions of barrels of oil equivalent
M3/d cubic metres of oil or gas as the case may be per day production
President Energy PLC
Peter Levine, Chairman
Rob Shepherd, Group FD
Nikita Levine, Investor Relations
+44 (0) 207 016 7950
finnCap (Nominated Advisor)
Christopher Raggett, Charlie Beeson
+44 (0) 207 220 0500
Shore Capital (Corporate Broker)
Jerry Keen, Antonio Bossi
+44 (0) 207 408 4090
Tavistock (Financial PR)
Nick Elwes, Simon Hudson
+44 (0) 207 920 3150
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 Rio 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.
The Group is also actively pursuing value accretive acquisitions of high-quality production and development assets in Argentina capable of delivering positive cash flows and shareholder returns. With a strong institutional base of support, including the IFC, part of the World Bank Group as well as the international commodity trader and logistics company Trafigura, an in-country management team as well as a Board whose interests are aligned to those of its shareholders, President Energy gives UK investors access to the Argentina energy growth story combined with world class standards of corporate governance, environmental and social responsibility.
This announcement contains inside information for the purposes of article 7 of Regulation 596/2014