02 September 2016
PRESIDENT ENERGY PLC
("President", "the Company" or "President Energy")
President Energy (AIM: PPC), the oil and gas exploration company provides the following update on its operations.
· Drilling operations ongoing at DP1002 S/T Puesto Guardian Concession, Argentina
· Subject to successful execution, the well is targeted to be hooked up and in full production during first part of October adding, as a base case, 500 bopd, which would double existing production from the Concession
· Current production at Puesto Guardian Concession of 510 bopd with July average of 440 bopd
· Coiled Tubing campaign to commence mid-September on four old and currently shut in wells at Puesto Guardian to add incremental new production and expand producing well stock
· President engaged with fellow E&P Company in cost sharing and procurement
· Net production expected to return to 250 bopd by end September after two wells come on-stream
Well DP1002 S/T, Dos Puntitos Field, Puesto Guardian Concession, Argentina
Drilling operations are ongoing, albeit with certain delays. Five days of non-productive time ("NPT") were lost due to electro-mechanical issues relating to the Drilling Rig. This is substantially at zero cost to President and after the issues were solved the Rig has delivered to date drilling rates of penetration ahead of the Company's expectations.
The well reached 3,475m (true vertical depth ("TVD") of 3,078m) before, what the Company currently considers a material metal failure in a drill pipe of the Drilling Contractor, caused loss of the Bottom Hole Assembly ("BHA"), for which loss President has in place insurance cover. A cement plug is now being set and the well will continue to be drilled out from 2,920m (TVD 2,896m). The material failure is being investigated by the Company.
Up to the date of failure the well was being drilled on plan (subject to the NPT) with oil based mud and with no material surprises in the geological formations encountered.
The side track out from 2,920m will be drilled to the casing point at the start of the Yacoraite section being at 3,850m (TVD 3,111m). On casing, the horizontal leg will be drilled, the well tested and then hooked up with full production, subject to successful execution, targeted for the first half of October.
Subject thereto, management considers a base case initial projected production for this well of 500 bopd, which would double the existing production levels from the Concession.
Production in Puesto Guardian Concession, Argentina
Current daily production from the Concession is now at 510 bopd having had an average of 440 bopd in July.
Taking advantage of the current market conditions, with greater cost effective availability of services and equipment, a workover of four old shut in wells will commence during September utilising for the first time in the Concession a coiled tubing unit with nitrogen lift capability. The workovers are designed to achieve a helpful increment to overall production as well as to expand the Company's inventory of producing wells to give more stabilised field production rates.
Co-operation with fellow E & P Company deepens
Petro AP is an E&P subsidiary of the Chinese conglomerate TCL (turnover 2015 US$16.2 bln - CNY105 Bln) which is a fellow operator in the North West basin of Argentina. In particular Petro AP has the Pizzaro Licence bordering the Puesto Guardian Concession and will be drilling an exploration well there with the same H&P Flex 3 Rig that President is currently using after the first two wells being drilled by the Company.
Petro AP and President have entered into a Cooperation Agreement under which the mobilisation and demobilisation costs of the H&P drilling rig is shared equally. This has been expanded to sharing costs of other aspects of services including inspections, drilling mud and supervision. The Companies having generated mutual respect continue to engage to discuss further opportunities for cooperation and cost savings including but not limited to joint equipment purchases and procurement.
Having suffered from well declines and shut-ins in the year to date, Louisiana production is projected to be back to in the region of 200-250 boepd by the end of September as a result of two wells coming on stream. Louisiana continues to generate free operating cash flow,despite the prevailing low oil price.
Peter Levine, Chairman, commented:
"Whilst the new well DP1002 ST, a first horizontal at our Puesto Guardian Concession, has experienced certain unforeseen issues to date, drilling is ongoing and the management is focussed on delivering a successful well and achieving the production potential.
The current production level at Puesto Guardian is pleasing and our continued efforts aim to enhance and stabilise production levels of which the forthcoming work-over programme of old shut-in wells is an example.
Finally, in Louisiana, after a period of lower production we are working towards achieving the previous level of 250 boepd by the end of September."
This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
Miles Biggins, BSc Joint Honours University College London, with 25 years of experience in the oil and gas sector, is a Petroleum Engineer and member of the Society of Petroleum Engineers 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.
President Energy PLC
Peter Levine, Chairman
Miles Biggins, COO
+44 (0) 207 016 7950
+44 (0) 207 016 7950
Peel Hunt LLP (Nominated Advisor & Joint Broker)
Richard Crichton, Ross Allister
+44 (0) 207 418 8900
BMO Capital Markets
Neil Haycock, Tom Rider
and Jeremy Low
+44 (0) 207 236 1010
Gavin Davis, Henry Lerwill and Charles Stewart
+44 (0) 203 772 2500
This information is provided by RNS