Results from a flow test on oil explorer President Energy's (PPC:AIM) Lapacho well in Paraguay (pictured) could be an early Christmas present for shareholders. The shares are up 9.6% to 28.5p as the group confirms the well has found hydrocarbons in its primary Santa Rosa target.
This follows earlier success with the same well in October (20 Oct) when President found oil in the Icla formation. Flow testing will commence imminently with initial results expected within 10 days. These should help reveal if the £115 million cap is sitting on a commercial find.
President's success with this well is significant because Paraguay currently has no oil production whatsoever. President's 2014 drilling campaign has now drilled two wells (Lapacho and Jacaranda) which have demonstrated the presence of a new hydrocarbon province in the Pirity basin. President operates the entire prospective area comprising 34,000 square kilometres spread across three concessions (Pirity, Demattei and Hernandarias).
The group's chairman Peter Levine, whose previous oil and gas venture Imperial Energy was snapped up by Indian energy firm ONGC for £1.4 billion in 2009, says: 'Whilst it is too early to determine the composition of hydrocarbons in the Santa Rosa, both liquid and gas are extremely valuable commodities not only in Paraguay which imports all its own energy requirements but also in the neighbouring energy hungry countries of Brazil, Chile and Argentina.'
Canaccord Genuity which has a speculative buy recommendation and 55p price target says: 'This is an encouraging result and confirms the overall prospectivity of the area. Specifically on Lapacho, there are still many questions which the testing should address.'