President Energy plc (LON:PPC), the energy company with a diverse portfolio of production and exploration assets, has announced an operations and production update in relation to its activities across the Group.
Key points
• Compressor at Las Bases field, Rio Negro, now commissioned
• Newly drilled well LB-1001 at the Las Bases field opened up and producing, new EVN-x1 at the Estancia Vieja field well to follow
• Production in Salta, Argentina stable and South Louisiana, USA steady
• Total current instantaneous Group net production estimated at approximately 4,000 boepd
• Current net gas production in Argentina approximately 2,000 boepd
• The Company is currently finalising plans for next year’s capital expenditure
• Investor conference call scheduled for 11:00 (GMT) on Tuesday 8th December 2020
Operations
The new compressor infrastructure at the Las Bases field has been commissioned and is in operation. The compressor enables more gas to be delivered from the Company’s Estancia Vieja gas wells. Accordingly, this is the first time four wells in this field have been able to produce together and are now flowing gas to market through President’s pipeline infrastructure. The Company has identified potential to drill further wells in that field.
At the same time, the newly drilled LB-1001 (gas) well has been placed on production, with aggregate production from this well is currently ahead of expectation. The recently tested well LB-1, as yet not on stream, will be connected and placed into production before year end. Likewise the new well EVN-x1 is currently off-line having a pump fitted. President will monitor the results from that well in due course with a view to drilling shallow appraisal and production gas wells in the Las Bases field in 2021. Current cost projections per well, including artificial stimulation are around US$1 million.
The production from the Puesto Guardian concession in Salta is stable. As previously announced, President is progressing with planning and a feasibility study with a view to drilling 2 or 3 vertical development oil wells in 2021 in the Dos Puntitas field, part of the Puesto Guardian concession, and is in the process of applying for the relevant environmental and location permissions. The last vertical well drilled in Dos Puntitas initially produced 250 boepd.
In South Louisiana, USA, production is steady with only small declines over the last 12 months. The Simmons 2 well having been off-line for repair for over two months has come back on line with total net production from the wells now approximately 280 boepd.
In the light of the overall progress made, operational plans for the next 13 months are now being prepared and will be announced in January 2021 after Board review.
Production
Aggregate group net production has now reached 4,000 boepd with virtually an even split between oil and gas.
This is a current daily production rate and demonstrates the level that President, on present evidence, considers the wells can deliver. As such this rate varies day by day as wells go on and off-line. The average rate over time is a more valuable representation of the production and these figure will be published at appropriate times.
Nevertheless the general increase in production, with no material increase in opex, will have a beneficial effect on the costs per barrel and the bottom line of the Company taking into account the base opex cost in the fields has already been largely covered by core production.
President is now considering the most expedient long term production levels for optimum field and reservoir management. Such consideration will, inter alia, take into account the fluctuation between Argentina’s domestic summer and winter gas pricing and the ability to constrain or increase each well’s production depending on all prevailing circumstances.
Prices
In relation to prices, the Company notes the recent positive upward movement of both the oil price and Argentina gas prices, the latter particularly welcome since it coincides with the Company materially increasing its gas output.
The oil price receivable by President for December production is estimated at more than the US$42 per barrel mark for the first time since March with the current spot gas prices achieved in the first week of December being US$2.10 per MMBtu which prices fluctuate week by week. These prices permit the consideration of the drilling expenditure in 2021 referred to above.
Peter Levine, Chairman, commented
“Steady progress is being achieved but we have the capacity within ourselves to build on this and achieve more. In this regard the announcement today and those made recently demonstrate such capability and underline the potential in our assets which we continue to work hard to realise.
“We look forward to increased activity next year and expect to make an announcement within the next two months regarding future plans and timing”.
