President Energy updates on drilling operations

President Energy plc (LON:PPC), the energy company with a diverse portfolio of production and exploration assets focused primarily in South America, has provided a group update.

Highlights

•             Four well committed drilling programme in Argentina to commence by end March in Rio Negro Province

•             Planning in progress for potentially drilling and 3D seismic data acquisition in H2 at the Puesto Guardian Concession, Salta, Argentina 

•             Further announcements on new reserves report and market guidance for current year expected by end February

Rio Negro

President has a firm programme to drill four new slim hole gas wells in the Las Bases and Estancia Vieja Concessions in Rio Negro Province commencing during March. The wells are projected to be completed and on production in time for the commencement of the winter gas prices that start in May. Spot gas sale prices then are projected to rise to in excess of US$3 MMBtu compared to the present spot price of around US$2.3 MMBtu.

Three of these wells will target the Centenario formation in the Las Bases Concession and are expected to cost circa $1.3 million each with a drilling time of approximately 14 days per well. This price includes a mini hydraulic stimulation subject to results of logging.

The Centenario is the same formation as addressed by the recent successful workover of the formerly producing Las Bases well LBx-1 which is currently free flowing 33,000 m3/d (1.15 MMsft/d or 194 boepd) without having been hydraulicly stimulated. Success case initial production rates per well are 40,000 m3/d (1.4 MMsft/d or 235 boepd). 

The other well will be in the Estancia Vieja field and will twin the well EVx-1. This well may be drilled first in the sequence depending upon logistics.

EVx-1 was producing 50,000 m3/d (1.75 Mmsft/d or 294 boepd) after a workover at the end of last year but suffered a casing collapse at the start of this year. Such collapse is an occupational risk when working over and producing from older wells. Accordingly, the twin is intended to both recover and enhance this production level with a targeted initial production of 60,000 m3/d (2.1 Mmsft/d or 353 boepd) and prolong the life of gas recovery of the reservoir. The cost of such well is estimated to be US$1.5 million with an estimated drilling time of 21 days.

Puesto Guardian

The Company, in discussions with the Salta Province, is currently considering drilling two or three vertical oil wells in the currently producing Dos Puntitas field within Puesto Guardian in H2 2021. In order to save time, locations have been identified internally and applications to drill in progress.

Projected initial production for each of these wells is estimated at 45-50 m3/d (300 boepd) with a drilling time of 35 days per well. It is anticipated that a further announcement will be made at or around the end of April 2021, once a final decision has been made and the Company has more precise details available as to costs and time scheduling.

Consideration is also being given to complement the contemplated drilling by acquiring 3D seismic data over the formerly producing Canada Grande and currently producing Puesto Guardian fields later this year as well as some additional 2D data in the Ocultar exploration block. The seismic grid has already been determined. The next step is to commence a tender process for contractors and complete financial modelling for review.

Canada Grande was a prolific producing field in the history of the Concession with the more successful wells demonstrating initial flow rates of 1,000 bopd. All wells in this field were drilled solely relying on 2D seismic. It is considered that acquiring modern 3D seismic data will assist in identifying undrained areas within the field as well as defining and stepping out from its boundaries. Similarly, acquiring 3D seismic over the Puesto Guardian field where initial production rates were 600 bopd is considered a prudent and potentially rewarding action. Any follow on drilling in Salta arising from the results of this seismic acquisition will likely be in 2022. 

Funding

The costs of all the firm committed work programme referred to above will be met out of the Group’s own and future resources and capabilities.

Further announcements

Before the end of February the Company expects to announce an updated Group reserves report as at 31 December 2020 and separately to provide the market with a review of key performance parameters of 2020 and guidance as to the same for the full year 2021

Peter Levine, Chairman, commented

“In the face of a continued challenging environment, we remain optimistic and look forward to a more successful and certainly busier 2021 than the fractured previous year in which we still made progress

“By getting our ducks in a row on operations at this early stage, whilst maintaining focus on the bottom line, we are putting things in place to give us every reasonable chance to achieve an ever further improved year ahead.”

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