The oil and gas exploration company provides the following update on its operations.
Argentina The Coiled Tubing programme is progressing and operations have just commenced on the second of the expected now five well campaign. The intervention on the first well, Poso Escondido 3, a previously producing well shut-in since 1993, has provided valuable information on the Yacoraite reservoir at this location and has flowed a limited amount of oil to surface. Although the stimulation and extended testing could not be carried out due to a tubing leak, the operation demonstrated that the Yacoraite remains without significant depletion and is capable of flowing oil without artificial lift. The well will now be a candidate for a follow-up workover campaign that is being planned at the Concession. There are no reserves attributed to this well in the reserves statement referred to below.
The analysis and investigation as to the circumstances surrounding the drilling of DP1002 S/T continues and will be pursued vigorously by President. Meanwhile, a resumption of drilling remains suspended.
Management re-iterates that the mechanical failures on DP-1002ST were not related to geological factors of the target producing reservoir and that the horizontal landing of the well demonstrated that the well target was robust. The mechanical issues have no bearing on future drilling potential of the Puesto Guardian Concession with independently assessed reserve figures of 1P Proven and 2P Proven plus Probable Oil Reserves of 11 million bbls and 18.1 million bbls respectively.
Current production from Louisiana is approx. 220 boepd with oil prices becoming more robust and, importantly, gas prices showing an increase of over 73% over the last 6 months. Gas represents 23% of President's current production in Louisiana.
President is estimating approx. US$150 000/month profit after tax from its Louisiana operation for Q4 2016. In effect this amount also represents the free cash generation back to the Group from Louisiana operations.
In the Company's RNS of 2 September 2016 President announced the signing of a Co-Operation Agreement with Petro AP and noted the strengthening relations between the two companies.
Petro AP has been drilling a vertical exploration well at Selva Maria, North West Argentina, 7km from the boundary of the Pirity Concession of President Energy across the border in Paraguay. The site of this well is some 200 km to the North East of the Company's Puesto Guardian Concession in Salta. The Selva Maria well was drilled to intersect the deep Cretaceous reservoirs in the central part of the Olmeda basin, of which the Pirity sub-basin is the Paraguayan extension and includes the Cretaceous prospects in the Company's Pirity Concession. RPS, the international consultancy, has previously assessed gross mean unrisked Prospective Resources of 342.5 million boe over four prospects in President's Cretaceous prospect portfolio within that Concession. President has the benefit of over 800 km2 of 3D seismic data as well as 2D data which was acquired in 2014 over those four Cretaceous prospects.
The Argentine Secretary of Energy website shows that the Selva Maria well is producing good quality light crude oil. Whilst it is understood that the commerciality of the well is subject to ongoing testing and analysis, oil produced from the well is being sold according to Provincial records.
Petro AP is further conducting a 2D and 3D seismic data acquisition campaign over Selva Maria and surrounding acreage that extends right up to the Pirity Concession boundary on the Paraguay border.
President's management believes that Petro AP is drilling in a deep and hot section of the Olmeda Basin and news of saleable oil production and seismic activity, 7 km from the border with President Energy's Pirity Concession, is of potentially significant interest for the Company. The Selva Maria well is the nearest Cretaceous oil producing analogue well to President's acreage.
As stated in the recently published Interim Accounts, geophysical studies on the Company's interests in Paraguay continue and this latest information will be factored in to President's updated acreage assessments.
The Selva Maria Cretaceous target formation is to be distinguished from the nearby Palma Lago oil field where production is principally from the volcanic reservoir.
As announced previously, in relation to this small area of land between the Pirity and Hernandarias Concessions, the Group holds a Prospection Permit and has received environmental license on the Pilcomayo Block, adjacent to President's Pirity Concession. The Company has decided to move forward and has made a contract application for prospection, exploration and exploitation of that area. With the right of priority due to the previous permit, the application is being considered by the Ministry and a response should be received before the end of 2016.
Peter Levine, Chairman, commented:
"Work continues in Argentina, the oil is in the ground and there is a determination to produce the same from our robust reserves.
"Louisiana is picking up and producing very helpful post tax profits with free cash flow.
"The information coming out of the Selva Maria well, only 7km from the border of our Pirity Concession, is encouraging for the Cretaceous prospectivity of President Energy's acreage in Paraguay.
"Notwithstanding the fact that the commerciality of long term production has not yet been declared by the Operator, it is beyond question that the nearest Cretaceous well to President Energy's acreage is producing oil.
"This data will be helpful when it comes to the commencement of our 2017 Paraguay farm-out programme."
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/20102016/president-energy-provides-update-on-argentina-and-paraguay-operations/