President Energy, the energy company with a diverse portfolio of production and exploration assets focused primarily in Argentina announces an update on its Paraguay asset and its drilling plans for Rio Negro in the second half of the year.

Drilling and Workover plans for H2 2020

These were briefly referred to in the Company announcement dated 3 June 2020.

Locations have been identified for two new wells which President is planning to start drilling within the next four months. Preliminary discussions are taking place with service providers to capitalise on current pricing in view of the fact that many have significant capacity and there is currently virtually no new drilling of conventional wells taking place in the whole of Argentina.

The first well will be the Las Bases 1001 development well targeting proven un-produced attic gas in the Las Bases structure with 6 bcf of total recoverable reserves; target depth is 1,700 metres and P50 well rate is 100,000 m3/day (605 boepd) with a high chance of success and estimated costs of US$1.9 million completed.

The second well will be the Estancia Vieja EVN-x1 exploration well. This will target a new and so far un-drilled independent structure for both gas and oil to the north of the producing Estancia Vieja field; P50 case is oil production of 40m3/day (252 bopd) and 60,000 m3/day of gas (350 boepd). Target depth is 2,000 metres and there is a good exploration chance of success for this well with estimated costs of US$2.5 million completed. In a success case, the whole of the Estancia Vieja north structure will be opened up with an estimated 14 Mmbbls of Oil in Place and 26 Bcf of Gas in Place which will require up to a further 6 wells.

Once completed, the wells can be placed on stream without delay.

There are no 2P reserves booked for the Estancia North structure in the current independent audited 2P Group reserves of 26.4 MMboe calculated as at 31 December 2019. 

In addition to the above there will be follow up infill drilling and workovers in Puesto Flores but for the current year the above two wells are the priority and consequently the permitting and procurement processes have commenced with permits expected within the next two months.

A further announcement will be made once more definitive information regarding the wells is available.

Paraguay

The term of the Pirity Concession, being the principal asset of the Company in Paraguay, has benefited from an extension of time due to force majeure, the result of which means the Concession period extends until the first quarter 2022. In the event of successful drilling, this period will be extended further into a long-term production licence. 

Prior to the Covid-19 crisis, President was in substantive discussions with a foreign National Oil Company (NOC) who, after detailed due diligence, made a preliminary offer in relation to a farm-in, including the drilling of a well on the Delray complex containing, in total, an estimated 230 MMboe of Oil in Place ("STOOIP"). Due to the crisis, these discussions were suspended. Accordingly, whilst at the present time there has been no concrete re-engagement with that party and there is no guarantee that such will re-occur, the detailed discussions did encouragingly demonstrate that the farm-in prospectivity is real and tangible. The force majeure extension of the Concession period will be of significant benefit in the ongoing farm-out process.

In the Pirity Concession as a whole, as previously announced, President has identified in its estimation over 500 Mmboe of STOOIP. 

Peter Levine, Chairman, commented:
"We believe now is the time to plan and invest for the future, particularly as we will have negligible third party debt at the half year end and are in a solid position.   

"The fact that we will be able to bring successful wells into production in Rio Negro without any delay or excessive costs demonstrates the value of our conventional onshore wells in central locations with the benefit of owning and operating the regional pipelines and infrastructure. This enables us to transport produced oil and gas from the fields to the main national pipelines and on to our offtaker Trafigura, a strategically important major shareholder in President."

KeyFacts Energy: President Energy Argentina country profile   l   KeyFacts Energy: President Energy Paraguay country profile