(President Energy, 13.Nov.2018) — President Energy announced that production results from its first new Argentine well were ahead of expectations, while results from the second new well were very encouraging.
Highlights from the Puesto Flores/Estancia Vieja Concession, Rio Negro Province (90% President and operator and 10% EDHIPSA, the Provincial energy company) follow:
— First new well PFO 1001 successfully completed and tested, flowing from the Pre Cuyo (a deeper and sandy secondary target formation) at over 200 bopd which is ahead of expectations for the whole well
— The primary target, some 200 metres higher up in the well with 15 metres of net pay and excellent porosity of 25% will be brought into production at a later date
— In due course this successful well is likely to result in an increase in President’s proven oil reserves
— Second new well PFE 1001 drilled to target depth on time and budget with oil and gas shows in mud logs in all three-target formations
— Acquisition of the two new Concessions in Rio Negro, Puesto Prado and Las Bases expected to be completed by early December
— Oil prices and peso/dollar rate stable, net backs at Puesto Flores now some US$40 per barrel
— Year-end 2018 Group exit net production target rate confirmed as in excess of 3,000 boepd
New well PFO 1001
PFO 1001 is a vertical well which has now been successfully completed and tested from only the secondary deepest and sandy target Pre Cuyo interval; during the test, production was over 200 bopd with only 2% water, which is in excess of production expectations from the well as a whole. The well has now been placed on production with an electrical submersible pump.
The main target, the shallower Punta Rosado formation 200 metres higher up the well, was observed to have a net pay of 15 metres and excellent porosity of 25%. It has however been decided that at the present time it would not be prudent to test and co-mingle that zone as President would first like to observe how the deeper Pre Cuyo intervals performs to gain a greater understanding of reservoir capability prior to bringing the main target on production.
In due course this successful well is likely to result in an increase in President’s proven oil reserves.
This directional well has now been successfully drilled on plan, time and budget to the target depth of 2,550 metres.
Live oil has been seen on the surface, with good oil shows and full chromatography C1-C5 gas readings in the mud logs from both the primary Punta Rosado (predicted by President) and the secondary Pre Cuyo secondary targets as well as a shallower interval. The mud logs from the Pre Cuyo formation are particularly encouraging as this is the first time that such an interval has been penetrated in the Eastern part of the Puesto Flores Concession. President has at present no material oil reserves booked for this interval in such eastern part.
Electric logs are now being run and, following completion of these logs, the well will be cased after which the drilling rig will be transported to the next well to be drilled being PFO 1005, which is expected to spud at or around the end of November.
The workover rig, which is being released from the PFO 1001 will then be brought on to complete this well and, subject to successful testing, the well should be brought on stream in early December.
Puesto Prado and Las Bases Concessions
It is expected that the acquisition of these two new Concessions will be completed by early December. With the kind permission of the authorities of the Rio Negro Province of Argentina, President is making preparations to promptly commence production from these Concessions through opening up certain currently shut-in wells. A further announcement in respect of the Concessions is expected to be made in December.
As with President’s other concessions, President is very pleased to be able to continue its partnership with EDHIPSA, the Rio Negro Provincial energy company which will have a 10% participation interest in the Concessions.
Oil Price, net backs and peso rate
Whilst President has noted the recent decline in international oil prices, the US dollar price being obtained by President in Argentina for oil sales has been stable.
The oil price expected to be received in November for President’s oil produced from its main centre of operations in the Neuquen basin is approximately $66 per barrel; at this level, net backs there are now in excess of $40 after all operating costs, royalties and taxes but before G&A. President is not anticipated to pay any corporate taxes in Argentina before 2020.
The peso dollar exchange rate has likewise stabilised in the recent past as a result of successful government action and a perceived growing confidence in the markets. There are no current signs of the previous significant volatility and as far as President is concerned, it’s very much business as normal.
Exit Rate year-end 2018
President confirms that its targeted Group net exit production for the year-end 2018 is in excess of 3,000 boepd representing an increase of more than 50% year on year.
“We are energised by the progress we are making as we continue with the second new well in our drilling programme with our motivated, focused and impressive Argentine team. We view the prospectivity and greater potential of our Puesto Flores field with increasing confidence and continue to be grateful for the support given to us by the Rio Negro Provincial authorities and our partner there EDHIPSA,” said President Energy Chairman and Chief Executive Peter Levine.