President Energy gives the following update relating to its Argentine assets.
Highlights
- Two workovers successfully completed in December with results ahead of expectations
- Five workovers being planned for commencement during Q1 2016 with further follow-on well candidates thereafter
- Recent devaluation of the Peso and new Government policy on oil prices and incentives for gas production, viewed positively
Operations
The two workovers at the Dos Puntitos Field, Puesto Guardian Concession, have been completed on budget.
The results of the two workovers and stimulation pilot have exceeded management expectations with production of the two previously shut in wells at an aggregate rate of approximately 120 bopd after a higher rate of initial flush production. This compares with the pre-workover mid-case projection of 88 bopd.
As a result of this success, President is planning a follow-up stimulation programme of 5 wells to commence as soon as possible in Q1 2016 with further follow-on well candidates possible thereafter. The stimulation pilot included a matrix stimulation with acid that doubled the productivity of the well. These results have a direct and potentially material beneficial read-through to work being done on the well design and production potential of some future wells being contemplated as part of the next drilling program.
New Government Policy
In December 2015 a new Argentine Government was elected which has declared its intention to promote oil and gas exploration and production.
President notes the new Government's policy relating to the price of the local benchmark crude oil for 2016 being set at US$67.50 per barrel. This follows on from an approximate 30% devaluation of the Peso which took place in the latter part of December 2015. Once the price for crude oil produced in Salta Province becomes known, the Company will advise the market but last year the discount was approximately 10% from the standard rate, a price still substantially higher than global crude prices with local currency benefits arising from the devaluation.
The new Administration also intends to increase the amount of US dollars that can be paid out of Argentina to repay foreign originated loans held by companies working in the country, subject to qualifying conditions. The limit has increased from $50 thousand per month to $2 million.
These developments will positively impact President's plans to increase oil production, lower its costs and progress strategic discussions relating to its multi-Tcf gas prospects.
Retirement of Country Manager
President also announces Carlos Felices has stepped down from his full time role as Country Manager in Argentina having been appointed to the Main Board of Directors of YPF, the Argentine National Oil Company. President is pleased that whilst no longer an executive of the Company, Carlos will continue to provide advice to President as a part time consultant. President congratulates Carlos on his new role at YPF and is extremely grateful for his valued contribution whilst Country Manager.
Peter Levine, Chairman, commented:
"The objective now in Argentina is to build on the platform of increased production to make further advances in 2016, first by expanding the programme of workovers and then, circumstances permitting, with the drilling of new wells".
"Carlos Felices leaves his full-time role with us for YPF with our sincere gratitude and thanks for his valued work as Country Manger and I look forward to his contribution in his new consultant advisory role."
Miles Biggins, Bsc Joint Honours University College London, with 25 years of experience in the oil and gas sector, is a Petroleum Engineer and member of the Society of Petroleum Engineers who meets the criteria of qualified persons under the AIM guidance note for mining and oil and gas companies, has reviewed and approved the technical information contained in this announcement.
