President Energy (PPC), the energy company with a diverse portfolio of production and exploration assets focused primarily in Argentina provides an update on its drilling and workover plans in Rio Negro Province, Argentina.
On 15 June 2020 the Company, inter alia, announced preliminary details of drilling and workover plans for Rio Negro to be commenced in H2 2020.
Since that announcement further progress has been made as follows:
1. Workovers of two wells are now expected to commence by end August 2020, both at the Estancia Vieja field. The wells being EV-20 and EV-x1 are not currently producing and the workovers are targeting total initial production of 3.5 Mmscft/d of gas and 50 bopd. Costs of these two workovers are, all factors being equal, currently estimated to be in the region of US$750k in total for both workovers.
2. Drilling of the previously announced Las Bases LB-1001 development well is currently scheduled to commence mid to end September 2020, with the drilling of the second well EVN-x1 projected to follow on and commence some 25 days thereafter allowing for inter well site movements. As stated on 15 June, these wells are targeting a total initial production of 5.6 MMscf/d of gas and 188 bopd with both chances of success estimated at 75%. Costs of these two new wells, are currently estimated on a completed basis (including attendant infrastructure) at US$4.4 million in aggregate.
3. As EVN-x1 is targeting a new undrained structure within the larger Estancia Vieja field, which could contain between 5-14 mmbbls of oil-in-place and between 11-26 Bcf of gas initially in place, a success case would open up the possibility of some 6 follow on wells, of which 5 would in such case target additional gas production and one additional oil production.
4. After this drilling programme, President will then take time to review the results and re-commence drilling in Q1 2021.
5. Within H1 2021, President is planning to drill in Rio Negro two wells, one a development well and the other an exploration well on a recently identified structure in the southern part of the Puesto Flores/Estancia Vieja concession. The well, Vinderman ex-VI-x1 will target initial production of 300 boepd from an undrilled structure which could contain anywhere between 4-12 mmbbls of oil-in-place. The chances of success are adjudged at over 50%.
6. In a success case for the above wells, the beneficial uplift impact on the level of proven hydrocarbon reserves and according net present value therefor will be material in the context of the Group's current independent audited reserves in Argentina of 15 MMboe proven (1P) and 25.9 MMboe proven plus probable (2P).
In the light of the nature and proximity of drilling in September, the infrastructure work previously scheduled for June in relation to compressors and infrastructure has been re-imagined and re-engineered so that the work will be carried out in parallel with the drilling to facilitate the differences in pressures and volume.
All the above work costs are projected to be paid from President's own resources and cash flow without the requirement for additional borrowing beyond current levels.
Further announcements will be made at the appropriate times.