President Energy (AIM: PPC), the energy company with a diverse portfolio of hydrocarbon production and exploration assets focused primarily in South America as well as Atome, a new green hydrogen and ammonia company, provides an operational update in relation to its oil and gas activities in Argentina and Paraguay.
· New oil treatment plant at the Puesto Flores field, Rio Negro, Argentina is partially in service with full operational capacity expected by the end of July, slightly later than originally forecast due to Covid related delays
· At Puesto Guardian, Salta Province, Argentina, the first of the three new firm oil wells is currently expected to be spudded on time in the first half of October with the second and third wells to be drilled back to back through Q4 2021
· Ordering of long lead items and contracting of rig for Salta in advanced progress in readiness for the spud date of the first well
· Reprocessing of 202km2 3D seismic at the Pozo Escondido field, Puesto Guardian Concession, Salta to take place in Q3 2021 with a view to generating new drilling opportunities for Q1 2022
· Previously announced new 3D seismic of 100km2 over Canada Grande now expected to be acquired at end of rainy season at or around March 2022
· Paraguay farm-out awaiting regulatory approvals, currently expected before the end of the current quarter, and in the meantime, negotiations regarding long lead items and the drilling rig are in progress with various site visits having taken place
Peter Levine, Chairman, commented
"Given the circumstances, the actions of President's engineering team in relation to the new oil treatment plan has been commendable in the face of the difficulties encountered. The facilities once in full operation, expected by the end of this month, means that we own and control the delivery of our oil in Rio Negro with the concomitant cost savings
"Salta operational planning presses ahead to ensure the new wells will be drilled on time. Further details on the wells and expectations will be announced in due course. Paraguay also progresses in line with expectations and prior announcements
"These operations, the carrying on the core production businesses in Argentina and America together with the significant progress on Atome demonstrate the potential of our Group whose current entire market capitalisation is less than £50 million."
Oil Treatment Plant
The development of the new oil treatment plant at Puesto Flores Field, Rio Negro Province, Argentina, is now in operation and is expected to be fully commissioned by the end of this month on budget.
This is notwithstanding various unforeseen difficulties encountered including issues with Covid affected contractors and work restrictions, the weather, and corrosion encountered in certain tanks not shown up by the due diligence surveys previously made. Despite all of this, President is delivering the cost saving project with only a short delay and in any event on budget.
In full operation, together with the new water disposal facilities already in commission, the savings per barrel of oil from that previously paid to the third party are some US$4 per barrel. A meaningful addition to the bottom line.
Salta Province, Argentina
The first of the three new oil wells to be drilled at the Dos Puntitas field, Puesto Guardian, Salta Province is now scheduled to spud in the first two weeks of October, with wells two and three being drilled back to back thereafter in Q4 2021.
Advanced discussions are in progress with regard to the drilling rig and also long lead items with the objective of commencing drilling operations on time. In this regard, investors are reminded that both the rig, long lead items and service companies have to travel some 1,700km from the Neuquén Basin, approximately the distance from London to Moscow as there is little in the way of oil services in Salta. In respect to the rig, discussions include retaining the rig in field so as to make it available for any drilling in the first part of 2022.
In the light of the time necessary to obtain environmental consents for the acquisition of 100km2 of new 3D seismic over the formerly prolific but currently inactive Canada Grande field, and local annual rainy season, the commencement of such work has been pushed back to the end of Q1 2022 so as to avoid delays which may occur.
After review of the old 202km2 3D seismic acquired over the Pozo Escondido field at Puesto Guardian, it has been decided to reprocess this data with a view to identifying drillable prospects. The reprocessing and review are expected to be available in the first part of Q4 2021 allowing for decisions to be made at that time regarding further drilling at that field.
The previously announced regulatory approval process necessary in relation to the farm out of Pirity Concession is progressing positively and it is targeted that the approval process will be satisfactorily dealt with by end September 2021.
In the meantime, discussions with long lead item providers as well as rig contractors are progressing in line with expectations with a view to drilling in H1 2022 as previously informed to the market.