President Energy PLC Operations and Corporate Update (7987Z)

TIDMPPC

RNS Number : 7987Z

President Energy PLC

26 May 2021

26 May 2021

PRESIDENT ENERGY PLC

("President" or the "Company")

Operations and corporate update

President Energy (AIM: PPC), the energy company with a diverse portfolio of production and exploration assets focused primarily in South America, provides an update with regard to operational activities and corporate matters.

Highlights

-- New gas well EV-1002 successfully completed, tested at over 100,000 m(3) /d (3.53 MMsft/d or 580 bopd) with excellent pressure and now on stream with production from both new wells EV-1001 and EV-1002 building

-- Aggregate current production from the new EV wells together with the new well LB-1002 is expected to be approximately in line with pre-drill projections at approximately 170,000 m(3) /d (6 MMscft/d or 1,000 bopd) being the equivalent of 6,000 MMBtu

-- Aggregate actual cost for the three new wells fully completed and on stream was in line with budget at approximately US$4M

-- Possibility of new wells in the same originally pressured fault block as EV-1002 now being considered for later this year

   --         Gas prices in Argentina rising further with spot prices currently at US$ 6.50 per MMBtu 

Peter Levine, Chairman, commented on the core business in Argentina

"On 20th January, President announced plans for the commencement of its H1 2021 drilling programme by end March comprising new gas wells in the Las Bases and Estancia Vieja Concessions in Rio Negro Province. Despite a variety of hurdles, all three new wells were drilled on time and on budget with initial aggregate production levels expected to hit pre-drill expectations as they build up.

"President also previously announced its intention to bring the wells on stream by the end of May to capitalise on winter gas prices that were, at the time of planning, projected to rise in excess of US$3 MMBtu. Indeed, EV-1001 and EV-1002, the second and third wells drilled in the sequence, have now been placed on production meaning President has achieved its objective. Significantly, current winter spot gas sale prices in Argentina are US$6.5 MMBtu, much above expectations and a marked 182% increase from January 2021 prices.

"It is the responsibility of management to formulate a business plan, execute and deliver on it. As evidenced by the series of announcements this year, that part of the plan relating to drilling in Rio Negro has been executed at the same time as other multi workstreams continuing in parallel.

"Next up is the delivering of the oil treatment plant mid this year with the Salta drilling and seismic programme following later in the year".

EV-1001 and EV-1002

The new well EV-1002 has been successfully completed and tested after perforation of an 8.5 metre interval in the Vaca Muerta reservoir. During testing, the well flowed at over 100,000 m(3) /d (3.53 MMsft/d or 580 bopd) with an 8mm choke and an excellent well-head pressure of 1,750 psi. President is now considering the overall prospectivity in the same fault block as supporting a possible further drilling campaign for later this year or the first part of 2022.

The very high wellhead pressure compared to the other EV wells requires work on balancing the production from that field so as to optimise all wells of varying pressure being online at the same time. This work is currently in progress, the issue was anticipated and in fact is a good problem to have.

Unlike EV-1002, which has original pressure in a virtually undrained fault block, EV-1001 is located in a producing block and therefore a more pressure depleted area. Due to this and reservoir quality, the well was both perforated and fracced, so it is taking longer to clean up. To assist in the clean-up of the near well bore, a treatment with CO(2) is anticipated to take place in the next 21 days.

Combined with LB-1002, the first well in the three well drilling programme, the aggregate current production from these three newly drilled wells is expected to achieve in due course 170,000m(3) /d (6 MMsft/d or 1,000 boepd) which is in any event in line with expectations and translates into the equivalent of around 6,000 MMBtu a day.

The current spot gas prices in Argentina continue to increase and are currently US$6.5 per MMBtu.

President will report average actual production for H1 as well as updated guidance for the full year in its Interim Report due later this year.

Paraguay

Whilst the execution of agreements regarding the Paraguay farm-out is taking longer than originally anticipated due to the structured signing formalities of a State company combined with many of their executives having again to work from home, President remains both patient and highly confident that agreements will be entered into in early course.

The key message is that this delay in signing will not affect the timing of the drilling of the exploration well due in H1 2022.

Atome

As advised on 22 February, the Company formed Atome Limited as a UK intermediate holding company intended to be focused on developing a hydrogen and ammonia production, marketing and sales business as distinct from an OEM (original equipment manufacturer). Atome has not to date traded and prior to the events below, had a paid up share capital of GBP2.

The Company has now allotted a 15% interest in Atome to Alpha Oil Invest GmbH of Zug, Switzerland ("Alpha") for cash at par value reflecting the work both done and continuing to be performed by Alpha referred to below. Alpha, in operation since 2006, is an established independently managed fund whose ultimate owner is Peter Levine, the chair of President. Since its inception Alpha has made a wide range of investments in a variety of sectors. Alpha has developed an interest and expertise in renewable energy. In this respect Alpha, at its own cost, has previously identified, originated and developed certain business opportunities which it is now introducing to Atome rather than pursuing them itself.

The allocation of shares in Atome is not a related party transaction for the purpose of Rule 13 of the AIM Rules for Companies due to that transaction being de minimis in its size. Nevertheless, in the spirit of Rule 13 of the AIM Rules for Companies, the independent directors of the Company (being all those save for Peter Levine and Rob Shepherd as an executive director), have carefully reviewed the terms of the issuance in the context of Rule 13 and consider them to be fair and reasonable insofar as the Company's shareholders are concerned.

It is expected that a further announcement relating to Atome will be made in June with progress being made on two diverse projects.

Glossary

Bopd means barrels of oil per day

Boepd means barrels of oil and gas equivalent

MMBtu means million standard cubic feet of gas

Mmsft/d means Million standard cubic feet of gas per day

M(3) /d means million of cubic metres of gas per day

Contact:

 
  President Energy PLC                       [phone] 
   Nikita Levine, Investor Relations          [e-mail] 
  finnCap (Nominated Advisor and broker) 
   Christopher Raggett, Tim Harper           [phone] 
 

Notes to Editors

President Energy is an oil and gas company listed on the AIM market of the London Stock Exchange (PPC.L) primarily focused in Argentina, with a diverse portfolio of operated onshore producing and exploration assets.

The Company has operated interests in the Puesto Flores, Estancia Vieja, Puesto Prado and Las Bases Concessions, and Angostura exploration contract, all of which are situated in the Rio Negro Province in the Neuquén Basin of Argentina and in the Puesto Guardian Concession, in the Noroeste Basin in NW Argentina. Alongside this, President Energy has cash generative production assets in Louisiana, USA and further significant exploration and development opportunities through its acreage in Paraguay and Argentina.

The Group is also actively pursuing value accretive acquisitions of high-quality production and development assets capable of delivering positive cash flows and shareholder returns. With a strong strategic and institutional base of support, including the international commodity trader and logistics company Trafigura, an in-country management team as well as the Chairman whose interests as the largest shareholder are aligned to those of its shareholders, President Energy gives UK investors access to an energy growth story combined with world class standards of corporate governance, environmental and social responsibility.

This announcement contains inside information for the purposes of article 7 of Regulation 596/2014

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May 26, 2021 02:00 ET (06:00 GMT)