President Energy’s (LON: PPC | FRA: NNH1) latest news was music to the ears of investors on Wednesday, with the drilling of a new well at the Estancia Vieja field coming in both on time and on budget. Results so far also suggest initial production will be just as expected.
The Estancia Vieja gas field is located in Rio Negro Province, Argentina. EV-1001 was not only drilled but also logged and cased in the planned time frame and budget. The drilling was to a target depth of 1,850 metres.
The electric and mud logs, as well as the petrophysical review, identified expected net gas pay. This supports the pre-drill projection for initial gas production of 60,000 cubic metres per day (m3/d). The results align with its twin well, EV-x1, drilled in 1988, which has since suffered a casing collapse.
Net gas pay identified for EV-1001 is 11 metres and average porosity is good at 27%.
The same coil tubing unit currently working to complete the previously drilled LB-1002 well will also complete EV-1001. Thus, President expects to test EV-1001 and put the well into production in the first half of May.
Until then, the rig that drilled EV-1001 moves to the next location. It will drill another well at Estancia Vieja, called EV-1002. The firm expects this to take up to four days, with the well set to spud in the next seven days.
In response to the good news, shares in President were up around 6%. The price has now climbed 36% year-to-date as the company goes from strength to strength.
Chair Peter Levine said the result was “pleasing” and reflected “continued professionalism” during a “difficult and disruptive time” for Argentina.
Levine pointed out that as spot gas prices in the region have climbed to $4 per million British thermal units, “every piece of incremental gas production delivered direct to the market” via the company’s pipeline benefits President’s bottom line.
Hence, he said, the firm’s story for the first half of 2021 is gas, with an additional firm well in Rio Negro planned and additional work in Rio Negro’s Las Bases field under review.
The second half of the year, however, will be “all about oil” according to Levine.
Oil to take the stage
President Energy is progressing plans for an “extensive work programme” in the Salta Province at the Puesto Guardian Concession (“PGC”). The company is already in advanced talks to acquire around 100 square kilometres of 3D seismic and is preparing for three new oil production wells at the PGC’s Dos Puntitas field.
The firm anticipates awarding seismic work for the PCG before June end. The work itself will then start in the third quarter of the year.
President Energy is already in discussions with rig contractors. Currently, it expects to begin drilling the three wells at or near the end of the third quarter. However, this is subject to permissions.
The company is expecting to deliver “material new oil production” at Salta Province by 2021 end, hoping to benefit from “more stabilised oil prices”.
“We will return to Salta Province in that period with some serious investment,” Levine vowed, noting the “extensive work programme” planned in Argentina in order “to take the benefit of higher oil prices”.