By Stewart Dalby
Aim-listed President Energy is a full cycle E & P group with production and development assets, as well as some high impact acreage in the portfolio.For the past year most of the reporting on President has centred on high –risk exploration in under-drilled Paraguay.
President migrated to the now politically-stable Paraguay because it felt its so-called bread and butter production assets elsewhere would most likely not give it the significant uplift in output it wanted.
After a ymore than 12 months ear of shooting seismic and drilling two deep holes there it now looks as if Paraguay could, in time, well deliver on this ambition for an exponential boost to production.
This does not mean, however, that it regards its modest production and development opportunities as unimportant or that it is going to cast them aside and concentrate entirely on going for the jackpot in Paraguay. Far from it.
President’s group production for the 12 months to December 31 2014 averaged 430 boepd with Louisiana contributing 225 boepd, and Argentina the rest. Cash of approximately US$1.4 million was held as at January 2015 with US$10.4m drawn under the US$15 million IYA Loan facility.
Recently the company announced a £9 million fund raise and set out its plans for both Argentina and Paraguay. President plans to raise the £9.1m via the issue of 72m shares at 12.5p. This comprises a firm placing of 29.7m shares equivalent to £3.7million and a proposed placing of 43.2m shares equivalent to £5.4m. New shares will have a 1 for 1 warrant exercisable at 18.75p within three years.
While announcing the capital raise the company also set out its plans for Argentina and Paraguay. In Argentina on the company’s Pueblo Guardian concession a report by independent reservoir engineers Gaffney Cline & Associates confirms the management’s assessment that, by way of example, only 8 per cent of the 9 million barrels (mmbbls) of proved (1P) oil reserves are being produced. This suggests there is significant potential for further production from the proved as wells as from the further 8.4 mmbbls of probable and possible (2P + 3P) oil reserves.
Since acquiring full ownership and operatorship of the Puesto Guardian concession, President has been carrying out reprocessing of seismic and reservoir engineering analysis. As a result the company is ready to embark on a new drilling programme.
The Phase 1 work-over programme of up to 10 shut-in wells with proved oil reserves oil reserves is expected to start this spring. The Phase 2 programme is currently targeted to start during the latter part of 2015 subject to adequate project finance being in place. This phase consists of up to 17 new wells to be drilled targeting proved oil reserves. Current projections are that after between US$25-US$30-million of initial development finance, the Phase 2 new well programme will become self -funding.
As for Paraguay only three months ago, it was still uncertain quite how successful, or otherwise, the Lapacho well – the second of three planned in the Paraguayan Chaco region – was going to be. his well followed mixed results from the first Paraguayan well, Jacaranda, which had depressed share prices despite some early enthusiasm from the company.
Fast-forward a month and there was much more room for optimism. n a December 10 statement, President reported “very encouraging” hydrocarbon shows had been encountered at the Lapacho x-1 well throughout the gross formation thickness extending right to target depth.
It said the well had now reached target depth at 4,543 metres in the Santa Rosa Formation, the primary pre-drill target, with 418 metres of the 600 metres target interval drilled.
From the logs, Lapacho x-1 penetrated 54 metres of clean sandstones with individual sand bed thicknesses up to 10 metres, most of which appear to be hydrocarbon-bearing.
The outcome was n line with pre-drill estimates, President added, with the well targeting a fault block trap containing gross mean prospective resources of 1 trillion cubic feet (Tcf) of gas (166 mmboe) and 30 mmbbls of condensate within a greater Lapacho area considered to potentially contain some 5 Tcf plus associated condensate.
The company now says President will continue with its exploration programme in 2015 building on the success it achieved in 2014. President’s share price enjoyed a brief flurry when the Lapacho results became known and enjoyed 12 months high of 38.37 pence. Now however, like other small cap concerns in London, the shares down by concerns over future oil price volatility amongst cautious and are at 13.25p