President Energy plc (LON:PPC) Chairman and Chief Executive Officer Peter Levine caught up with DirectorsTalk for an exclusive interview to discuss their latest drilling update and what we can expect in terms of news flow in the coming weeks and months.
Q1: Now you’ve announced a testing success at Las Bases field in Argentina this morning. Peter, how does this impact on President Energy?
A1: Well, we need to look at the history first. We drilled and we announced very recently, in October, Las Bases 1001, it’s a new development gas well and we achieved a good result, we announced that on the 26th of October which achieved a good result, both from the electric logs and testing.
Now those logs showed several pay zones, one of which was a cretaceous formation called the Centenario which was a shallow interval i.e. less than 1000 meters. Now, in Las Bases 1001 because our logs showed we had several intervals, as is normal we tested from the bottom up. Now, we happen to have a very good result from the lowest interval and therefore we decided to produce from that zone and leave the testing and production of a higher intervals until later. What we then did with the logs from the recently drilled well of Las Bases 1001, we then read across and considered the logs of the well drilled by our predecessors Chevron, called Las Bases 1, which they drilled in 1999.
It identified the same scenario, but it was present but they never produced from that, they produced from a lowest zone, a deeper zone, they prolifically produced gas but then it watered out. So, they shut in the well and that’s where it lay for several years until we decided to take a chance card from the monopoly pack and re-enter the well and perforate it, which we’ve now done, and test that Centenario section which had been, up till the time we tested it, completely undrained.
The results of such test is the result we’ve just announced and whilst it’s perhaps a tighter formation, even allowing for this, we tested a good commercial flow of gas as indicated in recent announcement today. It will be put on production by the year end and so Las Bases 1 will once again, after many years, be back onto production, albeit from a different level.
Now, as we can’t see any water nearby, it will be certainly a candidate for artificial stimulation which we expect would further significantly enhance the flow rigs. However, this is a test of an old well, it’s an intervention, it’s a well which hasn’t been produced, I’s a workover.
What is the importance of this? Well, the importance of this test is the read across because at this interval is widely present in the Las Bases field, it’s shallow, can therefore can be drilled quickly, for example, in 7-10 days, economically will cost us less to drill and we have all our infrastructure to plug in the new found production. So, it will have a significant impact.
Furthermore, there are no reserves currently booked for this interval so most certainly we will see in this year’s results report, which is due out in February, with an effective date of 31 December, a positive addition of both proved and probable reserves.
So, what does this demonstrate? This demonstrates the running room and the potential in our existing fields and that’s very important. The two wells that we’ve drilled, both successful, one, an exploration well which is EVN -x which we’re putting into production in the next few days and the other one, Las Bases 1001 combined with this test has demonstrated the fact that we have ample scope here for low cost, good margin production, onshore from our existing fields.
Wrap that all in one package and you can see that the test result have slightly more importance than a normal test result for perforating an old shutting well, hence the announcement that we just made.
Q2: So, what’s next and what news can we expect coming out over the next few weeks and months?
A2: Well, I’ve alluded to the fact that we are starting to produce from the two wells that we just drilled which is Las Bases 1001 and EVN-x1, the latter being an oil well and the former being a gas. So, the next piece of news that we see will be to look at the initial production figures from those wells, we’ve got test production figures which we announced but not when we put these in line in production.
We anticipate being able to say something in the relatively near future and then we would be looking at announcing our plans for the forthcoming year a bit later on towards the end of this year.
So, in important terms, I think the next most important announcement will be showing the initial online production, taking into account the gas wells, taking into account the commissioning of the compressor, effectively bringing you on stream the Estancia Vieja well and the Las Bases well. Also, of course, the increase in oil, we hope, from EVN-x1 well, which as I said is, as we speak now being put into production.
In a nutshell, that’s where President Energy is at.