• Testing success at well LB-1, Las Bases Field
• Proven production from the previously undrained Centenario formation

President Energy announces testing success at the old shut-in well, LB-1, Las Bases field, Rio Negro, Argentina.

Highlights

• Workover and testing of the shallow Centenario interval in the old shut-in well, LB-1 was a follow-on from the successful newly drilled well LB-1001
• Gas freely and continuously flowed to surface in commercial quantities during test at choke sizes ranging from 4mm to 16mm
• Potential to materially increase production by performing artificial stimulation
• This represents the first time any hydrocarbons have been tested and flowed by President from this previously undrained Centenario interval within its concession areas
• The commercial production of the shallow Centenario opens up the potential to cost effectively drill this prevalent shallow interval elsewhere in the Company's licences
• Centenario formation will make a positive addition to President's end of year reserves (no reserves of any category currently booked for the formation)
• The well will be placed on production before the year end

Las Bases LB-1

On 26 October the Company announced that, as a result of the success of the newly drilled LB-1001 at the Las Bases field, Rio Negro Province, there was potential for a workover, perforation and testing of the shut-in well LB-1 to initiate, in the words of the announcement 'new previously untapped gas production'.

LB-1 was drilled originally by Chevron and was a prolific producer of gas from deeper sections which subsequently watered out. It has been shut-in for several years, however, the results of LB-1001 highlighted the potential of gas production from a shallower, younger Cretaceous sand interval known as the Centenario at a depth of approximately 950 metres.

No commercial production by President or its predecessors in title has ever been seriously attempted from this interval which had in effect been bypassed and ignored. Accordingly, no reserves have ever been booked by President in respect of this interval despite the fact the Centenario Formation is prevalent at these shallow depths in the Las Bases, Puesto Prado and Estancia Vieja fields.

It is this sand body of approximately 7 metres (23 feet) which has now been tested. After perforation and an acid treatment to the interval the well flowed freely and continuously to surface through choke sizes varying from 4mm to 16mm with little or no water. On termination of the testing, pressure built up to original pressure within one hour suggesting inter alia good reservoir production qualities.

It is considered that, on production, this interval without further stimulation will initially flow, steady state, at approximately 21,000 M3/d (120 boepd). It is expected that this would increase materially with a hydraulic or further acid artificial stimulation due to what could be a tighter form of reservoir rock in this interval. In this regard, the rock properties and dynamic reservoir data will now be analysed and reviewed during the initial stages of production. A positive and important feature is the fact that on the logs there does not seem to be an identifiable oil / water contact nearby.

Work has now commenced on subsurface mapping of this interval across President's licence acreage. Whilst it is premature to say more, it is already clear that this result is a potential play opener at least in the Las Bases field and in any event it will make a positive addition to President's end of year reserves.

The cost of the workover is estimated on budget at a modest US$350,000 and the well will be placed on production before year end.

Peter Levine, Chairman, commented,
"This is an encouraging result.

"Whilst in the context of our growing Group production, the expected pre-year end initial production can be said to be more incremental than material, the testing success has a potential impact of somewhat greater significance.

"Taking into account the now proven produceability of the reservoir, the shallow depth thereby meaning modest costs for drilling new wells, the potential to materially upscale production levels by artificial stimulation and in particular the prevalence of this Centenario interval over areas in our Concessions, it is a potentially new play opener in at least Las Bases and perhaps others of our Rio Negro fields.

"Accordingly, this result following on from the two successful drilled wells in the last two months, demonstrates the continued potential for organic growth in our onshore short cycle, high return conventional oil and gas assets as well as the maturing capability of our teams in handling multiple work streams simultaneously.

'Step by step may seem a trite expression but it underlines the clear and obvious positive rate of climb that President is achieving in its business."

KeyFacts Energy: President Energy Argentina country profile