20 April 2022

PRESIDENT ENERGY PLC

("President" or the "Company")

Operational and Strategy Update

President Energy (AIM: PPC), the international energy company provides an update on operational and strategy matters.

Key Highlights

·      Salta Province, Argentina

o  Testing at wells DP2001/2003 continues to progress, with both already having demonstrated commercial production

o  Side-track from the formerly producing well PG 13-1 has been successfully drilled to a target depth of 3,512 meters. Management is confident in its ability to bring this to production before the end of May

o  Well PE-8 has now been worked over and cleaned of accumulated sand with Swab results showing oil and gas production

·      Preparatory work for the drilling of the Paraguayan exploration well continues with President's partner, OPIC, the subsidiary of CPC Corporation of Taiwan, both having now confirmed a location known as Tapir 1

·      The macro environment continues to support higher global oil prices, with a US$2 per barrel increase in prices receivable for Argentinian April production with a projected upward trend later in year

·      Pursuant to increasing pricing and gas demand in Argentina, President is re-evaluating a Paleozoic deep gas prospect in the Martinex del Tineo field within the Puesto Guardian Concession with a farm out process to start by end Q3

·      In Louisiana, the Triche well is producing in-line with expectations in the range of 180 barrels of oil plus gas with high value remaining recoverable reserves internally assessed. Simmons well is also producing in line with the expected 50 barrels of oil a day

·      Increasing value of President's holding the recently spun-off AIM company Atome Energy PLC

SALTA PROVINCE, ARGENTINA

Drilling

Wells DP2001/2003

The new wells DP2001 and 2003 remain in the process of various stages of testing. As has been stated previously both oil wells have demonstrated they produce commercially. With long life wells such as in the Puesto Guardian Concession, time is being necessarily spent to understand downhole conditions and reservoir characteristics in order to optimise production. This process remains ongoing.

The wells have carbonate reservoirs which over time can inhibit flow through accumulation of residues of these same carbonates caused by pressure changes in the reservoir. Therefore, it is important to run laboratory tests to determine the right type of treatment and/or acid stimulation as well as pump size in order to ensure optimum steady state well-flow. During this time both these wells will be in sequence flowed and shut in as part of this process.

Accordingly, whilst this is taking more time than originally considered, the fundamental point is that both wells are oil producers and are already making solid contributions to Salta oil production.

Wells PG 13-1

This well is a side-track of the old, formerly producing well, shut-in due to an irretrievable fish (packer) in the well. The original well has been shut-in for at least 11 years. The side-track coming out of the original casing through a whip stock has been successfully drilled to a target depth of 3,513 metres, landing in the same reservoir level approximately 30 metres from the original well position. It was then cemented.

Logging while drilling and mud-logs showed similar positive hydrocarbon bearing characteristics to those in the original PG13 well which was drilled in the 1980's. The target producing reservoir is very good quality sandstone having proved to have good porosity and permeability. PG13-1 is being completed with a casing liner to protect the formation and eventually may be stimulated depending on circumstances.

The drilling rig is now being released and the work of clean out and completion will be made by the workover rig. It is anticipated that this will take some 3 weeks before results from the well can be identified. For the reasons stated above, there is a level of confidence running through from management to the long serving field operatives that PG13-1 will prove to be a sound commercially producing oil well which will, all being well, be on stream before the end of May. By that time all three new wells should be optimally producing.

Well PE-8

This old well in the Pozo Escondido field in the Puesto Guardian Concession and adjacent to the producing PE-7 well was shut-in many years ago following an unsuccessful frac stimulation which screened out prior to President taking over the field operation. Since the frac, the Company has bled off oil to surface from time to time with pressure at the wellhead.

Taking advantage of the workover rig being in the Concession, the well has now been worked over and cleaned of accumulated sand, Swab results showed oil and gas production. The well is now being placed on production also for May.

WATER FLOODING PROJECT RIO NEGRO

This important project has been planned in detail and discussions with the relevant province are expected shortly whereupon, subject to the Province of Rio Negro approval, commencement of the initial work can be programmed. At the same time the management team, has implemented cost saving initiatives to improve margins in parallel with a fresh look at the principal fields in Rio Negro through external consultants. Whilst this work, as with the water flooding secondary recovery programme will take time for the effects seen, it is believed that all of these efforts will be rewarded in the future and are in the medium to long term interests of the Rio Negro Concessions. 

OIL PRICES IN ARGENTINA

The much-awaited increase in domestic oil sales prices in Argentina in part reflecting the global market has commenced with a US$2 per barrel increase in prices receivable for April production and a projection for further step by step increases during the year.

MARTINEZ DEL TINEO EXPLORATION, ARGENTINA

In the years between 2012 and 2016, President considered a Paleozoic deep gas prospect in the Martinez del Tineo field within the Puesto Guardian Concession.

In 2016, steps were taken to farm-out the prospect which with a background of the prevailing hydrocarbon market at the time ultimately proved to be unsuccessful.

Similar to President's Paraguay acreage which has now been successfully farmed-out to the Taiwanese State Energy Company (see below), events including macro pricing and gas demand in Argentina, has led President to re-evaluate the prospect including the risk reward matrix which has materially benefitted from better economics. Since 2016, domestic realisable gas prices have increased by 50% in dollar terms to nearly US$4 per Million BTU which taking into account the potential size of the prize is a significant change.

The prospect is situated within the long term Puesto Guardian Concession expiring in 2050 and has significant infrastructure already in place due to President's existing oil production operations. In terms of size, an independent Gaffney Cline and Associates report in 2012 best estimated Unrisked Recoverable Resources at 570 Bcf of gas and 14.5 MMbls of condensate with an updated Company internal estimate in 2016 after further geological and geophysical work upgrading those figures to approximately 2.8 Tcf of gas and 69 MMbbls of condensate from two independent formations.

The deep prospect, considered to have a target depth of 4,200 metres which is covered and clearly delineated by reprocessed 3D and 2D seismic, offers the highest structural position on a plunging anticline in the presence of an up-dip fault/saddle break, close to the Santa Barbara Mountains in Salta where source shales and reservoir sandstones are proven.

The potential location for a deep exploration well allows that well to penetrate a shallower Yacoraite potentially oil bearing interval approximately 1,000 metres higher up thus providing a default potential for hydrocarbon production in the event of failure in the main target. In effect the exploration could be interpreted as the deepending of an appraisal well at the Martinez del Tineo Field. 

Monetising options in the case of success include delivery of gas through a constructed pipeline, or gas to power.

Accordingly, the Martinez del Tineo gas farm out process is now being re-activated with steps to be taken to update the offering and data room and promote the same to the market with such marketing both domestically and internationally likely to commence before the end of Q3 2022.

PARAGUAY EXPLORATION

Preparatory work for the drilling of the exploration well continues with President's partner, OPIC, the subsidiary of CPC Corporation of Taiwan. The drilling location has now been confirmed as Tapir 1, within the Delray Complex of prospects to the southwest of the previously considered locations of Delray Main.

Tapir has a Company internal estimated PMean unrisked recoverable oil in place of 96 MMbbls, with the Delray Complex having a total of 306 MMbbls PMean unrisked recoverable oil in place.

The well targets mainly the Lecho and Volcanic reservoirs and is located on a central structural high with a clear four-way dip structure shown by 3D seismic acquired by President as part of its original exploration campaign. Tapir is considered to have a more favourable location than the original Delray Main site relative to the source rock generative area and charge migration pathway. The principal exploration risks being migration from source and thus charge.

A further independent sub-surface study commissioned by President in March 2022 placed a 17% chance of success on the Tapir prospect. Of course this means also a high chance of failure and this correctly reflects the grounded attitude which investors must adopt in relation to exploration.

The updated projected time to spud the well is now beginning of Q4 2022. The delay to the original timetable has been the result of needing to coordinate all logistics, consents and approvals and the projected time to repair and recondition the preferred drilling rig required.

On the positive side, with macro events materially affecting the cost of hydrocarbon fuel in Paraguay, a country currently totally reliant for its liquid fuel on imports of finished product by barge through 1,000km of river system from the River Plate, the economics in the event of success have significantly improved the value of the prize and concomitantly the risk/reward ratio.

LOUISIANA

Whilst there have been sporadic interruptions of production due to technical issues in the facility, the Triche well is producing in-line with expectations in the range of 180 barrels of oil plus gas. Simmons is also producing in line with the expected 50 barrels of oil a day. An average sales price of US$109 was achieved for the oil sold in March with gas prices robust.

An internal estimate of proven recoverable oil in the Triche has identified a total of 300,000 barrels of oil yet to be produced giving a total realisable gross undiscounted sales value from that well at US$100 per barrel oil of US$30 million (President 70 per cent working interest) with as previously observed an excellent net back level with low opex and adequate tax losses to cover profits. 

Peter Levine, Chairman, commented:

"We should now see benefit from positive results from our drilling campaign in Salta, the increases in oil prices in Argentina and consistent contribution from Louisiana wells with excellent oil prices.

"At the same time, the high impact exploration Paraguay project is in progress with results expected by the end of the year. President is also re-invigorating the farm-out project at Martinez del Tineo with a significant potential prize having now been brought into greater focus and attraction due to the increase in hydrocarbon prices.

"The waterflood, secondary recovery project for the main Puesto Flores field previously announced is in the final stage of planning and approvals for the commencement of implementation is this half year.

"Finally, it is pleasing to note the progress of the green hydrogen and ammonia production AIM company, Atome Energy (President: 28% holding) and the improvement in its share value".

Glossary

Bcf means billion cubic feet of gas

Bopd means barrels of oil per day

Boepd means barrels of oil equivalent per day (oil and gas)

MMBTU means million British thermal units of gas

MMbbls means million barrels of oil

Tcf means trillion cubic feet of gas

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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 Río 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.

It has also a 27.9% investment interest in Atome Energy PLC a green hydrogen and ammonia producer whose shares are traded on AIM of the London Stock Exchange.

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.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR"). The person who arranged for the release of this announcement on behalf of the Company was Peter Levine, Chairman.