President Petroleum: Drilling Rig Contracted to Spud La. Well
President Petroleum updated on its drilling plans in Louisiana, USA.
- Drilling contract signed for Kafoury 3 well at East Lake Verret ("ELV") with drilling expected to commence first week of November 2010
- Contract includes option for a second well immediately after Kafoury 3
- Two further wells planned at East White Lake ("EWL") to be completed by the end of 2010 targeting proven undeveloped reserves
Kafoury 3 Well, ELV
Axxis Drilling has been contracted to drill the Kafoury 3 exploration well at the Company's operated ELV field. The well is planned to test the extension of the known shallow field plays of the Siphonina Davisi and Margulina D-1 sands and to penetrate the deeper Planulina and Cristellaria R sands, which are also substantial producers in neighboring fields. The possible gross reserves attributable to the prospect are 110 bcf of gas and 1.2 mmbbls of oil, of which around 85% is located in the deeper sands. President Petroleum expects to have a net revenue interest of approximately 55% in these deeper sands whilst the interests in the shallower sands have not yet been finalized.
The well is expected to spud in the first week of November 2010. Drilling to a measured depth of 14,500 feet is expected to take around forty days. The Company has an option to retain the rig on location to drill a second well, which would most likely be a shallow producing well to obtain additional early cashflow.
Drilling costs for Kafoury 3 are estimated at US $5.5 million with a further US $3.3 million for completion and tie-back to the Company's processing facilities. A successful well could be producing by February 2011.
If the Kafoury 3 well is successful, up to three deep wells will be drilled in 2011 in addition to the shallow well. The development program also envisages two further deep wells in 2012.
EWL Development Drilling (President Petroleum 25% Working Interest)
Peak Energy, operator of EWL has proposed two further wells targeting Proven Undeveloped Reserves ("PUDs") in the field. Previous drilling for PUD's at EWL has been very successful.
The LA Furs 22 well is a 6,200 feet sidetrack targeting gross reserves of 135,000 barrels of oil equivalent ("boe"). Net cost to President Petroleum is US $300,000 with expected net production of some 50 bbls/day of oil.
The VPSB 16 well is a more complex 11,000 feet well with multiple targets. Net cost is US $570,000 with gross reserve potential 650,000 boe. Production rates will be determined by completion strategy.
Drilling of these wells is expected to commence in November 2010 and continue into December.
Stephen Gutteridge, Chairman of President Petroleum, said, "We are pleased to have signed the drilling contract for Kafoury 3 and to have secured an early spud date. This well has the potential to significantly increase our cash generation in Louisiana from early next year and to open up the prospect of increasing our production to 3,000 boe/d by the end of 2011.
"The continued low-risk, low-cost development of EWL will add further immediate production and cashflow and we expect additional wells to be proposed by the operator in 2011. With the successful Placing announced today, all of our 2010 and 2011 drilling plans are fully funded and the Company has increased its ability to add further quality assets if the opportunity arises."