President Petroleum Updates AU Ops
President Petroleum provided the following operational update.
The Northumberland 2 well was a wild cat, high risk well. As such the results themselves while not showing commercial quantities of hydrocarbons are not seen by President as negative for the whole of the PEL 82 License nor a depletion of potential value of that License.
To the contrary, the results are both intriguing and encouraging and President continues to analyze the data.
President is now taking steps to optimize the potential of its existing production base.
Positive production performance is now being achieved with an increased weighting of oil to gas as a result of East White Lake acquisition in 2010.
In this regard:
- First of scheduled Proven Undeveloped ("PUD") opportunities increased oil production by 30%
- Five further PUD opportunities have been identified collectively having the potential to materially increase production, and improve the bias to oil (over 50%)
- Drilling of the first PUD has already commenced with up to four others due to commence sequentially over the next six months
- Initial capital costs not material to substantial cash balances of PPC; average payback for each PUD is estimated at six months; will not impair PPC ability to pursue acquisitions
- Majority of targets have long production profiles
- NPV per barrel on the oil wells are estimated to be some $45 on an oil price of $100 WTI, a significantly higher value than previously expected
- President is currently enjoying very beneficial relief from severance tax on some of its Louisiana production
- The Company's substantial tax losses in Louisiana will not only shield the Group from corporate tax but allows the Group to consider acquisition of low risk production opportunities which can be exploited with greater bottom line impact
Peter Levine, Chairman of President Petroleum Company Holdings BV commented, "The recent drilling in Australia highlighted the overall potential of PEL 82 and it would be premature to ignore the prospective value of this Block at this stage. For a first well on an unexplored license the results were encouraging. Detailed analysis work continues and we will update investors in due course on our forward plans for PEL 82.
"The Group remains committed to using its strong cash position to achieve growth by acquisition, particularly of production or near production opportunities with material upside both on reserves and production itself.
"Active steps are also being taken to make the most of production upgrading and opportunities in our existing licenses and elsewhere. The substantial tax losses will now be utilized as a tool to increase the bottom line benefit.
"Both myself and the main Board are committed to generate significant growth from our solid base."