TIDMPGR
RNS Number : 9459R
Phoenix Global Resources PLC
06 March 2019
6 March 2019
Phoenix Global Resources plc
("Phoenix" or the "company")
Q4 2018 Operational Update
Phoenix Global Resources plc (AIM: PGR; BCBA: PGR), the upstream
oil and gas company offering its investors direct exposure to
Argentina's Vaca Muerta shale formation and other unconventional
resources, is pleased to announce its operational update for the
fourth quarter of 2018, together with an update on planned drilling
and other operational activity for the next six months.
Operational highlights
-- Eight unconventional vertical wells were successfully
completed at Puesto Rojas in H2 2018 with all the wells currently
on test and producing
-- The encouraging results from the Puesto Rojas area well
tests, together with well results from previous campaigns, have
been used to help define the 2019 development plan for the area
-- The Company's first horizontal well located at Mata Mora
completed drilling in early January 2019. Drilling started on a
second horizontal well on the block at the end of January 2019.
When drilling of the second well is finished, both Mata Mora wells
will be completed and put on test
-- In February 2019, the company concluded discussions to obtain
the Corralera Noroeste licence. The company now holds all the
licences comprising the Corralera block at a 90% working interest
level and is operator on each of the licences. Securing Corralera
Noroeste adds 26,000 additional acres of Vaca Muerta and other
unconventional exposure
-- The sale of certain Colombian licences was completed in
November 2018, further focusing the group's activities on
Argentina
-- Average working interest daily production of 9,985 boe in Q4 2018 (Q3 2018: 9,946 boe*)
*adjusted for volumes under-reported by Chañares Herrados
operator in Q3 2018
Financial performance (unaudited)
-- Convertible RCF increased by US$25.0 million in December 2018
and by a further US$50.0 million in February 2019. Additional funds
to be used for 2019 appraisal and development plan
-- FY 2018 Revenue of US$177.0 million
-- Average realised prices for 2018 before hedge of US$50.24/
boe (oil US$59.26/ bbl; gas US$4.10/ mmcf)
-- Brent swap contract expired 14 December 2018. The company no
longer holds any hedging instruments
-- FY 2018 Capital expenditure of US$130.2 million
Outlook
-- Completion of the initial horizontal wells at Mata Mora
planned for H1 2019, up to four additional horizontal wells planned
for 2H 2019 contingent on the results of flowback testing of the
first two horizontal Mata Mora wells
-- Up to eight additional unconventional vertical wells planned
in 2019 as part of the initial development of the Puesto Rojas
folded Agrio formation
Anuj Sharma, CEO, said:
"Q4 2018 was a period of strong operational progress for Phoenix
Global Resources. Through two highly positive unconventional
appraisal projects, we have been able to further our understanding
of our unconventional asset base and define our forward work
programme.
Specifically, after the successful initial results from our
completions campaign at Puesto Rojas, the company now plans to move
towards the development of the folded Agrio formation using
unconventional vertical wells. At Mata Mora, evaluation of the Vaca
Muerta formation continues with further horizontal wells planned
for H2 2019 pending the outcome of the initial two wells and based
on the success that other operators have experienced on
neighbouring blocks.
The results underscore the potential of the unconventional asset
base that we have assembled in both Neuquén and Mendoza provinces
and the potential value generated by selectively adding key acreage
to our portfolio.
As we now move to appraisal and development plans in multiple
unconventional targets, including the Vaca Muerta and Agrio
formations, we look forward to updating shareholders on results of
the horizontal wells at Mata Mora when the completions phase has
concluded, and the production potential of the wells has been
determined."
For further information, please contact:
Phoenix Global Resources Anuj Sharma, CEO T: +54 11 5258 7500
plc Kevin Dennehy, CFO
Stockdale Securities Antonio Bossi T: +44 20 7601 6100
David Coaten
Panmure Gordon Charles Lesser T: +44 20 7886 2500
Camarco Billy Clegg T: +44 20 3757 4980
Owen Roberts
James Crothers
Qualified Person Review
In accordance with AIM guidance for mining, oil and gas
companies, Mr. Javier Vallesi and Mr. Greg
Easley have reviewed the information contained in this
announcement. Mr. Vallesi, Chief Operating
Officer for the group, is a petroleum engineer with over 22
years of experience in the oil and gas industry and is a member of
the Argentinian Institute of Oil and Gas. Mr. Easley, Senior
Manager -Reservoir and Engineering, is a petroleum engineer with
over 10 years of experience in the oil and gas industry, is a
licenced Professional Engineer in the State of Texas and is a
member of the Society of Petroleum Engineers.
About Phoenix
Phoenix Global Resources is an independent oil and gas
exploration and production company focused on Argentina and listed
on the London Stock Exchange (AIM: PGR) and Buenos Aires Stock
Exchange (BCBA: PGR). The Company has over 6.3 million licensed
working interest acres in Argentina (of which over 5 million are
operated), 57.2 million boe of working interest 2P reserves and
average working interest production of approximately 9,885 boepd in
Q4 2018. Phoenix has signi cant exposure to the unconventional
opportunity in Argentina through its 560,000 working interest acres
with Vaca Muerta potential.
The Company's website is www.phoenixglobalresources.com
Q4 2018 production
Average total daily production volumes in Q4 2018 compared to
full year 2017 and Q3 2018 were as follows:
Production (boepd)
FY 2018 FY 2017 Q4 2018 Q3 2018
-------- -------- --------
10,256 11,070 9,885 9,946*
-------- -------- --------
*adjusted for volumes under-reported by Chañares Herrados
operator in Q3 2018
Total average daily production in Q4 2018 was 9,885 boepd.
Production in most basins remained stable with the exception of the
mature Cuyana basin that continues to experience natural decline in
production volumes.
Drilling and completions campaign
Appraisal activity in the period has been focused on the
continuation of work at Puesto Rojas and the commencement of
horizontal drilling at Mata Mora. Most of the drilling and
completions activity in 2018 has been at Puesto Rojas where the
company has multiple unconventional opportunities. The appraisal
work at Puesto Rojas has yielded encouraging results and has
provided a significant amount of data to gain a better
understanding of each of the potential target formations. This has
enabled the company to better delineate prospects and prioritise
investment.
The Agrio opportunity at Puesto Rojas is now defined in three
elements, being the folded, tight and organic Agrio. The folded
Agrio, together with the Vaca Muerta formation at Mata Mora
represent the company's primary near term unconventional
development prospects. The folded Agrio has been de-risked for
development through the wells previously drilled at Puesto Rojas
and the results of the eight completions performed in H2 2018. The
Vaca Muerta formation at Mata Mora is considered to be sufficiently
de-risked based on the results from other operators on neighbouring
offset blocks together with the information acquired by the company
during the drilling of the initial horizontal well at Mata
Mora.
Puesto Rojas Area
During Q4 2018, the company drilled the CDM-3004 well, which
will be completed unconventionally in the folded Agrio pending the
necessary provincial permits. In addition to the planned completion
in the folded Agrio, this well has also been designed to collect
additional data in the Vaca Muerta formation in preparation for
horizontal drilling operations at Puesto Rojas planned for H2 2019.
The planned horizontal well, our first at Puesto Rojas, is designed
to further appraise the development opportunity for Vaca Muerta in
the area.
The well CDM-3012 (previously CDM-3003) was completed in the
Vaca Muerta formation during Q4 2018. The well also contains behind
pipe potential in the Agrio stages. Unlike previous wells at Cerro
del Medio, the CDM 3012 well has not yet been completed in the
Agrio formation and is only completed in the Vaca Muerta formation
at this time. This slight modification to the completion process
will allow the company to assess the sensitivity of Vaca Muerta
performance to the shut-in period that would otherwise be needed to
allow other horizons to be completed. The shallower Agrio stages
are planned to be developed at a later date.
The ongoing flowback operations and results are discussed below
in the Neuquina basin activity summary. Based on the encouraging
results of the program the company expects to move to development
drilling of the folded Agrio using vertical wells in 2019. This
formation is considered as the initial lower risk and potentially
high return development prospect at Puesto Rojas. We also plan to
drill the initial horizontal evaluation well in the Vaca Muerta at
Puesto Rojas during 2019.
Mata Mora
The Mata Mora.x-1001 well successfully reached its total depth
of 5,259 metres on 2 January 2019 and was subsequently cased and
cemented. The well was drilled to a total lateral length of 1,969
metres, with 99.3% of the lateral section successfully drilled
within a seven-metre window in the Vaca Muerta and a significant
portion of the lateral remaining within a narrower three-metre
window.
The second horizontal well at Mata Mora, the MM.x-1002 well, was
spud in late January 2019 and has completed drilling the vertical
section at a depth of approximately 2,400 metres in late February.
Drilling has now commenced on the lateral portion of the well.
When drilling is complete at MM.x-1002, the well will be
completed in a simultaneous hydraulic fracturing operation together
with Mata Mora.x-1001, that is planned for Q2 2019. The performance
of these wells will then be evaluated ahead of drilling further
wells in the block that are currently planned for later this
year.
Business development activity
On 18 January 2019, Phoenix was awarded the Corralera Noroeste
block in Neuquén province by GyP, the province owned oil and gas
company. The approval of the final decree from the provincial
Governor related to the formal grant of the licence was received in
late February 2019. The company now holds a 90% working interest
and operates all three of the licences comprising the Corralera
block. This adds approximately 26,000 acres of Vaca Muerta and
Tight Agrio potential to the company's existing licences.
Neuquina basin
Production (boepd)
FY 2018 FY 2017 Q4 2018 Q3 2018
-------- -------- --------
4,471 5,026 4,112 4,157
-------- -------- --------
Puesto Rojas Area
Production (boepd)
FY 2018 FY 2017 Q4 2018 Q3 2018
-------- -------- --------
1,822 2,697 1,668 1,649
-------- -------- --------
Operator: PGR
The production increase at Puesto Rojas was due to wells that
were completed in the third quarter, coming on flowback during Q4
2018. This production increase from new wells was offset by minor
downtime events, including at the CP-1010 Vaca Muerta well that was
taken offline due to a pump failure on 22 October 2018. The well
was returned to production at a rate of 150 bopd on 29 October
2018.
Multiple unconventional horizons at Puesto Rojas were tested
through unconventional completions in the period. Four new wells
were completed together with four older wells with the objective of
identifying which horizons have potential for horizontal
unconventional completion and which are better suited to vertical
unconventional completion.
All eight wells completed at Puesto Rojas during 2018 are
currently on flowback with the drilling and stimulation work
designed to maximise data recovery from this important stacked
play. The flowback operations provide valuable data to the company
about well performance and the production potential of each
well.
The first stage of flowback recovers the pumped water that was
used for hydraulic fracture from the formation and is performed by
grouping together frac stages that are subject to similar pressure
regimes. For example, the Agrio and Chachao formations are flowed
back separately to the higher pressure Vaca Muerta formation. When
enough frac load water has been removed from the well, oil should
begin flowing. A series of production logging tools are then run to
determine the most productive intervals, the potential of which
will be verified by individually swab-testing each zone such that a
flow rate can be established as well as an approximate oil cut. If
appropriate, an extended pump test can also be performed on each
zone to attempt to determine its full production potential.
The status of the flowback operations is summarised below:
The four new wells completed in the period are all located at
Cerro del Medio.
CDM-3001 flowed back the tight Agrio, organic Agrio, and organic
Chachao sections comingled at a rate of 92 bopd and as of 2 January
2019 was flowing back Vaca Muerta stages in the well.
CDM-3007 flowed back the tight Agrio, organic Agrio, and organic
Chachao sections comingled at a peak rate of 84 bopd. As of 8
December 2018, the well was flowing back Vaca Muerta stages at a
peak rate of 96 bopd. This well also has behind pipe potential in
the folded Agrio section, which will be completed later.
CDM-3023 flowed back the folded Agrio and tight Agrio sections
together with a peak rate of 351 bopd. Based on this rate, and
prior well results, the company plans to move ahead with vertical
development of the folded Agrio play. The well has been flowing
back Vaca Muerta stages since 8 November 2018 with a peak rate of
153 bopd. During the Vaca Muerta flowback, the Agrio stages were
allowed to continue producing up the annulus and have continued to
flow naturally at over 350 bopd.
CDM-3012 is currently testing the Vaca Muerta formation and
achieved a peak rate to date during pumping operations of 88 bopd.
It is likely that rate will continue to increase as pump rate is
increased and water cut decreases.
Based on the highly encouraging results of the wells on Cerro
del Medio, the folded Agrio has been identified as a target
development with vertical unconventional wells. The remaining wells
show promise for horizontal development of the formations under
test.
A number of older wells were also completed in the current
campaign.
CP-1013 and CP-1017 were limited tests of tight Agrio stages and
flowed back at a peak rate of 25 bopd and 20 bopd respectively.
PR-53, an older Chachao well, was completed in the Vaca Muerta
section. The well is now currently on test in the Agrio stages,
with results pending.
ClCh.x-2001 was a more selective test of tight Agrio and Vaca
Muerta stages, limiting each to selective set in each zone. The
Vaca Muerta stages produced at a peak rate of 30 bopd. On 16
September 2018 the Agrio stages were put online and reached a peak
rate of 37 bopd.
Each of these wells provides valuable information related to the
formations being tested that will be used to determine the most
appropriate drilling and completion methodologies .
Chachahuen Sur
Production (boepd)
FY 2018 FY 2017 Q4 2018 Q3 2018
-------- -------- --------
2,348 1,976 2,276 2,311
-------- -------- --------
Operator YPF
Production at Chachahuen Sur was largely flat in Q4 2018, driven
by a decrease in drilling activity as the field is increasingly
drilled-out. The operational focus at Chachahuen Sur is moving
towards water flood to stabilise production and arrest decline. The
current focus of the operator, YPF, is on improvements in water
flood conformance as it seeks to better understand how effective
the injection of water is in pushing oil to production wells. In
addition to drilling water injection wells, several production
wells have also been converted to injectors. The expectation of the
water flood operations is that production should be held largely
stable over the next several months.
During the quarter YPF drilled eight (Q3 2018: 11) new wells and
performed 11 workovers (Q3 2018: 12), most of which were undertaken
to improve water flood results.
In December 2018, the province of Mendoza granted the Cerro
Morado Este part of the original Chachahuen Sur concession as a
separate exploitation concession. YPF is operator of the concession
(PGR: 20%) and is currently drawing up plans to develop the
concession over the next several years. Any development decision
will require PGR's approval and the company is in discussion with
YPF through a regular programme of operating committee meetings to
understand the plans, economics of the play and the associated
capital requirements in advance of any capital investment
sanction.
Austral basin
Production (boepd)
FY 2018 FY 2017 Q4 2018 Q3 2018
-------- -------- --------
3,960 3,900 4,033 3,902
-------- -------- --------
Production remained largely flat in the Austral basin with
production increases realised from the Tierra del Fuego assets
offset in part by minor production declines in the Santa Cruz Sur
assets.
Santa Cruz Sur
Production (boepd)
FY 2018 FY 2017 Q4 2018 Q3 2018
-------- -------- --------
3,024 3,180 2,896 2,966
-------- -------- --------
Operator: ROCH S.A.
Production decreases at Santa Cruz Sur were driven largely by
natural decline. In Q4 2018, nine minor pulling jobs for well
repairs were performed with no other significant activity
undertaken.
Tierra del Fuego
Production (boepd)
FY 2018 FY 2017 Q4 2018 Q3 2018
-------- -------- --------
936 720 1,137 936
-------- -------- --------
Operator: ROCH S.A.
Production increases in Tierra del Fuego were largely driven by
completion of the LFE-1004 well in the Tobifera formation during
October 2018. The well tested at initial rates of 5.2 MMscfpd and
11 bopd. In addition, hydraulic fractures were performed on the
SM-1003 and LR.x-1001 in December, which are currently still under
evaluation.
The continued development plans for both Santa Cruz Sur and
Tierra del Fuego remain under discussion between Phoenix and the
asset operator, ROCH S.A.
Cuyana basin
Production (boepd)
FY 2018 FY 2017 Q4 2018 Q3 2018
-------- -------- --------
1,818 2,136 1,734 1,883*
-------- -------- --------
* re-presented, refer footnote below field-by-field production
table
Operator: PGR
The company continues to experience natural production decline
in the relatively mature Cuyana basin assets.
No major activity took place in the Cuyana basin. Eight
maintenance pulling jobs were performed in the period.
Additional information
Production summary
Basin/Concession WI FY2018 FY2017 Q418 Q318
% Net BOE/D Net BOE/D Net BOE/D Net BOE/D
----- ---------- ---------- ---------- ----------
AUSTRAL 3,960 3,900 4,033 3,902
----- ---------- ---------- ---------- ----------
Angostura (CA-14) 13% 352 50 529 383
----- ---------- ---------- ---------- ----------
Campo Bremen 70% 538 573 504 539
----- ---------- ---------- ---------- ----------
Chorillos 70% 1,999 2,103 1,944 1,959
----- ---------- ---------- ---------- ----------
Las Violetas 13% 563 646 586 532
----- ---------- ---------- ---------- ----------
Moy Aike 70% 98 105 88 78
----- ---------- ---------- ---------- ----------
Oceano 70% 389 399 359 390
----- ---------- ---------- ---------- ----------
Rio Cullen 13% 22 24 22 22
----- ---------- ---------- ---------- ----------
CUYANA 1,818 2,136 1,734 1,883
----- ---------- ---------- ---------- ----------
Atamisqui 100% 318 333 319 316
----- ---------- ---------- ---------- ----------
Chañares Herrados 78% 499 514 457 578*
----- ---------- ---------- ---------- ----------
Puesto Pozo Cercado 78% - 274 - -
----- ---------- ---------- ---------- ----------
Refugio Tupungato 100% 1,002 1,014 959 989
----- ---------- ---------- ---------- ----------
GOLFO SAN JORGE 6 8 7 4
----- ---------- ---------- ---------- ----------
Sur Rio Deseado Este 25% 6 8 7 4
----- ---------- ---------- ---------- ----------
NEUQUINA 4,471 5,026 4,112 4,157
----- ---------- ---------- ---------- ----------
Cajon De Los Calallos 38% 121 159 120 125
----- ---------- ---------- ---------- ----------
Cerro Mollar Norte 100% 91 105 95 83
----- ---------- ---------- ---------- ----------
Cerro Mollar Oeste 100% 88 107 86 88
----- ---------- ---------- ---------- ----------
Chachahuen Sur 20% 2,298 1,949 2,226 2,257
----- ---------- ---------- ---------- ----------
Chachahuen Sur (Permiso) 20% 50 28 50 53
----- ---------- ---------- ---------- ----------
El Manzano Oeste (Agrio) 100% 11 43 - -
----- ---------- ---------- ---------- ----------
El Mmanzano Oeste (Resto) 40% 16 16 15 19
----- ---------- ---------- ---------- ----------
La Brea 100% 37 67 33 54
----- ---------- ---------- ---------- ----------
La Paloma 100% 1 - - -
----- ---------- ---------- ---------- ----------
Puesto Rojas 100% 1,744 2,485 1,487 1,477
----- ---------- ---------- ---------- ----------
Rio Atuel 67% - - - -
----- ---------- ---------- ---------- ----------
Vega Grande 100% 12 68 - -
----- ---------- ---------- ---------- ----------
Grand Total 10,256 11,070 9,885 9,946
----- ---------- ---------- ---------- ----------
* The previous operational update under-reported Q3 volumes at
the Chañares Herrados concession as at the time only production
data through August had been made available and verified. This
report presents updated Q3 volumes.
All production figures in the tables and the text of this
announcement are Net figures for the company's interest in the
various licences. Totals may not add due to rounding.
- ENDS -
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END
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