President announces that, subject to Governmental and regulatory approvals, it has been granted an option at no cost to the staged farm-in of an up to 80% maximum participating interest in the Hernandarias Block in the Chaco Region of Paraguay as Operator, ("the Agreement").
Subject to exercise of the option, on completion of the Agreement, President will fund the first US$ 17 million of a work programme, including one well drilled to test the Devonian at any time within the three year exploration phase of the Concession Contract (the period starts upon the award of the Concession Law). No additional consideration or back costs are payable by President. The Hernandarias Block covers a very large area (18,507 km2) and is located immediately north of President's existing Pirity and Demattei Concessions.
On completion of the Agreement, President would operate a contiguous land block of 34,507 km2 covering almost the entire prospective Pirity Rift Basin and has thus secured a basin controlling position in the Chaco region of Paraguay.
Under the terms of the contemplated Hernandarias Block, on completion of the Agreement, President as Operator would retain the entire land block of 18,507 km2 for year 1 of a new Concession Law prospection phase, after which time the area will reduce to 8000 km2, equivalent tothe size of each of the existing Pirity and Demattei Concessions. At that point, President will operate three contiguous Concessions totaling 24,000 km2.
History of the Prospect Area
The Hernandarias Block was initially applied for on 6 September, 2010, as a Prospecting Permit by Hidrocarburos Chaco S.A. ("HCH"). The Prospecting Permit was granted on 23 February, 2011 and was converted to a provisional Concession Contract on 28 December 2012. This provisional Concession Contract has now been approved by the relevant Senate Commissions and will go before the Senate, House of Deputies and Executive Office for final government approval as a full Concession Law during 2014.
Prospectivity
The Hernandarias Block is of great interest to President because it contains the same Paleozoic play system that has delivered very significant reserves (14 billion barrels oil equivalent) in numerous giant fields (wet gas and liquids) in the adjacent Andean mountain front of Bolivia and Argentina. Several of the giant Bolivian/Argentinean mountain front fields individually contain in excess of 10 tcf.
Whilst the Andean mountain front structures die out to the east before the Paleozoic basin reaches Paraguay, President has used its 2013 seismic data and old well control to follow the elements of the Paleozoic play system into the Hernandarias Block. Most importantly, the Paleozoic play system in the Hernandarias Block becomes highly structured into numerous large rotated fault blocks developed along the northern flank of the Pirity Rift Basin. Hence, the Hernandarias Block contains a major new Paleozoic structural play fairway along the northern flank of the Pirity Rift Basin, developed solely in Paraguay and not developed in adjacent Bolivia or Argentina.
It is contemplated that on completion of the Agreement, President will commence prospect specific seismic in the Hernandarias Block following award of the Concession Law with a view to drilling the first Paleozoic structural test on the Hernandarias Block within the three year work programme period.
Peter Levine, Chairman, President Energy commented:
"The Hernandarias Block is a promising one, in which President has a significant level of understanding based on its work in the Pirity and Demattei Concessions.
"We are pleased to have agreed the right to work in this area with the existing permit holder, Hidrocarburos Chaco S.A."
