President Energy buys Argentina blocks

President Energy has acquired 100% stakes in two Neuquén Basin blocks, the company announced in a press release on Thursday.

The E&P operator paid USD 400,000 to Chevron for the Puesto Flores and Estancia Vieja assets, located in the Río Negro province. As the current concession agreement for the blocks ends on November 27, a 10-year extension has already been negotiated with the Río Negro provincial government, for which President Energy will pay USD 15 million upon regulatory approval, and an additional USD 7 million by 2018.

“This acquisition represents a significant step into the world-class Neuquén Basin, which is widely accepted as the most prolific hydrocarbon region in Argentina and one of the best in South America,” President Energy chairman and CEO Peter Levine said in the statement.

“The acquisition provides significant forward momentum and an important platform for growth in the Neuquén Basin where, in line with a committed strategy to expand, we continue to actively consider other appropriate acquisition opportunities capable of delivering strong shareholder value.”

The blocks will transfer to President Energy’s ownership on October 1. Once the province’s legislature has ratified the extension agreement, Empresa de Desarrollo Hidrocarburífero Provincial, commonly known as Edhipsa, will enter the blocks with 10% stakes, while President Energy will retain 90% interests.

“We are particularly pleased that we will be partnering with Ediphsa, the Río Negro province’s own energy company, with whom we look forward to forging a strong, long-term and mutually beneficial relationship,” Levine said.

According to the statement, local regulators have also approved a 2018 work programme that will include both new wells and workover activities. President Energy said that its objective was to raise output from the assets to 3,000 bopd, up from the current 1,200 bopd.

Prior to the acquisition, Chevron had solely owned and operated both Puesto Flores and Estancia Vieja for 15 years.