Phoenix Global renegotiates Argentina acreage, wins new area

Phoenix Global Resources announced the renegotiation of its Mata Mora and Corralera block interests on Monday, in accordance with the memorandum of understanding mentioned in its readmission document published on 24 July last year.

The AIM-traded company also announced the award of four new blocks in the recent Neuquén Province bid round.

It said it increased its acreage in the core Vaca Muerta play, converted its non-operated position to operated position, and gained four new blocks in the Neuquén province.

The firm’s interest in Mata Mora and the retained part of Corralera was increased from 27% to 90%, with Phoenix assuming operatorship.

In 2018, two horizontal Vaca Muerta wells were planned in the Mata Mora block, which was on trend and immediately next to one of the most prolific blocks in the Vaca Muerta play.

Four new exploration blocks were awarded in the April 2018 Neuquén province bid round, the board confirmed, with Phoenix awarded operatorship on all new acreage secured in the round.

Licence fees of $10m, related to new and renegotiated acreage, would be due to the Neuquén province at completion.

Phoenix’s Vaca Muerta net operated acres had increased 14.5% to 560,000 acres as a result of the transactions, representing approximately 7.5% of the entire Vaca Muerta acreage.

An additional 70,000 net acres of other unconventional prospects had been secured in the bid round as well, the board reported.

The company said it had entered into a number of joint venture agreements with the province-owned Gas y Petróleo del Neuquén (GyP), and related to both the Mata Mora and Corralera blocks.

Those blocks, until now, had been the subject of an MoU between GyP, the subsidiaries of Phoenix and Integra Oil & Gas (IOG).

In order to conclude the agreement with GyP, IOG had agreed not to participate in the blocks and Phoenix said it could agree to a suitable compensation to IOG.

The joint venture agreements took the Argentina legal form of Uniones Temporales de Empresas or ‘UTE’, and secured Phoenix’s rights to approximately 100,000 acres of Vaca Muerta exposure.

Phoenix said the agreement with GyP provided the foundation for the appraisal and, ultimately, development of the Mata Mora and Corralera acreage.

In addition, the acquisition of a further four new exploration blocks in Neuquén Province together added an additional approximate 11,000 net acres with Vaca Muerta exposure, and a further 70,000 acres of other unconventional exposure.

The company’s management said it believed that the potential for the unconventional development in the proposed areas was “high”, and it intended to carry out three-year work commitments as conferred by the licence awards.

At Mata Mora, under the revised licence terms, Phoenix committed to drill two horizontal wells in the block, and expected to fulfil that commitment in 2018.

The planned wells would be drilled consecutively in order to minimise mobilisation and demobilisation costs of drilling crews, associated equipment and other service costs.

As part of the agreed and revised Corralera licence commitments, Phoenix said it would drill a well on each of Corralera Sur and Corralera Noroeste blocks.

It expected that those wells would be drilled in 2019 or 2020.

At La Tropilla I, the company planned to fulfil a portion of the licence commitments including the reprocessing of existing seismic data in the 2018/19 timeframe and, based on the results of the seismic interpretation, potentially drill an initial well at La Tropilla in 2020.

Finally, at Aguada de Castro Oeste I, Aguada de Castro Oeste II and Santo Domingo I, in furtherance of its commitments in the area Phoenix said it planned to carry out geochemical and seismic work and to drill an initial well on Aguada de Castro Oeste I, potentially in 2019/2020.

“We are delighted to have renegotiated and increased our working interest in now PGR-operated Mata Mora and Corralera blocks from 27% to 90% as well as adding four new operated blocks in the Neuquén Province to Phoenix’s portfolio in the recent Neuquén bid round,” said Phoenix CEO Anuj Sharma.

“Together, these agreements will mean that Phoenix’s acreage position now covers approximately 7.5% of the entire Vaca Muerta formation.”

Sharma also highlighted that the company signed an LOI with Nabors to secure a drilling rig in order to immediately start its horizontal drilling campaign in the Neuquén province.

“Phoenix has an active work programme across our portfolio for 2018 based on our accelerated business plan, which focuses on multiple unconventional targets in the Neuquina Basin.”