Phoenix Global Resources reports 'strong' operational progress

Upstream oil and gas company Phoenix Global Resources updated the market on its operations for the fourth quarter of 2018 on Wednesday, and outlined its plans for drilling and other operational activity for the next six months.

The AIM-traded firm said eight unconventional vertical wells were successfully completed at Puesto Rojas in the second half of 2018, with all wells currently on test and producing.

It said the encouraging results from the Puesto Rojas area well tests, together with well results from previous campaigns, had been used to help define the 2019 development plan for the area.

Phoenix said its first horizontal well located at Mata Mora completed drilling in early January, with drilling having started on a second horizontal well on the block at the end of January.

When drilling of the second well is finished, both Mata Mora wells would be completed and put on test, Phoenix confirmed.

In February, the firm concluded discussions to obtain the Corralera Noroeste licence, and it now held all licences comprising the Corralera block at a 90% working interest level, and was operator on each of the licences.

Securing Corralera Noroeste added 26,000 additional acres of Vaca Muerta and other unconventional exposure, the board said.

The sale of certain Colombian licences was completed in November, which further focussed the group's activities on Argentina.

Average working interest daily production totalled 9,985 barrels of oil equivalent in the fourth quarter, up slightly from 9,946 boe in the third quarter.

On the financial front, the company’s convertible revolving credit facility was increased by $25m in December, and by a further $50m in February, with the additional funds to be used for its 2019 appraisal and development plan.

Revenue for the 2018 full-year totalled $177m, with average realised prices for the year before hedge of reaching $50.24 per barrel of oil equivalent.

Its Brent swap contract expired on 14 December, with the company no longer holding any hedging instruments.

Capital expenditure for the year totalled $130.2m.

Looking ahead, Phoenix said completion of the initial horizontal wells at Mata Mora was planned for the first half of 2019, with up to four additional horizontal wells planned for the second half, contingent on the results of flowback testing of the first two horizontal Mata Mora wells.

Up to eight additional unconventional vertical wells were also planned in 2019, as part of the initial development of the Puesto Rojas folded Agrio formation.

“The fourth quarter of 2018 was a period of strong operational progress for Phoenix Global Resources,” said chief executive officer Anuj Sharma.

“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.”

Sharma said that at Mata Mora, evaluation of the Vaca Muerta formation was continuing with further horizontal wells planned for the second half of 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.”