20 October 2014

PRESIDENT ENERGY PLC

("President" or "the Company")

OIL DISCOVERY IN PARAGUAYAN CHACO

President Energy announces an update on its Lapacho well, Pirity Concession, Paraguayan Chaco (President 64% operated interest)

Highlights

Lapacho well discovery

·     President has made the first ever oil discovery in the Paraguayan Chaco

·     Conventional light oil / condensate discovery - expected to be commercial (subject to
 testing)

·     Drilling is continuing in order to reach the original target of the Santa Rosa sands

Jacaranda well update

·     Discovery supports the presence of liquid hydrocarbons in the deeper sandstone
 reservoirs in Jacaranda

·     250 meters of liquid hydrocarbon saturation  now identified in the shales in  Jacaranda

·     Re-entry of Jacaranda now being proposed

Production

·     First phase production commencing during 2015 feasible subject to satisfactory testing

Peter Levine, Chairman, commented;

"This discovery represents a significant milestone for both President Energy and for the country of Paraguay. President has demonstrated beyond doubt that movable conventional oil does exist in the Paraguayan Chaco.

"Whilst we are most satisfied with this discovery, President is now focused on drilling down to the original target which still lies in front of us".

Lapacho Well

The PY-PE- L x-1 (Lapacho) well, currently drilling in the Paraguayan Chaco, has discovered two conventional oil bearing pay zones in the Devonian Icla Formation at a depth of 3926 metres. This formation was not the original  target of this well .The well is now setting casing at the base of the Icla Formation at a depth of 4127 metres before drilling ahead to test the  target being the underlying Devonian Santa Rosa Formation.

The two Icla pay zones are in addition to resource estimates given earlier this year (RPS Report, 12 June 2014) for the Lapacho Prospect and have been evaluated by a full suite of wireline logs including FMI and Platform Express as well as extensive side wall cores. President continues to work with Schlumberger as its integrated project manager. Combined net sand thickness is 20 metres with an average porosity of 6%. Logging shows the extensive development of conductive natural fractures. Side wall cores are bleeding live oil and hydrocarbon type appears to be light oil and condensate. It is intended that production flow testing will be conducted at the end of November when the well reaches final TD, together with such testing of the Santa Rosa Formation as may be appropriate.  Given the good matrix porosity and abundant natural fractures, hydrocarbon flow rates from the Icla pay zones are expected to be commercial on a stand-alone basis. The size of the Icla discovery is still to be determined but can be seen to extend over at least the crest of the large underlying Santa Rosa structure, which has a closure of 25 km² in the discrete fault block being tested by the Lx-1 Lapacho well.  

Drilling remains on time and on budget with TD projected for at or around mid November when it is anticipated a further update will be given.

Jacaranda Well

In addition to this announcement of an Icla Sand discovery at Lapacho and as an update to our operational announcement of 4 September 2014, President announces that following the completion of evaluation at J x-1 Jacaranda, a very long interval of liquid hydrocarbon saturation has been identified in the Jacaranda structure lying within the Devonian shales of the Los Monos/Icla Formations. The liquid hydrocarbon saturation  occurs between a depth of 4150 metres and 4400 metres and appears as a continuous saturation of 250 metres within the shales. The occurrence of such abundant liquid hydrocarbons at this depth much increases the chance of success to discover liquid hydrocarbons (light oil/condensate) in conventional sandstone reservoirs below 4000 metres.

The immediate action proposed to our partner in the well is to proceed after Lapacho to deepen the Jx-1 Jacaranda well to encounter the same Icla Sand liquid bearing pay zones as just discovered at Lapacho below current TD at Jacaranda. The re-entry of the well , the costs of which can be met out of the Company's existing cash facilities, would mean that the Tapir Prospect, which is drill ready, would be addressed at a later date

Background

The two President operated wells (Jx-1 Jacaranda and Lx-1 Lapacho), which are the first to be drilled in the Pirity Basin of the Paraguayan Chaco for 30 years, have already at this stage proven the presence of:

·     thick Devonian source rocks actively generating liquid hydrocarbons,

·     effective Devonian sandstone reservoirs,

·     effective mechanisms  to trap liquid hydrocarbons

·     extensive natural fracturing to enhance production flow rates and

·     live accumulation of conventional liquid hydrocarbons

In total, some 32 large Santa Rosa structures have been seismically identified in the three President-operated Concessions, which is a land position covering over 34,000 km² and the entire Pirity Basin.  

 Next Steps

1.    Continue drilling the Lx-1 Lapacho well to intersect and test the original target, the 400 metre thick Santa Rosa section, which is expected to contain thick, naturally fractured reservoir sands lying immediately below the Devonian Icla Formation. The opportunity to discover liquid hydrocarbons (rather than gas) is now much enhanced. The greater Lapacho prospect area covers 100 km² and is considered by President to contain gross mean unrisked resources of approximately 1 billion barrels oil equivalent, (5.2 Tcf and 157 mmbbls of condensate). The Lapacho well main target is a discrete, well-defined fault block trap with management estimates of approximately 200 million barrels oil equivalent (1Tcf of gas and 30 mmbbls of condensate) of gross mean unrisked resources.

2.    Once the Lx-1 Lapacho well has been successfully completed, President is proposing to re-enter the suspended J x-1 Jacaranda well to test the Icla Sand pay zones below current TD.  The Jx-1 Jacaranda well reached TD at 4500 metres in July and productive Icla Sand reservoirs are projected to be encountered below 4600 metres. Compared to Lapacho, an additional thickness of Icla Formation has been preserved at Jacaranda and management estimates a thickness in excess of 50 metres for the Icla pay zones with in excess of 20 million barrels oil equivalent gross mean resources at a high chance of success. Operational consideration is being made to mobilize the QG1 rig back to the Jacaranda location once the current well L x-1 has been successfully tested and completed.

Production

Taking account the prospect of liquid hydrocarbons, initial contingent planning has commenced with a view to first phase production commencing during 2015. President views this timescale as feasible subject to satisfactory testing.

Dr. Richard Hubbard, PhD Geology Stanford University, with 40 years of experience in the oil and gas sector, as President Chief Operating Officer, who meets the criteria of qualified persons under the AIM guidance note for mining and oil and gas companies, has reviewed and approved the technical information contained in this announcement.

Contact:

President Energy PLC

Peter Levine, Chairman +44 (0) 207 016 7950

John Hamilton, CEO +44 (0) 207 016 7950

Ben Wilkinson, Finance Director +44 (0) 207 016 7950

RBC Capital Markets

Jeremy Low, Matthew Coakes, Daniel Conti +44 (0) 207 653 4000

Canaccord Genuity Limited

Tim Redfern, Henry Fitzgerald-O'Connor +44 (0) 207 523 8000

Bell Pottinger             

Gavin Davis, Henry Lerwill +44 (0) 203 772 2570