PPP Pennpetro Energy Plc

Pennpetro Energy Plc

Operational Update on Extended Well Testing, Facilities Agreement and Director Changes.

Highlights:

•          9,053 barrels produced in Texas to date since well testing at Chalk Talk wells commenced.

•          8,601 barrels of oil sold to date.

•          Well testing continues to optimise oil production.

•          Long-term surface oil storage facilities agreement reached with Millennium Petrocapital Inc.

•          Director change at Nobel Petroleum, the Company's 100% operating subsidiary in Texas.

London, 25 March 2024 - Pennpetro Energy PLC (LSE: PPP) ("Pennpetro" or the "Company"), the independent oil and gas company focusing on development and production in the Peach Creek (Austin Chalk) Oil Field in Gonzales County, Texas, USA, is pleased to provide an interim update from the Company's 100% Chalk Talk #1H ("CT1H") well testing program.

In early December, the Company announced that oil production from the extended well testing programme from CT1H saw average oil production for November 2023 of 161 barrels of oil per day (bopd) and saw oil flows at the end of November exceed 400 barrels of oil per day with increasing levels of gas. At these high rates, total fluid being produced was of the order of 600-700 barrels per day and was being pumped to surface using a downhole electric submersible pump (ESP).

The well then experienced a number of top-of-well and bottom-of-well technical issues which required technical intervention and resulted in a sustained fall in overall daily production.

Since the last report, the quantity of fluids pumped to surface experienced a fall due to a number of holes developing in the high-pressure production tubing above the pump. The faulty tubing has since been replaced and oil has been intermittently produced in the period, as staff and consultants on site dealt with remedying the lower production rates experienced since the recent work-over.

Although the holes in the production tubing have now been repaired, oil production has still not been restored to the high  levels seen in November. This is due to fragmented generator and pump electrical issues and potential well blockages forming again below the pump depth whilst the well was off-line being repaired. The Company is working with Halliburton and Summit Pumps to address the ongoing issues still being experienced to steady the well's production.

The CT1H well has now been put back to pump and current oil production is running at between 30 barrels of oil per day and 70 barrels of oil per day. A new work-over planned for the coming months, to clean the well 1,000 feet along the horizontal, would aim to get the CT1H well back into much higher oil production rates. 

By way of an overall update on oil production and sales from the Chalk Talk 1H well (since the 1 November 2023 pump start), the well has produced a total of 9,053 barrels of oil with oil sales to date totalling 8,601 barrels.

With respect to the CT4H well testing, this well was temporarily put to test, producing approximately 600 barrels of oil before being shut in again to allow all efforts on site to be directed towards the remedial repair works on the CT1H well. 

In addition, Pennpetro has managed to secure the extended use of the surface oil storage facilities located at Whistling Straits 5 with a long-term rental agreement with Millennium at US$10,000 per month.

Director Changes:

After having worked in the oil and gas industry for 46 years, Mr Andy Clifford has decided to retire from his Board position with Pennpetro Energy PLC and as the President of Nobel Petroleum USA Inc. 

He will retain a significant shareholding position in the company and will be available for consultation.

The Company is pleased to announce that it has appointed Deane Pierce as interim President of Nobel Petroleum Inc with immediate effect.

Deane has been working with Andy Clifford on Nobel's activities from the beginning and is well versed on the Company's assets in Texas. 

Deane Pierce has over 30 years' experience in petroleum operations and finance in a variety of operating areas including the Texas and Louisiana Gulf Coast, West Texas, Mid-Continent, and Rockies.

He started with Hunt Energy Company after graduating from Texas Tech University in Petroleum Engineering and progressed from various engineering assignments to Gulf Coast Operations manager. From there he transitioned to International with ARCO Oil and Gas as North Africa Area Manager. He later joined the predecessor to the EOG Resources working as Engineering Manager in key start-up projects.

He joined Vanco Energy in 2000 as Operations Manager and completed a number of West Africa projects in Deep Water. He joined El Paso Oil and Gas in 2005 as South American Area Manager responsible for a number of offshore development projects offshore Brazil. After El Paso sold its International Division Deane joined Odebrecht Oil and Gas in 2010, headquartered in Rio de Janeiro, handling West and Brazil. 

After leaving Odebrecht, Deane became President and CEO of ADP Energy ventures which provides capital, engineering services and consulting where he has been involved with projects in Oklahoma, Louisiana and the Texas Gulf Coast including the Austin Chalk.

Deane has invented some key horizontal inflow and completion devices which have helped increase oil production and reduce water and gas cut. He has utilised state of the art perforating and inflow technology to improve marginal field performance and reduce operating cost.  He is a registered Petroleum Engineering and has authored a number of technical papers dealing with improving well performance, completion technology and reducing well costs.

He has an engineering degree from Texas Tech University and an MBA in Finance from Dallas Baptist University.

Lastly, the Company has been engaged extensively in negotiations with a suitable board replacement for Andy Clifford on the Pennpetro board and look forward to updating shareholders further when contracts have been finalised.

Tom Evans, Pennpetro Energy's CEO said:

"We are gradually learning what is required to maintain steady oil production from our Chalk Talk wells in Texas. We initially saw excellent production from our Chalk Talk 1H well getting to an amazing 700 barrels of fluid per day with oil production peaking at 410 bopd in late November, then down hole issues in December saw a decline in the well's performance. It took some time to realise that the decline in oil production experienced in December was primarily due to a quarter inch hole that developed in the production tubing at around 7,500 feet depth. This combined with reduced fluid flow to the well bore, due to the well potentially collapsing below the pump level has seen the CT1H well run well below expectations. We are working with our consultants at Halliburton and Summit to bring the well back to its full production potential and this work is ongoing. The good thing is we continue to see oil coming to surface as we address the issues at CT1H and we continue to receive oil sales with last month's net sales equating to US$48,470.26, for PPP, which shows the robust economics of our acreage. We are optimistic that a further work-over, to clear the potential blockages below the pump, will see this well produce much better than the current circa 50 bopd. We have over 2,000 acres of prime oil ground in Gonzales County in Texas and this acreage has the potential to build a robust oil production company."

"I am also delighted that Deane has accepted the challenge to be the interim President of Nobel Petroleum Inc. He has been involved alongside Andy since 2018 and knows our assets and relationships well, meaning a seamless transition with little interruptions to our day-to-day operations."

-ENDS-

This announcement contains inside information within the meaning of Article 7(1) of (i) Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014, as amended (the "EU Market Abuse Regulation") and (ii) the EU Market Abuse Regulation as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018.

For further information visit www.pennpetroenergy.co.uk or follow us on X @pennpetro or contact:

NOTES TO EDITORS:

Pennpetro Energy is an independent oil and gas company focusing on production in the Gonzales Oil Field in Texas, USA. Shares in the company were admitted to the Official List of the London Stock Exchange by way of a Standard Listing on 21 December 2017 with the ticker symbol "PPP".

Its wholly owned subsidiary, Nobel Petroleum USA Inc. has a 100% Working Interest in 2,036.38 acres in Gonzales County in Texas. These acres include the Whistling Straits #5 well and the Chalk Talk #1H and #4H wells. Noble also has a Participation, Development and Option Agreement and Joint Operating Agreement with Texas based Millennium PetroCapital Corporation over a 250,000-acre Area of Mutual Interest in Gonzales County, Texas, aimed at exploiting the prolific proven Austin Chalk oil and gas play. Pennpetro Energy has also recently signed a conditional binding agreement to conduct a new 3D seismic survey on the Horse Hill Oil Field near London's Gatwick Airport which paves the way to drilling the next production well (HH-3) for 49% of the revenue of this proposed well.