President Petroleum (LON:PPC) told investors that it is clear that hydrocarbons are present in the Kafoury-3 well in Louisiana, USA, but it will take longer than expected to explore the main target section.
The company said it has encountered higher than expected pressures and very high background gas, which has significantly increased at depth. Consequently the well will take longer and it has caused a significant increase in projected costs.
President Petroleum shares fell more than 7 percent in early deals on London’s AIM market. The shares lost 5.25 pence and were last trading at 63.75 pence per share.
Crucially President Petroleum said the well is now at a depth of 13,687 feet and it is poised to intercept the main target, which is thought to contain nearly two thirds of the targeted resources.
“Whilst the company has not yet identified any commercial hydrocarbon producing sands in the upper two target prospects, this does not in any way affect the prospectivity of the deep section,” the company said.
“As it is clear there are hydrocarbons in the system, the decision has been made to drill ahead, despite the challenging conditions.”
Additionally President Petroleum also updated investors on its operations in southern Australia, where it is on schedule and budget to drill the Northumberland-2 towards the end of February.
Northumberland-2 will target two reservoirs that are independently estimated to contain total prospective resources of 40 million barrels of oil, or 55 billion cubic feet of gas.
The company describes the well as a very high impact opportunity.