Land-locked Paraguay may lack the hydrocarbon resources to rival neighboring Brazil and Argentina, but one of the country’s oil and gas players believes a prospect there shows signs of promise.

After completing and interpreting seismic data over Paraguay’s Hernandarias Block, the U.K.-based President Energy Plc (AIM: PPC) said on Oct. 9 that its Boqueron prospect could hold “significant” new prospective resources.

The company also recently reported locking up the remaining rights to the Pirity Concession in a deal for cash and a percentage of future profits.

President said gross estimates of the Boqueron prospect’s unrisked recoverable resources are 559 billion cubic feet of gas (Bcf), 302 million barrels (MMbbl) of oil and 17 MMbbl of condensate.

The prospect is located in the Pirity Sub-basin, an extension of the proven Olmedo Sub-basin petroleum system near Argentina and is considered the largest in Paraguay’s Hernandarias Block.

“The results of the seismic program carried out earlier this year are very promising and underline the potential of the Paleozoic play in the Hernandarias Block,” Peter Levine, chairman, said in a news release.

Described as a three-way drip structure of up to 60 square kilometers against Devonian source rocks, the prospect could contain light oil at depths of 1,600-2,700 meters, the company said.

“The new seismic [data] supports the correlation of the same Paleozoic section proved in Lapacho in a northwards direction through a series of structures culminating in the largest structure at Boqueron,” President said.

The large Boqueron structure is a compelling drilling opportunity. However, given the current volatility in the market, President said its spending is more focused on production.

“Strategic considerations remain ongoing, and accordingly it is premature to provide a definitive timetable for drilling of an exploration well on Boqueron,” President said. “The company nevertheless continues to target commencement of drilling as soon as all relevant circumstances permit.”

In No Hurry

While the E&P is not rushing to drill an exploration well on the prospect, it’s showing commitment to the nation of more than 6 million people.

The company notes that businesses in Paraguay pay a flat 10% tax on profits and a sliding scale royalty on oil production that ranges from 10%-14%.

On Oct. 6, the company acquired the remaining 36% interest in the nearby Pirity Concession from Petro-Victory Energy’s (VRY) subsidiary Pirity Hidrocarburos S.R.L. (PH).

Under the terms of the deal, President will pay PH $500,000 in cash as well as a net profits interest of 3% from any future net income generated, according to Toronto Stock Exchange documents. The deal also includes forgiveness of US$2.85 million in “confidential debt” owed by PH.

President’s acquisition of the Pirity Concession contains the Jacaranda and Lapacho wells and brings its ownership of the area to 100%.

In December, President said its Lapacho x-1 well encountered hydrocarbon shows in the Santa Rosa Formation after reaching a total depth of 4,543 meters. Despite running into deteriorating hole conditions at one point, President said the formation could be commercialized. A test of the formation confirmed a hydrocarbon accumulation in the range of 1 to 5 Tcf plus condensate in the Lapacho area,

President currently has a 40% interest in the Hernandarias Block, but a farm-in option could bump its interest up to 80% if the company invests $10.4 million in drilling activity within the next four years.

President’s Jacaranda and Lapacho wells, which both identified potentially significant hydrocarbon accumulations, are suspended pending possible re-entry and flow testing, President said.

“It is those same formations which were the target of the recently completed seismic campaign in the Hernandarias Block,” President said in an Oct. 6 news release. “A third drill-ready location exists in Pirity at the Tapir Cretaceous prospect, forming part of the Jurumi complex of five large dip enclosures across the border from the producing Cretaceous Palmar Largo fields in Argentina.”

Based on 3-D seismic data acquired in 2013, President said the Jurumi complex could have an estimated 453 MMbbl of gross mean unrisked prospective resources.

President Energy has onshore producing assets and exploration licenses in Argentina and Louisiana, and onshore exploration licenses in Paraguay and Australia.

Velda Addison can be reached at vaddison@hartenergy.com.