Phoenix Global Resources : Q3 2019 Operational Update

9 December 2019

Phoenix Global Resources plc

('Phoenix' or the 'company')

Q3 2019 Operational Update

Operational highlights

●	Extended well testing continues at Mata Mora with the installation of artificial lift planned on MMx-1001 in early 2020
●	Five wells completed in the Folded Agrio formation at Puesto Rojas and all wells currently on flowback
●	The 2019 drilling campaign completed with the drilling of two wells at La Paloma, satisfying the licence commitments for the block
●	Waterflood optimisation ongoing at Chachahuen Sur as part of secondary recovery operations to manage production decline
●	Average daily working interest production increased to 10,830 boe (Q2 2019: 9,640 boe)

Financial performance (unaudited)

●	Amended convertible RCF extended by US$10.0 million to fund exploration and development activity through year-end
●	Q3 revenue of US$34.1 million (Q2 2019: US$36.5 million)
●	Average realised prices in Q3 2019 of US$38.9/ boe (Q2 2019: US$45.1/ boe)
●	Sale of non-core, partner-operated conventional Santa Cruz Sur assets completed 12 November 2019

Outlook

●	Planning underway for initial long-lateral unconventional well to be drilled at Corralera in H1 2020
●	Work continues on the application for an unconventional development concession at Mata Mora in 2020

Javier Vallesi, COO commented:

'We are pleased with the ongoing progress made during the quarter where the paced development of our significant unconventional development portfolio continues to show promising results and to provide valuable information related to the subsurface. Testing continues at Mata Mora, the results of which will be used to help define the future drilling and the overall development plan for the block. At Puesto Rojas, the vertical Agrio unconventional wells were drilled and completed under budget and are now on flowback. Consistent with our operational objectives, we continue to build our organisational and execution capability as we begin the appraisal and development of our unconventional concessions.

The sale of our Santa Cruz assets in November further focuses our resources on the company's significant unconventional acreage consistent with our stated objective to become a leading, Argentina-focused, unconventional development and production company.

The board continues to monitor the transitional arrangements following the October presidential election and believes that the oil and gas industry will remain an important part of the economy contributing to the future of Argentina.'

For further information, please contact:

Phoenix Global Resources plc	Kevin Dennehy, CFO	T: [phone]
Shore Capital Joint broker and nominated adviser	Antonio Bossi David Coaten	T: [phone]
Panmure Gordon Joint Broker	Charles Lesser	T: [phone]
Camarco Financial PR	Billy Clegg Owen Roberts James Crothers	T: [phone]

About Phoenix

Phoenix Global Resources is an independent oil and gas exploration and production company focused on Argentina and listed on the London Stock Exchange (AIM: PGR) and the Buenos Aires Stock Exchange (BCBA: PGR). The Company has over 1.8 million licenced working interest acres in Argentina (of which over 0.7 million are operated), 57.1 million boe of working interest 2P reserves and average working interest production of approximately 10,249 boepd in 2018. Phoenix has significant exposure to the unconventional opportunity in Argentina through its approximately 700,000 working interest acres with Vaca Muerta and other unconventional potential.

The Company's website is www.phoenixglobalresources.com

Mata Mora

The extended well testing on MMx-1001 and MMx-1002 continued in Q3 2019. Both wells remained on flowback for much of the period with MMx-1002 temporarily shut in from 10 September 2019 to allow for pressure monitoring on the well. As part of the testing and evaluation of the wells, a production logging tool was run in MMx-1001 in the period to assess the effectiveness of the completions design and its execution and to help in future well design and field development.

MMx-1002 is expected to return to production in early 2020 following the installation of artificial lift on MMx-1001, dependent on the rate of pressure decline observed in MMx-1001.

Together, the two Mata Mora wells yielded total production of 110,697 boe on a working interest basis in Q3 2019, consistent with budgeted expectations.

Puesto Rojas

The three new Folded Agrio unconventional wells, CDM-3014, CDM-3011 and CDM-3025, were completed in the period. In addition, the CDM-3007 and CDM-3012 were also re-completed in the Folded Agrio formation. These two wells were drilled as part of the 2018 drilling and completions campaign and had previously only tested the deeper Vaca Muerta and Organic Agrio sections. All the wells in the 2019 Folded Agrio campaign were drilled and completed under budget. The initial production expectations from the recent wells have been adjusted downwards due to a combination of reservoir response, lower than expected initial production from new wells and production curtailments required as a consequence of limited gas handling capabilities in the area. The company has recently commenced a gas to power project at Puesto Rojas to mitigate the constraint from associated gas.

Chachahuen

In Q3 2019, water quality for use in secondary recovery at Chachahuen was improved and the rate of water injection increased from 9.4 Mbbls/ day over 48 injector wells to 19 Mbbls/ day across 64 injector wells. It is expected that 16 further injector wells will be connected by Q4 2019 thereby increasing the total water injection rate at Chachahuen to 25 Mbbls/ day. To date, the waterflood project at Chachahuen Sur has been effective in arresting or slowing natural production decline in the well stock.

At Cerro Morado Este 18, delineation wells have been drilled in 2019 with promising results overall. The operator, YPF, is planning a waterflood pilot programme for the area in 2020.

It is estimated that the government commitments at Chachahuen will be completed by January 2020. Four of the ten remaining commitment wells have already been drilled and the final six will be drilled during Q4 2019 and early 2020.

Other unconventional areas

Rio Atuel

The ML.x-1001 well finished drilling in the period and, following completion, was put on production in October 2019. The well is currently in the flowback stage with results under evaluation.

The Rio Atuel block lies contiguous with Puesto Rojas and the ML.x-1001 well satisfies the second phase commitments associated with the block. The results of the well are expected to inform the development strategy for the block with a third phase commitment well to be drilled, potentially in 2020.

Other operated areas

La Paloma

Two wells, LP-9 and LP-7, were drilled in the La Paloma-Cerro Alquitran area targeting the Grupo Neuquén formation. It is anticipated that the completion of the wells will overcome the variable permeability issues encountered in the neighbouring Loma de la Mina conventional wells operated by YPF.

The completion of these wells will fulfil the licence commitments associated with the blocks allowing the company to hold the acreage until the expiry of the licences in December 2040. The royalty rate associated with the licences is fixed at 12%.

Other partner operated areas

On 13 November 2019, the company announced the completion of the sale to Echo Energy plc of its 70% non-operated interest in five mature conventional production blocks comprising the Santa Cruz Sur assets. The Santa Cruz Sur assets are located in the Austral basin in south Argentina and their sale is in line with the company's strategy to refocus Phoenix's portfolio to focus the company's resources on the development of its significant unconventional oil and gas portfolio.

Production summary

	Q3 2019 Gross	WI	Q3 2019	Q2 2019 Revised	Q2 2019	FY 2018
	BOE/D	%	NET BOE/D
Puesto Rojas Area
Puesto Rojas	1,327	100%	1,327	1,375	1,375	1,744
Cerro Mollar Norte	93	100%	93	86	86	91
Cerro Mollar Oeste	71	100%	71	81	81	88
La Brea	53	100%	53	31	31	37
Total Puesto Rojas Area	1,544		1,544	1,574	1,574	1,960
Mata Mora	1,203	90%	1,083	19	-	-
Corralera	-	90%	-	-	-	-
Chachahuen
Chachahuen Sur	9,734	20%	1,947	2,067	2,051	2,298
Chachahuen Sur (Permiso)	-	20%	-	-	46	50
Cerro Morado Oeste	873	20%	175	87	57	-
Total Chachahuen	10,607	20%	2,121	2,154	2,154	2,348
Other unconventional
El Manzano Oeste (Agrio)	-	100%	-	-	-	-
Rio Atuel	-	67%	-	-	-	-
Total other unconventional	-		-	-	-	-
Other operated
Atamisqui	339	100%	339	312	312	318
Refugio Tupungato	976	100%	976	969	969	1,002
Vega Grande	-	100%	-	-	-	12
Total other operated	1,315		1,315	1,281	1,281	1,332
Other partner operated
Angostura (CA-14)	4,160	17%	707	708	708	352
Campo Bremen	691	70%	484	441	441	538
Chorillos	2,508	70%	1,756	1,754	1,754	1,999
Cajon de los Caballos	303	38%	114	97	97	121
Las Violetas	3,658	17%	622	628	628	563
Moy Aike	110	70%	77	83	83	98
Oceano	523	70%	366	341	341	389
Rio Cullen	69	17%	12	9	9	22
Chañares Herrados	765	78%	597	508	508	499
Sur Rio Deseadso Este	11	25%	3	3	3	6
El Manzano Oeste (Resto)	71	40%	28	41	41	16
Other partner operated	12,870		4,766	4,612	4,612	4,603
Total production	27,540		10,830	9,640	9,621	10,254